Australian Constitution and Contract Formation

The article discusses the doctrine of separation of powers in Australia and its application in the country. It also explains the elements of a valid contract and their application in a given context. The article provides insights into the legal system of Australia and its functioning.

Running Head: AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION
Australian Constitution And Contract Formation

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 1
Contents
Part A...............................................................................................................................................2
Part B...............................................................................................................................................4
References........................................................................................................................................9

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 2
Part A
The doctrine of separation of powers provides that those who are involved in making the law
should not enforce or administer that law. In Australia, the doctrine of the separation of powers is
responsible for the division of the institutions of the government in three separate branches
namely judicial, legislative and executive1. The legislature performs the function of making the
law while the function of putting the laws into operation is performed by executive branch2.
Lastly, the interpretation of law is the duty of judiciary. This doctrine is often regarded as the
keystones of fair government. However, the strict principle of separation of powers is not always
evident in Australia, however, it is a different version which combines the doctrine of
responsible government, basic democratic concepts set in the Westminster system and the
separation of powers adopted by United States.
The doctrine has been put in place in Australia for the purpose of preventing oppressive
government and therefore, different bodies are responsible for the different powers of the
government such that the balance can be maintained. The role of the three main elements of the
doctrine i.e. legislative, executive and judiciary has been discussed below:
Legislative- The legislative powers i.e. the power to make the laws are with the Parliament of
Australia and this power is provided to the Parliament by the Constitution. The legislation is
passed by the Parliament with the help of two houses of representatives and Senate along with
the Queen, who is represented by Governor- General. The law is framed when the proposed law
is agreed upon by both the Houses of Parliament. The powers of both the houses are equal,
however, there are certain restrictions on the powers associated with Senate for the introduction
and amendment of specific financial legislation. The role of the Governor- General in the
legislative process is relating to providing their assent to the acts3. The executive government is
1 Gabrielle Appleby, The separation of powers and rule of law in the Australian Constitution (14
October 2017) < https://boilingfrog.com.au/separation-powers-rule-law-australian-constitution/>
2 The Law Handbook, Elements of a contract (30 June 2017)
<https://www.lawhandbook.org.au/2018_07_01_03_elements_of_a_contract/>
3 Supreme Court of Western Australia, Separation of Powers (19 July 2012)
<https://www.supremecourt.wa.gov.au/S/separation_of_powers.aspx?uid=1910-3759-9835-

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 3
also authorized by the Parliament for spending the public money by making an agreement to the
government proposals for taxation and expenditure, serving as a forum for debate of the public
policy and scrutinizing the government’s administrative action. Moreover, the delegation of the
legislative powers is possible to the executive and as a consequence, it upheld the delegated
legislation’s validity4.
Executive- Executive is regarded as the physical part of the legislature and is often allocated with
some of the powers by the legislature such as formulating regulations under the Act passed by
the Parliament. The power of Executive is often restricted by Senate through its ability of amend,
query and block government legislation5. The Executive power of the Commonwealth is
exercisable by the Governor- General as the representative of the Queen and therefore is vested
in the Queen. The possession of the executive power is with Cabinet (senior ministers) and the
Prime Minister. The powers of the executive cannot be restricted or over- rules by the legislature
by way of passing new laws to that effect. The decision made by the executive cannot be
substituted by the court, however, it has the power of deciding on its correctness6. The queen is
provided with the power by the Constitution to disallow any Australian Act and it has never been
done before. Before putting the laws into operation, the Council ensures that the actions of
Ministers are properly documented and are constitutionally and legally valid along with being in
accordance with the policy of the government.
2395>
4 Parliamentary Education Office, Separation of Powers: Parliament, Executive and Judiciary, <
https://www.peo.gov.au/learning/fact-sheets/separation-of-powers.html>
5 John Alvey and Neal Ryan, The separation of powers in australia: implications for the state of
queensland, <
https://www.researchgate.net/publication/27481194_The_Separation_of_Powers_in_Australia_I
mplications_for_the_State_of_Queensland>
6 Peter Gerangelos, ‘Separation of powers in the Australian constitution: Themes and reflections’
(2017) 29 SAcLJ 903, 904.

