The Nature and Importance of Contract Law

Law

TABLE OF CONTENTS
ISSUES RELATED THE CASE.....................................................................................................1
RULES AND PRINCIPLES ...........................................................................................................1
APPLICABILITY IN CASE LAW.................................................................................................3
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................5

ISSUES RELATED THE CASE
The case is related with determination of law regarding, placement of an advertisement in
newspaper and response to the same by different parties. The law which is relevant for given
scenario is contract law. With determination of all terms related with an agreement and a valid
contract this case will be proceeded.
Facts related with this case are: - an advertisement was placed on 1st February by Swan
Valley Pty Ltd (SVP)giving discount on sale of its special categories of fruits. Offer was given to
sale mandarins at a price starting at $40 per carton containing 20 kg per carton. It was also
mentioned in the advertisement that big discounts can be availed on bulk orders. Inquiries were
to be made to Ms Citrus either through call or fax number mentioned in advertisement. For this a
reply was given by Best fruit to accept the offer through fax to purchase 20 cartons for $20. After
that on 4th Feb. reply was given by Lin’s fruit to purchase 200 cartons of Mandarins for $2000
including GST and delivery. For same Ms Citrus replied on 6th that they accepted their offer but
payment must be in cash or cheque payable on date of delivery and will not include delivery
charges.
This was accepted by Lin's Fruit on 8th Fab through a mail. On 10th Feb, Lin and Citrus
had a phone conversation and send her the copy of letter mailed on 8th. Both parties agreed to the
fact that delivery of Mandarins would take place on 1st March.
RULES AND PRINCIPLES
Contract law:
For a contract to be valid and legally enforceable must reflect that two parties have
agreed on same terms and without any force involving sufficient consideration. Parties can show
that contract was entered through an offer and acceptance.
1. Offer:
An offer can be defined as a communication which amounts to promise for 'doing
something' or' not to do something' (Smith, 2018). An offer can be made to a specific person,
group of individuals or even to the world at large.
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Invitation to deal:
An offer must be distinguished from a deal. The first thing which is important to check is
that whether the party making the advertisement have an intention to give a rise to agreement in
case affirmative response is received. Or it simply results in further negotiation.
Advertisement as an offer:
In general, the court does not count an advertisement as a legal offer which can
constitute a valid contract. They are considered as invitations to a deal for further negotiation.
Advertisement made shall contain a language which is not vague and contains any ambiguity.
For the fact, if an advertisement is given with full understanding about what it is offering with
complying all legal and federal laws, and constructed it as an offer and acceptance, it can be held
as valid offer.
Advertisement to be considers as offer:
 advertisement significantly defines its terms such as description, quality, quantity and
price.
 Communicated to specific person or group of persons (limited group of people) circumstances are prevailing that offerer have an intention of entering into a contract.
Counter offer: an offer that give rise to new term or condition becomes a counteroffer. This
means to add, limit or change some or all condition of original offer (Australian Contract Law,
2018). A binding contract is entered when counter offer is accepted by the offeree/buyer which is
enforceable on part of seller /offerer.
 Negotiation
Among several forms of counter offer one is negotiation which includes
acknowledgement from the seller about the delivery dates of products or services. There are
three options available with buyer to response to counter offer:
1. react to another counter offer
2. accept it
3. reject it
There is no limit on number of counter offer, but each shall present a price which is less
than the previous offer. This reveals the fact that both parties have an intention to finalize the
offer and are near to it.
Case law: Carlill V carbolic Smoke ball co
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In this law suit, Carbolic company put an advertisement to pay 100-pound award to those
who suffered from cold and influenza by using smoke balls for 3 times a day. Mrs Carlill on
seeing this purchased smoke balls and caught flu after using it. She claimed the reward but
company refused to pay.
It was held that it was a valid offer from company and acceptance by Mrs Carlill. The
offer was valid as advertisement language was not vague, offer was not sale puff and it was made
to world.
Raffles v Wichelhaus
In this case there was confusion regrinding a ship of cotton, there were two with same
name and both buyer and seller agreed for different one Cartwright, 2016). It was held that there
was ambiguity in terms, hence no contract between parties.
2. Acceptance:
This is a statement which can be oral, written or by conduct from the offeree agreeing to
the offer. It must be given by a person to whom it is directed. It cannot be silent that is must be
communicated to offer err.
Case law: Crown V Clarke
In this case it was held that there was no contract between Crown and Clare as he gave
information to secure his release (Cases, 2018). He did not give information to claim the
rewards, so not liable for the same.
3. Consideration:
For a valid contact consideration in another requirement (Cheng, Smyth and Guo,2015).
This means something valuable generally in monetary terms must be given back for accepting
the thing which was offered to be purchased or to take.
4. Intention to create legal relation:
For commercial agreement parties generally intend to be legally bound. anticipation
cannot be made that there is such an intention but it is not difficult for a party to prove the same.
Rose and Frank & Co v Crompton
In this case it was held that parties have clearly mentioned do not intent to have legal
relation so there was no binding contract between them.
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APPLICABILITY IN CASE LAW
In the present case, it can be seen that advertisement was placed in newspaper for sale of
mandarins. There is an intention of SVP of making contract legally bound, so it cannot be
considered as mere 'invitation to deal'. Moreover, advertisement clearly defined the description
of Mandarins it wants to sale. It was outlined as, quality-both imperial and Murcott, quantity 1
carton having 20 kgs, price $40 per carton and open to negotiation on bulk orders. Hence, it is an
offer to sale and it was addressed to vendors dealing in fruits only.
As mentioned above description and with decree made in case of Carlill, it can be seen
that counter offer was made by Lin's fruit to purchase 200 cartons for $2000 i.e. $10 per carton
with delivery and GST. Then negotiation started with counter offer of accepting the offer but
without delivery charges, it was accepted by buyer (Contracts & agreements, 2018). The price
paid for Mandarins is consideration for this agreement and it is adequate as mentioned in
advertisement than on bulk purchase discount can be availed.
CONCLUSION
SVP and Best fruit:
There was no contract between both parties as counter offer was made by Best fruit to
purchase 20 cartons for $20 each and no further negotiation was done by Ms, Citrus.
SVP and Lin's fruit:
In this case both parties have a valid agreement between them as there was a valid offer,
acceptance and sufficient consideration. Lin's fruit made a counter offer and both agreed to it
after negotiation. For entering in to a legally enforceable contact they must possess intention for
creating the same.
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REFERENCES
Book and Journals
Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing.
Cheng, Z., Smyth, R. and Guo, F., 2015. The impact of China’s new Labour Contract Law on
socioeconomic outcomes for migrant and urban workers. human relations. 68(3). pp.329-
352.
Smith, J., 2018. Contract law in Australia [Book Review]. Ethos: Official Publication of the Law
Society of the Australian Capital Territory. (248). p.60.
Online
Cases. 2018. [Online]. Available through :<https://www.australiancontractlaw.com/cases.html>.
Contracts & agreements. 2018. [Online]. Available through
:<https://www.accc.gov.au/consumers/contracts-agreements>.
Australian Contract Law. 2018. [Online]. Available through
:<http://www.acc.com/legalresources/quickcounsel/australian-contract-law.cfm>.
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