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Australian contract law problem question - Case Study Example

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The main issue in the given situation is whether there was a valid and enforceable contract between Elaine and Kramer. In common law, there are three key elements to the creation of a contract: an agreement (consisting of offer and acceptance), a consideration, and an intention to create legal relations.
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Australian contract law problem question
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Download file to see previous pages The offer may be oral, written or implied from conduct. Offers are of two kinds: a specific offer is made to a specific offeree. No one else can accept it. 'If you propose to make a contract with A, then B cannot substitute himself for A without your consent and to your disadvantage, securing to himself all the benefit of the contract': see Pollock, CB, Boulton v Jones (1857)1. A general offer can be accepted by anyone, and usually without prior notification of acceptance: Carlill v Carbolic Smoke ball Co. (1893)2. It was found in Carlil that there was: 'an offer made to all the world'; 'to ripen into a contract with anybody who comes forward and performs the condition'; and that 'as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so.' In the given situation, Elaine's statement 'I will give that bike to anyone who can fix my neck', was clearly a general offer. However, neither it was shown that Kramer has validly communicated his acceptance to Elaine nor it was shown that the latter has dispensed with the notice of acceptance. Clearly, there was no valid and enforceable contract between Elaine and Kramer considering that there was no agreement between the parties. However, it can be argued that acceptance may be done by positive conduct of the offeree as long as the acceptance must be active and that there must be some positive act by the offeree: Felthouse v Bindley (1862)3. Hence, Kramer may argue that by massaging Elaine, he has communicated his acceptance by positive conduct to Elaine.
Furthermore, a valid offer has certain characteristics: certainty (a promise to pay an extra 15 or 10 buy another horse if a horse 'proves lucky to me' is too vague to amount loan offer: Guthing v Lynn [1831])4 and communication (an offer must be communicated to the offeree before it can be accepted.) Thus, if a seaman helps to navigate a ship home without informing the owners in advance, he cannot insist on payment, since the owners have not had notice of his offer, and, therefore, no opportunity to accept or reject it: Taylor v Laird (1856)5. Thus, in the given situation, the promise 'I will give that bike to anyone who can fix my neck' lacks the requirement of certainty. Such promise is similarly too vague as the promise to pay an extra 15 or 10 buy another horse if a horse 'proves lucky to me' to amount to a loan offer: Guthing v Lynn [1831])
In several cases, it has been ruled that preliminary statement may not amount to an offer. An invitation to treat which is a statement that is intended to elicit an offer from someone else has been ruled to have no legal force as the offer it elicits can be accepted or not without obligation: Gibson v Manchester City Council (1979).6 Moreover, a statement of the price at which one is prepared to consider a selling a piece of land or any communication of information in the course of negotiations is a mere preliminary statement which were held not to be an offer. In the given situation, it can be argued that Elaine's statement was a mere preliminary statement which does not constitute a valid offer.
Moreover, another requirement in the creation of a valid and enforceable contract is an intention to create legal relations. In an agreement between friends in a domestic arrangements, there is a presumption ...Download file to see next pagesRead More
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