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 4
Judicial- High Courts along with the other Federal Courts have the power to interpret the law and
to judge their application in different individual cases. This judicial power of the Commonwealth
is provided to such courts by the Constitution. The major function performed by the High Court
is to interpret the Constitution and have the power to rule a law to be unconstitutional. This
implies that it would mark the law beyond the Parliament’s power and therefore, can be regarded
of no effect. The interpretation of any ordinary law by the court may be overridden by the
Parliament by way of amending or passing an Act of Parliament. Moreover, the doctrine of
persona designate allows the judges to perform the non- judicial functions in their capacity as
against their judicial capacity.
Through the performance of their roles by the above mentioned three branches, the doctrine of
separation of powers is achieved in Australia. The doctrine requires that all the arm of the
government perform their functions separately and do not exercise the functions or powers of
others.
However, some shortcomings often arise from the doctrine during its application in Australia.
The major shortcoming with the separation of powers in Australia has been a contentious one
and it is still questionable where the power actually lies in the political system of Australia. The
shortcoming is visible as this doctrine is not strictly complied in Australia due to lack of
complete separation between executive and legislature. The key principles relating to the
separation of power provides that non- judicial power cannot be vested in Ch III courts and on
the other hand, judicial power can only be vested in Ch III court. The compromise of these
principles can lead to the abuse of power.
Part B
1. An agreement which is enforceable by law can be defined as a contract. In other words, it is
much more than simply an agreement between two people. A contract is enforceable if there is a
valid offer and acceptance along with an intention for creating a legally binding agreement, a
valid consideration, consent and legal capacity for entering into the contract. If such elements of
a valid contract are not present, the contract is not enforceable under the law.

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 5
Offer and Acceptance- The formation of the contract takes place when an offer made by one
party is accepted by the other party. An offer can be defined as a definite promise to be bound, if
acceptance is given to the terms relating to the offer. The withdrawal of the offer is also possible
before such offer is accepted by the other party. In this case, there is a valid offer between the
two parties namely the Events Management Ltd and Rigby Corporate Function Planners Pty Ltd.
Moreover, the acceptance of the offer takes place when the party to which the offer is made
responds and agrees to such an offer by way of providing a clear statement indicating their
acceptance through an act or some conduct. In other words, there is a requirement that the
acceptance should be communicated to the offeror effectively7. In this case, the acceptance to the
offer is missing between the parties. This is due to the fact that the rough draft relating to the
contract has been prepared by the Events Management Ltd but is still not forwarded to the Rigby
Corporate Function Planners. Moreover, Rigby Corporate Function Planner is also advising
Events Management regarding their withdrawal from the proposed business sale. So, it can be
concluded that the offer is still not properly accepted by the party. Similar facts were discussed
in the case Crown v Clarke (1927) 40 CLR 227 and it was held that acceptance needs to be given
in response to the offer8.
Intention for Creating Legal Relations- Only agreement does not result in a contract between the
parties9. There must be intent between the parties to create the legal relationship. The explicit
stating of such intention in the written document is rarely found but it is inferred from the nature
of the agreement and the nature of relationship that exists between the parties10. In this case,
there is an intention for creation a legal relationship between the parties as Events Management
will pay a purchase price for the acquisition made by it to Rigby Corporate Function Planners.
7 Ewan McKendrick and Qiao Liu, Contract Law: Australian Edition (Macmillan International
Higher Education, 2015) 47.
8Australian Contract Law, Crown v Clarke (1927) 40 CLR 227,
<https://www.australiancontractlaw.com/cases/crown.html>
9 Jeannie Marie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law
(Thomson Reuters (Professional) Australia, 2012) 10.
10 Richard Stone and James Devenney, The modern law of contract. (Routledge, 2017) 141.

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 6
Consideration- Consideration can be defined as the price paid by one party to the other for the
promise made by it. Consideration is not always required to be in money, however, it should be
something of value11. However, the adequacy of the consideration is not questioned by the court
as long as it exists and is of real value. In this case, there is an agreed consideration of $ 750,000
which has been agreed between the parties.
Legal Capacity- A valid contract cannot be entered into by all the people. If a contract involves
minors, people having mental impairment, prisoners, corporation and bankrupts then there may
arise some kind of issues with the consent12. Such factors are not present in the given case but the
consent for the contract is still missing between the parties. There are some points on which
agreement is not made between the parties which include transfer of intellectual property and
transition of staff leave liabilities which will also have an impact on the consideration to fixed
between the parties. In other words, consent to all the terms of the contracts is still missing.
After taking into consideration, the above elements of the valid contact, it can be concluded that
a contract does not exist between Events Management and Rigby Corporate Function Planners.
11 Brian Coote, Contract as Assumption: Essays on a Theme (Bloomsbury Publishing, 2010) 61.
12 Beth Walston-Dunham, Introduction to Law (Cengage Learning, 2008) 417.

