Contract Law Essentials

• A contractual dispute begins with establishing if a contract exists.
• Proper formation is necessary for a contract to exist.

Key Ingredients to Contract Formation

• Agreement relies on mutuality of terms and arises when a valid acceptance follows a valid offer.
• Consideration is the quid pro quo exchanged by both parties, proving the bargain exists.
• Intention to create legal relations means a contract is legally enforceable, unlike gratuitous promises.

Other Factors Affecting Contract Formation

• Capacity refers to each party's ability to enter into and enforce a contract, protecting parties such as minors.
• Certainty and completeness ensures contract terms are definite, final, and resolve all major issues.
• Privity of contract generally means a contract is only enforceable by or against a party to it, subject to some exceptions.
• Form relates to how a contract is created, such as sales of land requiring a deed.
• Form is specifically an issue with specialty contracts, not simple ones.

Court Considerations in a Dispute

• Is there a contract, based on offer, acceptance, consideration, intention, and capacity?
• What are the contract's terms, including express, implied, warranties, and representations?
• Have the parties performed their obligations, or has a breach occurred?
• If a breach occurred, did it cause the loss or injury?
• What remedies are available to the injured party?

Offer and Acceptance

• A contract begins with the acceptance of an offer. Therefore, the initial task to show that agreement has occured is confirming whether there was a valid offer

Offer

• A statement of the terms on which the offeror is prepared to be contractually bound.

Key Parties to an Offer

• Offeror: The person making the offer (promisor)
• Offeree: The person receiving the offer (promisee)

Elements of a valid Offer

• Must be clear
• Must be communicated verbally, in writing, or through conduct

Meeting of the Minds

• It refers to the objective understanding of a contract's key terms.
• Objective: A reasonable person would have understood the contract's key terms when it was made.
• If no meeting of the minds exists, there cannot be a valid contract.

Offer vs. Invitation to Treat

• An invitation to treat is an invitation to enter into negotiations that may lead to an offer.

Invitation to Treat

• It cannot be accepted.
• A person is not bound by it.
• Examples include goods on display in shops, items for sale at auction, requests for tenders, and advertisements.
• A price tag is considered an invitation for a customer to make an offer.
• Fisher v Bell [1961] 1 QB 394: Displaying a price tag on a flick-knife illegal sale was not a legal offer, only an invitation to treat.
• Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1952] 2 QB 795: Display of medicine was an invitation to treat, successfully argued that it was not a legal offer.
• Payne v Cave (1789) 100 ER 502: An auctioneer asking for bids makes an invitation to treat.

Response to a Request for Information

• A response to a request for information is not legally binding.
• It is not intended to be a binding promise and therefore not an offer.
• Harvey v Facey [1893] AC 552: Providing the lowest price for property did not constitute an offer.

Termination of Offer: Revocation

• Until acceptance is communicated, no contract is formed.
• An offer can be revoked before acceptance.
• Revocation needs to be communicated effectively by the offeror or a reliable third party.
• Revocation can be implied by conduct communicated to the offeree by a third party.
• An offer cannot be revoked if an option has been granted by the offeror.
• If an offeree revokes acceptance post-communication, the offeror can either enforce the contract or accept revocation as repudiation.
• Dickinson v Dodds (1876) 2 ChD 463: Knowledge of another sale revokes the offer.
• Goldsbrough, Mort & Co Ltd v Quinn (1910) CLR 674: An offer for value cannot be revoked.

Rejection

• Rejection can be expressed in writing or verbally, or implied through actions.
• Rejection is only effective when communicated.
• After an offer is rejected, it cannot be resurrected.
• Hyde v Wrench (1840) 49 ER 132: A counter-offer implies rejection of the original offer & eliminates it.

Battle of Forms

• Two questions arise: Was a contract formed? If so, on whose terms?

