Validity of Contractual Consideration and Breach of Contract under Australian Consumer Law

This presentation discusses the validity of contractual consideration and breach of contract under Australian Consumer Law. It covers the main elements of a contract, implied terms, and the consequences of invalid consideration. It also applies these concepts to two case scenarios involving Magda and Elton.

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Solution 1
A

Issue
Whether Magda and Avinash had a
valid contract?

Law
Main contractual elements includes:
Offer
An offer is the proposal made by an offeror to an offeree communicating his
desires with a hope of approval.
Iinvitation to treat are not offers
An offer can be revoked before the same is accepted.
An open offer must be supported with value to make it binding.
Acceptance
When the offeree confirms the offer then it is an acceptance.
If offer not accepted, but the terms of offer are changed, then, it is counter
offer.

Consideration
Anything of value which is required to support the offer and acceptance in
order to make them enforceable in law.
Legal intention
The parties must have legal intent to bind by the contract and enforce in law.
Capacity
The parties should be of sound mind and must be major.

Application
i. Magda sells her prints through website and studio.
ii. She offered ‘Paris Stilton’ for sale @ $2,000 with description- ‘a limited
edition of only 3 prints’. Only one was unsold.
Advertisement is not an offer but an invitation to sell.
On 19th February
ii. An offer by Avinash @$1,600.
iii. Magda reject offer and quote new offer @ $1800.
So, a counter offer which cancelled the offer of Avinash.
Avinash asks Magda to hold the offer till 21st February but without
consideration.

20th February
Avinash confirms the offer of Magda but require certificate of authenticity
that verified the portrait’s origin and status as a limited edition work.
So, offer by Magda on 19th is not accepted.
Additional term was incorporated.
So new counter offer was made by Avinash.
Magda is willing but require confirmation by 4PM.
No confirmation by Avinash by him 4PM on 20th February.
So, no acceptance is made by Avinash.
Magda revoked the offer at 11:30AM on 20th February.
Thus, the offer by Magda was revoked.

Conclusion
There is no contract that exists amid Avinash and Magda.
The offer by Magda was revoked by her before the acceptance of
Avinash.

B

Issues
– Whether Elton qualifies as a consumer?
– Whether Magda has breached any terms of the
contract?
– Whether Magda has made any misstatements?

Law
The Australian Consumer law is applicable
Section 3
A person is consumer if the goods are purchased
for consumption/persons use and the worth is
less than $40,000.

Implied Terms
Section 55
Goods must fit for the purpose so acquired.
Section 54
Goods acquired must be of acceptable quality:
i. free from defects,
ii. must be safe,
iii. durable,
iv. must fit the purpose for which it is supplied
Section 56
Goods sold on description must correspond with the
goods.

Section 18
No person in trade and commerce must engage in any misleading or
deceptive conduct against the consumer.

Application
Issue 1
• Elton has purchased the portrait for $2000,
which is less than $40,000.
• The portrait is not acquired for re sell rather
the same is used for personal use.
• Thus, Elton is a consumer as per section 3 of
ACL.

Issue 2
Various implied terms are voliated :
Section 56
The description given by Magda regrading the painting was not
true as the quality was very low. The colour of the portrait was
degrading.
So, the portrait actually supplied is not as per the description
provided;
Section 54
The portrait is not of acceptable quality.
Section 55
The purpose for which the portrait is acquired considering it
unique is not served.

Issue 3
Magda submitted that the portrait is ‘a limited edition of only 3
prints’ and only one was unsold.
But, about ten of the so-called limited edition prints of Paris
Stilton were sold to other buyers.
Magda during her business course has made statements that she
only had one edition, whares, she has 10 editions left, in order to
deceive and misled Elton so that he enters into contract with her.
Thus, there is violation of section 18 of ACL as misleading and
deceptive conduct is incurred by Magda upon Elton.
So, Elton can terminate the contract.

Conclusion
i. Elton is a consumer as per section 3
ii. There are violation of section 54-56 of ACL
by Magda.
iii. She also violated section 18 of ACL by
misleading and deceiving Elton.

Solution 2

‘Consideration provided under a
contract is not always valid. This
can have unfortunate
consequences for a party seeking
to enforce the ‘contract’.

Consideration
i. Consideration is the price paid by the promisor to make the promise
enforceable in law.
Ii. There should be some detriment on the part of the promisee.
Iii. Consideration must always be stipulated by the promisor to make it
valid;
iv. It must be sufficed and not adequate or illusionary.

A consideration makes a contract valid, but, at times consideration are not
valid:
Past consideration
A pre date consideration which is supporting any actions of future is invalid.
Existing duty
When a person is performing any existing duty which he is already liable to be
performed in an already existing contract.
Duty in law
When a person is performing a duty in law.
Part payment of debt
In exchange of full settlement of the credit amount is not found to be a good
consideration

Conclusion
Thus, at times considerations provided by the
parties considering it to be valid in law, but such
Consideration provided under a contract is not
always valid.
• Now, a contract is made amid Magda and Elton
wherein Magda agreed to gave the portrait in
exchange of $2000 which is a valid consideration
in law.
Thus, there is exchange of valid consideration in law.