Source of legal rights
Torts
Contract
Statute
We will look at:
 Contract
 Example of use of common law (cases)
 Australian Consumer Law
 Example of use of legislation (and inter-action with case
law)
 How to use case law and legislation in legal problem
solving.
What is a contract?
How do we know whether or not a contract has been
formed?
Case law
A contract is an
agreement that is
enforceable at law.
Source of law
 How do we find the law of contracts?
 Mainly case law
 e.g. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Carlill v Carbolic Smoke Ball
[1893] 1 QB 256
 Unilateral contract
 Offer can be made to world at large
 Distinguish offer from invitation to treat by looking at
intention of offeror
 Unilateral contract – offer made at large, but only accepted
by those who actually perform
 Unilateral contract – communication of acceptance not
required
 Consideration can equal detriment/effort
OFFER/ACCEPTANCE ANALYSIS
OFFER
+
ACCEPTANCE
=
AGREEMENT
INTENTION
CONSIDERATION
Offer
“the indication by one person to
another of his or her willingness to
enter into a contract with that
person on certain terms”
Carter and Harland, “Contract Law in Australia” 4th edn p28
Case law?
An offer is not....
 A request or the supply of information
 Harvey vFrom
FaceyHarvey
[1893]AC552
to Facey:
From Facey to Harvey:
From Harvey
to to
Facey:
"We agree
buy Bumper
Hall Pen for the sum of nine
hundred pounds asked by
you.
Please
send
us
your
title
"Will
you sellprice
us Bumper
Hall Pen?
"Lowest
for
Bumper
deed in order that we may
Telegraph
lowest
cash
price-answer
early£900.“
possession."
HallgetPen
paid;”
Harvey v Facey
“the mere statement of the lowest price
at which the vendor would sell contains
no implied contract to sell at the lowest
price.”
Lord Morris at 556
An offer is not...
 An invitation to treat
 Pharmaceutical Society of Great Britain v Boots Cash
Chemists (Southern) Ltd [1953] 1QB 401
Examples of Invitations to Treat
advertisements/circulars
price lists
displays of goods in shops
calls for bids at auctions, and
calls for tenders.
So, is every ad an invitation to treat?
What do the cases tell us about offers?
 The offeror must intend to be bound by the offer
 E.g Harvey v Facey
 Boots case
 We can often determine this intention by looking
at the amount of detail in the offer (it should
contain enough detail to allow a binding contract
to come into existence)
 E.g Carlill v Carbolic Smoke Ball
 The offer must be communicated to the offeree
 All cases
All an offer needs is
a ‘yes’ to make a
contract
OFFER/ACCEPTANCE ANALYSIS
OFFER
+
ACCEPTANCE
=
AGREEMENT
INTENTION
CONSIDERATION
Acceptance
A FINAL and UNQUALIFIED assent
to the terms of an offer made in the
manner specified or indicated by
the offeror
The “yes” which ends
negotiations
Acceptance must respond to the offer
 So, only those persons:
 to whom the offer was made; and
 who have the offer in mind at the point of
“acceptance” may accept
The Crown v Clarke (1927)40CLR 227
Must accept offer with offer ‘in mind’
R v Clarke
“it is not an absolute proposition of law that one
who, having the offer before him, acts as one
would naturally be induced to act, is deemed to
have acted on the faith of or in reliance upon that
offer. It is an inference of fact and may be
excluded by contrary evidence.”
Starke J at 244
Acceptance must be communicated
 Silence is not sufficient
 Felthouse v Bindley
(1862) 142 ER 1037
 Conduct may communicate acceptance
 Empirnall Holdings v Machon Paul
(1988) 14 NSWLR 523
OFFER/ACCEPTANCE ANALYSIS
OFFER
+
ACCEPTANCE
=
AGREEMENT
INTENTION
CONSIDERATION
INTENTION TO CREATE LEGAL RELATIONS
“To
create a contract there must be
a common intention of the parties
to enter into legal obligations,
mutually communicated expressly
or impliedly”
Atkin LJ in Rose & Frank Co v JR Crompton & Bros Ltd [1923] 2 KB 261 at 293
Rebuttable presumptions
 In social and domestic agreements there is a
presumption against legal obligations
 Balfour v Balfour [1919] 2 KB 571
 Cohen v Cohen (1929) 42 CLR 91
 Jones v Padavatton [1969] 1 WLR 328
 The presumption is rebuttable
 Merritt v Merritt [1970] 1 WLR 1211
 Wakeling v Ripley (1951) 51 SR (NSW) 183
Balfour v Balfour
“There are agreements between parties which do not
result in contracts within the meaning of that term in our
law. The ordinary example is where two parties agree to
take a walk together, or where there is an offer and
acceptance of hospitality. Nobody would suggest in
ordinary circumstances that those agreements result in
what we know as a contract, and one of the most usual
forms of agreement which does not constitute a contract
appear to me to be the arrangements which are made
between husband and wife…they are not contracts
because the parties did not intend that they should be
attended by legal consequences.”
