Contract Law: Formation & Elements

This assignment delves into the heart of contract law, focusing on the formation of contracts and their key elements. It draws from various sources, including academic texts like 'Beyond Employment' by M. and Riley (2012) and 'Business and Society' by Lawrence and Weber (2014), as well as case law such as L'Estrange v Graucob [1934]. Students will explore international business perspectives through works like 'Global Business' by Peng (2016). The assignment encourages students to understand the fundamentals of contract formation and elements in both Australian and global contexts.

Business law

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Question 1.......................................................................................................................................1
Question 2........................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
Business law is considered as the commercial law and refers to the laws that governs the
dealings between people and commercial matters. Mainly, there are two distinct areas of
business laws (Georgieva, Jandik and Lee, 2012). It usually focuses on the aspects of business
including the sales as well as distribution of goods along with financing of certain transactions.
There are various significant laws and regulations have been developed by parliament and other
sources that are used to resolve the problems and disputes between the parties. There are various
case examples have been discussed which are considered as similar with the case study of Arick
for analysing the appropriate solution.
Question 1
Contract law encompasses various laws or legislations which are directed towards
enforcing certain promises. In Australia, it is considered that the contract law is primarily
operated by the common law but increasingly, the statutes which are supplementing the common
laws of contract particularly in relation towards the protection of consumers. Analysis of present
case study has provided an understanding about the breach of contract between the parties
entered in to contract (Wild, Wild and Han, 2014). Case clearly relates with young tennis player
named “Agla” having age of 16 years who entered into a contract with the two different parties.
First contract was made by Agla with Bagla who was noted as tennis coach. Contract between
both parties was based on the terms that coach will organise all training programmes for Tennis
player and also take decision about which tournament she should play. Further, it was also
decided that 20 percent of winning amount from tournament will be provided by Agla to his
coach as consideration against the services provided by him.
Agla has made her second contract with seller of tennis equipment company Sagla Ltd on the
terms of contract that Agla will use the tennis equipment of the company for its promotion.
Against her services, Company has promised to pay all her travelling expenses. Within the terms
of contract, it was also mentioned that these contracts are made within same year, July 2011 and
both of these contracts will end after 3 years on July 2014. As per contract law, it is essential for
parties to provide correct information who are entered into contract, in order to make the contract
valid. In July 2012, Agla has refused to obey the instruction of coach to play in tournament of
the century in Japan, where the total price money was RM 3 million and returned to Malaysia for
defending her title of Fictional Rojak champion, where the total price money was only RM
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50000. Secondly, due to less publicity in her second championship against her first tournament in
Japan, Sagla Ltd has breached the contract by refusing to pay her expenses of travelling from
Japan to Malaysia. Later on, Tennis player has also decided that she will not use Sagla's
equipment and ordered 10 “semi-precious stones” tennis rackets from Bitfirm Sdn Bhd, seller of
tennis equipment and it was decided to pay RM 5000 as consideration against the tennis rackets
but after the delivery of tennis rackets, Agla has decided to retire from tennis.
According to common law, there are basically six elements that needs to be fulfilled for
the formation and enforcement of contract between parties. In absence of these elements, a court
may find that a contract is not binding on the parties (Snedaker, 2013). It is important for the
parties in contract to consider all the elements in order to make the contract valid. These
important elements of contract are mentioned as follows:
 Agreement: The first and foremost requirement for a valid contract is agreement, which
normally consist of offer and acceptance (Bayne and Morris, 2012). In order to get offer
and acceptance to be occurred, there must be an offer communicated by one party to
another by settings out the terms and conditions. That offers must be accepted by
individuals prior to any withdrawal. In present case study, there was an existence of offer
between Agla and his coach Bagla that he will provide him coaching against
consideration of 20% of his tournament price money (Anandarajan, Anandarajan and
Srinivasan, 2012). Count offer with Sagla Ltd that she will use their tennis equipment for
their promotion and against it, company will have to pay her travelling expenses.
 Consideration: This is the next element of contract which implies that there is
requirement of valid consideration among the parties. It will be in the form of goods,
money, promise to do something or refrain from doing something. In present case, there
is an existence of consideration between Agla and other parties (van den Heuvel, Soeters
and Gössling, 2014). In first case, Tennis player is taking services of Bagla against
consideration of 20% percent of winning price money and promise to obey all
instructions. Secondly, she has also promised Sagla Ltd to use their goods against her
travelling expenses. In last case, Agla has also entered in to contract with Bitfirm Sdn
Bhd, to purchase 10 tennis rackets of semi precious stones at RM5000 each. Therefore, it
can be said that on ground of consideration, contract is valid.
