Understanding Contract Law Essentials

This assignment focuses on fundamental contract law principles. It requires an in-depth understanding of contract formation, essential elements, and vitiating factors that can impact the validity of a contract. Students need to demonstrate their knowledge by analyzing relevant case studies such as *Carlill v Carbolic Smoke Ball Co* and *Hadley v Baxendale*. The assignment emphasizes legal concepts like offer, acceptance, consideration, and remedies for breach of contract.

Running head: CONTRACT LAW
Contract Law
Name of the student
Name of the university
Author note

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Table of Contents
Topic 1.........................................................................................................................................................2
Topic 2.........................................................................................................................................................4
Topic 3.........................................................................................................................................................5
Topic 4.........................................................................................................................................................9
Topic 5.......................................................................................................................................................12
Topic 6.......................................................................................................................................................14
Topic 7.......................................................................................................................................................17
Topic 8.......................................................................................................................................................19
Topic 9.......................................................................................................................................................20
Topic 10.....................................................................................................................................................23
Bibliography...............................................................................................................................................24

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Topic 1
Part 1
1. Specific performance is an order which is made by the court to make a party do a specific
act.
(i) Specific performance order can be made in relation to a sale of land
(ii) It cannot be made n relation to sale of care1
2. Court will not awards specific performance when compensation and other damages can
compensate the loss
3. The purpose of an injunction is to prohibit a person form doing an act
4. The purpose for damages in the breach of contract is to ensure that the aggrieved party’s
initial position when the contract has not been entered into has been restored.
5. Punitive damages are provided in case of extreme breaches and negligence whereas
compensatory damages are awarded for personal injury claims not very serious2.
6. The damages which are awarded for the breach of contract are
Repudiation
Compensation
Injunction
Specific performance
Part 2
1 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
2 Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases and materials. Wolters
Kluwer Law & Business, 2016.

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1. Hadley v Baxendale case provides through its two limbes that Damages of contract must
be fair and reasonable arsing from ordinary course of dealing and the other party must
have special knowledge in relation to special circumstances for damages to be allowed3.
2. In Hadley v Baxendale- the defendant caused injury to the plaintiff. Special instructions
have been provided by the plaintiff to the defendant. Court held that damages can be
provided where such communication was made.
In Laundry (Windsor) Ltd v Newman Industries Ltd plaintiff made a claim for
extraordinary damages. it was held by the court that only ordinary damages could be
provided.
3. an injured plaintiff cannot claim interest as damages for breach of contract as per
Hungerfords v Walker as it is not consistent with the two limbs of Hadley v Baxendale.
4. The Liquidated damages clause cannot be always enforced by a contract. They are only
applicable when the damages are equal to the best estimates of the parties.
5. Duty of mitigation is the duty imposed on contractual parties to reasonably mitigate the
harm which can be caused to each other4.
6. No damages for emotional distress is contract law cannot be claimed as provided by the
case of Michigan Supreme Court, in Kewin v Massachusetts Mutual Life Ins Co.
7. quantum meruit’ is a reasonable money paid in relation to a contract.
8. issue
can Jane claim damages from Tom
rule
Hadley v Baxendale
3 EWHC J70, (1854) 156 ER 145
4 Kötz, Hein. European contract law. Oxford University Press, 2017.

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Application
All losses are reasonable
Conclusion
She can claim all losses.
Topic 2
Part 1
Question 1
The first idea is correct as complicated contracts have to be in writing. This is to avoid any
uncertainty in the future in relation to the terms of the contract. The second idea is not correct as
it is a simple contract and would cause inconvenience for both the parties and such dealings are
usually conducted by trade custom5s.
Part 2
Question 1
There is a contract as per Balfour v Balfour6 in case of the bank because there was an intention to
create a legal obligation. There is no contract as per Merritt v Merritt7 in relation to mum as the
intention of creating a legal obligation was not present in the case.
Question 2
Domestic arrangement – there was contract- no, the agreement was serious to be enforceable
5 Dressler, Joshua. "Problem in the Contract Law Bundle PAC." (2015).
6 [1919] 2 KB 571
7 [1970] EWCA Civ 6

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Domestic arrangement- there was a contract-no, the plaintiff was party despite family
relationship
Commercial arrangement- intention of being legally bound- yes, the honorable clause rebutted
the presumption
Topic 3
Question 1
Invitation to offer
Offer
offer
counter offer
offer
supply of information
offer
inquiry
acceptance
rejection of offer
Question 2
issue

