Law of Contract: Assignment

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Contents
Solution 1....................................................................................................................................................2
I...................................................................................................................................................................2
Issues.......................................................................................................................................................2
Law..........................................................................................................................................................2
Application..............................................................................................................................................3
Conclusion...............................................................................................................................................4
II..................................................................................................................................................................4
Issues.......................................................................................................................................................4
Law..........................................................................................................................................................4
Application..............................................................................................................................................5
Conclusion...............................................................................................................................................6
Solution 2....................................................................................................................................................6
Reference List.............................................................................................................................................8

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Solution 1
I.
Issues
Is there a valid contract amid Avinash and Magda?
Law
In the law of contract, there are five elements together that constitute a valid contract. (Clarke
2013)
An offer is the prime element that initiates any contract. An offer is the statement of terms and
condition which an offeror wants the offeree to comply with and thus communicates the same to
the offeree with an anticipation of approval and is held in Carlill v Carbolic Smoke Ball Co
[1893].
An acceptance is the approval of the offer that is received by the offeree. An acceptance must be
the mirror image of the offer and is held in Empirnall Holdings Pty Ltd v Machon Paull Partners
Pty Ltd (1988). If the terms are altered while accepting then it cancels the offer and is a counter
offer wherein the acceptance with varied terms is a new offer made by the offeree and is held in
Hyde v Wrench (1840).
If the offeror wants to cancel the offer then the same must be done before acceptance.
An offer can be made and kept open for an offeree for certain time but such offers are valid if
supported with some consideration.
When offer are invited by auctions, tenders, advertisements etc then the same are invitations to
treat. The person relying on the invitation makes an offer to the inviter and the inviter acts like an
offeree and when confirms the same then results in acceptance and is held in Partridge v
Crittenden [1968].
The parties to the contract must be major and of sound mind and is held in Nash v Inman [1908];
The parties must have legal intention to abide by the contract and is held in Air Great Lakes Pty
Ltd v KS Easter (Holdings) Pty Ltd [1989].

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The contract must be supported with consideration which is something of value in exchange of
promises and is held in Coulls v Bagots Executor & Trustee Co Ltd (1967).
The law is now applied to the facts of the case.
Application
The facts submit that Magda was a professional photographer. She sells prints with the help of
her website and from her home studio. Magda through her website is selling a portrait of an
Australian Olympic champion, Paris Stilton. An advertisement is posted in regard to the same
wherein the portrait is stated to be for $2000 with ‘a limited edition of only 3 prints’.
Now, normally when any person intends to sell anything then an offer is made. But, in case of
advertisements, as per Partridge v Crittenden [1968] it is an invitation to sell. Thus, Magda has
not made an offer rather, it is an invitation and she must act like an offeree.
Avinash liked the painting and thus on 19th February sent an email to Magda offering the portrait
for $1600. Thus, an offer is made. This offer was rejected by Magda by making a counter offer
@ 1800 Hyde v Wrench (1840). Thus, Avinash must accept the same in order to make a valid
contract. Avinash did not accept the offer but requires a time till 21st February to confirm the deal
with his wife.
Now. Magda permitted to Avinash that he can reply by 21st Feb, but this acceptance is not
supported with any consideration and thus is not valid.
On 20th February, Avinash sends his confirmation with a condition that he requires a certificate
of authenticity. Thus, the acceptance of Avinash is not the mirror image of the offer made by
Magda, but, a term is incorporated. So, this cancels the offer of Magda @ 1800.
Now, Magda on 20 the February at 9:30 AM sends an offer wherein she submitted that she is
willing to provide all the details @ 1800 provided Avian accepts the offer by 4PM.
Now, before Avinash could accept the offer of Magda she sold the painting to someone else and
revokes the offer at 11:30.
So, there is no contract amid the parties and the acceptance of Avinash on 21st February does not
have any value.

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Conclusion
There is no contract amid Magda and Avinash as the offers were never accepted by the parties in
order to make a binding contract.
II.
Issues
i. Can Elton be considered as consumer?
ii. Whether Magda has violated any terms?
iii. Whether misrepresentation is incurred by Magda?
Law
The provisions of the Australian Consumer Law are applicable.
The consumer is defined under section 3 of the ACL. Any person is considered to be a consumer
when he purchases goods for a value which is up to $40,000 or more than $40,000 provided they
are used for personal or domestic use and is rightly held in Bevanere Pty Ltd v. Gaetan Djino
Lubidineuse & Ors (1985). If the goods are used for re-sell then it is not for domestic use.
( Bailey, 2016)
When any goods are sold by the manufacture to the consumer then the ACL has laid down
certain guarantees that must be comply with. (Thampapillai et al, 2015)
i. As per section 54, the goods acquired by the consumer must fit his purpose and is
held in Grant v Australian Knitting Mills [1936].
ii. As per section 55, the goods must be of acceptable quality, that is, fit for the purpose
normally acquired, durable, safe and is held in McWilliams Wines Ltd v Liaweena
(NSW) Pty Ltd [1988].
iii. As per section 56, the goods are sold by description then the goods that are actually
purchased by the consumer must correspond with the description and is held in Metal
Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd (1999).
iv. As per section 29, no misleading or false representation must be made by the
manufacturer while selling the goods and is held in Kailash center for personal
development Inc, v Yoga Malik Pty limited (2003).

