Victoria University Business Law Assignment: Contract Law

This Business Law assignment analyzes a scenario involving a customer, John, and a dry-cleaning shop, 'Span and Spic.' The assignment explores contract formation, including offer, acceptance, consideration, capacity, intention, and certainty. It examines whether a contract was formed when John left his expensive suit for cleaning and the shop subsequently damaged it. The assignment references relevant case laws, such as David vs. Baker, R vs. Clarke, and Currie vs. Misa, to support its arguments. Part B of the assignment discusses the issue of the shop's liability for the damaged suit, focusing on the application of Australian Consumer Law (ACL) and exclusion clauses. The analysis includes Section 4B of the Competition and Consumer Act 2010 and relevant case laws like Curtis vs. Chemical Cleaning & Dyeing Co. and Parker vs. South Eastern Railway, to determine if the shop can rely on an exclusion clause printed on the receipt to avoid responsibility. The assignment concludes that a contract was formed and that the shop breached it, and the exclusion clause may not be enforceable.

Running head: BUSINESS LAW ASSIGNMENT
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BUSINESS LAW ASSIGNMENT
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Part A
Issue
The issue involved in this part how the contract has formed between ‘Span and Spic,’ the
shop and John, the customer.
Rules
In this scenario, various landmark judgments of several case laws will apply for
discussing the essential elements of the contract, which has been made between the dry clean
shop and its customer John. The case laws David vs. Baker 2015, Beaton vs. McDivitt 1987, will
apply here to discuss the background of this case study. The decision of the cases R vs. Clarke
1927 and Australian Woollen Mills Pty Ltd vs. The Commonwealth 1954 to apply here to
analyze the rules of offer and acceptance to form a contract. The offer and its acceptance are
some of the crucial elements for the formation of any contract. Currie vs. Misa 1875, will apply
here for the definition of the consideration in a contract. The consideration is also an essential
element of the contract. In the judgment of the case of Stewart vs. Casey 1892, it has held that a
past service done by the offeree at the demand of the offeror can be considered as sufficient
consideration for the formation of a contractual relationship. The case laws Blomley vs. Ryan
1956, Westmelton (Vic) Pty Ltd vs. Archer and Schulman 1980, and Gibbson vs. Wright 1954
have discussed the legal capacity of a person to enter into a contract. In the case law Helmos
Enterprises Pty Ltd vs. Jaylor Pty Ltd 2005, it has decided that the commercial arrangements of
the parties are to be acknowledged as an intention of making the contract. In the case of

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Whitlock vs. Brew 1968, it is held that in the creation of a contract, there should be a certainty to
complete and enforce the agreement legally.
Application
In the given scenario, John gives an expensive suit in a shop namely, ‘Span and Spic’ for
dry cleaning. He has selected the clean premium option, and the shop assistant confirms that this
option will fit for the dry cleaning of his suit. The shopkeeper has allotted a receipt with the
unique customer identification number, and the due amount will be rewarded at the time of the
supply of the clean suit. However, at the time of taking the delivery of suit, john has discovered
that a part of his costume has been scratched, and it becomes a different shade from the original
one. In that circumstance, john has refused to pay and demanded damages. In this case, it has to
decide whether there is a contract between the shopkeeper and John.
To form a contract legally bound, five crucial elements have to be fulfilled by the parties
to the contract. The Five elements are, Agreement amongst the parties, there must be a
consideration for the contract, parties should be capable of making the contract, and there must
be an intention between the parties to go into a legal association and certainty to make the
contract. These elements are discussed herein following the given case study regarding the
contract (Anderson, Boud and Sampson 2014).
Applying the case law, David vs. Baker 2015, it can be presumed that a promise will be
enforceable in the contemporary contract law, which arises from an obligation. There is a cause
of action occurs between the shopkeeper and John for the initial formation of the contract.
Applying the case law R vs. Clarke 1927, there is an expression of the offer at the part of
John to the shopkeeper for the dry cleaning of his suit. John has made an express offer to the

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shopkeeper, here John is the offeror and the shopkeeper is the offeree in the given scenario. The
proposal has duly communicated to the offeree. Applying to the decision of this case, Australian
Woollen Mills Pty Ltd vs. The Commonwealth 1954, the parties have shown their willingness to
make the contract. This communication and acceptance of the offer have fulfilled the first
element of the formation of the contract.
Applying the case law Currie vs. Misa 1875, there should be a sufficient consideration to
make the contract legally enforceable. In this given case, John has offered the shopkeeper for
cleaning a suit, which has been duly accepted by the shopkeeper. It can be stated in this context
that consideration means giving something in return for something. It was decided in the case of
Woolworth Ltd vs. Kelly 1991; the consideration may not be adequate; it will depend on the
discretion of the judge. Here, the shopkeeper has provided the cleaned suit to John and as a
consideration; John will pay the money after delivery of the suit. It has also fulfilled the essential
second element of the formation of the contract.
Applying to the case law Blomley vs. Ryan 1956, there should be a contractual capacity
to the parties to form a contract. In this given scenario, it has stated that John is a graduate and
working in a firm. He is capable of making a contract with the shopkeeper. Therefore, the
contract, which has been created by the shopkeeper and John, is fulfilled the third condition of
the formation of a contract.
Applying to the case law, Helmos Enterprises Pty Ltd vs. Jaylor Pty Ltd 2005, there is
an intention between the parties to complete the contract. In the given scenario, John has hired
the shopkeeper to clean his expensive suit and the shopkeeper also has an intention to clean that
suit of John. There are no domestic or social agreements between the parties, which may be a