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Whether there is a contract between Jane and Tarzan
Rule
In the case of Pharmaceutical Society of Great Britain V Boots Cash Chemists ( Southern)Ltd
(1953) 1 QB 4018 distinction between offer and invitation to a treat had been provided.
Application
The advertisement made by Tarzen was invitation to treat as it has the same facts as was present
in the case discussed in the rules. The case provided that where the offer is not complete it is an
invitation to treat.
Conclusion
There is no contract
Question 3
(a) case of offer and acceptance
(b) argument that there was no intension
(c) induced a person to get into contract
(d) No, unless complete
(e) Yes
(f) To the world at large
(g) Induce by the offer and complete it terms
(h) to use the product and get the disease- communication
(i) yes
8 (1953) 1 QB 401

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(j) objective test
(k) it means contract occurring by one party9
Question 4
Issue
Is the offer made by Bill valid
Rules
Carlill v Carbolic Smoke Ball Co10 is related to offer, acceptance and unilateral contract. the
case ruled that the offer can be made to the world at large. A valid offer has been made or not is
determined by applying the objective test. Acceptance does not have to be communicated
traditionally where there is an unilateral contract11.
Application
The boys were induced by the offer according to the principles provided by the objective test
Acceptance made by principles of unilateral offer
Conclusion
Offer is valid and the contract is binding in the parties
Question 5
Issue
9 Klass, Gregory. "A Critical Assessment of the Empiricism in the Restatement of Consumer Contract Law." (2017).
10 (1893) 1 QB 256
11 David Parker, Gerald Box., Business Law for Business Students, Lawbook Company, 2013

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Was there a valid contract
Rule
Adams v Lindsell12 - postal rule- as soon as letter posted acceptance is made and not when the
letter actually reaches the offeror
Application
The acceptance was made on 9th July because the letter had been posted in that day itself.
Conclusion
Valid contract as proper acceptance had been made.
Question 6
Issue
Was there a binding contract
Rule
Masters v Cameron13 contract is binding on the parties where there is a special condition
Application
In first case no special condition
In second case special condition
Conclusion
12 (1818)106 ER 250
13 (1954) 91 CLR 353

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Contract in second case and no contract is first case.
Question 7
Yes I agree because it is normal to have such correspondences before a contract is formed and
without correspondences the meeting of minds cannot take place.
Topic 4
Question 1 A
a) No,
b) Yes
c) Yes
d) Yes, in most cases
e) Yes
f) yes
g) yes
h) yes
Question 1 B
No, there is a valid contract
Question 2
Issue
Can Jim Sue Huyen for breach of contract

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Rule
Condition is the most important terms of the contract and if such term is not complied with the
parties whose right have been violated can rescind the contract.
Application
The term of the car being serviced was a condition
Conclusion
Jim can sue Huyen
Question 3
Issue
Can terry sue Dave
Rule
Promissory estoppels - Williams v Roffey Bros & Nicholls14 according to this case equity would
intervene to provide compensation to a party who acted upon the promise made by another
person
Application
The doctrine would be applicable in the case
Conclusion
Terry can sue Dave
14 (1991) 1 QB 1

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Issue
Can Sam claim the remaining 300 from Tom
Rule
Pinnel’s case – consideration – in this case a universal principle has been provided by the court
according to which part consideration was not considered as good consideration15
Application
In first case Sam can claim the outstanding as per rules of part consideration
In second case Sam cannot claim the outstanding amount as per rules of of pinnel case as the box
of chocolate may be considered as a consideration against the remaining amount.
Conclusion
Sam can in 1st situation and cannot in 2nd situation.
Question 5
Issue
Whether Lulu has to pay the different rent
Rule
Promissory estoppels and consideration
Application
15 Poole, Jill. Textbook on contract law. Oxford University Press, 2017

