Australian commercial law | Assignmnet

AUSTRALIAN
COMMERCIAL LAW
NAME: ________
STUDENT NUMBER: __________

Part A
Issue 1
The issue in the given case is to determine whether there was an enforceable agreement
between Wing and Tom. Thus, the equity and common law provisions would be reviewed in
relation to the formation of the contract and the promise made by the parties post the
formation of the contracts.
Rule 1
The Australian Contract Law governs the matters pertaining to the establishment of the
contract, management and operation of the contracts and the termination or the execution of
the contracts between the parties. It is essential to note that the law lays down certain
conditions that are mandatory to be complied with for an agreement to be regarded as a
contract that can be enforced in the courts1. These conditions are offer and acceptance of the
terms, intention to create legal relationships, presence of the consideration and lastly the
terms must be certain of the contract. The presence of all of the conditions will make an
agreement a contract that is enforceable in the courts2. If any of the above mentioned
conditions is not fulfilled, the agreement between the parties cannot be regarded as a valid
contract. One of the yet other legal rules is concerned with the doctrine of promissory
estoppel. The doctrine of promissory estoppel states that when the parties are already bound
by the contractual relationships and one of the parties relies on the promise or representation
made by the other party such that the former relies on it and acts accordingly, then the other
party cannot opt out from the said promise. The principle has been well pronounced in
numerous case scenarios including the Walton Stores (interstate) Ltd v Maher3. Three
conditions must be present necessarily are described below. The first condition is that the
parties must have acted in the reliance of the promise even when there is no support of the
consideration, secondly the initial contractual relationship must be valid and supported by the
consideration, and lastly a consideration must have been present in the original contract.
Application 1
The description of the application of the above stated legal principles to the given case
scenario is stated as follows. Wing and Tom shared a valid contractual relationship in the
light of the employer employee relationship. This is because both of them were associated as
1 Amanda P. Stickley, Australian torts law (LexisNexis Butterworths, 2016)
2 Clive Turner and John Trone, Australian Commercial Law 32nd edition, (Lawbook Company Australia, 2019)
3 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

employer and employee, Tom would pay remuneration in the form of the consideration and
the parties are aware of their duties and responsibilities that are certain. The initial contract
relationship additionally involved the payment of remuneration to Wing by the Tom’s
computers. In order to avoid the loss of the employee Wing, it was promised by Tom that the
salary of Wing would be doubled from 1 July 2020, to which later Tom refused. Applying the
principles of the doctrine of promissory estoppel and the pronouncement of the case Walton
Stores (interstate) Ltd v Maher, it can be stated that Wing relied on the Tom’s promise which
was in addition to the initial valid contractual relationship. Initially the contract was
supported by the presence of the consideration as well. Thus, the conditions of the promissory
estoppel are validly fulfilled.
Conclusion 1
The first conclusion is reached that a valid agreement is formed between Tom and Wing for
the payment of increased salary and the promotion of the employee as a partner, and the same
is validly enforceable in the light of the promissory estoppel rule.
Issue 2
The yet other issue is to identify the possible remedies that may be employed in the given
case study, if the valid agreement is stated to be established between the parties Wing and
Tom.
Rule 2
It has been stated in the case law of Walton Stores (interstate) Ltd v Maher that if the
promisor does not performs the promise later on, it would be inequitable for the promise for
the performance of the terms of the contract. Hence, the promissory estoppel is regarded as a
rule of equity and aims at defending the parties whose rights and position is undermined
because of the reliance being placed on the promise. The case further states for the payment
of the damages to the party whose rights has been undermined by the other party.
Application 2
The application of the above stated legal principles to the given situation leads to the
observation that the position of Wing has been undermined as he did not choose to leave the
job because of the expectation of the increased salary as promised by the employer Tom.
Conclusion 2