General Position in Common Law

• If a supplier starts work after receiving a purchase order, their conduct implies acceptance.
• The 'last shot' rule dictates the last terms and conditions communicated before acceptance are those the contract is formed upon.
• Butler v Ex-Cello Corp [1979] 1 WLR 401: The buyer's terms and conditions prevailed because the seller signed and returned the tear-off slip.

Avoiding Battle of Forms Situations

• Do not sign the purchase order if the buyer's terms and conditions are different.
• After receiving a counter purchase order, resend a confirmation of order response using your original terms.
• For goods, the delivery advice should restate the supply is under the supplier's terms and conditions.

Lapse of Time

• An offer does not stand forever.
• Offers may lapse either: by a stated time, or within a reasonable time if nothing is stated
• "Reasonable" depends on the contract, examples include perishable goods, shares, and property.
• Ballas v Theophilos (No2) (1957) 98 CLR 193: An offer to buy a deceased partner's share lapsed after 16 months.

Failure of Condition

• An offer is sometimes made subject to a condition, for example with building inspections, finance, or RAA inspections.
• Condition must be satisfied before contract is formed.

Acceptance

• Consists of elements such as consent to the offer as well as intention to be bound by the exact terms

Rules of Acceptance

• Acceptance (1) must be in reliance on the offer
• The offeree must know of the offer for true agreement, and there must be "meeting of the minds" as necessary
• Acceptance (2) must be absolute and unqualified; 'Acceptance must be unequivocal'

Rules of Acceptance (continued)

• An offer must be accepted by someone it was designated to
• Acceptance may be expressed: (1) Verbally, (2) in writing, (3) Even by conduct
• If the method of acceptance is prescribed, then it must be followed
• Acceptance must be communicated to the offeror to be effective, therefor silence is never an acceptance, for example Felthouse v Bindley [1862]

Postal Rule

• Acceptance takes place when letter posted into the mail box
• Even if delayed delivery or never arrives!
• Must be correctly addressed and stamped
• Established in Adams v Lindsell [1818]
• However, offeror can express to circumvent postile rule i.e. 'your answer by post is only to bind if it reaches me' - Household Fire Insurance Co v Grant [1879]
• Bressan v Squires [1974] 2 NSWLR 460: Courts rule that for the Postal Rule to apply, the word posted must be evident

Instantaneous Forms of Communication

• Fax, Email and Text Messaging
• Postal rule does not apply
• Electronic Communications Act 2000 (SA), electronic transactions have equal status to written contracts
• When an electronic system has been designated (email address, mobile phone number), the time of receipt if when message is capable of being retrieved
• Where no system is designated, the time of receipt is when the message becomes capable of being retrieved and the addressee is aware of the message

Consideration

• The price one party pays for the other's promise, often a promise for a promise.
• Must have an exchange between the parties with something of value whether that be an act or forbearence
• A simple contact is formed by consideration; must have this

Principles of Consideration:

• The limitation period: 6 Years (simple); 15 years (under deed)
• Must be legal; Must be real
• Need not be adequate (Not have to be equal value to promise), parties have freedom to contract and has what to deal
• Must be present or future (not past)
• Have value in eyes of the law
• Must move from promisee
• Not be vague or impossible to perform
• The consideration must be in response to the promise

Principles of Consideration continued

• If consideration is in the past in relation to the promise, then it is not valid i.e. cannot come before the promise related to it
• Present of future consideration if valid
• Roscoria v Thomas (1842) 2 QB 234: Purchased horse and 'the said horse as sound and free from vice'. Was proven horse was viscous, hence 'past consideration is not valid'
• Cannot only be enforced by the person who actually gave it
• Tweddle v Atkinson [1861]: Father of Bride passed before paying sum of money. Bride groom sured his father in law, but there was no consideration had moved from the bride groom to father in law

Principles of Consideration continued

• If the promisee tries to use a duty (or obligation) which is already owned to the promisor, it is not valid consideration
• Stilk v Myrick [1809] (sailer example)
• Recognising 'practical benefit' as good consideration
• Williams v Roffey Brothers & Nicholls (1991) - UK
• Musameci v Winadell Pty Ltd (1994) - NSW
• Hartley v Possonby (1857) 119 ER 1471: The ship's captain promised to pay the remaining sailors an extra £40 each, sailors brought a successful actions has sailing proved to be more dangerous for the remaining sailors