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 7
2.
Memorandum of Advice
To : Samantha (Departmental Manager)
From: Business Acquisition and Development Department
Date : 27 January 27, 2019
During the negotiation phase of the contract, certain points were agreed between the parties
through emails relating to purchase price, date of business transition, role of the owner/
managing director and the transfer of equipment, plant and staff on the transition date. The main
issue is relating to whether a valid contract is present between the two parties (Events
Management and Rigby Corporate Function Planners) or not.
For the purpose of formulating a valid contract, the presence of certain elements is considered to
be essential. Such elements include, offer and acceptance, intent for creating a valid contract,
consideration and legal capacity. An offer can be defined as a definite promise to be bound, if
acceptance is given to the terms relating to the offer13. Moreover, the acceptance of the offer
takes place when the party to which the offer is made responds and agrees to such an offer by
way of providing a clear statement indicating their acceptance through an act or some conduct.
Also, the second element provides that there must be intent between the parties to create the legal
relationship14. The third element is consideration which is the price paid by one party to the other
for the promise made by it. Fourth element provides that the contract should not be entered into
by the parties who are not legally competent to do so such as prisoners, people with mental
impairment, bankrupts, etc.
13Australian Contract Law, Formation,
<https://www.australiancontractlaw.com/law/formation.html>
14 Legal Vision, What are the Elements of a Contract? (17 March 2017) <
https://legalvision.com.au/what-are-the-elements-of-a-contract/>

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 8
The application of such rule in the given context provides that there is an offer made by Events
Management to Rigby Corporate Function Planner, however, proper acceptance on all the terms
is still not received from the company. However, both the parties are competent and have the
intention of creating a legal relationship as well. The consideration has also been decided for the
proposed acquisition i.e. $ 750,000. The draft of the contract is still not forwarded to Rigby
Corporate Function Planner which implies that the terms of the offer have not been accepted.
However, both the parties agree to some of the points relating to the acquisition.
Therefore, it can be concluded that all the elements of a valid contract are not present in this case
and therefore, there is no valid contract between the parties. Proper acceptance and consent
relating to all the facts of the contract will lead to the creation of a valid contract.

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 9
References
Alvey, John and Neal Ryan, The separation of powers in australia: implications for the state of
queensland, <
https://www.researchgate.net/publication/27481194_The_Separation_of_Powers_in_Australia_I
mplications_for_the_State_of_Queensland>
Appleby, Gabrielle, The separation of powers and rule of law in the Australian Constitution (14
October 2017) < https://boilingfrog.com.au/separation-powers-rule-law-australian-constitution/>
Australian Contract Law, Crown v Clarke (1927) 40 CLR 227,
<https://www.australiancontractlaw.com/cases/crown.html>
Australian Contract Law, Formation, https://www.australiancontractlaw.com/law/formation.html
Coote, Brian, Contract as Assumption: Essays on a Theme (Bloomsbury Publishing, 2010).
Gerangelos, Peter, ‘Separation of powers in the Australian constitution: Themes and reflections’
(2017) 29 SAcLJ 903.
Legal Vision, What are the Elements of a Contract? (17 March 2017) <
https://legalvision.com.au/what-are-the-elements-of-a-contract/>
McKendrick, Ewan and Qiao Liu, Contract Law: Australian Edition (Macmillan International
Higher Education, 2015).
Parliamentary Education Office, Separation of Powers: Parliament, Executive and Judiciary, <
https://www.peo.gov.au/learning/fact-sheets/separation-of-powers.html>
Paterson, Jeannie Marie, Andrew Robertson and Arlen Duke, Principles of Contract Law
(Thomson Reuters (Professional) Australia, 2012).
Stone, Richard and James Devenney, The modern law of contract. (Routledge, 2017).
Supreme Court of Western Australia, Separation of Powers (19 July 2012)
<https://www.supremecourt.wa.gov.au/S/separation_of_powers.aspx?uid=1910-3759-9835-
2395>

AUSTRALIAN CONSTITUTION AND CONTRACT FORMATION 10
The Law Handbook, Elements of a contract (30 June 2017)
<https://www.lawhandbook.org.au/2018_07_01_03_elements_of_a_contract/>
Walston-Dunham, Beth, Introduction to Law (Cengage Learning, 2008).