Contract Law Essential Elements

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

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Q1A
The essential elements of a valid contract shall be discussed in this section (Knapp, Crystal and
Prince 2016). The section shall also examine the relation that existed between Avinash and the
café. To constitute a valid contract, the essential elements that need to be considered are:
Offer: the offer is defined as the promise to do an act in return for a consideration to constitute a
valid contract. the contract to be made enforceable, the terms of the contract need to be clear,
concise and not ambiguous (Kotz 2017). In the case of AGC (Advances) Ltd v McWhirter, the
court laid down the valid terms of the contract stating that to constitute a contract, the terms of
the offer cannot be incomplete (Moyle 2017). For a offer to be enforceable, the terms cannot be
uncertain. If the terms are not clear, the offer shall lose its essence and it will turn into an
invitation to treat (Hough and Kuhnel 2017). This was upheld in the case of Pharmaceutical
Society of Great Britain V Boots Cash Chemists(Southern) Ltd, where the court held that
when the goods are displayed on the shelves of a store, they do not constitute an offer but merely
an invitation to treat (MNNING 2016). Applying the same principles of offer and invitation to
treat in the present case, it can be held that the self service menu that was presented by the cafe
was an invitation to treat but when Avinash placed the order of pastry and the beverage from the
self service menu which was digital, an offer was constituted. Therefore, Avinash can be said to
be a valid offeror because he offered to pay in return of the orders to the cafe. The amount paid
to the cafe is a valid consideration.
Acceptance: acceptance is an important wheel in the contract because to constitute a valid
contract, it is essential that there has been an acceptance of the offer. Once an offer is accepted
by a party, it becomes legally binding but there are a few conditions that need to be met to

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constitute a valid acceptance (Sullivan and Hilliard 2016). The acceptance has to be clear from
all ambiguities and it has to be acceptance on the same line of the offer, that is, no changes can
be made to the already made offer. In cases when changes are made to an offer, it will be a
counter offer and not a valid acceptance (Fried 2015). In the case of Masters v Cameron, it was
held the acceptance has to be done in accordance with the terms of the offer. In the case of R v
Clarke, it was held that once a person has accepted the offer he should be fully aware of the
terms of the offer and the acceptance has to be done as per the terms of the offer. A silence will
not constitute a valid acceptance and the offeror cannot maintain silence. This was held in the
case of Felthouse v Blinley. The terms of the offer needs to be communicated to the offeror was
decided in the case of Powell v Lee (Bjorklund 2015). Applying the same rules to the present fact
scenario, it can be said that the cafe had accepted Avinash’s offer and the acceptance was done in
terms of the offer. The printed ticket given by the cafe can be considered a valid communication
of the offer. Therefore, Avinash got the printed ticket from the cafe which is a proof that the
acceptance was communicated to Avinash.
Intention of the parties to constitute a legal relation: the aprties need to have an intention to
create a legal relation and it was held in the case of Carlill v Carbolic Smoke Ball. This case laid
down the reasonable man test which held that the intention to create legal relation has to be
assessed from the point of a reasonable man and how he would have viewed the legal relation
(Wilkinson and Hoffman 2015). The Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty
Ltd held the objective test (McColl 2017). Applying both the tests held in the landmark
judgments, it can be said that both the parties, that is, the cafe and Avinash had the intention to
create a legal relation. The printed tickets prove that both the parties had the intention to enter
into a legal relation and they were aware of the terms of the contract.

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Consideration: Consideration the amount fixed by the parties which form the most important
element of a contract. The price is decided by the offeror for the fulfilment of a promise.
Chappell & Co Ltd v Nestle Co Ltd held that the promisor has to fix the promise and the case
also decided what constituted a valid consideration (Abrahamson 2014). Avinash paid the price
of the beverage and the food to the cafe. Therefore, the amount paid by Avinash can be
considered a valid consideration in return of the food. The conditions required to constitute a
valid contract has been upheld in the factual situation (Stone and Devenney 2017). A
consideration can be both paid in the present or as per agreement, a consideration can be paid at
a future date after the completion of the contract. In this case, the consideration as paid at the
moment, that is while purchasing the beverage and the food from the cafe.
Assessing the fact scenario, it can be said that all the valid constituents of a valid contract are
present and therefore there existed a contract between Avinash and the cafe. Both the parties has
acted in accordance to the terms of the contract and the essentials to constitute a valid contract
were present.
1(b) Issue: the issue is whether the cafe has to pay damages to Avinash or the cafe is bound by
the exclusion clause mentioned in the ticket.
Rule: Exclusion clause is defined as a term in the contract which restricts the liability of a person
who is already a party to the contract. With the help of the exclusion clause, a party can excuse
himself from any liability. The exclusion clause restricts the liability and the concept is essential
in the present fact situation. This principle was laid down in the case of L'Estrange v Graucob.
For an exclusion clause to be enforceable the parties need to be aware of the terms of the contract
and they should know about the exclusion clause while entering into the contract. In the case of