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The doctrine of promissory estoppels would intervene
Conclusion
She does not have to pay different rent
Question 6
A valid contact exits even when the consideration has been paid in part16
Topic 5
1. Express terms in a contract are those terms which have been agreed by the parties to the
contract in an expressed way either written or oral. The terms have been incorporated by
thee consent of both parties.
2. The three classes of terms which can be found in a contract are
 Condition – the most important term of the contract
 Warranty- the less important term of the contract
 Innominate terms – different then the above two approaches
3. In the case of Poussard v Spiers and Pond17 the tem found by the court was condition
because it was the fundamental term of the contract. in the case of v Guy18 the terms
found by the court were warranties as they were less important terms of the contract.
4.
(a) Yes, the contract has a condition precedent
(b) Yes, the contract is subjected to the parole evidence rule
(c) No, the price is a condition and not warranty
16 Ayres, Ian, and Alan Schwartz. "The no-reading problem in consumer contract law." Stan. L. Rev. 66 (2014): 545.
17 (1876) 1 QBD 410
18 (1876) 1 QBD 183

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5. As per the parole evidence rule when a verbal contract is documented any term which is
excluded from the documentation is not binding on the parties to it. Exception where the
contract was both oral and written
6.
(a) the verbal assurance provided was that there was no termites in the house
(b) the contract was both written and oral
(c) that whether the written contract is complete or not
(d)
(i) That a verbal promise had been made
(ii) The written contract is not complete, verbal promise constitutes contract
7.
(a) Yes, the contract entered upon by the parties had an effect of a collateral contract in
relation to the drains
(b) It was promised by the landlord that of the tenent entered into a contract the condition
of the drain would be fixed.
(c) The parole evidence rule as there was a written contract in the given situation
(d)
(i) collateral contract is a contract which is formed along with the primary
contract with respect to an additional promise
(ii) There was an additional promise. The party relied on the promise to get into
the main contract
8.
Issue

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Can Marcel make a claim against Yvonne for contract breach
Rule
Third exception of parole evidence and collateral contract- Van de Esschert v Chappell-
according to this rule a collateral contract can be breaded as a consideration for the
original contract as is binding in the parties.
Application
There is a collateral contract
Conclusion
Marcel can sue Yvonne
Topic 6
1.
(a) according to the test provided in the case of ---- if a document is signed it becomes
binding legally even where they are not aware of the terms if there was no fraud or
misrepresentation by the other party.
(b) In the case there was an exclusion clause present in the contract between the parties.
In the given situation the exclusion clause was triggered as the dress was not taken care
of. The court in this case ruled that the clause was not valid as the incorporator has
misrepresented the effect of the clause on the other party to the contract.
2.
(a) some examples of unsigned documents that may contain exclusion clauses are train
tickets or notice visible in a shop.

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(b) yes, if such clause has been duly communicated to the other person before the
contract had been made.
(c) firstly the clause has to be consistent with law. It has to be brought to the notice of
the party clearly before the contract is formed.
(d) in the case of Olley v Marlborough it had been ruled by the court that the notice is
relation to an exclusion clause has to be provided before the contract is entered upon by the other
party
(e) in the case of Balmain New Ferry Co v Robertson it had been ruled by the court that
exclusion clause can be incorporated through regular method of dealings however the use of
signs is not valid if its complex.
(f) an exclusion clause can be incorporated through regular method of dealings if the
parties are using the services often and are aware about the dealings of the company.
(g) in the case of Hollier v Rambler Motors (AMC) it had been ruled by the court that
Actual notice is different from constructive notice. However constructive notice cannot account
out of 1-2 transactions in 4-5 years.
3.
(a) According to the rule where a term which has been incorporated by a party to the contract is
ambigious, the court interprets the term against the party who has incorporated such terms into
the contract.

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(b) The rule has been employed in the case of White v John Warwick & Co Ltd 19 because the
term which had been incorporated by the defendant was ambigious and to the detriment of the
plaintiff.
(c) yes consumer warranties cannot be excluded through the use of an exclusion clause
4
Issue
Can barry make a claim for damages against the hiring firm
Rules
The clause has to be brought to the notice of the party before the contract is valid. Any clause
which is not duly communicated to the party or communicated after the contract is formed is
void.
Application
The rules were not followed and the clause is not valid
Conclusion
Barry can make a claim for damages against the hiring firm
part 2 and 3
1.
 Implication in law
19 [1953] 1 WLR 1285

