Contract Law Case Study 2022

Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:

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Part 1:
Issue involved:
The issues to be discussed here refer to the legal liabilities and rights of Kate, Gino,
Marcel, Lin, Singo and Hang as per the facts of the present case.
Rules:
In order to create a valid contract, a legally enforceable agreement must be made between
the parties to the contract (Watanabe et al., 2018). To make a valid agreement, a valid offer and
its acceptance must be made between the contracting parties as seen in the case of Wakeling v
Ripley (1951) 51 SR (NSW) 183.
The offerer must make a valid offer showing his intention to make a contract with the
offeree. The offeree when accepts the offer unconditionally, then it amounts to an acceptance.
Agreement forms one of the essential elements of a contract. An offer however must be
differentiated from an invitation to offer. An invitation to the offer is generally made not to any
particular person but to public at large to invite them in negotiations regarding the contract. Items
displayed for the purpose of sale can be regarded as the invitation to offer as seen in the case of
Pharmaceutical Society of GB v Boots Cash Chemists (Southern) Ltd [1956] EWCA 6, [1953]
1 QB 401, Court of Appeal (England and Wales). Similarly, advertisements in newspapers or
hoardings are not offers but invitation to offer. Thus the person who is making advertisement for
sale is not compelled to sell as seen in Partridge v Crittenden [1968] 1 WLR 1204 case.
In order to create contract, the acceptance of the offer must be done unconditionally. It
must be unequivocal as seen in the case of Spencer's Pictures Ltd v Cosens [1918] NSWStRp 1,

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(1918) 18 SR (NSW) 102, Supreme Court (NSW, Australia). In general, acceptance of an offer
occurs when communication of the acceptance is made to the offeror. However, the postal rule
forms an exception to the general rule. As per the postal rule, offer is said to be accepted when it
is posted by the offeree. This was entrenched in the case of Tallerman & Co Ltd v Nathan's
Merchandise (Vic) Pty Ltd [1957] HCA 10, (1957) 98 CLR 93, High Court. In case of
electronic communication, contract is created when the acceptance is received. Thus, until and
unless, the offer is accepted, no contract is formed.
Another essential element of the contract is the consideration. A contract without a
consideration cannot be enforced. In general past consideration is no consideration in the eye of
law as seen in the case of Roscorla v Thomas [1842] EWHC J74, (1842) 3 QB 234, High Court
(England and Wales). However, there are certain exceptions to this principle. To consider a past
service as a valid consideration, three criteria laid down in the case of Pao On v Lau Yiu Long
[1979] UKPC 17 must be satisfied. They are as follows; the act should have been done at the
request of the promisor, the parties to the contract should have understood that the act has to be
remunerated by payment or by conferring some benefit and such payment or conferring benefits
must be legally enforced.
Revocation refers to the withdrawing of the offer made by an offerer. This is established
in the case of Payne v Cave (1789) 3 TR 148 which states that offer can only be revoked at any
possible time prior to the acceptance taking place. Such revocation made by the offerer must be
communicated directly or indirectly to the offeree before he accepts the offer as seen in Byrne v
Van Tienhoven & Co [1880] 5 CPD 344.

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Application:
In the present case study, Kate proposes to give his old car to Gino. Gino replied : ‘Thank
you, that’s great. I am in some financial difficulty at present and getting your car as a gift will be
of enormous financial benefit to me’. Thus a valid offer was made by Kate which is again
accepted by Gino. Thus a valid agreement was created between both as per Australian Woollen
Mills Pty Ltd v The Commonwealth [1954] HCA 20; (1954) 92 CLR 424]. But, the
consideration for the transaction was the past services provided by Gino. When Kate started her
business, Hino helped her by giving her advice about computer programmes, informs her about
the names of the persons who are involved in the similar type of business and also make her meet
some of the potential clients. All these were regarded as the past services given by Gino. It is
known that past consideration is not a valid consideration as per the case of Re McArdle [1951]
Ch 669 unless all the three criteria are satisfied. In the present case, Gino has not given past
service at the request of Kate, both of them have not understood that the act has to be
remunerated by payment or by conferring some benefit. Thus, it does not amount to a valid
consideration. Hence, no contract was created between both Kate and Gino.
The advertisement made by Gino in the newspaper states that “Holden X22 car for sale
$20,000. Excellent condition. Write, phone or, email. Also, you may call at my home address.
The first person to contact me will get the car.” This amounts to an invitation of offer as it was
not made to any particular person or class of person but to the public in general. Moreover, he
published it to invite people to take part in negotiations with him regarding the sale of the car.
Thus it was an invitation to offer made by Gino as entrenched in the case of AGC (Advances)
Ltd v McWhirter (1977) 1 BLR 9454 (Supreme Court of NSW).