Case Study Analysis on Valid Contract and Chattel Mortgage

This case study analysis discusses the issues involved in the present case study assignment, the law related to a valid contract, and the application of the law. It also explains the buyer's claim for remedies and the concept of chattel mortgage, perfection, and fixtures.

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

1CASE STUDY ANALYSIS
Question 1:
1) Issues:
The issues involved in the present case study assignment are whether the Buyer can claim
any remedies from the Seller and whether the Seller has counter claims against the Buyer.
Another issue to be determined is whose claim will ultimately prevail in the court.
Law:
A contract can be enumerated as a legally enforceable understanding between two or
more legal entities or persons. The main aspect of a contract is that it consists of legally
enforceable promises. A valid contract has to follow 5 essential conditions.
Firstly, there has to be agreement between the parties. An agreement has two aspects; the
offer and the acceptance. Offer means desire of a party to bind himself in certain terms or
conditions as per the case of Australian Woollen Mills Pty Ltd v The Commonwealth [1954]
HCA 20. However, offer is not same as invitation to offer which has been discussed in the
decision given by New South Wales Supreme Court in AGC (Advances) Ltd v McWhirter
[1977] 1 BPR 9454.
Invitation to offer or treat is an offer made to the public in general and not to any specific
person unlike the offer which is made to a specific person such that the latter can respond to it by
making negotiations to create a contract.

2CASE STUDY ANALYSIS
As laid down in Banks v Williams [1912] NSWStRp 55, a contract cannot be entered into
until the offer made by a party is accepted by the other. Acceptance means agreeing to the terms
and conditions laid down in the offer.
Consideration is another condition of a valid contract. A valid contract must be always
supported by a consideration as held in the case of Woolworths Ltd v Kelly [1991] 22 NSWLR
189. Consideration can be money, any service or a promise to perform or not to perform
anything.
Intention of the parties to bind themselves to a contract is another significant condition of
a valid contract as stated in the decision of Emogenou v Greek Orthodox Community of SA Inc
[2002] HCA 8.
Another important condition is the capacity of the parties to enter into contract. The
common law prohibits the minors, intoxicated persons and mentally impaired persons to create
contract. If any contract is executed by any of such people , the contract is void as observed in
the case of Blomley v Ryan [1956] HCA 81.
The final condition of a valid contract is the certainty in the terms and conditions of the
contract. The rights and obligations of the parties towards each other must be certain, clear and
definite as held in the case of Upper Hunter County District Council v Australian Chilling &
Freezing Co Ltd [1968] HCA 8.
Other than the traditional form of contract, there lies another type of contract called the
option contract where an option is given to one party by another party to buy or sell anything of
value on a particular future date by paying the price of it by one of the parties to other as agreed

3CASE STUDY ANALYSIS
upon by them. It also provides that such contract cannot be revoked or terminated until the future
specified date is gone.
Application:
From the facts of the given case, it is seen that ‘For Sale’ sign board was an invitation to
offer made by Seller. Buyer when called Seller, Seller told him to send a cheque of $ 5000 on
that day and pay the balance money by 1st November. Thus Seller made an offer which was
accepted by the Buyer as he mailed him 5000 $ on that day. Thus an option was created between
them as Seller had allowed him to pay the remaining money by 1st November. Hence, this
contract is binding on both of them and cannot be revoked till 1st November. But when Buyer
called him, Seller refused to deliver van, thus he violated the contract. But Seller did not cash the
cheque.
Conclusion:
Thus Buyer can claim remedies from the Seller as he had breached the contract by
refusing to deliver the van before November 1st.
However, the Seller has counter claims against the Buyer that as he had not cashed the
cheque, no consideration was taken.
Thus from above discussion, it is seen that the Buyer’s claim is likely to prevail in the
court.
2) Buyer can claim remedies in the form of injunction to deliver van to others or specific
performance of the contract by delivering the van to him.

4CASE STUDY ANALYSIS
Question 2:
a) Chattel mortgage:
Chattel mortgage mean a loan contract where the buyer borrows money to buy any
movable property called the chattel. The money lender secures the loan by creating a mortgage
on the chattel.
b) Perfection:
Perfection denotes additional measures taken against the third persons to secure the
security interest. The provisions of fixture are contained in the Personal Property Securities Act
2009.
c) Fixtures:
The Fixtures and the Personal Properties Act 2009 (Cth) comprises the provisions related
to fixtures. It denotes a physical property that has been fixed or attached to a real property. In
Australia, according to Hobson v Gorringe [1897] 1 Ch 182, if there lies no agreement, the
doctrine of fixture is used to determine the title claims of an object.

5CASE STUDY ANALYSIS
References:
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20
Banks v Williams [1912] NSWStRp 55
Blomley v Ryan [1956] HCA 81
Emogenou v Greek Orthodox Community of SA Inc [2002] HCA 8
Hobson v Gorringe [1897] 1 Ch 182
New South Wales Supreme Court in AGC (Advances) Ltd v McWhirter [1977] 1 BPR 9454
The Fixtures and the Personal Properties Act 2009 (Cth)
The Personal Property Securities Act 2009.
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8
Woolworths Ltd v Kelly [1991] 22 NSWLR 189