Source of legal rights

Torts Contract

Statute

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.

What is a contract?

How do we know whether or not a contract has been formed?

Case law

Source of lawHow do we find the law of contracts?Mainly case law

e.g. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Carlill v Carbolic Smoke Ball[1893] 1 QB 256

Unilateral contractOffer can be made to world at largeDistinguish offer from invitation to treat by

looking at intention of offerorUnilateral contract – offer made at large, but only

accepted by those who actually performUnilateral contract – communication of

acceptance not requiredConsideration can equal detriment/effort

OFFER/ACCEPTANCE ANALYSISOFFER+ = AGREEMENT

ACCEPTANCEINTENTION

CONSIDERATION

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” 4th edn p28

Case law?

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."

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

An offer is not...An invitation to treat

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1QB 401

Examples of Invitations to Treatadvertisements/circularsprice listsdisplays of goods in shopscalls for bids at auctions, andcalls for tenders.

So, is every ad an invitation to treat?

What do the cases tell us about offers?The offeror must intend to be bound by the offer

E.g Harvey v FaceyBoots 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 offereeAll cases

All an offer needs is a ‘yes’ to

make a contract

OFFER/ACCEPTANCE ANALYSISOFFER+ = AGREEMENT

ACCEPTANCEINTENTION

CONSIDERATION

AcceptanceA 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

Acceptance must respond to the offer

So, only those persons:to whom the offer was made; andwho have the offer in mind at the point

of “acceptance” may accept

The Crown v Clarke (1927)40CLR 227Must accept offer with offer ‘in mind’

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

Acceptance must be communicatedSilence is not sufficient

Felthouse v Bindley(1862) 142 ER 1037

Conduct may communicate acceptanceEmpirnall Holdings v Machon Paul

(1988) 14 NSWLR 523

OFFER/ACCEPTANCE ANALYSISOFFER+ = AGREEMENT

ACCEPTANCEINTENTION

CONSIDERATION

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

Rebuttable presumptionsIn social and domestic agreements there

is a presumption against legal obligationsBalfour v Balfour [1919] 2 KB 571

Cohen v Cohen (1929) 42 CLR 91 Jones v Padavatton [1969] 1 WLR 328

The presumption is rebuttableMerritt v Merritt [1970] 1 WLR 1211 Wakeling v Ripley (1951) 51 SR (NSW) 183

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 wife…they are not contracts because the parties did not intend that they should be attended by legal consequences.”

Atkin LJ at 578

Rebuttable presumptionsIn business or commercial agreements, there is a rebuttable presumption that the parties did intend to create legal obligationsCarlill v Carbolic Smoke Ball [1893] 1 QB

256

Rose & Frank Co v Crompton & Bros Ltd [1925] AC 445

Honour clause

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

OFFER/ACCEPTANCE ANALYSISOFFER+ = AGREEMENT

ACCEPTANCEINTENTION

CONSIDERATION

Consideration...

The price paid for the promise

BargainA promise asked for, or relied upon, as

an aspect of a bargain between the parties to the contractDunlop Pneumatic Tyre Company v Selfridge & Company [1915] AC 847

Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd

“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

“Consideration…[requires the existence of] a quid pro quo”

Australian Woollen Mills v The Commonwealth

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 promisorDunlop Pneumatic Tyre Co v

Selfridge & Co Ltd [1915] AC 847

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.

PRIVITY OF CONTRACT

Only parties to a contract may enforce, or be bound by, a contract

Wedding cakeAs 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.

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 don’t hear to the contrary, I’ll 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.”

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.