Contract Law Issues 2022

RUNNING HEAD: CONTRACT LAW
Contract Law

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CONTRACT LAW
Issue
The main issue in the present scenario is:
a) Whether Alice McKinley (AM) is bound to pay extra sum to Winona Hyder (WH) as she
was forced to pay the new subordinate?
b) Whether she is bound to pay the sum due on the Lamborghini,
c) Is she bound to pay the sum owned to Grasping Bank (GB)?
d) In relation to the 2020 netball season, does she have any remedies against Netball Club
Pty Limited (NC)?
Rule
a) To bind a person in contract there must be agreement between parties and there must be
all essential elements of contract i.e. a valid offer and acceptance. Once a proposal is
acknowledged, it becomes promise. A promise accompanied by consideration becomes
an agreement and agreement that can be enforced by law, becomes a contract.1 Yet
another essential element of contract is capacity to contract. The general rule is that
contracts made by minor are not binding as they lack the maturity or knowledge to enter
into contracts hence they need protection. Minors who are below the age i.e. 18 years
lack the capacity to enter into contract.2 Contract entered into by minor are always void-
ab-initio, subject to certain exceptions. If the agreement is for the good of minor or
relating to employment then he can be bind to perform his promise. In the case of Roberts
v Gray3, a minor was found responsible for his failure to perform his promise for a tour
with the applicant who was billiard player. It was a contract for the benefit of minor. It
was further held by the court that the contract was executor and enforceable from its
inception.
b) If the contract made by the minor is for their benefit then such contract binds the minors
to contracts, leases and other dealings as per The Minors (Property and Contracts) Act
1 John W. Carter, Contract Law in Australia (LexisNexis, 2013) 1000
2 Minors (property and contracts) Act 1970 (NSW)ss. 8-9
3 (1913) KB 520, CA

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19704. It does not take into consideration the desire of parents or guardians as to whether
the agreement was to be created or not. A minor can be bound by ordinary transactions,
which are freely chosen by them in ordinary market conditions for example buying
something on credit or renting a car, but they cannot be hold responsible for the contract
that are unfair or exploitative. New South Wales (NSW) Fair Trading can attempt
solution where a minor believes that an unfair or exploitative has occurred. Those who
enter into contract with minor often require someone to give guarantee that minor fulfills
their part of the deal. Although, in all Australian jurisdiction all those contract which are
deemed necessities of life for the sale of or delivery of goods or services will bind the
minor except in New South Wales (NSW).5
c) There is substantial legislation in Victoria same as in NSW dealing with minor’s
obligation under contracts. The Supreme Court Act (s49)6 nullifies certain minors
agreement, these are:
 Agreements relating to repayment of money lent or lending of cash
 Agreements relating to payment of goods or services other than necessities
 Accounts stated
However, there are certain exceptions to it such as if the contracts are made for the
benefit of minor then it binds the minor for contracts, leases and other transaction. To
bind a minor into contract it is necessary to show that it was freely chosen by minor and
in ordinary transaction for example taking a loan. When a subject of permanent nature is
acquired by the minor attached with certain obligations like leasehold or share in
company or bank loan then he is obliged by the onuses as long as he holds the subject. As
in the case of London & North Western Railway v M’ Michael7, The minor was held
liable to pay the rent or calls on shares. The minor has option to rebut the contract at any
time throughout his minority and not after that.
d) Contracts made by the minor have no legal binding effect subject to certain exceptions
i.e. Firstly, Contracts for necessities and secondly, contracts relating to employment
especially sporting contracts. Whenever a contract for employment is made by minor
4 Minors (Property and Contracts) Act 1970 (NSW), s 6(1)
5 Sale of Goods Act 1895
6 The Supreme Court Act (VIC), 1986 s (49)
7 (1850) 5 Ex 114