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v. As per section 18, any statements are made which are deceptive or misleading and
which are made in order to induce the consumer to establish consumer contract is not
allowed and is an act of misrepresentation (Butcher v Lachlan Elder Realty Pty
Ltd [2004].
The law is now applied to the facts of the case.
Application
Issue 1
Elton visits Mgda studio on 20th February. He purchase the portrait @ $2000. The value of the
portrait is below $40,000 and is acquired for personal use. Thus, as per section 3 of the ACL, he
is the consumer in law.
Issue 2
Now, there are various terms that are violated by Magda.
It was submitted by Magda that the paper used for the portrait is of high quality and acid free.
But, the portrait that is purchased by Elton was printed on a very low quality photographic paper.
Because of the low quality of the paper there was color degradation that has started taking place.
If the higher quality paper would have been used then there would not have been any
degradation.
Thus, the paper is not of acceptable quality and does not fit the purpose for which it was purged
thereby violating section 54 - 55 of the act. Also, Magda has made a description regarding the
portrait but does not match with the actual portrait supplied and thus there is breach of section
56.
Further section 29 is violated because Magda has made a false representation that the quality of
the portrait is high and but the same was not true. Thus, a false representation is made by Magda.
Issue 3

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It is submitted by Magda that the portrait is a limited edition portrait. It was submitted that the
portrait has a limited edition of only 3 prints’ and only one remain unsold
However, later it was found that Magda has recently sold 10 of the limited edition prints of Paris
Stilton to other buyers. Thus, the statement that was made by Magda was not true rather it was a
false and is made by Magda in trade in order to induce Elton to buy her portrait. Thus, there is
violation of section 18.
Conclusion
Thus, there Elton is a consumer and there are several provisions of ACL that are violated by
Magda.
Solution 2
‘Consideration provided under a contract is not always valid. This can have unfortunate
consequences for a party seeking to enforce the ‘contract’.
In the law of contract, there are five elements together that constitute a valid contract. The same
are offer, acceptance, consideration, legal intention and parties capacity and is held in Carlill v
Carbolic Smoke Ball Co [1893].
Consideration is one of the most important contract essential which is required for the
enforceability of the contract. In Chappell & Co Ltd v Nestle Co Ltd it was held that no contract
is binding upon the parties unless the same is supported with some valuable object. In order to
make any promise enforceable in law there is a need of consideration. the promisee faces
detriment which is a valid consideration in law to support the promise made by the promisor.
However, in Biotechnology Australia Pty Ltd v Pace (1988), it was rightly held that it is not
every detriment on the part of the promisee that is considered as a consideration. a consideration
is considered to be anything of value. It is not necessary that the consideration must be value,
rather, a consideration which is sufficient in nature is also considered to be valid and enforceable
in nature.
But, does anything of value which may not be adequate but is sufficient constitute a valid
consideration to make the promises enforceable in law. The answer is No. at times a
consideration exchanged amid the parties is not considered be valid. Such as:

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i. In the leading case of Stilk v Myrick 1809 , it was held that when a person is obligated
to perform anything which he is under law bound to perform or which he is under
contractual capacity bound to perform, then, the same is not considered to be a valid
consideration in law. In Musumeci v Winadell Pty Ltd (1994), it was held that the
compliance of existing duty is not a valid consideration;
ii. In the leading case of Roscorla v Thomas (1842), it was held that a valid
consideration is one which is moved amid the parties during the time of performance
of the promise or after the performance of the promise. If a consideration is existed
but the acts are already performed by the parties, then, it is a past consideration and is
not valid in law. Invalidity of past consideration is also held in Harrington v Taylor
(1945).
iii. In the leading case of Foakes v Beer (1884) it was submitted that to settle the full
debt, when there is payment of part of the amount then it is not considered to be a
good consideration in law;
iv. Fulfilment of ant legal duty is not a consideration and thus not results in the
enforceability of the contract and is held in Glasbrook v Glamorgan County Council
[1925].
So, a consideration is the fundamental element to make any contract to be enforceable in law. but
a consideration needs to be adequate and is not always be sufficient. But, at times the
consideration that is exchanged amid the parties is not valid and thus results in the un
enforceability of the contract.
As per the case, a contract is made amid Elton and Magda in exchange of $2000, which is valid
in law. The consideration was sufficient and is exchanged amid the parties while the promises
are exchanged amid them. The consideration is legal in nature and thus have full validity in law.
Thus the contract amid Elton and Magda is valid in nature.

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Reference List
Books/Articles/Journals
Bailey, J (2016). Construction Law, CRC Press.
Thampapillai et al. (2015). Australian Commercial Law, Cambridge University Press.
Case laws
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309
Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130
Bevanere Pty Ltd v. Gaetan Djino Lubidineuse & Ors (1985).
Butcher v Lachlan Elder Realty Pty Ltd [2004].
Chappell & Co Ltd v Nestle Co Ltd[1960] AC 87
Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256;
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527;
Foakes v Beer (1884) 9 App Cas 605
Grant v Australian Knitting Mills [1936].
Glasbrook v Glamorgan County Council [1925] AC 270.
Harrington v Taylor 36 SE 2d 227 (1945).
Hyde v Wrench (1840) Beav 334
McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd [1988].
Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd (1999).
Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
Nash v Inman [1908] 2 KB 1

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Partridge v Crittenden [1968] 2 All ER 421, HC QBD.
Roscorla v Thomas (1842) 3 QB 234
Stilk v Myrick 1809 2 Camp 317
Online Material
Clarke, J. (2013) Australian Contract Law (Online). Available at:
https://www.australiancontractlaw.com/cases/airgreatlakes.html. Accessed on 19th May 2018.
The Law Teacher (2018) Advertisement was an invitation to treat, not an offer to sell (Online).
Available at: https://www.lawteacher.net/free-law-essays/contract-law/advertisement-was-an-
invitation-to-treat-not-an-offer-to-sell-contract-law-essay.php. Accessed on 19th May 2018.