Principles and Issues of Law - Assignment Example

ssignmеnt Тwо: Саsе Study Word count: 2478 Question One (15 marks) Using the four step process, discuss whether the parties have reached an agreement so that a contract can be said to exist and if Chad is obliged to pay the correct amount of $4,500 ($2,250 AUD per adult) for two adult Hockey Packages? Step 1: identify the principles or issue of law The principle or issue of law in this case study is whether an enforceable contract was created between the parties. Step 2: explain rule(s) of law relevant to the principle/area/issue of law identified in step one with reference to authority A contract is said to exist when there is offer and acceptance. By definition, the parties to the contract become obliged to discharge their obligations to the contract after indicating their acceptance of the terms and conditions of the contract. A contract is made enforceable by the terms which are binding to the parties. The terms of the contract define the obligations. Terms become part of a contract in two ways: either by agreement which may be express or implied, or by operation of the law (Lambiris and Griffin 2013, p. 121). Whether one party is obliged to fulfil particular conditions of a contract depends on the representations of the contract. A representation is a statement of fact that is made by one party to the other in the process of making a contract (Lambiris and Griffin 2013, p. 122). For a statement made by one party to be interpreted as part of the binding promise in the contract, it should be objectively verified whether or not the statement made was intended to be a binding promise. The court seeks to establish from the circumstances of the contract whether the statements made do amount to misrepresentations. If this is established, then the misrepresentations do not form part of the contract. This is applicable to all kinds of misrepresentation: fraudulent, negligent and innocent. In situations where there is disagreement on whether the statements made were intended to be part of the terms of the contract or simply a representation, the court tests what can be reasonably inferred from the circumstances of the contract. This depends on when the statement was made, whether the person making it did have special knowledge and whether or not the statement was included in the written agreement. In Olley v Marlborough, the plaintiff signed a contract with the hotel at the reception. At the time of signing the contract, there was no mention of an exclusion clause by the hotel. It was in the hotel room at the back of the door that there was a notice that sought to exclude liability of the hotel for any possible loss of or damage to property. The court established that the notice excluding liability for the hotel was ineffective since the plaintiff had not seen it by the time the contract was made. This means that in establishing the whether statements are part of the contract; the court relies on the time at which the statement was made or seen by the parties entering into the contract. Step 3: Apply the law to the facts of the question in a detailed and logical manner In determining whether the parties have reached an agreement so that a contract can be said to exist and if Chad is obliged to pay the correct amount of $4,500 ($2,250 AUD per adult) for two adult Hockey Packages, three key circumstances regarding the contract should be considered. First, the court shall seek to establish whether there actually exists a contract between Chad and Games Travel Pty Ltd. A contract is said to exist when both parties have expressed their willingness to be party to the terms and conditions of the contract. In this case, Games Travel Pty Ltd made a hockey package to the commonwealth games. When Chad made inquiries about the offer, he was doing so having understood the terms and conditions of the contract. When Games Travel Pty made corrections about the price for the tickets, this constituted to a counteroffer to Chad. Also, Chad’s communication that he would authorise payments from his credit card only if the initial price offered for the tickets was maintained constituted a counteroffer. Acceptance occurred when Games Travel Pty Ltd sent the tickets to Chad later. Step 4: Draw possible conclusions In conclusion, it is most likely that the courts will find that an enforceable contract does actually exist between Chad and Games Travel Pty Ltd. However, it is most likely that Chad cannot be obliged to pay the correct amount of $4500 AUD per adult as expressed in the notice. This is because by accepting to send the tickets to Chad, Games Travel Pty Ltd indicated acceptance of the counteroffer given by Chad, who authorised payment only for the earlier indicated amount of $ 1,250 AUD per person. Question Two (15 marks) Assume there is an enforceable contract between Games Travel Pty Ltd and Chad. Using the four step process, determine the express terms of the contract. In your answer you will need to indicate whether the terms are conditions or warranties. Step 1: Identify the principle or issue of law The principle or issue of law is proving the express terms of the contract and whether the terms are conditions or warranties. Step 2: explain rule(s) of law relevant to the principle/area/issue of law identified in step one with reference to authority Terms in a contract refers to agreed obligations that were made in circumstances which make them legally biding to the parties in the contract (Lambiris and Griffin 2013, p. 108). The terms of the contract are important because they define the duties of the parties to the contract and, as a result, provide a means by which the performance of the contract can be measured. The issue at hand here is to determine what constitutes the express terms of a contract. In the process of proving the terms of a contract, what matters is whether the contract is fully oral or written. Where a contract is made orally, the terms of the contract are verified by establishing evidence either from the parties to the contract or from the witnesses. In the case of LG Thorne & Co v Thomas Borthwick & Sons (1995) 56 SR (NSW) 81, the matter before the court was to establish what constitutes the proof for the terms of a wholly written contract. It was held that by the parole evidence rule, the terms are proven by reference to the written contract alone. However, there are several circumstances under which the requirements of this rule are not applied in determining the express terms of a contract. In cases where there is evidence in support of rectification, evidence that the written contract is only part of the whole agreement or evidence to indicate that there is resolution of uncertainty in the written document, the parole rule is not applied strictly (Lambiris and Griffin 2013, p. 112). In Van den Esschert v Chappell (1960) WAR 114, the court held that the promise made by the seller of the house to the buyer that the house in question was free from termite infection amounted to a condition of the contract. The decision of the court was informed by the fact that the promisor was aware of the importance of the promise to the promisee. The express terms of a contract arise from statements that have been made either orally or in writing. In general, the terms that become part of a contract arise from two sources: by agreement between the parties to the contract or