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 Capacity: Most important element which states that parties to the contract must have the
legal capacity to enter into binding contract relationship. This can mean that people such
as minors, people with mental impairment and people who mental challenged are not
capable to enter in to a contract (Munch, 2012). According to minors (property and
contracts) Act 1970 (NSW), Section 8 clearly determines a minor as a person under 18
years of age. From general rule, minor is not bound by a contract except as provided by
the Act (Section 17). Beneficial acts are presumptively binding. In present case, Agla is
also having the age of 16 years and as per law, she is considered as minor (Peng, 2016).
She is not eligible to enter into contract and not bound to be in contract in case of menta l
health. In present case, Agla entered in contract with Bagla and she breached the contract
for which she is not bound to be in contract. Secondly, contract was breached by
company for which they are liable to pay consideration because Agla has not promised to
follow the instruction of company and denied to use their equipment after company's
refusal to pay her travelling expenses. In last case, Agla is also not bound to pay prices of
rackets as she is eligible to enter within a contract (Lawrence and Weber, 2014).
 Intention to be legally bound: This element implies that all the parties entering into
contract must have person intention to be legally bound with contract otherwise, contract
will be considered as valid (Formation, 2018). In present case, all the parties have
entered into contract with an intention to be legally bound (Sheehy, Stubbs and Tolmie,
2012).
 Formalities: It is also essential to have all the terms clear in the mind of parties and
requirement of all the formalities needs to be fulfilled by parties for the enforcement of
contract (MacLean, 2012).
 Certainty: It states that contract must be sufficiently certain as well as complete to
properly identify the rights and obligation of both the parties. In this, Contract of Agla
with Bagla, Sagla and Bitfirm Sdn Bhd was certain but she has breached the contract of
three parties (Schwenzer, Hachem and Kee, 2012).
Summary
From this analysis, it has been analysed all the elements of contract has been fulfilled by
parties but it was found that Agla is not eligible to enter into contract as per minority act 1970,
which states that person without having age of 18 years or above are not eligible for making
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contract and also not bound to accomplish the terms of contract except in some cases (Johnstone
and et.al., 2012). Therefore, in present scenario, Enforceability of Agla's contract with Bagla,
Sagla Ltd and bitfirm Sdn Bhd will not be valid.
Question 2
Above given case study concentrates on legal issue related to the wonder-net and Arrick.
In this case, Arrick considered that there is one innovation and he could develop momentum to
cross across the distance, but that time a small accident was happened with Arrick. Law states
that it was the responsibility of organisation to make their aware about all things that would be
dangerous for them. It was clearly written on the Ticket that there is no responsibility of park and
its employees if any damages will cause to individual due to their wrong actions. Case study of
Parker v South Eastern Rly Co has also provided an understanding that, it is the responsibility of
individual to read carefully regarding the clause but it is also important for the organisation to
provide information regarding the same so that customers are aware of steps that they should
consider. Wonder-net park needs to provide information to Arrick and needs to stop him from
that actions. In order to provide a complete understanding about the case, there is another case of
Olley V/S Marlborough court [1949] has been analysed. In this case, claimant has also booked in
to the hotel and the contract was made at the reception desk, where it was not mentioned about of
an exclusion clause. Within the hotel rooms, on the back of the door a notice sought to exclude
the liability of owners of hotel and its employees for any lost, stole, damaged property. In this
case, Coat of claimant was stolen in the hotel for which he has made claim against the hotel. The
judgement provided by the court in this case was that the motive was ineffective, the contract has
already been made by the time claimant has seen the notice. It will not thus form part of the
contract. This case is to be focus on some most important part are as follows :-
 Sign above ticket both.
 When was the ticket obtained.
 Focus on before contract.
All such factor is most important and focus on improve condition of the organisation. In this
way, location is most important to collect ticket and provide some extra facility to all ticket
collect persons. Arrick is doing big mistake is develop momentum to cross across the distance
in less time or collect the ticket (Marshall, 2012). Wonder-net is not responsible for such kind of
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accident. So, Wonder-net is not responsible for any kind of issue in any situation. In the same
other case, Olley V Marlborough court Ltd. in accordance with the case, it is the negligence of
the Olley that she left her key on a rack behind the reception. When she came back she found
that her coat was stolen from room. In for to form a contract, it is important to make sure that
proper agreement is taken from the side from all the parties (Divanbeigi and Ramalho, 2015).
