Contract Law Case Study: Eddie and Elise, Jack Jones and Retirement Village

This case study discusses the legal issues and rules related to contract law in the context of two scenarios. The first scenario involves Eddie and Elise, and the second scenario involves Jack Jones and a retirement village. The article provides a detailed analysis of the legal issues and concludes with a summary of the key findings.

1
Contents
Solution 1.........................................................................................................................................2
Brief facts.....................................................................................................................................2
Issues............................................................................................................................................2
Rules.............................................................................................................................................2
Analysis........................................................................................................................................4
Conclusion...................................................................................................................................6
Solution 2.........................................................................................................................................6
Brief facts.....................................................................................................................................6
Issue.............................................................................................................................................6
Rules.............................................................................................................................................7
Analysis........................................................................................................................................8
Conclusion...................................................................................................................................9
Bibliography..................................................................................................................................10

2
Solution 1
Brief facts
Eddie is interested in selling his digital surround sound system to Elise. However, he does not
intent to sell his compact disc player along with the system. There are series of communications
that are exchanged amid the two with the help of letter amid 1st – 8th October. On the basis of
such exchange of letter there are two main issues that are raised.
Issues
i. What are the rights that are available to Advise Eddie and Elise?
ii. Is Eddie obliged to wait until the 8th October to sell his digital surround sound system
to Elise?
Rules
A contract can be formulated amid two or more parties provided all the legal requirements which
are needed in the formation of a contract are comply with. A contract is normally an agreement
which has the enforceability of law. An agreement is the combination of an offer and an
acceptance and this agreement must be combined with legal intonation and capacity of the
parties along with consideration is required to make a contract enforceable in law.
When an offeror communicates his intention to the offeree with a hope of confirmation then it is
an offer in law. In (Carlill v Carbolic Smoke Ball Co, 1893) it was held that an offer can be made
to an individual or to a group of persons or to the world at large.
The offeree when gave his approval to the offer then it is an acceptance in law. An acceptance
can be made against the offeror and nothing else ((R v Clarke , 1927). In (Manchester Diocesan
Council, 1970) if the acceptance is required to me made in specified time then any acceptance
after the time is in valid in law. (Collins, 2003)
Also, it is necessary that when an acceptance is made then it is considered to be complete and
valid only when it comes in the knowledge of the offeror. If the offeror is not aware of the
acceptance, then, there cannot be any agreement and is rightly held in (Empirnall Holdings Pty
Ltd v Machon Paull Partners Pty Ltd, 1988)

3
When an offer is made then the acceptance so made against such an offer must be the mirror
image of the offer. But, when acceptance is made by the offeree by changing the terms of the
offer then it is not an offer in law, rather, it is considered as counter offer and which can cancel
the original offer and is rightly established in (Hyde v Wrench, 1840). But, mere enquiry is not
counter offer and does not revoke the original offer ( Stevenson Jacques Co v McLean , 1880)
(Latimer, 2012)
Normally when an offer is made by one party then it is upon him to decide as up to what time the
offer needs to be stand valid and existed for the offeree to accept the same. It is upon the offeror
to close the offer. However, many a times an offeror is obligated to keep the offer open provided
there is some kind of consideration which is given by the offeree to offeror. This is called an
option or open offer and is rightly held in the leading case of (Dickinson v Dodds, 1876).
The general rule is that whenever an acceptance is made then the same must be made and must
be communicated to the offeror in order to make an agreement with the offeror. But, this basic
rule is different when the letter of acceptance is made through post. In (Tallerman & Co Pty Ltd
v Nathan's Merchandise , 1957), the acceptance is considered to be valid when the letter of
acceptance is posted by the offeree. There is no need that the letter must reach the offeror.
Further, in (Dickinson v. Dodds , 1876), if the offeror wants to revoke his offer then the
revocation must reach the offeree before the competition of the acceptance. If acceptance is
made before the revocation of offer reaches the offeree then there is a binding contract amid the
parties.
Consideration is the element which makes an agreement enforceable in law. Every agreement
must be supported with an agreement and is held in (Currie v Misa , 1875). It was submitted that
when an offer was made for a specific time frame then it is open to the offeror to revoke such
offer before the completion of the time frame. But, if the offeree gave some consideration to
keep the offer open then the offeror cannot revoke the offer for such time duration.
Apart from the other elements there must be presence of legal intention of the parties and that the
parties to the contract must be capable to make a valid contract with each other.