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Darlington Futures Ltd v Delco Australia Pty Ltd, it was held that the exclusion clause should
be given the same treatment like any other clause of the contract. What is important to consider
whether a reasonable notice of the exclusion was given or not to the other party is an important
matter of consideration (Lee and Tang 2015). The exclusion clause cannot be enforced
retrospectively and the parties cannot be said to be bound by an exclusion clause after they have
entered into the contract. The exclusion terms needs to be told to the parties at the time they are
entering into the contract (Andrews 2016). The parties need to be aware that an exclusion clause
exists between the parties and that they have signed the contract knowing very well that there is
an exclusion clause in the contract which shall bind the rights of the parties. Olley v
Marlborough Court Ltd held that exclusion clause cannot be enforced against the parties after
they have signed the contract. Hornton v Shoe Lane Parking held Ltd an exclusion clause at the
back of a ticket will not be construed as a restriction on the liability of a party. Section 3 of sch2
of Competition and Consumer Act holds that to be a consumer, a person has to consume any
good or service of an object whose amount does not exceed a sum of 40,000. To be a consumer,
the goods need to be consumed for personal or domestic purpose. Under section 64 of the
Australian Consumer Law that the terms of a contract can only be modified if they are aligned
towards the interests of the suppliers and aims to give them remedies relying on the terms of the
exclusion clause. The rights and warranties given to a party cannot be taken away by any terms
of the contract. By the provision of section 260 of the ACL, it can held that the manufacturer is
obligated to a customer to ensure that his services comply with the provisions of section 60 of
the Act.
Application: By applying the principles of L'Estrange v Graucob, it can be stated that Avinash
was not told about the exclusion clause and it can also be held that a valid contract was existing

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between the parties. Avinash was not aware of the exclusion clause that was mentioned in the
ticket. The exclusion clause cannot be said to be a restriction on the liabilities of the cafe and
they cannot escape liability. Any provision of law that takes away the consumer guarantee that
are accorded to a consumer will be considered a violation of section 64 of the ACL.
Conclusion: the exclusion clause cannot be said to be enforceable and the cafe cannot limit its
liability by showing that the exclusion was existing and therefore Avinash can claim damages.
Question 2
Contract term is the duties and obligations of the parties to a contract and the contract terms are
enforceable against the parties. A contract can be either written or oral or both. The terms of the
contract can be either express or implied and a valid contract can be both.
Implied terms: when the terms for the contract are not expressly mentioned but the terms of the
contract can be understood from the conduct of the parties, it is an implied contract. An implied
contract term is binding on the parties and the Court adjudges if the contract is valid and the
terms are essential for the performance of the contract. The Court will deem an implied term
enforceable if it understands that the terms of the contract are binding on the parties and such
terms of the contract are necessary for carrying out the functions (O’Leary 2017). This was held
in the case of Moorcock (1889) 14 PD 64. It was held in the case of Balmain New Ferry Co Ltd v
Robertson, it was held that the court understands the enforceability of an implied term from the
conduct of the parties and whether they have dealt in the past. From the trade and practice, the
implied contract terms can be concluded (Dressler 2015).

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Express term
An express term in a contract is provided in writing or a written contract is entered between the
parties.
Conditions
The terms of the contract are binding on the parties and non fulfilment of the terms of the
contract is considered to be a breach of contractual terms.
Warranties
In cases of non fulfilment of warranties, the party can claim damages but they are not considered
as important as conditions. If the warranties are not fulfilled, it is not that the contract does not
get affect but the ultimate goal of the contract may be affected.
Therefore, applying the same rule to the above mentioned factual scenario, it can be said that the
exclusion clause was invalid. Avinash ordered from the cafe and as per the terms of Avinash, the
cafe accepted the order. The order was placed by Avinash from the self service menu and
therefore, the terms were expressly mentioned. Both the parties were aware of the terms of the
contract and they were expressly known to them. Apart from the express term of the contract,
there was also an implied term which was implemented by the ACL. These conditions were not
expressly mentioned and they could be gauged from the conduct and the behaviour of the parties.
These implied terms can be held to be providing the consumer guarantee to Avinash.

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