by operation of either general law or legislation. Also, the terms to contracts which are agreed upon by the parties may either be expressly agreed upon or be by implication. The terms are expressly agreed upon either in discussions between the parties to the contract or they may be included in a signed document or referred to on a ticket or notice. When determining the express terms of a contract, the process is dependent on the circumstances surrounding the contract in question. The court relies on the special circumstances to establish whether particular terms have been included in the contract as express terms or not. This arises when there are disagreements over whether particular terms form the express terms of a contract or not. In L’Estrange v Graucob Ltd (1934) 2 KB 394, the matter before the court was to establish whether when a party signs a contract, it is bound by all the conditions contained in it. The court held that all individuals are bound to the conditions of a contract whether they are aware of it or not, as long as they sign the contract document. This means that in cases where there is no fraud or misrepresentation, a party is bound by the provisions of the contract even if the party in question is not fully aware of all the contents of the contract. Sometimes the court depends on the circumstances of the case to determine the express terms of the contract. In Causer v Browne (1953) VLR 1, it was held that what the plaintiff saw formed the express terms of the contract. Whether the terms of a contract are conditions or warranties depends on what the parties intended as evidenced in the circumstances under which the contract was made. In distinguishing between the two, the court asks whether the circumstances surrounding the contract provide enough evidence for it to be inferred that the promise was so important that the promisee would not have entered the contract without it and that the promisor was aware of this. In Bettini v Gye (1876) 1 QDB 183, the court established that the term that required Bettini to be in London 6 days before rehearsals for performances was not a condition of the contract but rather a warranty. In Associated Newspapers Limited v Bancks (1951) 83 CLR 322, Bancks had entered into a contract with the Associated Newspapers Limited to provide comic strips which would be printed on the first page of the paper for ten consecutive years. After three consecutive instances in which the comic strip was printed on page three of the paper, Bancks rescinded the contract and sued for damages. The matter before the court was to establish whether the condition to print the comic strip on the first page of the paper was a condition or a warranty. The court held that the front page term was a condition in the contract. Step 3: Apply the law to the facts of the question in a detailed and logical manner In order to determine the express terms of the contract between Games Travel Pty Ltd and Chad, the circumstances under which the contract was made need to be assessed. The question is how to establish the terms of the contract between Games Travel Pty Ltd and Chad. Since this is a wholly written contract, the court would seek to establish the terms of the contract between the two parties by referring to the written contract alone. This would take into account all the writing contained in the offer advertisement published by Games Travel Pty Ltd on their website. However, there are two important circumstances which shall be considered in this case. One, there is evidence in support of rectification in the contract. In the original notice, Games Travel Pty Ltd had indicated that the prices for the offered tickets were ranging from $1,250 AUD per adult. When Chad indicated his interest to take the offer at the price that had been indicated, Games Travel Pty Ltd indicated that the price was actually $2,250 AUD per adult and not as it had been indicated before. This can be taken as evidence in support of rectification of the prices for the tickets. The second issue that needs to be determined is whether there was resolution of uncertainty in the written contract. There was uncertainty on the issue of whether the tickets for the Women’s Hockey medal matches would be guaranteed. To seek clarification, Chad wrote to Games Travel Pty Ltd seeking resolution of the issue. Since Games Travel Pty Ltd indicated that these particular tickets do form part of the contract and that they could be guaranteed to Chad, it can be inferred that this communication constituted a resolution of uncertainty in the written document. Therefore, it can be deduced that the express terms of the contract cannot be established from the written document alone but rather with exceptions to the parole rule. This means that the express terms of the contract shall be proven from both the written notice as well as the resolution of uncertainty and rectification. In determining whether the terms of the contract were conditions or warranties, the question is whether it can be inferred from the circumstances of the contract that the promise was so important that the person to whom it was made would not have entered the contract without it, and that this was apparent to the person offering the promise. From the facts in this case, it can be established that Chad had made it clear that his intention was to obtain tickets for the women’s Hockey medal matches. It would be the duty of the court to establish that the promise of obtaining tickets to the medal matches was so important to Chad that given that Games Travel Pty Ltd would have indicated that they could not offer it, Chad would not have entered into the contract. Second, it should be established whether the promisor, Games Travel Pty Ltd, was aware of the fact that the promise of tickets to the Women’s Hockey medal matches was so important to Chad and that he would not have entered the contract if the promise of the tickets was not available. After Chad wrote back inquiring about this particular promise, Games Travel Pty Ltd wrote back indicating that this promise was a guarantee. This, therefore, means that the promisor was aware that the promissee considered the promise for the tickets very important and that he could not have entered into the contract if the promise had not been made in the first place. In these circumstances, it can be inferred that the promises made in the offer were so important to Chad that he would not have entered the contract if they were not offered, and that Games Travel Pty Ltd was aware of this. Therefore, the terms of the contract were conditions and not warranties. Step 4: Draw possible conclusions In conclusion, the terms of the contract are conditions. Also, the terms of the contract are as contained in the written notice with exceptions for the rectifications made concerning the prices of the tickets and the resolution to the issue about tickets to the Women’s Hockey medal matches. References List of cases referred to Associated Newspapers Limited v Bancks (1951) 83 CLR 322 Bettini v Gye (1876) 1 QDB 183 Causer v Browne (1953) VLR 1 L’Estrange v Graucob Ltd (1934) 2 KB 394 LG Thorne & Co v Thomas Borthwick & Sons (1995) 56 SR (NSW) 81 Olley v Marlborough Oscar Chess v Williams (1957) 1 All ER 325 Van den Esschert v Chappell List of other sources Lambiris, Michael, and Laura, Griffin. 2013. First Principles of Business Law. Sydney: CCH. Read More