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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.

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Presentation on theme: "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."— Presentation transcript:


2 Source of legal rights Torts Contract Statute

3 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.

4 What is a contract? How do we know whether or not a contract has been formed? Case law

5 A contract is an agreement that is enforceable at law.

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



9 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


11 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?

12 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."

13 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

14 An offer is not... An invitation to treat Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1QB 401

15 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?


17 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

18 All an offer needs is a ‘yes’ to make a contract


20 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

21 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

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

23 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

24 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


26 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

27 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

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 wife…they are not contracts because the parties did not intend that they should be attended by legal consequences.” Atkin LJ at 578

29 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

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


32 Consideration... The price paid for the promise

33 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

34 Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd DunlopDewSelfridges

35 “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

36 “Consideration…[requires the existence of] a quid pro quo” Australian Woollen Mills v The Commonwealth

37 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

38 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.

39 PRIVITY OF CONTRACT Only parties to a contract may enforce, or be bound by, a contract

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.

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 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.”

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.


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