Case Study about Contract Law 2022

Running head: CONTRACT LAW
Contract Law
Name of the Student
Name of the University
Author Note

CONTRACT LAW1
Introduction
An ambiguity lies with the issue that whether a contract should have a formal
documentation enumerated with all the terms as well as conditions for the purpose of
attaining the status of legal enforceability. However, there are certain instances where any
contract that has been instituted as an informal agreement by way of verbal negotiations can
result into a legally enforceable contract. In many cases, the individuals agree upon and
negotiate certain terms to an agreement informally before enumerating them in a formal form
and signing the same. The terms of the contract that has been resolved between the parties to
an agreement by negotiation is generally enumerated by the parties to the contract in a formal
document, which has been duly signed by them for the purpose of recoding the same. The
parties negotiating a contract might also make an informal draft of the terms they have agreed
upon. Whether such an agreement would attain the status of a legally enforceable contract is
to be assessed under the light of the motive of the parties negotiating to effect legal
relationship through their agreement. For the purpose of assessing the motives of the person
to effect a legal relationship, the courts are required to assess the preciseness of the
contractual terms that has been enumerated in a written form and the fact that whether the
terms that has been disputed has been incorporated express clause or wording.
A contract is required to contain four essential elements for the purpose being rendered as
valid. These include offer that has been accepted, consideration that valid, motive of the
parties to be bound legally as well as certainty of the contractual terms. There are certain
situations, where the written agreements fail to attain the status of a contract. One such
situation has been faced in the case of Masters v. Cameron (1954) 91 CLR 3531. In this case,
it has been considered by the court that the document involved can be treated as an express
1 Masters v. Cameron (1954) 91 CLR 353

CONTRACT LAW2
contract of effecting the sale or it has been an agreement of negotiation, which needs to be
followed while performing the contractual agreement.
This case involved an agreement that has been created between two parties for the sale of
a property, which was supposed to be fit for farming. The contract between Cameron and
Masters has been initiated with the memorandum in a written form. The words “This
agreement is made subject to the preparation of a formal contract of sale which shall be
acceptable to my solicitors on the above terms and conditions.” has been included in the
memorandum. Subsequent to this event, a payment of $1750 has been made by Masters to an
individual who has been working as the agent of Cameron, a real estate company. However,
there was a change of decision on the part of Masters and he has made a refusal to continue
with the contractual obligations. There has been a claim for damages by both the parties to
the contract following a breach. The contention made by Masters was the return of the money
he has already paid and as justified his claim with the contention that it was an agreement and
not a valid contract. However, Cameron has claimed a valid contract to have been already
created between them and claimed the money paid by Masters to be retained.
In this case, the courts has been presented with the issue that whether the memorandum
that has been drafted has been effective in forming a legally enforceable agreement or it has
been evidencing a mere instrument presenting the negotiations that needs to be given the
form of a contract. It has been concluded by the trial court that memorandum is a conclusive
record of a valid contract. However, this decision has been overturned by the High Court. It
has been contented by the High Court that a memorandum cannot have the effect of
concluding a contract that has legal enforceability. It has been explained by the court that
signed documents can be of three forms. Firstly, there are certain documents relating to the an
agreement in which the parties have reached the final stage of negotiation, the parties has
reached at a conclusion to form a contract and parties have agreed to conclude the contract