Law of Australian Contract - Case Study Example

Running Head: Law of Australian contract Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Title : Law of Australian contract Date : xxxxxxxxxxx 2010 Introduction A contract may be defined as a promise or rather agreement which gives rise to rights and obligations and that is legally binding to the party of a contract.  However, all contract made and agreed upon by the parties are agreement, but not all agreement made are contract. In Australia, contract only refers to those agreements which have the potential and intension to create a legal and binding relation with the parties to the contract. Contract law takes in any laws or regulations which are aimed at enforcing certain promises. In Australia, contract law is largely regulated by the 'common law', but more and more statutes tend to enhance the common law of contract - principally in relation to consumer fortification (Goldring 1979). These Law is further split into sections and bisections on the common law of contract majorly in Australia .In relation to contract law in Australia the main section is separated into several wide areas: formation (consideration intention to create legal relations, agreement, capacity to contract and finally formalities) performance and termination Case study Toll Logistics Toll was established and founded in the year 1888 by Albert Toll. It later on became part and parcel of the Peko group in the late 1960s in the process of transporting goods that dealt more with mining and manufacturing process in Australia. In 1986, Toll company entered into a contract to sell the management buyout which was led then by Paul little (managing director) and Tolls former chairman called Peter Rows thorn. As part and parcel of Toll’s Holdings, it is a leading transport where its logistics group headquartered is based in Australia. Toll Global and Logistics merged relationships, expertise and network industrial over the past decades in order to bring customers to a wide range of stylish logistics and related services which is supported by the gigantic logistics aptitude and resources of Tolls group. There are several essential element of a contract; they are widely elaborated below, Agreement The first important requirement of a valid contract is the agreement; it is usually made up of offer and acceptance.  Offer It may be defined as something done by one party to the contract which the Australian law deduces its intension to enter into a contract with the other party. It is a promise which when accepted it establishes a binding agreement. The individual making the offer is known as the offeror while the party receiving it is called the offeree. It is very important to distinguish an offer from the following: invitation to treat, declaration of intension and mere supply of information. Invitation to treat is not an offer; it occurs where a party to the contact invites the other party to come and make an offer, case sited is pharmaceutical Society of Great Britain v Boots cash Chemist. Declaration of intension refers to the statement made by an individual regarding the proposed future course of action. However this does not amount to offer. Harris v Nickerson N (Nickerson) an auctioneer declared in an advert there will be the sale of office furniture’s (Harris) a prospectus buyer travelled all the way to attend to the auction which never took place. H sued N for loss of time and travelling expenses. It was held that H did not have the intension to sell since the auction advertisement was not an offer but a mere declaration of intension. The buyer is usually the one who makes an offer by bidding and the auctioneer usually accepts it at the fall of the hammer (Quain 1963). Therefore there was an offer in the contract entered between Toll and the Logistic service provider (Allan 1992). Acceptance Australian common law states defines acceptance as the external manifestation of the assent / willingness of the offeree to enter into a contract. Acceptance is an unambiguous statement made either orally, written or by conduct by the offeree to the offer. Acceptance can only be accepted by the person to whom the offer was made. It is a sufficient reason if the offer was initially made by one party with an intension that the offeree should act on it, for that matter. However, no particular procedure is required for acceptance to be legally binding in Australia. Australian common laws establishes that silence constitute to acceptance. It is still possible to waive and auction the requirement for warning of acceptance in some situations- generally where it would be commercially unreasonable to entail such communication - as in recompense cases. Therefore there was acceptance between Toll Group based in Australia and the logistic service provider. Cited case is house fire insurance v Grant. House fire insurance v Grant G applied to purchase a house in a company. The offer was accepted by the company. The company later on posted an allotment share to him unfortunately the letter never reached G. The courts held that the contract was completed the moment the letter was posted to G. Therefore G was totally liable to pay for the shares agreed upon (Thesiger 1987). Consideration It is something done which has value in the eyes of the Australian law, it moves from a party to the contract to the other. In many control consideration is not a vital element of a contract – it is merely sufficient reasons that the parties have fully reached an agreement.  However, Australia common law states that, for agreement to be legally binding, the promisee is required to provide consideration for the promise to be received.  