Atkin LJ at 578
Rebuttable presumptions
 In business or commercial agreements,
there is a rebuttable presumption that the
parties did intend to create legal
obligations
 Carlill v Carbolic Smoke Ball [1893] 1 QB 256
 Rose & Frank Co v Crompton & Bros Ltd
[1925] AC 445
 Honour clause
Role of presumptions
Ermogenous v Greek Orthodox Community of SA Inc
[2002] HCA 8
 It is said that it may be presumed that there are some
"family arrangements" which are not intended to give
rise to legal obligations and it was said in this case that
it should not be presumed that there was an intention to
create legal relations because it was a matter
concerning the engagement of a minister of religion. For
our part, we doubt the utility of using the language of
presumptions in this context. … Reference to
presumptions may serve only to distract attention from
that more basic and important proposition.“ per
Gaudron, McHugh, Hayne and Callinan JJ
OFFER/ACCEPTANCE ANALYSIS
OFFER
+
ACCEPTANCE
=
AGREEMENT
INTENTION
CONSIDERATION
Consideration...
The price paid for the
promise
Bargain
 A promise asked for, or relied upon, as an aspect
of a bargain between the parties to the contract
 Dunlop Pneumatic Tyre Company v
Selfridge & Company [1915] AC 847
Dunlop Pneumatic Tyre Co v
Selfridge & Co Ltd
Dunlop
Selfridges
Dew
“An act or forbearance of one
party, or promise therof, is the
price for which the promise of
the other is bought, and the
promise thus given for value is
enforceable”
Sir Frederick Pollock, adopted by the House of Lords in Dunlop Pneumatic Tyre
Company Ltd v Selfridge & Company Ltd
“Consideration…[requires
the existence of] a quid
pro quo”
Australian Woollen Mills v The Commonwealth
Without consideration a promise cannot be
enforced
 SO, only a party providing consideration can
enforce a promise
 Consideration must move from the
promisee
 But, it need not move to the promisor
 Dunlop Pneumatic Tyre Co v Selfridge & Co
Ltd [1915] AC 847
Past consideration is not good consideration
If what is done is not done as a reaction to the promise,
it cannot be good consideration.
 Roscorla v Thomas
[1842]3QB234
›
Eastwood v Kenyon
[1840]113ER482
PRIVITY OF CONTRACT
Only parties to a contract
may enforce, or be bound by,
a contract
Wedding cake
As well, Mavis is being threatened with legal action by
Chrissie Saranrap. Chrissie was married a month ago and was
expecting Mavis to provide her specialty – the “nouveau
doveau” - a tiered tower of cupcakes, iced in white and
arranged to resemble the wings of doves – as the centrepiece
cake for her wedding reception. Mavis loves doing cakes for
weddings – in fact she now makes more money from doing
wedding cakes than she does from her regular cooking
classes.
Chrissie saw information about Mavis’ cake services
after an article in the local paper, and called round to
see Mavis, and look at the different cakes she could
make. They discussed possibilities and pricing and
Chrissie left with a price list. Apparently, Chrissie
called and left Mavis a message on the answering
machine ordering the “nouveau doveau” for her
wedding, to be delivered on 2nd May at the wedding
reception, for $2,000 COD. In her message, Chrissie
had said: “If I don’t hear to the contrary, I’ll assume
everything is OK. Call me if there is a problem –
otherwise I will see you on the 2nd. Looking forward
to your lovely creation.”
Unfortunately, because of all the work being done to
the kitchen and problems with electrical work and
electrical supply, Mavis had experienced a number of
black outs which had interrupted her answering
machine. Mavis – never received the message from
Chrissie, and so of course, had not provided the cake.
Chrissie is very angry and claims her wedding was
ruined without the cake. She has threatened to sue
Mavis.