Contract Law and The Law of Negligence in Australia

This article discusses the essentials of contract law, including offer, acceptance, legal intention, consideration, and capacity. It also covers the law of negligence in Australia, including the duty of care, breach of duty, and damages. The article provides examples of relevant case law and defenses available to defendants.

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Contents
Solution............................................................................................................................................2
Topic 1 Contract Law.............................................................................................................2
Topic 3: The Law of Negligence in Australia.............................................................................4
Reference List..................................................................................................................................7

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Solution
Topic 1 Contract Law
A law of contract is a legal document which has the approval of law and which has forcibility of
law. When two or more persons or the entities desire to enter into private affairs and intends to
bind by the same then they can formulate a legal document and the parties are liable to comply
with the contractual terms that are decided by them. (Latimer 2016)
Any contract that is established amid the parties can be formulated when all the essential
components are complied with. The main essentials that are needed to form a contract are:
i. Offer – An offer is the statement or the proposal which is made by the offeror and
communicated to the offeree wherein the offeror expresses his desires which he
intends to be comply with by the offeree. An offer can be made either orally or in
written form or by conduct. It is only when the offer so made reaches the offeree that
a valid offer is made and is held in Carlill v Carbolic Smoke Ball Co (1893)
ii. Acceptance – The offeree when after receiving the offer gives his approval without
bringing any variations to the terms of the offer, then, it is an act of acceptance. An
acceptance can be made orally, in written form or by conduct. It is necessary that the
acceptance should reach the offeror to make it binding on the parties and is held in
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988)
iii. Legal intention – The parties who makes the contract must have the legal intonation,
that is, they are willing to comply with the terms of the contract legally and enforce
the contract in the court of law and is held in Balfour v Balfour [1919]
iv. Consideration- When the promises are made amid the parties, then, it is necessary
that the same must be combined with some form of benefit or gain which brings
enforceability to the contract and is called consideration and is held in Dunton v
Dunton (1892)
v. Capacity – The parties that are making promises must be capable, that is, they are not
barred by any law and must be of sound mind.
Thus, these are the main contract essentials that are needed to establish a contract.

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Now, whenever a contract is made amid the parties, then the contract can be verbal or written in
nature: (Suff 1997)
i. Verbal contracts – The contract that are made by the offeror and the offeree orally are
called verbal contracts. These contracts are also valid and enforceable provided all
contractual elements are complying with.
ii. Written contract – the contract which are in documentation or deed form are written
contract. All the terms are made part of the document in textual form. The terms are
easy to interpret as the same are not verbal and are in text form.
Whatever may be the form of the contract, the parties are liable to comply with the terms of the
contract. Now, the terms of the contract are bifurcated depending upon the importance they hold
in a contract. That is: (Latimer 2016)
i. Condition – The terms which are the heart and soul of the contract are called
conditions. These are the terms which are so relevant in the contract that if any party
makes a default in complying with conditions, then, the soul and essence of the
contract is loss and the contract stands no relevance.
If any condition is violated, then, the aggrieved party can cancel the contract and sue
the defaulting party for damages and is held in Poussard v Spiers and Pond (1876).
ii. Warranties – Those terms which are not the heart and soul of the contract and are
only needed to provide assistant to the main terms of the contract. These terms are
only needed for the proper functioning of the contract. If any party does not comply
with these terms, then, the aggrieved party can only ask for damages and cannot
cancel the contract and is held in Bettini v Gye (1876).
iii. In-nominate terms – These are the terms which are not considered as a condition or a
warranty but are considered as one deepening upon the importance it holds in a given
situation. The consequences depends upon how a term is treated in any given
situation and is held in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd
[1961].
Now, a contract can be a standard form of contract. It is a kind of contract wherein the terms and
conditions of the contract are not decided by the parties mutually, but it is one party to the

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contract that decides all the terms of the contract and gave an option to the other party to either
confirm t the contract or just leave the same. There is no room for any kind of negotiations amid
the parties. (Latimer 2016)
Now, whatever may be the form of contract, it is a settled law that once a contract is made it
comes to an end. But, there is no one single manner in which a contract to an end. There are
several methods that is: (Latimer 2016)
i. By performance – When the parties to the contract are able to achieve the purpose for
which the contract is established amid the parties, then, the parties have performed
their parts of the obligations and there is nothing left to do. Thus, a contract comes to
an end by performance of the contract.
ii. By agreement – At times before the contract purpose is achieved by the parties, the
parties decide to cancel the contract. Then, in such situation the parties by entering
into an agreement can decide to bring the contract to an end.
iii. By frustration – When the contract made amid the parties is valid and enforceable but
because of some supervening event the compliance of the contract becomes
impossible, then, the contract is considered to be ended on account of frustration. The
parties are willing to perform the contract but are not able to perform because of
impossibility.
iv. Breach of contract – When one of the party to the contract does not comply with his
contractual obligations, then, the non defaulting party has the power to terminate the
contract on account of breach of contract.
Thus, the formation of contract requires compliance of all contractual term but there are various
other elements which must also be comply with so that the purpose of formulating the contract
can be achieved.
Topic 3: The Law of Negligence in Australia
The law of tort is a very prominent law that prevails in very country. One of the most promising
laws that exist is the law of negligence. Negligence in simple words signifies failure to exercise
appropriate care in certain circumstances.