Contents of a Contract

• The terms of a contract are the statement on rights and obligations; Alolong with allocating the risk for each party
• Where there is a written contract, it may be difficult for a party to arfue that an oral statement had become term i.e. Parole Evidence Rule
• Where a contract is reduced into writing (the entirity), is presumed the writing has all the turns and not to be changed

Exception

• Expection to Parole Evidence Rule
• Van den Esschert v Chappell [1960] WAR 114: Immedialy before agreeing to buy Van den Esschert's house, Chappell asked if it was free from infestation by white ants. Van den Esschert, said yes. Hence, was chappel entitled to lead evidence, a term, orally agreed, that the house was free of white ants?

Express and Implied Terms

• Express Terms: Verbal or Written by parties with intent
• Implied Terms: Inserted into contact by law
• May be implied under certain circumstances
  • Past Dealings: Trade Usage or custom; Business Efficacy: Status/Statute (HILLAs & CO v arcos [1932])
• Must be satisfied that there has been a consistent any sufficiently long course of dealings

Statue

• Of GOOGS Act 1895 (Sa) and AUSTRALIAN CONSUMER LAW
• Schedule 2 COMPETITION and CONSUMER ACCT 2010 (Cth)
• Seller that has right to sell goods/ corresponds an description of sample with sample...
• GOODS MUST REASONABLY FIT THEIR PORPOSE (espically for sellers with expertise), in other words, MERCHANTABLE QUALITY

Sale of Goods Act 1895

• State Based; Only applies to supply of goods (Nor services)
• Covers all sales (business to business and cunsumer)

Altering the Terms of a Contract

• Either by: Mutual Agreement, supported by consideration
• Where contact allows for variations (i.e. contains variation classes)
• Terms can br categorized to differentiating levels of importance

Examples

• Conditions (most important): Warranties (lesser importance)
• Difference in remedies by breach (innocent party can terminate and sue for damages)
• Warranty (innocent party can sue for damages only)
• Tramways ADVERTisting Ltd v Luna Park (NSW ) Ltd ("essential to the contract)

Exclusion Classes

• Often used in commerical to indicates who should ensure
• Court see exclusion classes unfair in contract terms (unequal bartering power0
• Companies CANNOT exclude their liability for implied terms

Singed Documents

• A party who sings a contract with a written exclusion clause is generally bounds But cannot argue didn't see the exclusion clause/ (LEstrange v graurob Ltd), i.e cant deny in signing document of terms you dont agree with

Unsinged Documents

• F exclusion clause appears (one not contractural and ineffective), i.e the person relying on the class must do all that is reasonable bringing to notice of the recipient
• Constructive or actual notice is necessary before before contract

Exclusions of Consequential Loss

• Common in construction contracts

Economic Duress

• Factors that act as misleading conduct in contratcs
• Section 18 of ACL (Engage in conduct that is misleading and deceptive/or likely
• Section 18 ACT implies 'strict liability'
• The PLF needs to overall conduct and error
• I the misleading conduct is lead into a contract (remedies)

Misleading Conduct

• Silence of conduct/ even that PlF was contributory fault to action

Remedies in Misleading Conduct

• Damages for loss (s 236
• Orders on application of either the injury on the regulator
• Declaring contract void
• Refund property and damages caused to other party

Pennalities Misleading Conduct

• Pennalities against contravention of contracts up to $1.1 (body corporation) (s222)

Requirements for Duress

• Pressure does not have to be the sohle cause
• Pressures must be illegitimate
• Ireesistuble, l." cannot e resisted

Sotuations Where Duress is Present

• Threats of violence against to natural persons or other family
• Forms could take economic duress commerically

