代写 Contract Law And Formation of a Contract

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  • HI 6027 - Business and Corporations Law  1
    Week 2
    HI 6027
    BUSINESS AND CORPORATIONS LAW
    Introduction to Contract Law
    And
    Formation of a Contract
    2
    Contracts
    ‖Contracts are a fundamental part of
    people‘s daily lives and form the
    basis of commercial law.‖
    Some basic examples:
     sales contracts – buying food
     employment contracts – going to
    work
     rental contracts – leasing a flat
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    Sources of contract law
    The study of contract law involves an
    examination of common law
    principles and the extent to which
    they have been affected by
    legislation.
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    Contract v. Agreement
    Contract & Agreement
    distinguished
    Terms ‗contract‘ and ‗agreement‘ are
    often used to mean the same thing.
    Traditional definition of contract is:
    ’a legally enforceable
    agreement’
    An agreement is NOT necessarily a
    contract.
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    The law of contracts
    Legally Enforceable
     For legality, the agreement must
    contain a promise and must have
    been intended by the parties to be
    legally enforceable in a court of
    law .
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    The law of contracts
    Contract defined
    A contract can be defined as:
    ―An agreement concerning promises made between
    two or more parties with the intention of creating
    certain legal rights and obligations upon the parties
    to that agreement which shall be enforceable in a
    court of law.‖
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    Creation of a simple contract
    Creation of an
    Apparent Simple Contract
     Three elements required:
    • Intention to contract,
    • Agreement between the parties and
    • Consideration.
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    Creation of a simple contract
    Essential elements:
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    Creation of a simple contract
    Steps for creation:
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    Creation of a simple contract
    Steps for validity:
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    Intention to Create Legal
    Relations
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    Intention to create legal relations
    Step 1: Intention to create legal
    relations
    The fact that parties have reached
    agreement does not necessarily
    mean that a contract has been
    formed.
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    Intention to create legal relations
    Step 1: Intention to create
    legal relations
    There must be clear intention
    by the parties that the
    agreement containing
    their promises is intended to
    be enforceable in law.
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    Intention to create legal relations
    Express intention
    Consider terms that expressly
    and clearly state the parties‘
    intentions.
    Almost invariably expressed in
    the negative.
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    Implied intention
    The courts have to determine
    objectively whether the parties
    intended the agreement to be legally
    enforceable
    To assist, consider two categories:
     social, family, domestic, voluntary
     commercial or business
    Intention to create legal relations
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    Implied intention
    Traditionally:
     social, family, domestic, voluntary
    • presumed no intention
     commercial or business
    • presumed intention to be bound
    Intention to create legal relations
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    Implied intention
    Traditionally:
     Apply the relevant presumption.
     The presumption could be rebutted by
    evidence sufficient to satisfy the court.
    Intention to create legal relations
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    Implied intention
    Intention to create legal relations
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    Intention to create legal relations
    Non-commercial agreements
    Three types:
     Social agreements - ones made between
    friends or acquaintances;
     Domestic agreements - ones made
    between family members and relatives;
    and
     Voluntary agreements - where the
    parties may volunteer their services.
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    Non-commercial agreements
    Under the ‗traditional‘ approach
    no intention is presumed to exist,
    though this is rebuttable by the
    evidence produced by the plaintiff.
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    Non-commercial agreements
    -  Other domestic arrangements
    In the case of other domestic
    situations the courts may look at the
    words and conduct of the parties as well
    as the seriousness of the consequences:
    Wakeling v Ripley (1951)
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    Commercial or business agreements
    -  General
    In business and commercial
    agreements the courts assume
    that there is an intention to
    create legal contractual
    relations:
    Edwards v Skyways Ltd
    (1964)
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    Statutory position
    While the common law may
    provide no remedy for misleading
    advertising, because when it is
    regarded as a puff or an
    invitation to treat, and therefore
    non-contractual, there may be
    statutory remedies under the
    provisions of the Australian
    Consumer Law, which deals with
    misleading or deceptive conduct
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    Agreement between the Parties
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    Agreement
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    Agreement
    Step 2: Is there agreement
    between
    the parties?
    Generally characterised by an
    ‘offer’ by one party and an
    ‘acceptance’ by another.
    Important in determining the time,
    place and contents of the
    agreement.
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    Agreement
    As ‗offer-acceptance‘ approach
    does not always work, the
    Courts have taken a ‘global
    approach’ by examining the
    acts and conduct of the
    parties.