As per the case of Hollier v Rambler Motors (AMC) Ltd. each time the customer visited
the firm signature was taken stating that any accident that take place firm will not be responsible.
Each time they used to take signature but one time they did not and that time fire took place
customer’s car caught firm (Loong, 2013). As the contact was not signed so per the clause that
was made, it was mentioned that the firm will not be responsible for any type of loss that is
faced. In this case, no problem is to be faced by Wonder-net, only there is one situation focus on
all the rule and regulation is to be provide by Wonder-net and use it (Hong, 2015). In this case
Arrick was sawn that there is one innovation and he could develop momentum to cross across the
distance, but that time a small accident is happened with Arrick and suffer ankle and scratches.
In this case, full based on the rule and regulation is to be provided on ticket. To read carefully
and use them, so no accident is to done. As per the above case follow guide line is most
important for each and every candidate any provide safety. In this case report focus on two or
more case as and example and to solve any misty and help them to Wonder-net. The judgement
provided in this case by the court was held that motive was ineffective, the contract has already
been made by the time claimant has seen the notice.
L E strange Vs Graucob [1934]
This case will provide understanding about the court of appeal which was made by the
claimant party who purchased a Cigarette vending machine to use in her Cafe. Moreover, order
was signed by her in which there was a statement in the small print that any expressed or the
implied condition, statements of warranty, statutory or otherwise is expressly excluded
(L’Estrange v Graucob [1934], 2018). Further, it was also found that the vending machine which
was purchased by the claimant was not working and she has decided to reject it under the sale of
goods act for reason of not being of the merchantable quality. Further, in the above mentioned
case the decision provided by the court has provided an understanding that while signing the
order form she was bound by all the terms contained within the form which irrespective of
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whether she has read the form clearly or not consequently her claim was complete unsuccessful.
Therefore, as per law the company is not liable to pay any amount of claim.
From the above analysis, it was clearly identified in the case that Wonder-net theme park
has clearly stated on their ticket window to look at your ticket (Mavrakis, Meagher and Hogan,
2017). It was also written on the ticket to see the written rules which states that any person chair
lift does so is entirely at his own risk and also assumes all the risks incidental thereto. Neither
wonderland nor its employees are liable for type og injuries sustained in the connection with the
riding on the chair lift. Thus, it can be said that arick is not entitled for any claim against
damages.
CONCLUSION
In this above report, it is concluded that business laws plays an important role in
regulation of business operations and other contracts. In first case, it was identified that there are
some important elements needs to be parties in order to enforce the contracts. First clearly
determines the Agla who was tennis players, was not eligible for contract as she was minor as
per minority act 1970. Law states that minors are considered as those persons who have not
covered the age of 18 years and not bound to be in contract of law.
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REFERENCES
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Johnstone, R., McCrystal, S., Nossar, I., Quinlan, M., Rawling, M. and Riley, J., 2012. Beyond
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Lawrence, A.T. and Weber, J., 2014. Business and society: Stakeholders, ethics, public policy.
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Loong, S., 2013. Legal protection of religious freedom in Australia [Book Review]. Ethos:
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MacLean, R., 2012. The Power of the Commonwealth Executive to Contract, Post Williams v
Commonwealth of Australia. Canberra L. Rev., 11, p.150.
Marshall, B.A., 2012. Reconsidering the proper law of the contract. Melb. J. Int'l L., 13, p.505.
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Peng, M.W., 2016. Global business. Cengage learning.
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Schwenzer, I., Hachem, P. and Kee, C., 2012. Global sales and contract law. Oxford University
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Sheehy, E., Stubbs, J. and Tolmie, J., 2012. Defences to Homicide Battered Women: A
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Online
Formation, 2018. [Online]. Available
through:<https://www.australiancontractlaw.com/law/formation.html>
Hong, C., 2015. “What are the elements of a contract?”. [Online]. Available
through:<http://www.hillhouse.com.au/legal-question/what-are-the-elements-of-a-
contract/>
L’Estrange v Graucob [1934], 2018. [Online]. Available
through:<https://webstroke.co.uk/law/cases/lestrange-v-graucob-1934>
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