Thus, unwarranted promises are normally not enforceable (Carter 1996)  Intention to create legal relations The Australia law clearly stipulates that despite the existence of other elements of a valid contract, an agreement will not be considered if it lacked intension to create a legal relation; this is to mean that both parties to the contract must show the willingness to be legally binded by the contract. Most of the time, this binding are usually evidenced in writing. However, where both parties fail to indicate or show that ICLR (Intension to Create legal relations) lacks, the Australian courts assumes that there is no contract. For instance Domestic, Family Agreements is said to lacked the notion of ICLR therefore it is not legally binding. In this case, the contract entered by the Toll Group with logistic service provider is said to be legally binding with an element of ICTR (National Library of Australia 1994). There no contractual agreement between Mary and James, reason being that is family matter, family matter lacks the intension to create a legal binding contract. For example in the case of stipulates that: Jones v padavaton A mother offered to pay accommodation and maintenance for her daughter, if the daughter left her current job in US and go to England to read for the bar. The daughter agreed and quite her job in US. However, due to domestic disagreement between the mother and the daughter which was a family agreement, the mother withdrew her support to her daughter. The daughter went to court for a breach of contract. It was later on held that was a family agreement and not a contract because it is presumed to lack the intension to create legal relations. The same applies with Mary and James there is no contract ( Elvis 1968). In the case where James arrives at the store and there are no pet toys left he can successfully sue Mary for a breach of contract. The court will however consider or declare Mary liable if there was an agreement between Mary and James regarding the pet toy. If there was none then Mary is not liable. A contract can only be accepted if it has all the features of a valid contract and has the intension to create a legal and binding relationship Discharge / termination of a contract This are the circumstance under which the court may decide to terminate the terms and agreed of a valid contract between two or more parties. First is the Performance, Common law of the Austrian states that where both parties to the contract have fully performed their obligation under the contract and there’s nothing left to be done the contract can be terminated. For instance in the contract case study of Toll group and Logistic provider, the parties performed their obligations to the contract hence it was later on terminated through the merger of two providers. . Second is the Breach of contract, contract may be discharge where an individual to the contract or party to the contract fails to perform or carry out his obligations under the contract. An individual or both parties to the contract may fail to carry out their duties. Where breach occurs the innocent party who is fraudulently mislead has the right of terminating the contract (Davis 2000). Third, Operation of the Australian law, The Australian law states that a contract shall be terminated if a party to the contract has become incapacitated by law. The Australia law may incapacitate a party on declaration of bankruptcy, thereby terminating the contract (Carter 1996). And last but not least, Frustration of the contract, A supervening impossibility will terminate a contract under the following circumstance, where there is a non occurrence of the condition that was initially agreed upon by the parties to the contract, death or personal incapacity of one individual to the contract and finally change in the law, this largely occurs where the subject matter to the contract has been subsequently declared illegal by the act of parliament. This factor has the ability of terminating the initial contract entered in by the parties to the contract (Carter 1996). Conclusion Contract must be legally binding; a contract that lacks essential elements of a contract shall be considered null and void to the extent to its inconveniency. Thereby it shall not at any moment be considered as a contract. It is very essential that parties to the contract must communicate their willingness to enter into a binding contract. An offer made to a group of people must be communicated by the entire group, failure to do will automatically terminate the terms and conditions of the agreement. Intension to create a legal relation one of the important concept or elements to a contract, agreement entered into which lacks ICTR is not considered to be legally binding. This includes agreement between a husband and a wife, separation agreement, agreement between a parent and a child, social agreement, agreement not subject to the jurisdiction of the court is considered not to be legally binding to the parties of a contract, and this means that a party or an individual to the contract has the ability of terminating the contract. This termination will however not make him liable for that matter. It is therefore very important for parties to fully understand the terms and conditions of the contract. However, an individual who enters into a contract affected by vitiating factors such as: duress, undue influence, misrepresentation, and mistake has the ability of recovering anything lost in the course of the agreement. The Australian courts have done so to ensure that no party shall forcefully induce the other party to enter into a contract References Allan D & Hiscock M, Law of contract in Australia, (Australia: CCH 1992). Allan G, Cases and materials on contract law in Australia, (Australia: Butterworths 2003). Carter W & Harland D J, Guidebook to contract law in Australia, (Australia: CCH 1996). Care J C, Contract law in the South Pacific, (Routledge Cavendish: 2001). Carter W & Harland D, Supplement to Cases and Materials on Contract Law in Australia, (Australia: LexisNexis Butterworths 1996) Cheshire G & Fifoot C, Cheshire, Fifoot & Furmston's Law of contract, (New York: Oxford University Press 2007). Davis J, Contract, general principles: the Laws of Australia. (Australia: Thomson Law book Co 2000). Goldring L, Consumer protection law in Australia, (Australia: Butterworths 1979). National Library of Australia, Australian law of contract, (Australia: National Library Australia 1994) Vettori S, The contract and the changed world of work corporate social responsibility series, (Ashgate Publishing Ltd 2007). Wheelern M, Feminist perspectives on contract law, (Australia: Routledge Cavendish 2005). Cited case study Thesiger, C. The Household Fire and Carriage Accident Insurance Company (Limited) v Grant. (Australia 1987). Elvis, M. Jones v Padavatton. 29 November 1968. United Kingdom. Quain, B. Harris v Nickerson: Contract, offer, auction, withdrawal of goods, mere declaration. (Australia: 25 April 1873)   Read More