Commercial Law and Law of Contract - Assignment Example

Name Course Tutor Institution The facts Michelle express an interest in learning to fly Michelle agrees to lease a small aircraft. Nathan offers the flight lesson free of charge. Nathan asks Michelle to sign a waiver accepting any liabilities that might occur in the cause of that training. Michelle replied in writing that she has accepted all the terms and condition. Michelle signs the waiver and pays for the aircraft lease fees for the first month. Nathan refuses to accept any money for the flight training. Nathan over accelerates, careering over ran way and hit the tree. Michelle is injured and broken two of her legs Nathan demands Michelle to pay the remaining lease fees, all flight training fees from the beginning of the lease calculated at the standard hourly rate and loss of flight school income. Michelle refuses to pay for which she holds Nathan responsible for the damages suffered and that Nathan should pay for her medical bills, compensation for pain and lost income. The law The appropriate law would appear to be A contract is formed if there is a legally binding agreement, which is a valid offer followed by acceptance. An offer must be communicated-Taylor v Laird A contract is only formed when an offer is accepted. The acceptance must however be communicated by the offeror to the offeree- Felthhouse v Bindley Once acceptance has been made, it cannot be revoked and if it is revoked, it amounts to a breach of contract- Hochster v De la Tour Since acceptance is created by mutual agreement, it can only be terminated by mutual agreement as well. New terms cannot later be incorporated into an already existing contract as it amounts to breach of contract- Schuler (LA.G) v Wickman machine tools sales Applying the law to the facts Nathan a flight instructor at airfield, called Sir Ross Smith airport offers to give Michelle flying lessons. Nathan did not have any intension of offering lessons to Michelle but since they were associates, he was forced to do so, on the terms and condition that, in case of an error caused by the instructor the student will be liable for both the loss and the damage. Therefore it is Nathan who is giving an offer. The offeror, who is Nathan, is making conditions for which he is prepared to be bound in the event of acceptance of the offer by Michelle (Stone Pp 176). This offer must be communicate to the offeree. Nathan takes an initiative of communicating through writing to Michele, his intentions to create a binding term as illustrated in the case of Tailor v Laird (No 2) (1 856) 721 CLR 1. Immediately after Tailor decided to quit his captaincy but still continue with voyage as a normal crew, the court held that he was not at any time entitled to receive wages as the owner of the ship was not aware of Tailors decision to quite as captain. Nathan therefore makes an offer to teach Michelle on how to hike. Michelle replies Nathan in writing that she would be more than happier to get the lessons on the specified terms and condition of the contract and hence Michelle is the party making an acceptance. An acceptance must be communicated (Clark and Throckmorton Pp 623)1. After Michelle’s showed interest and expressed on how much she would be happy to receive the lessons, Nathan makes states the terms and condition of the contract in writing, of which Michelle accepts it. However, for acceptance to be legally binding between the parties to the contract, it must be communicated by the offeror to the offeree as illustrated in the case of Felthouse v Bindley(No 1) (1862) 138 CLR 1 where an uncle and nephew negotiated over a sale of the nephew’s horse (Books Pp 12). The uncle had said,’ if I hear no more from you I shall consider the horse mine at 30 pounds’. The nephews stock was then put up for auction. At the sale the auctioneer fail to withdraw the horse from the sale as he had been instructed to do by the nephew, and the horse was sold to another party. In order to claim conversion in tort against the auctioneer, the uncle needed to prove that a contract existed with his nephew for the sale and purchase of the horse. The uncles’ action against the auctioneer failed. He was unable to prove that the horse was his. The nephew had not actually accepted his offer to buy. The court held that silence would not mean acceptance (Suff Pp 142)2. Offer of Nathan and acceptance of Michele forms a valid contract that is enforceable in law. A contractual agreement is said to exist when a valid offer is followed by a valid acceptance. Once acceptance has been made it cannot be revoked and if it is revoked it amounts to the breach of contract as illustrated in the case of hochster v De La Tour (No 1) (1853) 922 CLR 1 where the claimant was hired to begin work as a courier two months after the contract date. One month later, the defendant wrote to him and cancelled the contract. The defendant then tried to answer his claim by arguing that he could not sue unless he could actually show that on the due date he was ready to perform. The court would not accept this defense. The court held that there was no requirement that the victim of the breach of contract should be oblige to wait until the contract was in fact breached before being able to sue. It was sufficient that the claimant was aware a breach would occur and he could sue accordingly (Emanuel Pp 326). Nathan contract with Michelle has stated clearly that the training Nathan would offer will be free of charge and despite Michelle persistent efforts to pay for the training Nathan did not accept any payment. It will be a breach of contract if he tries to introduce new terms and conditions i.e. payment of the training fees on standard hourly rate which was not incorporated in the previous contract before. On the other hand, Michelle is also in the breach of contract as the waiver stated clearly, that the student would be liable to indemnify the flight school, in case of damages or error caused by the instructor (Casenote Legal Briefs: Contracts Pp 204)3. Since acceptance is created by mutual agreement, it can only be terminated by mutual agreement as well. There are two ways in which a contract could be discharged by agreement, a bilateral discharge and a unilateral discharge. In a bilateral discharge, there would be new agreement between parties in replacement of the original agreement. The clear assumption is that both parties are to gain a fresh but different benefit from the new agreement. However, in unilateral discharge, one party releases the other party from his obligation under the original agreement. Michelle and Nathan should have chosen to discharge the waiver either by any of the above two ways (Koffman and Macdonald Pp 123). Nathan should have released Michelle from hare obligation under the original agreement, or Michelle would have agreed with Nathan that since she has lost during the cause of training, i.e. breaking her two legs, new agreement should be created so that both parties would gain in replacement of the original agreement. In the case of Williams v Roffey Bross & Nicholas contractors limited (No 2) ([1991) 236 CLR 1 it was sufficient to discharge the other parties obligation where there is an extra benefit gained. The extra benefit gained by the one party is identified as the consideration given by the other party in the exchange for being released from existing obligations of the original contract (Limited and Latimer Pp 243)4. Concussion I would advice micelle not to sue in the law of contract as she is in breach of the terms and condition of the original contract. This is because she is restricted by the doctrine of estoppel through her signature. The fact that she signed a waiver, she is bound by the terms and conditions obtained by the waiver, i.e., to compensate the flight school in case of the instructors error. She can however bring an action in tort of negligence. I would advice Nathan not to sue since he is also in a breach of contract, because he introduces new terms and condition to the contract that were not initially contained in the original contract. References Books, LLC. 1862 in the United Kingdom: Felthouse V Bindley, Milroy V Lord, 1862 in Ireland. Australia: General Books LLC, 2010. Casenote Legal Briefs: Contracts, Keyed to Ayres and Speidel's Studies in Contract Law, 7th Ed. Casenote Legal Briefs. Australia: Aspen Publishers Online, 2009. Clark, William Lawrence and Archibald Hall Throckmorton. Handbook of the law of contracts. Australia : West publishing co, 1914. Emanuel, Steven. Emanuel Law Outlines: Contracts. New York: Aspen Publishers Online, 2010. Koffman, Laurence and Elizabeth Macdonald. The law of contract. Chicago: Oxford University Press, 2007. Limited, CCH Australia and Paul Latimer. Australian Business Law 2009 - 28th edition. Australia: CCH Australia Limited, 2008. Stone, Richard. The Modern Law of Contract: Seventh Edition. New York: Taylor & Francis, 2009. Suff, Marnah. Essential Contract Law. Chicago: Routledge, 1997. Read More