contractual obligations - legal FA4
elements of a contract:
agreement: is there an agreement in existence between the parties
intention: is any such agreement intended to be legally binding
consideration: does consideration support the agreement
formalities: has the contract compiled with any required formalities
offers:
writing, orally or through an act
must be known to the offeree
offer can be withdrawn before being accepted
invitation to treat - where a pricetag is on goods; an invitation for potential customers to make an offer
termination of offers:
expiry after a reasonable time
revocation (taking back the offer before acceptance) - cannot be revoked after accepting without penalty
counter-offer (where the other party gives a different offer) - very prevalent in real-estate business or when large financial contracts at stake
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 265
defendant Carbolic Smoke Ball placed an advert in the newspaper for products stating any person who purchased and used their product but still contracted influenza despite properly following the instructions would be entitled to a 100 euro reward
claimant, Ms Carlill, thu purchased smoke balls and despite proper use contracted influenza and contracted illness and attempted to claim a reward
defendant contended they could not be bound by the advert as it was an invitation to treat rather than an offer because the advert was mere ‘puff’ and lacking true intent; that an offer could not be made to the world; the claimant had not technically provided acceptance; the wording of the advert was insufficiently precise; and, that there was no consideration as necessary for the creation of a binding contract law
issue:
whether the advert in question constituted an offer or an invitation to treat
held:
the court of Appeal found for the claimant, determining that the advert amounted to the offer for a unilateral contract by the defendants. Ms Carlill provided acceptance when completing the conditions stipulated by the advert. the Court further found that: the advert’s claim to sincerity negated the company’s assertion of lacking intent; an offer could indeed be made to the world; wording need only be reasonably clear to imply terms rather entirely clear; and consideration was identifiable the use of the balls
acceptance:
occurs when communicated to the person making the offer
cannot be withdrawn without the agreement of the offerer
can be by conduct
silence is NOT an acceptance
postal acceptance rule - acceptance takes place once the letter is posted
intention:
the court will look at the behaviour of the parties to determine the intention
difficulties for a court to determine the intention
can be gray period / area when it comes to difference between intention and invitation to treat
consideration:
the value that passes fro one party to another
exchange of finance
the person taking an action must ensure they have given consideration to enforce the contract
enforce = contract
consideration in the form of a promise must be clear
word will be heresay -> consideration in the form of a promise is considered heresay
does not have to be of market value
contract by deed | simple contracts |
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capacity:
ability for people to enter into a contract and properly understand their obligations
non-Australian citizens are required to comply with forein investment rules
bankrupt and in jail are not allowed to enter into contracts about land, cars, or loans with a bank
important vocab!
void = no legal affect; essentially does not exist
voidable = cancelled or returnable
breach = broken rule or promise
impaired mental capacity:
courts will not enforce if can be proven:
at time of contract
the person’s mind was so affected by the impairment
they were incapable of understanding the nautre of what they were doing
the person making the agreement with the MIP knew of the impairment
intoxication:
matthews v baxter (1973) LR 8 Exch 132
baxter agreed to purchase a house at auction
baxter was drunk at the time
when sober aggreed to be bound by the contract, then changed his mind
claimed intoxication at the time and the seller should have known that
court: since he agreed when sober he had to honur the contract
voidable
minors
cash purchases | enforceable |
contracts for necessaries | those things that a minor needs to maintain standard of living they currently enjoy. individual basis (it depends) |
beneficial contract of service | e.g. apprenticeship; enforceable |
acquisition of land or ongoing obligations | e.g. shares etc: enforceable - anything done with shares will be enforceable, so eg might find oneself in financial trouble |
vocab:
repudiation: upon becoming an adult, the minor states that they are not prepared to perform their obligations under the contract
ratification (minors): upon becoming an adult, the minor confirms that they are prepared to perform their obligations under the contract, making the contract legally binding
formalities:
need to be in writing: sale of land, purchasing an automobile, door-to-door sales and transfers of shares
copyright act 1968 (cth)
bills of exchange act 1909 (cth)
terms of a contract:
express terms (written down details)
implied terms (
conditions and warranties (specifics; ‘these are the duties. eg, if you had to work overtime, late nights etc = specific conditions like time and a half)
clause = written down term (opt out option; cooling off clause; ‘these are the amount of time to give if you want time off’ etc)
express terms:
usually easily identifiable e.g. contract is both written and oral terms
Parole Evidence Rule states that court will assume all terms are in the written contract
can say that party 1 made promises to make party 2 sign
Representation - a statement made before a contract is entered into that affects matters relating to the contract
to decide whether part of a contract or a representation:
if long time has passed between when statement was made and the contract was entered into, the statement is probably not a term of a contract
if statement was made orally and not included in the contract, it is probably nota term
if the statement was important to a party’s decision to enter the agreement, it probably is a term
if the person who makes the statement is in a better position than the other person to check the accuracy of the statement, it is likely to be a term
sales talk / mere puffery
ads may contain statements that are exaggerated and obviously untrue. statements in ads, such as ‘whiter than white’ → ‘puff’ statement is unlikely to be taken seriously, and thus under law a ‘puff’ is not a misrepresentation
exemption clause:
a term in a contract that seeks to restrict the rights to parties under a contract
implied terms:
can be implied by common law or statute
looks at intentions of the parties
so obvious it goes without saying
conditions and warranties
condition | warranty |
