Contract Law and Australian Consumer Law

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Contents
Answer 1.....................................................................................................................................................2
Issues I.........................................................................................................................................................2
Law..........................................................................................................................................................2
Application of Law..................................................................................................................................3
Conclusion...............................................................................................................................................5
Solution 2....................................................................................................................................................5
Issue II.....................................................................................................................................................5
Law..........................................................................................................................................................5
Application of Law..................................................................................................................................6
Conclusion...............................................................................................................................................7
Solution 2....................................................................................................................................................7
Reference List............................................................................................................................................11

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Answer 1
Issues I
i. Is a contractual relationship that exits amid Annie and Joe for the sale/purchase of
single core CPU?
ii. If a contractual relationship exists then can Joe sue Annie for any kind of remedies?
Law
An agreement which is when combined with legal intention, capacity and consideration results in
the formation of a contract. An agreement is established when there is a valid offer reciprocated
by a valid acceptance.
The offeror when transfers or communicates certain terms to the offeree which he wish to be
obeyed by the offeree, then, such transfer of terms is called an offer in contract law. The terms of
the offer must be clear and must be communicated to the offeree to consider the offer as
complete and binding and is held in Gibson v Manchester City Council1. In the leading case of
Carlill v. Carbolic Smoke Ball Co2 the court held that an offeror has the right to make the offer
either to a particular person, or class or group of persons or to the general public but whomsoever
it is made, the offer must be communicated to make it a valid offer in law3.
Now, when the offer is communicated to the offeree, then, it is the duty of the offeree to either
affirm the offer so made or does not comply with the offer terms. But, when the offeree desires
to agree with the offer terms then the offeree can either orally, in writing or by conduct express
his desire of affirmation and this affirmation is called acceptance in law. It is very necessary that
some sort of expression must be carried out by the offeree to communicate the acceptance. If the
offeree desires to accept the offer but remain silent then it is no acceptance and is held in
Felthouse v Bindley4.
Generally, when the offeror makes an offer and if he also clarifies the way and manner in which
the acceptance to be made, then, it is necessary that the said manner specified by offeror must be
comply with in order to consider the communicate of acceptance and is held in Latec Finance
1 Gibson v Manchester City Council - CA [1978] 1 WLR 520
2 Carlill v. Carbolic Smoke Ball Co (1891).
3 John W. Carter, Contract Law in Australia (LexisNexis Butterworths, 2013).
4 Felthouse v Bindley (1862).

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Ltd v Knight5. In Crown v Clarke6 it was held that no other mode is allowed but slight changes
are allowed and when the offeror comes in the knowledge of the acceptance results in a binding
agreement.
But, the rule is slightly different when the acceptance is made by post. The acceptance is deem to
be complete against the offeror when the letter is put into transit and not when the letter finally
reaches the offeror and is held in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd7.8
However, at times, the offeree instead of affirming to the offer wish that some variation must be
bought in to such terms by incorporation of new terms in the offer or changes or to bring changes
to the existing term, then, it is not an acceptance and is called counter offer. A counter offer
cancels the offer. The counter offer made by the offeree is the only new offer that prevails9. But,
when the offeree does not bring any changes to the offer but seek additional information in
relation to the offer then it is not counter offer and is held in Stevenson Jaques & Co v McLean10.
When a binding contract is made then the parties to the contract must comply with its terms.
Non performance of the terms results in breach of contract and the aggrieved party has the right
to seek damages. If the term violated is the root term of the contract, then, it is a condition and
the contract thus be terminated and damages can be claimed. If the term is not the root term then
only damages can e ascertained.
The rules related to offer, acceptance, and counter offer, postal acceptance rule is now applicable
to the facts of the case to resolve the issues rose.
Application of Law
Issue i
Joe is dealing in the business of computers and is operating a store for the repair of the
computers in the name of ‘Connect Computers’ (CC). CC enters into a contract with WPS
(Whittlesea Primary School) for the delivery of 150 computers for $45,000 by 31st June 2018.
5 Latec Finance Ltd v Knight (1969)..
6 Crown v Clarke (1927) 40 CLR 227.
7 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
8 MIK, Eliza, ‘The Effectiveness of Acceptances Communicated by Electronic Means, Or – Does the Postal Acceptance Rule
Apply to Email’ (Journal of Contract Law, 2009).
9 Hyde v Wrench (1840) Beav 334.
10 Stevenson Jaques & Co v McLean (1880)

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Joe is need of 75 CPUs so that the contract with WPS be completed. He called Annie (friend)
who is operating an IT supply business for the supply of the CPUs. Annie, on 12th February 2018
sent a email to Joe specifying that she can gave 75single core CPUs @4,000. The email is sent
along with a form and if Joe confirms the quote then the form must be printed and send and be
return within 7 days.
The email by Annie to Joe is an act of offer which is made by Annie (offeror) to Joe (offeree).
the offer is made along with the mode in which the acceptance is to be made. So, Joe must make
sure that the acceptance must be made as desired by Annie within 7 days.
However, Joe was not happy with the single core CPU. On 12th February, Joe request Annie to
gave the price for the quad-core CPUs so that he can compare the process of both the kinds of
CPUs. A request is also made that the original quote should be kept open for 14 days. Now as
per Stevenson Jaques Joe has made request but no changes are made to the original offer of
Annie. So, there is no acceptance by Joe neither any counter offer is also made by Joe.
Annie, on 16th February sent a quote for 75 quad-core CPUs @ $12,000. This mail is just a reply
to the request that is made by Joe and there is no cancelation of the offer from the side of Annie.
Now, Joe on 16th February, Joe prints and sign the order form and post the same. By posting the
form an acceptance is made by Joe and the contract is made amid the parties on the 16th itself and
is held in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd.
So, there is a valid contract amid the parties.
Issue ii
Annie sold the stock of CPU to Pear and does not deliver them to Joe. On 18th, she emails to Joe
that she can only supply the CPU until August. Now, because of non supply of CPU by Annie,
the contract with WOS is not concluded and Joe has to purchase the CPUs from the market
@7,000.
So, the supply of CPU was the root term of the contract amid Annie and Joe, since Annie did not
comply with this root term, so, Joe can cancel the contract and sue Annie for the damages that
are suffered by him, th at is, $3,000 ($7,000-$4,000).