CONTRACT LAW 3 Essay Example

  • Category:
    Law
  • Document type:
    Article
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    917

LAW OF CONTRACT

Introduction

The Australian common law recognizes contracts that satisfy the following elements. These elements comprise of offer and acceptance, two or more parties with contractual capacities, certainty of terms, considerations that are valued and the intention of creating binding obligation.

Conveyancing Act 1919 NSW and Real Property Act 1900 NSW are the sections of the law, that stipulates the damages that can be awarded to a party who breach the contract. These acts give the legal procedures that prevail in case of conflicts between the parties. In addition, these acts contained the performance that can be required in order to protect the innocent party from losses that are likely to occur in case the contract is terminated by the other party.

Offer and acceptances

Offer and acceptances are the key determinant of whether the contract exists. The offer is usually an indication that one party to the contract is ready to create a contract that is legal and binding with the other party. A contract is created legally when there is a valid acceptance of the offer in a prescribed manner. The offeree has an obligation of communicating acceptance to the offeror [ CITATION Car13 l 1033 ].

To advise Tim, Joe and Frank effectively the following principles must be considered. Some of these principals comprise the following.

Promissory estoppel

This is legal advice that can be used to stop the promisor from denying that there was no contract existing due to the absence of the consideration provided. Australian laws recognize that a promise made so as to induce action will be binding to the party who made that promise. For example, the scenario below shows how promissory estoppel can be applied.

Joe was promised a 12 foot extension ladder by Frank so that he can stop disturbing him. As per the laws of contract, there was no consideration for the ladder. However, Joe will rely on the rule of promissory estoppel. Under this law, Frank will be stopped from going against his promises he made. A similar decision was made in Australian high court during the Waltons v Maher case which took place in 1988.

Part-performance

This is an vital doctrine in an Australian law that allows the court to enforce oral contracts. In the normal situations contracts must be in written forms so as to act as evidence. Through part performance, a party can claim for the existence of a contract despite the lack of written evidence.

In the case of Frank, there was no valid contract because Coffey Bros fail to provide a signed agreement. Frank should know that where there is no valid agreement there is no contract. This means that the negotiation that was intended to create a legal contracted failed due to lack of a signed document from Coffey Bros.

However, frank can sue Coffey Bros for compensation for the work done basing on the doctrine of part-performance. Furthermore, he can sue Coffey Bros under the ground of;

  1. Acceptance by silence

  2. Acceptance by conduct

It is evidence that Coffey Bros knew that the renovation was on the process, and they did not bother to stop them. This is a clear indication that there were acceptance by silence and conduct. In addition, unconscionable conduct is evident here. Coffey Bros decided to remain silent knowing that the contractor was waiting for the duly sign agreement so that he can start working. The court should compel Coffey Bros for the compensation of the work done. There was a similar ruling in the case of Waltons Stores Ltd versus Mahe. Other cases that have been ruled under this law are High Trees case under the English law, the Metropolitan Railway Co. V Hughes and many others.

Consideration

Consideration is an essential element in contract formation. It is required by Australian common law that for the contract to be valid, there must be consideration given by one party to another party. The consideration given must satisfy the following conditions.

  1. Consideration provides must not be past.

  2. It is not a must to be adequate but sufficient.

  3. It must move from one party to another.

In the case of Tim, he must know that there are rules governing consideration in law of contract. Tim had entered into a valid contract with Frank. They had agreed that Tim will do all the plumbing work and the consideration agreed upon was $ 100,000. This was the terms of the contract and any other condition will be considered invalid and cannot be petitioned in a court.

I will, therefore, advise Tim not to sue Frank because the initial contract was not completed. Even though, he had underestimated the contract, he cannot blame Frank because he was the one making an offer and Frank accepted it. Furthermore, Frank was supposed to sue Tim for breaching the contract. Tim wanted to quick the contract in a simple reason that he was facing cash flow problem, and that could amount to breach of contract. There was a similar case which was facing the Commonwealth of Australia versus Amann Aviation Pty Limited Company[ CITATION Lat12 l 1033 ].

It was also illegal for them to agree on new terms of the old contract. If Tim and Frank had made a new contract, with a compensation of $ 50,000 then Tim could be able to sue Frank. However, that is not the case here.

References

Carter, J. (2013). Contract Law in Australia. LexisNexis Butterworths.

Latimer, P. (2012). Australian Business Law 2012. CCH Australia Limited.