Case Study Analysis

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

1CASE STUDY ANALYSIS
Question 1:
1) Issue:
The issues involved in the case study analysis are whether the Buyer has any potential
claim against Seller and whether there are any defences available to the Seller against the claims
of the Buyer.
Law/Rules:
A contract can be defined as an agreement between two or more parties that can be
enforced legally. In order to form a valid contract, five essential criteria are to be fulfilled. The
first criterion is that the parties must bind themselves to a valid agreement. An agreement is a
two step process consisting of offer and acceptance. It is given in R v Clarke [1927] HCA 47
case. Offer made by a party shows his intention to get himself bound by certain terms and
conditions by such agreement with another party as observed in Australian Woollen Mills Pty
Ltd v The Commonwealth [1954] HCA 20. However there lies a difference between an offer and
an invitation to offer. To distinguish it, the court usually considers the willingness of the offerer
as enumerated in Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 case
by the Court of Appeal.
Invitation to offer is often denoted as a request of a party to others, not a single party but
to public or people in general to allow them to make offers such that an agreement can be
initiated by accepting the offer. Display of price on menu card, statements on sign board are
regarded as examples of invitation to offer. It has been held in Westminster Estates Pty Ltd v
Calleja [1970] 1 NSWR 526; (1970) 91 WN (NSW) 222.

2CASE STUDY ANALYSIS
The offer made by a party cannot come in to effect unless it has been accepted by other
party. Any offer when accepted completes an agreement. Acceptance means the permission
given by another party to become part of an agreement with the other party that made the offer.
This is stated in the Taylor v Johnson [1983] HCA 5 case.
The 2nd criterion of contract is the presence of consideration. As per decision given in
case of Beaton v McDivitt [1987] 13 NSWLR 162, an agreement becomes enforceable only
when it consists of consideration.
The 3rd criterion to form a valid contract is the intention of the parties to a contract is their
intention to perform the obligations and exercise rights given in the contract as observed in the
landmark case of Helmos Enterprise Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235.
The 4th criterion is the capacity of the parties. The parties must not be legally barred from
entering in to contract. Minors, mentally challenged and drunken persons are prohibited by law
to enter in to contract as found in Johnson v Buttress [1936] HCA 41 case. If a contract is
entered by theses prohibited persons, such contract will be treated as void.
The last criterion is certainty to constitute a valid contract which was decided in the case
of Whitlock v Brew [1968] HCA 71. When all the criteria are satisfied, a valid contract is
formed.
There is another type of contract known as the option contract where the agreement
allows a party to buy or sell any particular valuable thing or property on a pre scheduled future
date at a price or consideration as agreed upon by the parties to such contract.