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In Australia, the law of negligence has its own place. The law of negligence simply submits that
‘a person should exercise reasonable care in their actions and take account of the potential harm
that they might foreseeable cause to other people or property. In the leading case of Donoghue v
Stevenson [1932] the law of negligence was developed. In Australia, the prevalence of the law of
negligence was found in Grant v Australian Knitting Mills [1936] which was later retreated in
Caparo Industries PLC v Dickman [1990]. (Latimer 2016)
The compilation of the results of all the leading cases has led to a conclusion that when any
defendant carry out any action or omission, then, the law has imposed him with a duty that the
defendant must make sure that no harm is caused to any plaintiff because of his actions and
omission. The leading case has established that in order to consider that a defendant is negligent
then there are few basic elements which are needed to be comply with. The same are:
i. Duty of care – The duty of care signifies that when the defendant decides to take any
action or omit any action then it is his duty that he must make sure that because of his
acts no person should be harmed who is considered to be his neighbor. In the leading
case Donoghue v Stevenson [1932] Lord Atkin has shed light on the concept of
neighbor.
It is submitted that any person who is directly affected by the acts and omissions of
the defendant is considered to be the neighbor of the defendant. Thus, any plaintiff is
considered to be the neighbor of the defendant only when such plaintiff shares a
relationship of proximity with the defendant. Thus, if the acts or omission affects the
plaintiff directly then he can be the neighbor of the defendant otherwise not (Baar v
Snowy Mountains Hydro-Electric Authority (1970).
Also, the defendant is not responsible to provide care to very neighbor of his, rather,
it is held in MacPherson v. Buick Motor Co. (1916) that protection is only granted to
such neighbors who can be reasonably foreseeable by the defendant.
ii. Breach of the duty of care – It is also submitted that any defendant can be held to be
negligent in his actions only when the duty of care that is imposed on the defendant is
violated by him. The duty is said to be violated by the defendant only when the level
of acre that is expected in the given situation is not met by the defendant. The level of
care falls short when the care that taken by the defendant is not what a reasonable

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man will do in the similar situation, the level of care varies on the situation, that is if
the plaintiff is old or a child then the degree of care is high; if the gravity of risk is
high then the care is high and vice versa. Thus, if the defendant falls short of the care
that is expected from him then there is breach on the part of the defendant
(Bonnington Casting v Wardlaw (1956).
iii. Damages – Once a breach is incurred by the defendant, then, the defendant is held to
be negligent only when there is some kind of damages that is caused to the plaintiff. It
is not for every damage the defendant is held to be accountable. The defendant is
accountable only for those kinds of damages that are reasonably foreseeable by the
defendant. if the damages that are caused to the plaintiff are too remote and is of such
a nature that no reasonable man can predict the incurrence of such kind of los, then,
the loss I remote in nature and the defendant is jolt liable for such kinds of losses.
Also, the defendant can be held liable for the losses that are caused to the plaintiff
because of the acts and omissions of the defendant. Thus, the cause because of which
loss is caused to the plaintiff is because of defendant’s acts and omission. If the loss is
caused is because of any other reasons, then, the defendant cannot be said to have
inflicted damage upon the plaintiff.
It is the duty of the plaintiff that all the elements of the negligent must be proved against the
defendant in order to hold him liable under the law of negligence.
However, the law of negligence has also granted protection to the defendants. If the defendant
can prove that the loss that is caused to the plaintiff is not because of the negligence of the
defendant alone, but the loss is caused because the plaintiff is also negligent, then, the defendant
can rely on contributory negligence. Also, if the loss that is caused to the plaintiff voluntary, that
is, the defendant has notified the plaintiff of the loss, then, the defendant ca protect himself under
the defense of voleti non fit injuria.
So, the law of negligence is very important and proper care should be applied to make sure that
all the elements are met to hold a defendant negligent in his actions.

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Reference List
Books/Articles/Journals
Latimer, P 2016, Australian Business Law 2016, Oxford University Press.
Suff, M 1997, Essential Contract Law, Cavendish Publishing.
Case Laws
Balfour v Balfour [1919];
Baar v Snowy Mountains Hydro-Electric Authority (1970)
Bettini v Gye (1876) 1 QBD 183;
Bonnington Casting v Wardlaw (1956).
Carlill v Carbolic Smoke Ball Co (1893);
Caparo Industries PLC v Dickman [1990] UKHL 2
Donoghue v Stevenson [1932];
Dunton v Dunton (1892)
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) ;
Grant v Australian Knitting Mills [1936]
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1961] EWCA Civ 7;
MacPherson v. Buick Motor Co. (1916)
Poussard v Spiers and Pond (1876) 1 QBD 410

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