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which is for his own benefit, then such contract has binding effect. This is how sports
organizations can safeguard their interests in obtaining youthful talent. However, clubs
need to make sure that contracts are for the advantage of the minor.8 If any terms of
contract are violated by the clubs or sporting organization without any proper cause then
it shall be deemed as breach of contract. Breach of contract means repudiation of contract
or failure by either party to contract to perform any promise without any legal excuse that
forms the main part of the contract. If either party breaches the terms of contract then the
other party can take action. Various remedies are available to the plaintiff for breach of
contract in NSW. The other party or the plaintiff has certain rights under laws for
example they can take action against the loss resulting from such breach. It is also known
as quantum merit. In this, the law considers that, something should be paid to the
innocent party for the obligations they have performed.9
Application
a) There were all the essential elements of contract. The agreement referred to
employment as it was for the benefit of minor. As applying the case of Roberts v
Gray, minor was held liable by court. Similarly, in the given situation, a contract was
for the advantage of minor as WH offered her to pay $20 in return of her services.
Since the contract was for the benefit of minor, she can be obliged to pay WH. WH
can also claim for damages for breach of contract.
b) As per the Minors (Property and Contract) Act 1970 minor can be compelled to
perform contract which was for his good. AM hired Lamborghini for her personal use
and did not paid any of the installments. In law, she can be compelled to pay the
installment as she hired the car for personal use. One can bind minor only if he enters
into contract freely and for his own benefit but cannot be held responsible for the
transaction that are unfair or exploitative.10 Those who do business with minor are
8 Daniel Reynolds and Lyndon Goddard, Leading Cases in Australian Law: A Guide to the 200 Most Frequently
Cited Judgments (Federation Press, 2016) 444
9 John W. Carter, Carter’s Guide to Australian Contract law ( LexisNexis Butterworths, 2011) 634
10 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013) 1103

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required to take guarantee for the deals done by the minor. In the present scenario,
AM hired Lamborghini for her personal use and benefit so she can be compelled to
pay the installment.
c) As per the Supreme Court Act (s49) which is similar to NSW laws, certain contracts
entered into with minor void for example agreements relating to repayment of money
lent or lending of cash or agreement relating to payment of goods or services other
than necessities.11 There are certain exceptions attached to it. As applying the case the
case of London & North Western Railway v M’ Michael, AM took loan for her
personal use and did not paid any of the installment, she can be obliged to pay
installments owned to GB.
d) Whenever a contract for employment is made by minor which is for the benefit of
minor, then such contract has binding effect. But, if either party to contract breaches
any terms of the contract, it shall be considered as breach of contract.12 In the given
scenario AM played for the NC for the 2017-2019 netball seasons. On 4 may 2019
while playing she injured her knee which was common injury that occurs to many
professional players. The doctors advised her that her knee requires surgery, as she
would not be able to play although such surgery was not urgent. NC was aware of
such effect. Furthermore, she was advised that she could play but only with pain killer
injections and severe physiotherapy. On 12 May 2019, NC informed AM’s new coach
that she will get a contract for the 2020 season only if she continues to take injections
and physiotherapy and if she continue to play form 26 May until the end of season.
AM’s new coach informed her about the same. AM continued playing for the rest of
matches with the pain killing injections and she also did all the physiotherapy. This
act of AM amounts to implied consent. On 16 July, NC informed that they do not
want her further to play 2020 season. This act of NC led to breach of contract. Once
the prosecution proved that all the elements of breach of contract are present then AM
can claim damages for:
 Delay in her surgery due to which she cannot find new club
11 The Supreme Court Act (VIC), 1986 s (49)
12 Jeannie Marie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law ( Thomson Reuters
Professional Australia Limited, 2016) 931

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 Due to lack of her match fitness, her career is jeopardized and lack of
experience for the 2020 season will make it very difficult for her to find
another club.
Conclusion
From the above it can be concluded that:
a) AM is bound to pay extra sum as she breached the terms of contract.
b) As AM hired Lamborghini for personal use and benefit she is obliged to pay
outstanding amount.
c) It is advised to AM to pay the installments owned to GB to avoid litigation.
d) AM can institute a suit for breach of contract and can claim remedies.