4
Analysis
Issue 1
Eddie, on 1st October writes a letter to Elise that he is interested in selling his system to Elise
@$3500 but she must communicate her acceptance by 8th October otherwise he will sell the same
to some other person.
As per (Carlill v Carbolic Smoke Ball Co, 1893), Eddie has made an offer to Elise which is open
till 8th October. Thus, if Elise makes an acceptance to the offer of Edie by 8th October then there
is a valid contract between the two.
Thus, there is a valid offer that is made by Eddie to Elise.
The letter is received by Elise on 3rd October. On the same day Elise writes a letter to Edie
specifying that she is interested in buying the sound system offered by Edie. Elise also agrees
that the price that is charged by Edie is also fair. However, she submits that she cannot afford to
buy the compact disc and thus is enquires whether Edie could include the compact disc player in
the price of $3500.
It is submitted under the leading case of (Hyde v Wrench, 1840) that if an acceptance is made
which is not in compliance with the offer terms then it is counter offer. But, there is no counter
offer that was made by Elise, rather, only an enquiry was made by Elise to the offer of Edie.
Thus, as per ( Stevenson Jacques Co v McLean , 1880) there was no acceptance that was made
by Elise and the offer of Edie remains still intact. Elise is still permitted to accept the offer of
Eddie provided the same is not revoked by Eddie before the acceptance.
The letter posted by Elise on 3rd October reaches Eddie on 5th October and he believes that Elise
is not willing to pay $3500 for the system without the compact disc player. Eddie on 5th October
posts a letter of revocation of offer to Elise specifying that he is not willing to sell his system and
is trading off for the new system on 8th October. This letter was not received by Elsie till 8th
October. It is submitted that the offer which is made by Eddie must be revoked by him before the
same is accepted by Elise. If an acceptance is made before the revocation then there is valid
contract amid the two. The offer can only be revoked when the letter of revocation which is
posted by Eddie on 5th October comes in the knowledge of Elise.

5
Later Elise decided to accept the offer that was made by Eddie on 3rd October. On 4th October,
Elise posts a letter of acceptance to Eddie confirming the offer that was made by him. As per
(Tallerman & Co Pty Ltd v Nathan's Merchandise , 1957) the acceptance made by Elise is
completed as soon as the letter of acceptance was posted. The letter was not received by Eddie
till 9th October. However, it makes no difference as the acceptance was validly made on 4th
October itself. Further, the acceptance was made by Elise before the letter of revocation is
received by her. The letter of revocation did not receive by Elise before 9th October and the
acceptance is made by her on 4th October. There was immediate acceptance.
Thus, Eddie is not allowed to trade his system.
So, there is a binding contract between the parties and Elise has a right to Eddie for the breach of
contract.
Issue 2
It is submitted that generally Eddie is not obliged to wait until the 8th October to sell his digital
surround sound system to Elise. However, if Elise has given some form of token money to keep
the offer to remain open then Eddie cannot revoke the offer. However, there was no token money
that was given by Elise to keep the offer open. Thus, by applying the law as laid down in
(Dickinson v. Dodds , 1876) it is submitted that Eddie is not obligated to keep the offer open till
8th October. There is no consideration that is moved from Elise to Eddie to consider this option
and thus it is upon Eddie to revoke the offer even before the expiry of the deadline, that is, 8th
October.
Conclusion
Thus, Elise can sue Edie for breach of contract. Also, Eddie is not obligated to keep the offer
open till 8th October as there was no consideration that was provided by Elise.
Solution 2
Brief facts
As per the facts, Jack Jones was a Fremantle cabaret artiste. He established a contract with the
manager of one of Perth's biggest retirement villages. As per the contract he would put a 2 hour

6
show every Wednesday afternoon at $250 per performance at the village for six months. But, the
contract was established as a mark of " mutual respect and friendly cooperation".
Issue
Would the retirement village succeed if it sued Jack Jones for breach of contract ?
Rules
When any contract is made then the main contract essentials include offer, acceptance, and
capacity, considerate and legal intention. It is on the presence of all the contractual elements that
a contractual relationship can be established amid the parties and the parties are bound to the
terms of the contract. (Latimer, 2012)
An offer is the prime element that is needed for the formation of contract, an offeror makes an
offer to an offeree. The offeree when gave his approval to the offer then it results in the
formation of a contract. But, an offer ad acceptance only results in the formation of an
agreement. There are few other ingredients that are also needed for the formation of a valid
contract and one of the most important elements is the presence of the legal intention
The presence of legal intention is very much required to make the contract enforceable in law. If
the parties to the contract do not intent to abide by the contract legally then such a contract has
no relevance in law.
Legal intention in any contractual relationship implies that the parties to the contract are willing
to abide by the terms of the contract legally. That when any dispute is incurred amid the parties,
then, the parties to the contract are willing to go to the court of law and decide their dispute as
per the rules and norms of the law of the country. The intention must be to abide by the law and
to the terms of the contract under the scanner of law.
This legal intention is found in all kinds of contract whether it is commercial or domestic. But,
there are few basic prepositions that are found in relation to legal intention in both domestic and
commercial contracts.
Generally, in domestic contracts, the parties is presumed to have entered into contractual
relationship and there is no presence of legal intention and is held in (Balfour v Balfour , 1919)
wherein the husband promises to pay a certain sun of money to his wife if she remains to live in