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elements of a contract:
agreement: is there an agreement in existence between the parties
intention: is any such agreement intended to be legally binding
consideration: does consideration support the agreement
formalities: has the contract compiled with any required formalities
offers:
writing, orally or through an act
must be known to the offeree
offer can be withdrawn before being accepted
invitation to treat - where a pricetag is on goods; an invitation for potential customers to make an offer
termination of offers:
expiry after a reasonable time
revocation (taking back the offer before acceptance) - cannot be revoked after accepting without penalty
counter-offer (where the other party gives a different offer) - very prevalent in real-estate business or when large financial contracts at stake
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 265
defendant Carbolic Smoke Ball placed an advert in the newspaper for products stating any person who purchased and used their product but still contracted influenza despite properly following the instructions would be entitled to a 100 euro reward
claimant, Ms Carlill, thu purchased smoke balls and despite proper use contracted influenza and contracted illness and attempted to claim a reward
defendant contended they could not be bound by the advert as it was an invitation to treat rather than an offer because the advert was mere ‘puff’ and lacking true intent; that an offer could not be made to the world; the claimant had not technically provided acceptance; the wording of the advert was insufficiently precise; and, that there was no consideration as necessary for the creation of a binding contract law
issue:
whether the advert in question constituted an offer or an invitation to treat
held:
the court of Appeal found for the claimant, determining that the advert amounted to the offer for a unilateral contract by the defendants. Ms Carlill provided acceptance when completing the conditions stipulated by the advert. the Court further found that: the advert’s claim to sincerity negated the company’s assertion of lacking intent; an offer could indeed be made to the world; wording need only be reasonably clear to imply terms rather entirely clear; and consideration was identifiable the use of the balls
acceptance:
occurs when communicated to the person making the offer
cannot be withdrawn without the agreement of the offerer
can be by conduct
silence is NOT an acceptance
postal acceptance rule - acceptance takes place once the letter is posted
intention:
the court will look at the behaviour of the parties to determine the intention
difficulties for a court to determine the intention
can be gray period / area when it comes to difference between intention and invitation to treat
consideration:
the value that passes fro one party to another
exchange of finance
the person taking an action must ensure they have given consideration to enforce the contract
enforce = contract
consideration in the form of a promise must be clear
word will be heresay -> consideration in the form of a promise is considered heresay
does not have to be of market value
contract by deed | simple contracts |
|
|
capacity:
ability for people to enter into a contract and properly understand their obligations
non-Australian citizens are required to comply with forein investment rules
bankrupt and in jail are not allowed to enter into contracts about land, cars, or loans with a bank
important vocab!
void = no legal affect; essentially does not exist
voidable = cancelled or returnable
breach = broken rule or promise
impaired mental capacity:
courts will not enforce if can be proven:
at time of contract
the person’s mind was so affected by the impairment
they were incapable of understanding the nautre of what they were doing
the person making the agreement with the MIP knew of the impairment
intoxication:
matthews v baxter (1973) LR 8 Exch 132
baxter agreed to purchase a house at auction
baxter was drunk at the time
when sober aggreed to be bound by the contract, then changed his mind
claimed intoxication at the time and the seller should have known that
court: since he agreed when sober he had to honur the contract
voidable
minors
cash purchases | enforceable |
contracts for necessaries | those things that a minor needs to maintain standard of living they currently enjoy. individual basis (it depends) |
beneficial contract of service | e.g. apprenticeship; enforceable |
acquisition of land or ongoing obligations | e.g. shares etc: enforceable - anything done with shares will be enforceable, so eg might find oneself in financial trouble |
vocab:
repudiation: upon becoming an adult, the minor states that they are not prepared to perform their obligations under the contract
ratification (minors): upon becoming an adult, the minor confirms that they are prepared to perform their obligations under the contract, making the contract legally binding
formalities:
need to be in writing: sale of land, purchasing an automobile, door-to-door sales and transfers of shares
copyright act 1968 (cth)
bills of exchange act 1909 (cth)
terms of a contract:
express terms (written down details)
implied terms (
conditions and warranties (specifics; ‘these are the duties. eg, if you had to work overtime, late nights etc = specific conditions like time and a half)
clause = written down term (opt out option; cooling off clause; ‘these are the amount of time to give if you want time off’ etc)
express terms:
usually easily identifiable e.g. contract is both written and oral terms
Parole Evidence Rule states that court will assume all terms are in the written contract
can say that party 1 made promises to make party 2 sign
Representation - a statement made before a contract is entered into that affects matters relating to the contract
to decide whether part of a contract or a representation:
if long time has passed between when statement was made and the contract was entered into, the statement is probably not a term of a contract
if statement was made orally and not included in the contract, it is probably nota term
if the statement was important to a party’s decision to enter the agreement, it probably is a term
if the person who makes the statement is in a better position than the other person to check the accuracy of the statement, it is likely to be a term
sales talk / mere puffery
ads may contain statements that are exaggerated and obviously untrue. statements in ads, such as ‘whiter than white’ → ‘puff’ statement is unlikely to be taken seriously, and thus under law a ‘puff’ is not a misrepresentation
exemption clause:
a term in a contract that seeks to restrict the rights to parties under a contract
implied terms:
can be implied by common law or statute
looks at intentions of the parties
so obvious it goes without saying
conditions and warranties
condition | warranty |
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