We will look at: Contract Example of use of common law (cases)
Australian Consumer Law Example of use of legislation (and
inter-action with case law) How to use case law and legislation in
legal problem solving.
Slide 4
What is a contract? How do we know whether or not a contract
has been formed? Case law
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A contract is an agreement that is enforceable at law.
Slide 6
Source of law How do we find the law of contracts? Mainly case
law e.g. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
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Carlill v Carbolic Smoke Ball [1893] 1 QB 256 Unilateral
contract Offer can be made to world at large Distinguish offer from
invitation to treat by looking at intention of offeror Unilateral
contract offer made at large, but only accepted by those who
actually perform Unilateral contract communication of acceptance
not required Consideration can equal detriment/effort
Offer the indication by one person to another of his or her
willingness to enter into a contract with that person on certain
terms Carter and Harland, Contract Law in Australia 4 th edn p28
Case law?
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An offer is not.... A request or the supply of information
Harvey v Facey [1893]AC552 From Harvey to Facey: "Will you sell us
Bumper Hall Pen? Telegraph lowest cash price-answer paid; From
Facey to Harvey: "Lowest price for Bumper Hall Pen 900. From Harvey
to Facey: "We agree to buy Bumper Hall Pen for the sum of nine
hundred pounds asked by you. Please send us your title deed in
order that we may get early possession."
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Harvey v Facey the mere statement of the lowest price at which
the vendor would sell contains no implied contract to sell at the
lowest price. Lord Morris at 556
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An offer is not... An invitation to treat Pharmaceutical
Society of Great Britain v Boots Cash Chemists (Southern) Ltd
[1953] 1QB 401
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Examples of Invitations to Treat advertisements/circulars price
lists displays of goods in shops calls for bids at auctions, and
calls for tenders. So, is every ad an invitation to treat?
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What do the cases tell us about offers? The offeror must intend
to be bound by the offer E.g Harvey v Facey Boots case We can often
determine this intention by looking at the amount of detail in the
offer (it should contain enough detail to allow a binding contract
to come into existence) E.g Carlill v Carbolic Smoke Ball The offer
must be communicated to the offeree All cases
Acceptance A FINAL and UNQUALIFIED assent to the terms of an
offer made in the manner specified or indicated by the offeror The
yes which ends negotiations
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Acceptance must respond to the offer So, only those persons: to
whom the offer was made; and who have the offer in mind at the
point of acceptance may accept
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The Crown v Clarke (1927)40CLR 227 Must accept offer with offer
in mind
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R v Clarke it is not an absolute proposition of law that one
who, having the offer before him, acts as one would naturally be
induced to act, is deemed to have acted on the faith of or in
reliance upon that offer. It is an inference of fact and may be
excluded by contrary evidence. Starke J at 244
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Acceptance must be communicated Silence is not sufficient
Felthouse v Bindley (1862) 142 ER 1037 Conduct may communicate
acceptance Empirnall Holdings v Machon Paul (1988) 14 NSWLR
523
INTENTION TO CREATE LEGAL RELATIONS To create a contract there
must be a common intention of the parties to enter into legal
obligations, mutually communicated expressly or impliedly Atkin LJ
in Rose & Frank Co v JR Crompton & Bros Ltd [1923] 2 KB 261
at 293
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Rebuttable presumptions In social and domestic agreements there
is a presumption against legal obligations Balfour v Balfour [1919]
2 KB 571 Cohen v Cohen (1929) 42 CLR 91 Jones v Padavatton [1969] 1
WLR 328 The presumption is rebuttable Merritt v Merritt [1970] 1
WLR 1211 Wakeling v Ripley (1951) 51 SR (NSW) 183
Slide 28
Balfour v Balfour There are agreements between parties which do
not result in contracts within the meaning of that term in our law.
The ordinary example is where two parties agree to take a walk
together, or where there is an offer and acceptance of hospitality.
Nobody would suggest in ordinary circumstances that those
agreements result in what we know as a contract, and one of the
most usual forms of agreement which does not constitute a contract
appear to me to be the arrangements which are made between husband
and wifethey are not contracts because the parties did not intend
that they should be attended by legal consequences. Atkin LJ at
578
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Rebuttable presumptions In business or commercial agreements,
there is a rebuttable presumption that the parties did intend to
create legal obligations Carlill v Carbolic Smoke Ball [1893] 1 QB
256 Rose & Frank Co v Crompton & Bros Ltd [1925] AC 445
Honour clause
Slide 30
Role of presumptions It is said that it may be presumed that
there are some "family arrangements" which are not intended to give
rise to legal obligations and it was said in this case that it
should not be presumed that there was an intention to create legal
relations because it was a matter concerning the engagement of a
minister of religion. For our part, we doubt the utility of using
the language of presumptions in this context. Reference to
presumptions may serve only to distract attention from that more
basic and important proposition. per Gaudron, McHugh, Hayne and
Callinan JJ Ermogenous v Greek Orthodox Community of SA Inc [2002]
HCA 8
Bargain A promise asked for, or relied upon, as an aspect of a
bargain between the parties to the contract Dunlop Pneumatic Tyre
Company v Selfridge & Company [1915] AC 847
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Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd
DunlopDewSelfridges
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An act or forbearance of one party, or promise therof, is the
price for which the promise of the other is bought, and the promise
thus given for value is enforceable Sir Frederick Pollock, adopted
by the House of Lords in Dunlop Pneumatic Tyre Company Ltd v
Selfridge & Company Ltd
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Consideration[requires the existence of] a quid pro quo
Australian Woollen Mills v The Commonwealth
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Without consideration a promise cannot be enforced SO, only a
party providing consideration can enforce a promise Consideration
must move from the promisee But, it need not move to the promisor
Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd [1915] AC
847
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Past consideration is not good consideration Roscorla v Thomas
[1842]3QB234 Eastwood v Kenyon [1840]113ER482 If what is done is
not done as a reaction to the promise, it cannot be good
consideration.
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PRIVITY OF CONTRACT Only parties to a contract may enforce, or
be bound by, a contract
Slide 40
Wedding cake As well, Mavis is being threatened with legal
action by Chrissie Saranrap. Chrissie was married a month ago and
was expecting Mavis to provide her specialty the nouveau doveau - a
tiered tower of cupcakes, iced in white and arranged to resemble
the wings of doves as the centrepiece cake for her wedding
reception. Mavis loves doing cakes for weddings in fact she now
makes more money from doing wedding cakes than she does from her
regular cooking classes.
Slide 41
Chrissie saw information about Mavis cake services after an
article in the local paper, and called round to see Mavis, and look
at the different cakes she could make. They discussed possibilities
and pricing and Chrissie left with a price list. Apparently,
Chrissie called and left Mavis a message on the answering machine
ordering the nouveau doveau for her wedding, to be delivered on 2nd
May at the wedding reception, for $2,000 COD. In her message,
Chrissie had said: If I dont hear to the contrary, Ill assume
everything is OK. Call me if there is a problem otherwise I will
see you on the 2nd. Looking forward to your lovely creation.
Slide 42
Unfortunately, because of all the work being done to the
kitchen and problems with electrical work and electrical supply,
Mavis had experienced a number of black outs which had interrupted
her answering machine. Mavis never received the message from
Chrissie, and so of course, had not provided the cake. Chrissie is
very angry and claims her wedding was ruined without the cake. She
has threatened to sue Mavis.