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Issue
The main issue in the present situation is whether the holder of Lamborghini can sue AM in tort
of negligence for the damage to the car or not?
Rule
S. 48 of NSW the Minors Act, 1970 (NSWMA), contains that a minor shall be held responsible
in tort whether or not such act may be interconnected with a contract or not or in element a cause
of action also in contract13. Although to establish case strong evidence are required to be proved
by defense to hold minor liable under tort.14 Under tort of negligence, the law takes account of
child’s age in determining the duty of care, which is expected from a child of a same age,
experience, and level of understanding. If the injury is minor then there is no use of filing a case
against minor due to lack of their assets or property. However if the liability for negligence or
significant injury is covered by insurance policy or other household then the different
considerations apply.15 The child must be of adequate age to shape the appropriate intention for
deliberate torts. However, it is a defense in common law for the defendant to show that the
complainant completely understood the danger of injury that materialized and chose to embrace
it voluntary, this is known as Volenti non fit injuria in law of tort.16 The owner of the car knew
that the defendant is minor and does not have driving license still he lent car.
As in the case of Madigan v Hughes & ORS17, a young boy aged 11 years met with an accident
when he rode his bike across a tinter section and sustained severe injuries. The child contravened
the usual traffic rules. The court in this case applied the principle laid down in the case of
McHale v Watson and Fellows18. Important factor were considered to prove the applicant degree
13 NSW the minors (Property and Contracts) Act 1970 s (48)
14 Jennings v Randall (1799) 101 ER 1419
15 Amanda Stickley, Australian Torts Law ( LexisNexis Butterworths, 2013) 681
16 Pamela Stewart and Anita Stuhmcke, Australian Principles of Tort Law (Federation Press, 2017) 722
17 [1999] NSW SC 183.
18 (1966) HCA 13

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of responsibility. It was held by the court that the standard of care is an objective to be measured
when a child is involved in an accident and held the child liable.19
Application
As per the s 48 of the Act a minor can be held liable in tort if the act was intentional or
foreseeable.20 The defense to establish his case must show standard of care and fault element at
the instance of minor. As in the case of Madigan v Hughes & ORS, the boy was held responsible
for the accident by the court. Similarly, in the present situation AM without having a driver
license hired a Lamborghini and smashed the car into tree. This act of her amounts to negligence
in tort. However, the owner of car can also be held liable in volenti non fit injuria as he lent his
car to minor without driving license.
Conclusion
Thus in the above situation, the advice for owner of car is to raise a claim of negligence against
AM before the court and can claim damages from AM. However, he would have to be prepared
for getting the pecuniary compensation reduced based on the proportion of his volenti non-fit
injuria.
19 Kirsty Horsey and Erika Rackley, Tort Law ( OUP Oxford, 2013) 618
20 NSW the Minors (Property and Contracts) Act 1970 s (48)

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Bibliography
A Books/Journal/Articles
Carter, John W. Contract Law in Australia (LexisNexis, 2013)
Carter, John W. Carter’s Guide to Australian Contract law (LexisNexis Butterworths, 2011)
Gibson, Andy and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
Horsey, Kirsty and Erika Rackley, Tort Law ( OUP Oxford, 2013)
Paterson, Jeannie Marie, Andrew Robertson and Arlen Duke, Principles of Contract Law
(Thomson Reuters Professional Australia Limited, 2016)
Reynolds, Daniel and Lyndon Goddard, Leading Cases in Australian Law: A Guide to the 200
Most Frequently Cited Judgments (Federation Press, 2016)
Stewart, Pamela and Anita Stuhmcke, Australian Principles of Tort Law (Federation Press,
2017)
Stickley, Amanda Australian Torts Law ( LexisNexis Butterworths, 2013)
B Cases
Jennings v Randall (1799) 101 ER 1419
London & North Western Railway v M’ Michael (1850) 5 Ex 114
Madigan v Hughes & ORS [1999] NSW SC 183
McHale v Watson and Fellows (1966) HCA 13
Roberts v Gray (1913) KB 520, CA

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C Legislations
NSW the Minors (Property and Contracts) Act 1970
The Supreme Court Act (VIC), 1986
Sale of Goods Act 1895