Contract Law: Validity of Contract, Exclusion Clause and Consumer Rights

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

CONTRACT LAW1
Part A:
Issues involved:
Issue arising here that requires to be analyzed is in what manner the contract is being
created between Stan and the café.
Rules:
A contract is said to be validly created provided all the essential elements are available.
The essentials of a valid contract, legally enforceable are agreement, consideration together with
intention of the parties. Unless all these elements are present, no valid contract can result as
given in Ecosse Property Holdingds Pty Ltd v Gee Dee Nominees Pty Ltd1.
An agreement is usually denoted by a transaction where one party initiates a negotiation
for creating a contract by making an offer to the other party as laid down in Scammell v Ousten2.
The party who initiates the negotiation by making an offer is generally termed as offeror. The
other party here is termed as the offeree. Here the offeror expresses his desire or intention for
creating a contract by signifying the terms, conditions of it by making an offer which is
entrenched in Carlill v Carbolic Smoke Ball Co3. By means of the agreement, there exists a
coincidence of the minds of the parties which is given under the Latin maxim consensus ad idem.
Contract can never be created unless the parties are in sync to the agreement. Thus to result into
a valid agreement, an offer must be given.
1 Ecosse Property Holdingds Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12.
2 Scammell v Ousten [1941] AC 251.
3 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.

CONTRACT LAW2
However such offer is not same as invitation to treat. In case of an offer, the offeror must
be making a definite promise to the other party to convince him to enter into the contract.
However, in case of invitation to treat such certainty is not present. It is necessary to differentiate
between them as an agreement can only be triggered by an offer and not invitation. Invitation to
offer is generally made to the public whoever is ready to make an offer. Here the invitation is
made to unascertained person as seen in Westminster Estates Pty Ltd v Calleja4. In usual
scenario, in cases where services or goods are displayed to the public with price tags, invitation
of offer exists then as in Pharmaceutical Society of Great Britain v Boots Cash Chemists
(Southern) Ltd5. Moreover, in case an offer after acceptance an agreement results whereas when
an invitation to offer is accepted, offer is resulted with respect to such invitation.
Another element required for resulting an agreement is the acceptance by the other party
to whom the offer is made as in R v Clarke6. Such acceptance must satisfy three criteria, firstly it
must be unqualified, secondly it has to be unconditional and finally, it has to be communicated to
the offeror.
Acceptance shall absolutely correspond to the offer as in Crown v Clarke7. In case the
offeree specifies any additional conditions or terms on the offer made to him, then it does not
result into acceptance because it is not unconditional or unqualified instead it amounts to a
counter offer as in Hyde v Wrench8. Further the acceptance will not take place unless its
communication is made to the offeror as given in Felthouse v Bindley9. This is because
consensus ad idem will not occur unless the offeror comes to know that his offer is accepted.
4 Westminster Estates Pty Ltd v Calleja [1970] 1 NSWR 526; (1970) 91 WN (NSW) 222.
5 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6.
6 R v Clarke [1927] HCA 47, (1927) 40 CLR 227, High Court.
7 Crown v Clarke (1927) 40 CLR 227 (High Court).
8 Hyde v Wrench (1840) Beav 334.
9 Felthouse v Bindley [1862] EWHC J35, [1862] 142 ER 1037, High Court (England and Wales).

CONTRACT LAW3
After these are fulfilled, a valid agreement comes into existence and such agreement can be
legally enforced.
Second condition of the contract is the consideration as given in Australian Woollen Mills
Pty Ltd v The Commonwealth10. It is known that consideration is nothing but an exchange of one
promise for another promise. To support such exchange of promises, a consideration must exist
as seen in Popiw v Popiw11. The contract law requires the payment of price against the promise
or some other form of compensation. Here the offeree also called the promisee got the right of
enforcing the contract against the promisor or the offeror only when it has been agreed by the
promisee to pay or award some valuation or has paid or awarded the valuation against the
promise as asked by the offeror or the promisor. In any simple contract, there lie mainly two
promises and hence there will be two considerations.
Here the consideration must not be adequate or total but it has to be sufficient as found in
Chappell & Co Ltd v Nestle Co Ltd12. It means that a minimum amount will be sufficiently
forming a valid consideration though it may not be adequate. Services, goods and even money
are considered as valid consideration but vague promises, moral duties, discharge of any public
duty or current duty will not be considered as suitable consideration.
The fourth essential element of the contract is the parties’ intention to result into a legal
relation among the parties. Contract law provides that contracting parties must be having a
common intention such that the promises made by them can be enforced in a legal manner as
found in Rose & Frank & Co v Crompton13. For determining whether the parties have a legal
10 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 (High Court).
11 Popiw v Popiw [1959] VR 197.
12 Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87.
13 Rose & Frank & Co v Crompton [1923] 2 KB 261.