    - Integrated Computer Services
    Pty Ltd v Digital Equipment Corp
    (Aust) Pty Ltd (1988)
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    Agreement
    Agreement arising by conduct
    Agreement may be established by
    implication arising from conduct
    of the parties:
    - Clarke v Earl of Dunraven and
    Mount-Earl [1897]
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    Rules relating to offer
    Rules as to offers
    There must be:
     an intention or willingness to be bound;
     a firm promise; and
     communication of the offer
    • (in writing, orally or by conduct)
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    Rules relating to offer
    Statements that are not
    offers
    An offer must be distinguished
    from an invitation to treat:
     This is an offer to consider offers
    and cannot create an agreement
    if there is a purported
    acceptance.
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    Rules relating to offer
    Invitation to treat
    Can include:
     auctions;
     advertisements;
     catalogues / Internet;
     price lists;
     goods in shop windows and shelves.
    Look at intention of the parties.
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    Rules relating to offer
    Auctions
    With a ‗reserve price‘:
     the auctioneer calling for bids is not
    making an offer but is asking for
    offers from prospective purchasers.
    With no ‗reserve price‘:
     the auctioneer becomes the offeror
    and must sell the goods to the
    highest bidder.
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    Rules relating to offer
    Tenders
     Tenders are not normally offers unless
    the tender states its exact needs, as
    distinct from what it may only require.
    Requests for Information
     A request for information is not a firm
    promise and so is not an offer. Nor does
    it destroy the offer as it is only an
    attempt to elicit information.
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    Rules relating to offer
    Notice of the offer
    The offer must be communicated to the
    offeree/s.
    The offer may be directed to
     one person,
     a group of people, or
     the world at large
    - Carlill v Carbolic Smoke Ball Co. (1893)
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    Rules relating to offer
    Options
     To keep an offer open for a specified
    time (an option), it must be
    supported by consideration.
    - Goldsborough Mort & Co Ltd v
    Quinn (1910)
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    Rules relating to offer
    Terms in the Offer
     Any terms contained in the offer
    must be brought to the notice of the
    offeree.
     Any and all conditions must be
    strictly followed.
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    Termination of offer
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    Rules relating to acceptance
    Acceptance be made in reliance
    of the offer
     The offeree must intend to accept
    the offer.
    - R v Clarke (1927)
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    Rules relating to acceptance
    Acceptance must be strictly in
    accordance with the terms of the
    offer
     If the offeror specifies a method of
    acceptance it must be followed:
    - Gilbert J McCaul (Aust) Pty Ltd v
    Pitt Club Ltd (1954)
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    Rules relating to acceptance
    Acceptance must be
    communicated
     Acceptance must be communicated
    to the offeror, either by words or by
    conduct.
     Mental acceptance, unless
    communication has been waived by
    the offeror, is insufficient.
    - Felthouse v Bindley (1862)
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    Rules relating to acceptance
    Who can make an acceptance?
     Acceptance must be conveyed by
    someone with authority.
    - Powell v Lee (1908)
    Cross-Offers
     Cross-offers do not give rise to an
    agreement.
    - Tinn v Hoffman & Co (1873)
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    Rules relating to acceptance
    Acceptance must be absolute
    and unconditional
     Acceptance must be absolute and
    unqualified or it may amount to a
    counter-offer.
    - Masters v Cameron (1954)
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    Rules relating to acceptance
    The postal rule
    Where the parties contemplate the
    use of the post as a medium of
    exchange of promises, the rules as
    to the time of acceptance change as
    follows:
     While an offer by letter is not
    effective until received by the
    offeree.
     Acceptance is effective as soon as it
    is posted.
    - Adams v Lindsell (1818)
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    Rules relating to acceptance
    The postal rule
    If revocation of the offer is to be
    effective,
    it must be received by the offeree
    before they post their letter of
    acceptance.
    - Byrne & Co v
    Leon Van Tienhoven & Co
    [1880]
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    Rules relating to acceptance
    Instantaneous communications
    Where the communication of
    acceptance is instantaneous, the
    contract is effective when the
    acceptance is received.
    - Entores Ltd v Miles Far East Corp (1955)
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    Rules relating to acceptance
    Instantaneous communications
    In cases of agreements
    communicated by means of
    telephone, fax or email, the contract
    is formed when and where the
    offeror hears or receives the
    offeree‘s acceptance.
    The Electronic Transaction Act 1999
    (Cth) provides guidance on times for
    receipt and dispatch.
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    Consideration
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    Consideration
    Formal Contracts
     No need for consideration as the
    contract is valid because of its form
    — such as, deeds.
    Simple Contracts
     Valuable consideration is required for
    the ‗agreement‘ to become a
    contract.
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    Consideration
    For simple contracts,
    Step 3: Is consideration
    present?
    Consideration is what each
    contracting party bargains for and
    gives in exchange for the return
    promise or performance of the other
    party.