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 Implication by fact
 Implication by custom
2.
(a) Right to claim repair, replace, refund or compensation
(b) Breach of section 56 of the ACL related to sale by description of Goods20
(c) Consumer right
(d) Provisions related to unconscionable conduct
3. The goods are of a value of less than $40000 or else the goods are used for household and
domestic purpose
a.
(i) Covered by ACL
(ii) Covered by ACL
(iii) Covered by ACL
(iv) Not covered by ACL
(v) Covered by ACL
(vi) Covered by ACL
b. The goods are of a value of less than $40000 or else the goods are used for household
and domestic purpose
c. No, exclusion clauses are not valid in consumer contract
Topic 7
1. Innocent misrepresentation is a kind of misrepresentation which is not made
intentionally. The element of intention is required to determine whether the
20 ACL at section 56

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representation is innocent or fraudulent. Thus if the representation is innocent the party
must prove that they had no intention of doing so.
2. Voidable means that aggrieved party of the contract can rescind the contract on its wish21.
3. The case of case Bissett v Wilkinson22 established that providing opinion in a fair manner
cannot be considered as misrepresentation.
4. In case of Fraudulent misrepresentation the aggrieved party would be able to make
rescind a contract as well as claim compensation. In case of innocent misrepresentation
the aggrieved party can only rescind the contract23
5. The right to rescind may be lost when the other person was aware of the fact that the
misrepresentation is being made by the other person.
6. Yes a failure to provide a material fact about a contract can also lead to misrepresentation
7.
(a) No misrepresentation as statement of opinion cannot be considered as a
misrepresentation
(b) Yes, the act of the seller would result in fraudulent misrepresentation
(c) No, the situation would not account to misrepresentation as per the rules of
exceptions to misrepresentation
8. Issue
The issue in this case is whether a contract has been breach and whether there is an act of
misrepresentation
Rule
Collateral contract
21 Chen-Wishart, Mindy. "The Nature of Vitiating Factors in Contract Law." (2015).
22 [1927] AC 177
23 Houh, Emily. "Sketches of a Redemptive Theory of Contract Law." Hastings LJ 66 (2014): 951.

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Misrepresentation
Application
Collateral contract was formed
Misrepresentation took place
Conclusion
The claim from breach of contract as well as misrepresentation can be made
c) yes the act would be applicable in this case under section 18 of the ACL related to
misleading and deceptive conduct24
9. yes the act would account to deceptive and misleading conduct under section 18 of the ACL
as well as misrepresentation under the provisions of common law.
Topic 8
1. Minors, person who are not mentally ill but are not in a sound mind when the contract is
entered upon, those who are restricted by Law
2. The court generally hold the contract which have been entered upon by a minor as void
ab initio. This means that no contract with a minor can be formed. However there are
certain exception to the rules which include contract for necessities and beneficial
contract for employment
3.
(a) No, in the given situation the contract which is entered upon with John is not
enforceable because John is a minor irrespective of how he looks.
(b) Yes, in such situation the contract would be binding as john needs such goods for
basics consumption and would result in a contract for necessities.
24 ACL at section 18

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4. No, as a 16 year old the contract would not be enforceable as such a contract does not fall
within the exception and minors do not have the capacity to get into a contract.
Illegality
1. No a contract can be void for various reasons such as capacity and inappropriate
consideration however all contract which have a illegal objective are considered as void
contract and cannot be enforced by law.
2. The contract to hire a criminal for the purpose of Assaulting someone would be illegal as
assault is a criminal act as per the penal code and therefore a contract to do so would also
be deemed an illegal contract.
3. Yes, all illegal contract are unenforceable by law.
4. Yes a tem of the contract can be declared void by a legislation or if it is not consistent
with a legislation. Such as the inclusion of exclusion clause is illegal in consumer
warranties contract by the Australian Consumer Law.
Topic 9
1. The contract which is entered upon by parties is void (Res Extincta) as there is no consent
between the parties in case of common mistake under common law as per Couturier v
Hastie (1856) 5 HL Cas 673. RES SUA- contract to purchase thing belonging to self is
void. In case if mistake of quality the contract is void as per Cooper v Phibbs25. In case of
unilateral mistake the contract is not void if there is only error of judgment as stated in
Webster v Cecil26
2.
25 (1867) LR 2 HL 149
26 (1861) 30 Beav 62.

