Australian Commercial Law
between two or more persons/parties where legal rights and obligations are designed
that can be enforced by law if required. (Turner &
Trone, 2016, P.50)
According to Sir
William Anson…”A contract is an agreement creating and defining obligation
between two or more persons by which rights are acquired by one or more to acts
or forbearance on the part of others”(Law Teacher: https://www.lawteacher.net/free-law-essays/contract-law/different-persons-definition-of-contract-contract-law-essay.php
(Downloaded 1st Jan
So, we can basically say contract consists of two
or more parties where they with their own desire come in an agreement that may
be written or oral & if not fulfilled by any party is punishable according
For the contract to be valid and enforceable, we
need to look for six major elements under FROLIC. If any of these are missing
the contract is not valid. In the context of given scenario, let’s check if
each and every elements are fulfilled or not.
Offer & Acceptance
RULE: An offer
made is a serious proposal by one party with other to enter a legal contract
where as acceptance is when the offered party agrees the proposal made by the
offering party. An offer is made only when the offer is directly communicated
to the offeree or when the offeree reads the offer either may be by post or
electronic means. (Turner
& Trone, 2016, P.56-59)
can be made by post or electronic means but if there is condition for not using
post then other means should be used. Carlill
v Carbolic Smoke Ball (1893)1 QB 256
In Sunita’s case, when Sunita checked the website it was not an offer but just
an invitation on advertise. But the offer was made when the salesman persuaded
her to buy the phone indicating the price being about 1200 AUD. This shows that
he was serious in intention as he solidified the price. Also, after the
conversation with the sales manager Sunita agreed and bought the phone as she
received her credit card bill later. Felthouse
v Bindley (1862) 11 CB (NG) 869.
So, yes offer and acceptance was made.
Is the contract in right form; i.e. written and consideration made?
contract can either be in written or oral form. It must be in written if it is
a gift or if required by statutes (i.e. Sale of Land Act) else it may be oral.
But written document is only part of the agreement, it is not the contract
itself. Past consideration can’t be used; it must be additional, fresh and new.
Consideration must be current or in future and it should be of sufficient
value. Stylk v Myrick (1809) 170 ER
Consideration is the price that is asked by the
promise in exchange of their promise- the price for the promise. (Australian
Contract Law: https://www.australiancontractlaw.com/law/formation-consideration.html
(Downloaded 1st Jan 2018))
In Sunita’s case, there is no gift being given as it is a buying and selling of
good or a product. So, it can be in oral form. Also there was exchange between
Sunita and salesman; Sunita paid money through credit card for the iphone she
received from salesman. So, two way considerations were made.
Yes, there was consideration made and it was in right form.
Was there an intention to enter a legal relation?
Normally, the intention of a party/person is judged on an objective test what a
neutral or a third person believes the intention by viewing it. It has two
If it is a commercial transaction, there is
intention and they are bound to enter a contract.
If it’s in a family or social and domestic
agreements, it is assumed that party doesn’t intend to enter in a contract.
But sometimes it may be
overturned if one of person largely or drastically changes their economic
circumstances. Riches v Hogben (1986) 1 Qd R 315
In this case, it is a commercial transaction. It has been assumed there was an
intention to go to the contract form both the parties.
Yes, intention was made to enter an legal contract.
the consent real?
Reality of consent can be checked with the following vitiating elements:
Fraudulent: Lies or falsely representing
something for own benefit. If fraudulent the contract can be canceled and sued
for damages. Peek v Gurney (1873) LR 6 HL 377
Negligent: Mistake in writing a contract or
carrying it out carelessly. Contract can be cancelled & sued for damages. Hedley Byrne & Co Ltd v Heller &
Partners Ltd (1964) AC 465 at 486,502-503,514.
Innocent: Silly mistake or an undesirably or
unknown misrepresentation. Contract can be cancelled but can’t be sued for
damages. Redgrave v Hurd (1881) 20 Ch D 1
COMMON: Both persons making same mistake,
therefore, can’t cancel contract but sue for damages. Leaf
v International Galleries (1950) 2 KB 86 at 89.
MUTUAL: Both person making two different
mistakes. In such case, contract is cancelled and sued for damage. Scott v Littledale (1858) 120 ER 304.
UNILATERAL: Mistake made by one party but knowingly or
unknowingly assisted by other. Contract may be cancelled as desire and sue for
the damages as remedies. Taylor v Johnson
(1983) 151 CLR 422 at 432.
DURESS: Any physical or economic threat given to one of the
parties. Contract becomes voidable. Barton
v Armstrong (1976) AC 104
UNDUE INFLUENCE: A condition where a
strong party takes an advantage of a weaker party’s weakness. Contract is
voidable. Allcard v Skinner (1887) 36
Ch D 145
UNCONSCIONABLE CONDUCT: More intent, greater undue influence which
might be illegal as well; Voidable contact. Commercial
Bank of Australia Ltd v Amadio (1983) 151 CLR 447.
Fraudulent: It could be fraudulent depending on
other circumstances we don’t know. We don’t have other evidence which says it
is deliberately done. If it is fraudulent it can be cancelled as the manager
also didn’t respond back.
Negligent: It could not be negligence because the
salesman could be more particular about the price and the manger also didn’t
Innocent: It is not innocence as the selling
party are professionals and they know what they do and how.
COMMON: There is no common mistake made.
MUTUAL: It can’t be a mutual mistake because a
salesperson is almost always sure about the procedure.
UNILATERAL: Salesman influenced Sunita to make
mistake by saying price about 1200 AUD but was deducted 1500. She made a
mistake paying bill without consulting further.
DURESS: No duress
UNDUE INFLUENCE: In this case, the
salesman persuaded Sunita to buy most expensive model even though he knew she
didn’t need it.
UNCONSCIONABLE CONDUCT: An expensive
mobile was sold to Sunita and along with that deducted 300 AUD more knowing she
didn’t need such an expensive phone.
Yes, Legal consent was made.