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    Consideration
    The aim in defining
    consideration is to enable a
    distinction to be drawn
    between promises of a
    gratuitous nature and given
    freely — such as gifts, and
    those which are onerous or
    ‗paid for‘ by the incurring of
    some obligation.
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    Consideration defined
    Consideration is the price you pay to
    buy the other person‘s promise.
    It is this concept of ‗price paid‘
    which was adopted by Sir
    Frederick Pollock in Dunlop
    Pneumatic Tyre Co Ltd v Selfridge
    & Co Ltd (1915):
    An act or forbearance of one party, or the promise
    thereof, is the price for which the promise of the
    other is bought; and the promise thus given for
    value is enforceable.
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    Consideration defined
    The promisor is the person
    undertaking the promise.
    The promisee is the person who is
    receiving, or the recipient of, the
    promise.
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    Rules for consideration
    1. Consideration is essential to
    the validity of every simple
    contract
    It may be:
     something the promisee gives the
    promisor;
     the carrying out of some act; or
     refraining from doing something that
    the promisee had a legal right to do.
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    Rules for consideration
    2. Consideration must not be past
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    Rules for consideration
    2. Consideration must not be past
    Consideration must be:
     Present (executed) consideration which is
    an act done in return for a promise.
     Future (executory) consideration where
    the parties exchange promises. Each
    promise being the consideration for the
    other.
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    Rules for consideration
    2. Consideration must not be
    past
    Past consideration occurs where a promise is given
    after an act has been performed.
     This is viewed as past consideration
    and is generally not enforceable.
     The act must de done in reliance of
    the promise.
    Roscorla v Thomas [1842]
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    Rules for consideration
    2. Consideration must not be
    past
    The rule that past consideration is no consideration
    sometimes means that a promise, made seriously,
    generally cannot be enforced by the promisee if it
    relates to PAST acts.
    However, if the promise also pertains to the future,
    that part of the promise will be enforceable: Anderson
    v Glass [1869]
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    Rules for consideration
    2. Consideration must not be
    past
    Past consideration can be good consideration if it was
    provided at the request of the promisor and can show
    that:
     the act was done at the promisor‘s request and
     the parties understood that the act would be
    remunerated and
     the promise would have be enforceable if it had
    been promised in advance of the act.
    Lampleigh v Braithwait (1615)
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    Rules for consideration
    3. Consideration must move from
    the promisee
     BUT it need not move to the
    promisor:
    Dunlop Pneumatic Tyre Co Ltd v
    Selfridge & Co. Ltd (1915)
     Where there are joint promisees and
    only one has given consideration, the
    other can still enforce the promise:
    Coulls v Bagot’s Executor and
    Trustee Co Ltd (1967)
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    Rules for consideration
    4. Consideration must have
    value
    but need not be adequate
     Consideration must have value but
    need not be adequate as this is
    something only the parties to the
    contract can decide:
    Chappell & Co Ltd v Nestlé Co Ltd
    (1960)
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    Rules for consideration
    5. Consideration must be
    sufficient
    This means that it must have some
    legal value.
    If not, it may be considered
    insufficient and no consideration at
    all.
    As long as consideration exists, the
    courts will not be concerned about
    its adequacy.
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    Rules for consideration
    Examples of insufficient
    consideration
    Repeating an existing duty imposed
    by the law: Glasbrook Bros Ltd v
    Glamorgan City Council (1925)
    Repeating an existing duty owed to
    the promisor: Stilk v Myrick (1809)
    but compare:
    Hartley v Ponsonby (1871);
    Williams v Roffey Bros & Nicolls
    (Contractors)
    Ltd (1990)
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    Rules for consideration
    Performing an existing legal
    duty for a
    third party can be sufficient
    consideration:
    Scotson v Pegg (1861)
    Part-payment of a debt on its
    own is insufficient
    consideration:
    Foakes v Beer (1884)
    Part-payment by a third party
    is sufficient consideration:
    Hirachand Punamchand v
    Temple [1911]
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    Rules for consideration
    Forbearance to sue can be sufficient
    consideration:
    Hercules Motors Pty Ltd v. Schubert
    (1953)
    Composition between a debtor and
    their creditors under the Bankruptcy
    Act 1966 (Cth) is sufficient to
    discharge the debt.
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    Rules for consideration
    Moral obligations
     Moral obligations as well as natural
    love and affection will not convert a
    promise into good consideration:
    Eastwood v Kenyon (1840)
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    Rules for consideration
    6. Consideration must be possible
    of performance.
    7. Consideration must be definite.
    8. Consideration must be legal.
    9. Consideration must be
    referable to the other party’s
    promise.
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