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Common mistake- The mistake made by both parties where subject matter of the contract did
not exists at all.
Unilateral Mistake - Where the parties are not present when the contract was negotiated. The
mistake was in relation to one party of the contract.
Mutual Mistake- This is a kind of mistake when there is a failure on the part of both the
parties to the contact to understand each other.
Duress
1. The three types of duress are Physical duress, Duress by Improper threat and Economic
duress
2. The contract is voidable on the operation of the party who has entered into the contract
due to duress.
3. In this case it had been ruled by the court that the person who has been forced to enter
into a contract due duress can rescind the contract even in case the duress was not the
motivating factor in relation to the contract.
4. The use of economic pressure in an unlawful manner to force a party to get into a
contract which they would have not entered into otherwise is regarded as an economic
duress27.
Undue influence
1. Undue influence is the process through which a person uses his position to take
advantage over another person and makes him get into a contract.
27 Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.

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2. Undue influence is presumed to have taken place in relation to contract which those who
are in a position of influencing the party to get into a contract which may be detrimental
for such party.
3.
Issue
Is the transfer of property belonging to Maria likely to be set aside.
Rule
Undue influence
Application
Under influence has taken place
Conclusion
The property transfer would be set aside.
Unconscionable conduct
1. There was a contract between a farmer and his son who was having financial
problem. The contract was declared to be under Unconscionable conduct.
2.
(a) The father had made guarantees against the son’s loan from the commercial bank.
Held that Unconscionable conduct took place because of a special disadvantage.
(b) The factor used by court was special disadvantage
(c) The bank should have considered the special disadvantage
3.
(a) unconscionable conduct under the ACL is stated under section 20, 21 and 22

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(b) The three elements analyzed by the court include bargaining power of the parties,
understanding capacity of the weaker party and the degree of good faith involved
in dealing28.
(c) Remedies for unconscionable conduct include financial penalties, compensation
of damages, contractual rearrangements, refund and recession of contract.
Topic 10
Discharge
1. A discharge of contract is the process through which the contract is brought to an end by
the parties to it and no longer has any effect.
2. A contract can be discharged by performance, Repudiation and frustration
3. Yes the contract in this case would be discharged by frustration. This is because the event
which took place was beyond the control of both the parties to the contract. Yes a refund
can be obtained under such situations29.
28 MacQueen, Hector, and Joe Thomson. Contract law in Scotland. Bloomsbury Publishing, 2016.
29 Hunter, Howard. "Modern Law of Contracts." (2017).

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Bibliography
Adams v Lindsell (1818)106 ER 250
Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.
Australian Competition and Consumer Act 2010 (Cth)
Ayres, Ian, and Alan Schwartz. "The no-reading problem in consumer contract law." Stan. L.
Rev. 66 (2014): 545.
Balfour v Balfour [1919] 2 KB 571
Bissett v Wilkinson [1927] AC 177
Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256
Chen-Wishart, Mindy. "The Nature of Vitiating Factors in Contract Law." (2015).
Cooper v Phibbs (1867) LR 2 HL 149
David Parker, Gerald Box., Business Law for Business Students, Lawbook Company, 2013
Dressler, Joshua. "Problem in the Contract Law Bundle PAC." (2015).
Hadley v Baxendale EWHC J70, (1854) 156 ER 145
Houh, Emily. "Sketches of a Redemptive Theory of Contract Law." Hastings LJ 66 (2014):
951.
Hunter, Howard. "Modern Law of Contracts." (2017).

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Klass, Gregory. "A Critical Assessment of the Empiricism in the Restatement of Consumer
Contract Law." (2017).
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases
and materials. Wolters Kluwer Law & Business, 2016.
Kötz, Hein. European contract law. Oxford University Press, 2017.
Landa, Janet Tai. "A Theory of the Ethnically Homogeneous Middleman Group: An
Institutional Alternative to Contract Law." Economic Success of Chinese Merchants in
Southeast Asia. Springer Berlin Heidelberg, 2016. 121-136.
MacQueen, Hector, and Joe Thomson. Contract law in Scotland. Bloomsbury Publishing,
2016.
Masters v Cameron (1954) 91 CLR 353
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Merritt v Merritt [1970] EWCA Civ 6
Pharmaceutical Society of Great Britain V Boots Cash Chemists ( Southern)Ltd (1953) 1 QB
401
Poole, Jill. Textbook on contract law. Oxford University Press, 2017
Poussard v Spiers and Pond (1876) 1 QBD 410

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Stone, Richard, and James Devenney. Text, cases and materials on contract law. Routledge,
2014.
Webster v Cecil (1861) 30 Beav 62.
White v John Warwick & Co Ltd [1953] 1 WLR 1285
Williams v Roffey Bros & Nicholls (1991) 1 QB 1