7
England. After some time the husband stopped paying the amount, the court held that the wife
cannot claim anything from the husband as the arrangement amid them was a domestic
relationship and thus the contract amid them is not enforceable in law. Also, in the leading case
of Jones v Padavatton [1969], Padavatton was a woman who was living in United States of
America with her son. She was doing great at her job and salary. The mother of Padavatton ,
Jones, inteds that her daughter should leave the United States of America, come to England and
become a barrister and in exchange of the same she is ready to give $200 per month to her. On
the pretext of the mother, Padavatton agreed. However, there was no agreement that was made
amid the parties. The mother took a house wherein she permitted her daughter and her son to
live. The court held that there is no contract that is established amid the parties. The intentions of
the parties were not legal and they established the arrangement on the pretext of family relations.
Thus, since the relationship amid the parties is domestic in nature thus there cannot be any kind
of contractual relationship amid the two.
On the same note, in commercial arrangements it is presumed that the parties to the contract wish
to comply with the terms of the contract legally and such a contractual arrangement has full
relevance in law and is held in (Esso Petroleum Ltd v Commissioners of Customs and Excise,
1976) wherein it was submitted that the contract is legally bound as the intention of the parties
determine so. (Adams, 1997)
But, in the leading case of ( Simpkins v Pays , 1955), it was found that a grandmother, her
granddaughter and their paying guest entered into a newspaper contents. They all agreed that the
prise money if any is awarded to them then the same will be distributed amid all of them.
However, later when the prise money was awarded it was refused to be divided on the basis that
the arrangement was domestic in nature. It was held that even though the arrangement was
domestic in nature still all the parties have legal intonation to abide by the contractual
arrangement legally. Thus, the general presumption is rebutted and the parties must divide the
prise money considering the same as a commercial contract.
Likewise, the general presumption that underlines the commercial contracts, that there must be
presence of legal intention can be rebutted. The general presumptions can be rebutted in law and
is held in n (Rose & Frank v Crompton, 1923). In the leading case the appellants and the Rose
entered into a commercial agreement but it was specificity mentioned as one of the term of the

8
contract that the parties are willing to abide by the contract legally. Thus, it was held that if the
parties can prove that they do not intent to abide by the terms of the contract legally even if the
arrangement is commercial then such contract lacks legal intention of the parties and thus is not
enforceable in law.
Also, if the parties to the contract can prove that though the parties establish a domestic or family
relationship but still wish to comply with the terms of the contract legally, then, such family
contractual relationship has legal validity in law and the contract is enforceable in law (Merritt v
Merritt , 1970). Likewise, if the parties can prove that they hold commercial relationship but
does not intent to abide by the same, then, such contracts are not enforceable in law.
Analysis
A written contract was made. In is submitted that is presence of offer, acceptance, and capacity
of the parties and consideration of $250. However, one of the prime elements that is needed in
the formulation of a contract, that is, intention of the parties was not present.
The fact reveals that the contract contains statement that every Wednesday afternoon at $250 per
performance at the village for six months. Rather, they merely had a mutually satisfying
arrangement of " mutual respect and friendly cooperation".
A commercial contract was entered amid Jack Jones and the manager of one of Perth's biggest
retirement villages, but, such commercial contract has no legal intention. Generally Jack was
charging fees for the his performance and thus on the basic looking of the facts it is revealed that
the contract that is made is commercial in nature. However, it is also found that when the
contract was drafted the parties to the contract, that is, Jones and manager of one of Perth's
biggest retirement villages, has established that they are only entering into the said contract on
account of family co-operation and mutual respect. Thus, by adding these words the parties have
converted the commercial contract on a non commercial contract specifying their intentions to be
not to be bound by the contract legally but to establish the contract on the mark of mutual respect
and cordial relationship. Thus, as per (Rose & Frank v Crompton, 1923), the presence of legal
intention was rebutted making the contract non binding in nature.
Thus, Jack Jones had only performed five of the shows when he was offered an engagement on a
large international cruise ship operating out of Singapore for 24 months. Jack Jones stopped

9
doing the show without notice. However, since there was no legal contract that was established
amid the parties thus the manager cannot sue Jack Jones. Jack Jones can prove that since the
contract that was made amid them was specially excluding their legal intonation, thus, there
cannot be any contractual relationship amid the two and the contract cannot be enforced in the
law in any manner whatsoever.
Thus, evidence are provided which established that a commercial contract is not treated as one
by proving that the intention of the parties are non commercial in nature.
Conclusion
It is submitted that there was no contractual relationship amid the manager and Jack Jones as
there was no presence of legal intention.

10
Bibliography
Simpkins v Pays (1955).
Stevenson Jacques Co v McLean (1880).
Adams, M. (1997). Australian Essential Management Law. Routledge.
Balfour v Balfour (1919).
Carlill v Carbolic Smoke Ball Co (1893).
Collins, H. (2003). The Law of Contract. Australia: Cambridge University Press. .
Currie v Misa (1875).
Dickinson v Dodds (1876).
Dickinson v. Dodds (1876).
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988).
Esso Petroleum Ltd v Commissioners of Customs and Excise (1976).
Hyde v Wrench (1840).
Latimer, P. (2012). Australian Business Law 2012. Australia: CCH Australia Limited.
Manchester Diocesan Council (1970).
Merritt v Merritt (1970).
R v Clarke (1927).
Rose & Frank v Crompton (1923).
Tallerman & Co Pty Ltd v Nathan's Merchandise (1957).