Contract Formation

Running Head: Contract Formation 1
Contract Formation
Name of Student:
Name of Institution:
Name of Tutor:

Contract Formation 2
Question 1
Issue
Is the fact that Weitao did not read the term render the term inapplicable?
Rule
A person is bound by a term in a written contract provided the term was provided in
the contract irrespective of whether the person read the contract or not when he signed the
contract, L’Estrange v Gaucob1. The common law principle in L’Estrange is applicable in
Australia and was applied in determination of Peekay Intermark ltd and another v Australia
and New Zealand Banking Group Ltd2 and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd3. In
Toll (FGCT) Pty Ltd the contract directed an agent to read the term of the contract overleaf.
However, he ignored and just signed the contract. The contract and the terms were found to
be binding irrespective of whether the terms were read on not. The only circumstance a
person can escape the application of a signed contract is where there are vitiating factors such
fraud and misrepresentation4.
It is not a requirement that the terms of a written contract must be brought to the
attention of the signing party in order to be binding5. However, where the terms of a written
contract are provided in some other place or document other than the one being signed, the
party’s attention must be adequately brought to the existence of such terms. Otherwise they
will be held not to be apply.
Application
1 [1934] 2 KB 394
2 [2006] EWCA Civ 386
3 [2004] HCA 52
4 Paul S. Davies, JC Smith’s the Law of Contract (Oxford University Press, 2018) 18.
5Paul Latimer, Australian Business Law (CCH Australia Limited, 2011) 440.

Contract Formation 3
Waitao signed the contract without reading the note. The fact that he signed the
contract but failed to read the note in the contract is immaterial based on the holding in
L’Estrange and Toll (FGCT) Pty Ltd. The signature was an assent to be bound. There is no
fraud or claim of misrepresentation that is likely to vitiate the contract.
Conclusion
The fact that Waitao did not read the note is immaterial. Waitao is, therefore, bound
by the term on the note.
Question 2
Issue
Is the contract between Warren and Evelyn complete and capable of being enforced?
Rule
The essentials of an enforceable contract include, among others, its completeness6. A
party cannot enforce an incomplete contract. However, this will depend on whether the term
which has not been agreed on is essential to the contract or not. In Harvey v Pratt7 a lease
contract was held to be unenforceable due to incompleteness. The lease did not provide the
commencement date. In Anaconda Nickel v Tarmoola Australia Pty Ltd8it was stated that the
parties’ intention determine whether a particular term is essential or not. In Harvey parties
agreed on everything including the price to be paid, however, commencement was not
provided. The court found the commencement time to be essential. In this case scenario the
6 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 2011) 437
7 [1965] 1 WLR 1025
8 [2000] WASCA 27