Memorandum of Advice on Existence of Contract

Running head: BUSINESS LAW
BUSINESS LAW
Name of the student
Name of the university
Author note

1BUSINESS LAW
Memorandum of Advice
To
Samantha
Subject: Existence of contract
Respected Madam,
Considering the situation faced by you, certain issues have been cropped up and all
the applicable rules are mentioned in the beneath:
Issue:
According to the statements made you, the nature of works of your company (i.e.
Business Acquisition) allows you to make contract with the companies’ development works.
In this present case, an agreement has been made with Rigby Corporate Function Planners
Pty Ltd. (RCFP). The companies have agreed certain terms and conditions and before the
final contract, the company has asked you to stop the further proceedings and it has been
stated that they can discontinue the process, as there is no contract made between them.
Therefore, the main issue that has been arisen in the case is to determine whether a contract
has been made between both the parties or not. Further, it is required to be decided whether
any pre-contractual negotiation has been made in this case or not. This memorandum of
advice will make your queries resolved and you will be able to find out all the answers of the
issues positively.
Rule:
According to the legal definition of the contract, it is an agreement, where the
provisions are legal in nature and imposed mandatorily on the parties to the contract. Under
the principle of common law, a contract can be of written or verbal. Further, not all the

2BUSINESS LAW
agreements are contract. There are certain elements such as agreement, consideration, and
legal capacity of the parties and intention of the parties. It has been held in Masters v
Cameron1 that in certain time, the pre-contractual negotiation has also formed the part of the
contract. Further, in Coal Cliff Collieries v Sijehama2, court has decided that if the terms of
the pre-contractual negotiation have been agreed between the parties, they could be enforced
between the parties and the negotiation agreement will be binding in nature. In GR Securities
P/L v Baulkham Hills Private Hospital P/L3, the intention of the parties has been supported.
There are certain cases, where the preliminary contract could be enforced legally.
Application:
Considering the above noted rules, it can be stated that the terms and conditions of the
pre-contractual agreements can also form parts of the contract. However, certain rules are
required to be maintained in this case. Three rules are mentioned in Masters v Cameron,
where the legal nature of the negotiating terms have been pointed out. They are as follows:
i. The pre-contractual terms are legal if the terms and conditions of the contract are
valid and clear and the parties have the intention to be bound legally in the
subsequent proceedings;
ii. The pre-contractual terms are legal where the parties have made their relevant terms
and they have no intention to make any additional changes regarding the implied and
express terms and make formal documents thereto;
iii. The pre-contractual terms are not legal if the parties have no such objective to
conclude the bargaining process before the formation of any formal contract.
1 (1954) 91 CLR 353
2 (1991) 24 NSWLR
3 (1986) 40 NSWLR 631