At common law

• courts makes duress occurs by a liable party to have liable to hand over for duress

Remedeis

• Can only occur by the courts

4 common remedies

1. Damages
2. Quatum Meruit (monetary award)
3. Specific Performance
4. Injunction (courts orders; monetary compensations)

Unliquidateed Damages (QUANTUM OF DAMAGES)

• The court assess qauntums and awards amount to fairy impact the injury that would not have happened and contract succesuly

There different forms that damage may occur:

1. Financial
2. Personal Injury
3. Damage and Property

• (often not awarded)

Assessment of Damages

Expectation Loss

• A bulider (B) wins and contract (1 million), principal breaches... -B terminates because contract is not reached .Therefore, B is entitled for further $50k for images

Assessments of Damages

• Damages for breaching building and plans by specifications
• Restitutional, Diminution (where restitution unreasonable)

Examples

1. Tabcorp Holding Ltd v Bowen Investment Ltd (LandLord and rented and altered space; awarded restitution costs; even thought the renovation works did not offect Leese/rent)

• In, TabCorp state it we be unreasonalble in instances like buiding used new versus second hand)

2. Westpoint Management Ltd v Cholocate: (Apartment; defects but it was not unreasonable and court help it's damages, they held building)

Liquidated

• The parties both agree with rates and sums in contract and occurs breach
• This pre fixed sum often leads to being a amount Liquidated or certained (Dunilop v Garage)

If liquidated damages amount to penalty:

• held to peanlty it’s not for enforceable, and injured to claim damages re- assess loss accordingly with court

Oantum Meruit

• meaning “the amount he deserves, and unfair enrichment, courts have awarded.
• Fair comical rare

Retitutionary Claim for Quantam Meruit

• Can gernerally are when there in not specify sum

Performance Means

A contract discharged if both parties completed the performance of all the obligations

Exceptions of the Performance Rile

1. Subtantion Performacrn
2. Acceptance of Partial Performance
3. Divisbke Contact

Substantion Performance

1. Obligateee Subsantitional Performacne
2. minor defects will rectify be the work substanlialy complete

(Sumpter v Hedges: partial of contrcatusl ligation. HEdges lest will no hoick)

Dovisve Contracts

• WHere parties in contrafct clearly divideee
• (STate paymebt from for resident contact)
• I,e, where contact is possibblly done

Fracturation

• A new intervene event will will will

(Tayloy vs Caludeenwlll: building building to be used and burnt to ground)

• Under radical differnca

###Discharged by Contracnt

1. A breachers contact parties is it will occur (fail to performs) Actual Breach: (Time performance arrives) Anitcipatory breach: (Parry indicate that it will to performance

((Hochster v de la tour:

Negligent

Duty Negligent

1. duty to Care
2. breach that care (Dnoghue v STevensen: Ginger case and the court allowed persons to claim for damage; but not for pure echo

Duty Of Care

1. Act of Parliament, Shown in a case of low “negligence is the emission what to prudence people would do”

BREACH OF DUTY

What constitutes Negligent standards

Bolam v FRien Hospital: (skill of a camp tent man exercising standards of reasonably good, but conform to “those proper standards is not high legibly what to does”.

Causatoon and Re- remoteness of damages

2. Was the caused because the Plaintiffs demand (Barnette v Chelsea & Kensington Hospital: sciencentifc. Because matter) What constitutes Pure ecomin losses (Spartan Steel & martyin contracntors

• “ligabiluty of negligenceny exists as long as thoughtess slip or blunder. Exposs deffendant and liability with intermate amount interminates”*

3. A NEgelgent serrves Elective (all losses)

By Anilding Affect is Poor Economic

Damages what to go

1. Damages Breach (byran v Manoney and Woolcock va CO9C

• duty by due to proximality
• high and economic foss caused by defect

Explore key aspects of contract law, including required elements, privity, and 'quid pro quo'. Understand legal principles from landmark cases like Fisher v Bell and Payne v Cave. Differentiate between offers and invitations to treat.