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factor in disqualifying the contractual relationship. There is an intention to perform the contract
between the parties to such a contract. This intention to make the contract is also fulfilled the
fourth element of the formation of the contract.
Applying the case law, Whitlock vs. Brew 1968, it can be said that the promise must be
adequately certain and comprehensive that the rights and obligations of the parties to an
agreement can be recognized and applied. In the given scenario, there is a certainty between the
shopkeeper and John, where their rights and duties according to the contract have been
recognized and legally enforceable. This certainty of making a contract has fulfilled the latest
constituent of the construction of the contract, which is executable by the court of law.
Conclusion
Therefore, it can be concluded in this scenario that there is a contract between John and
the shopkeeper, and it is legally enforceable. In this case, the shopkeeper has breached the
contract by delivering the damaged suit. He can not be exempted from his responsibility by
showing the back of the receipt regarding the exemption of duties.
Part B
Issue
The issues involved in this part, whether the owner of the shop “Span and Spic” can be
allowed to depend on the clause, which has been enclosed on the back of the receipt to escape
from the legal responsibility of damage to John’s suit.

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Rules
In the given scenario, various sections of the Australian Consumer Law (ACL) will apply
to explain the issue. Section 4B of the Competition And Consumer Act 2010 deals with the term
‘consumer.’ According to this section, a consumer may be an individual who has acquired such
specific services if as well as only when the value of that services does not exceed such
stipulated amount and in such situation where the price has exceeded that stipulated amount, the
services should be an ordinarily acquired for own. The judgment of the case law, Curtis vs.
Chemical Cleaning & Dyeing Co. 1951 will apply here for the misrepresentation with the
customer. In this case, the customer has given her wedding cloth to a professional dyeing service
for dry cleaning. The plaintiff has been returned her dress with damage. The plaintiff has claimed
damages against the defendants. The court of law has held that the misrepresentation on the part
of the participants to the contract may cease the contractual relationship between them. The case
law Parker vs. South Eastern Railway 1877 has dealt with the exclusion clause in a contract.
The Appellate court has held that a person could not be able to avoid the contractual relationship
by failing to take into consideration the provisions of the agreement. However, the party who
wants to be dependent on that exclusion clause, he must have to take such reasonable steps to
come into the notice of the customer regarding such exclusion clauses. The case Darlington
Future Ltd vs. Delco Australia Pty Ltd 1986 has dealt with the exclusion and limitation clauses
in the contract paper. In this case, the claimant has contracted with the defendant for brokerage
services. The contract has included various clauses of exclusion and limitation. Such as clause 6
of that contract has excluded the obligation for any damage arising out of transaction activities
on behalf of the other party. Clause 7 has limited the liability of the defendant to $100 if the
claim has appeared in the court. However, the aggrieved party has sued in the court against

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damage for almost $3lakhs. The court of law has observed that the clauses should be interpreted
regarding the totality of such a contract. The Competition and Consumer Act 2010 in its
Schedule 2 describe the deceptive conduct, misleading, unfair trade practices, unlawful behavior,
the condition and warranties of the product, safety of the product, liability of the manufacturer of
the merchandise and many others (Pearson 2017).
Application
In the given scenario, John has given his suit for dry cleaning in the dyeing shop ‘Span
and Spic.’ The shop has delivered the damaged suit to John, which he has discovered at the time
of receiving the suit delivery. In that circumstance, John has precluded to pay to the money and
demanded reimbursement. The proprietor of Span and Spic has come in front of the shop and has
elucidated to John that at the back of the receipt, there is a declaration regarding the exclusion
clause that ‘Span and Spic’ is not liable and does not admit any obligation for any damage of any
clothing.
Applying to Section 4B of the Competition And Consumer Act 2010 in this scenario,
John is entitled to be a consumer (Tokeley 2017). There is a contractual relationship between the
shop ‘Span and Spic’ and its customer Jhon. According to this section of the Act, John is said to
be a consumer because he has taken a service from the shop within the stipulated amount by the
shop. As he is a consumer is this scenario, he can get the availability of the provisions of the
Australian Consumer Law.
Applying the case law Curtis vs. Chemical Cleaning & Dyeing Co. 195, in this context,
is can be proved for misrepresentation in the contract. It can also be discussed the importance
and position of an exclusion clause of the agreement. In that case, the plaintiff has given her

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wedding dress for cleaning in the defendant company. The defendants have returned the dress
with damage in it. They have been avoided their liability by showing an exclusion clause of their
contract. The court held it as unreasonable, and the defendants are liable for their fault regarding
the delivery of the damaged dress. In this scenario, the ‘Span and Spic’ shop has delivered the
dress of their customer, John, his damaged suit. It is the duty of the shop to handover the dress
with caution. The defendants can not show the back of the receipt, where it is written that the
shop owner will not be liable for delivering a damaged suit.
Applying the case Parker vs. South Eastern Railway 1877 in this scenario that the shop
can not able to avoid its liability by showing the exclusion clause. The defendant has to show the
reasonableness of the utilization of such exclusion clauses in the contract. For the exclusion
clauses in Parker’s case, the court held that it can not be avoided, but should proceed with any
reasonable steps to bring into the notice of the customers. In this scenario, the shop does not take
any practical action to bring into the notice of John about the exclusion clause. This clause has
written on the back of the receipt, which the customers do not usually notice. Therefore, the shop
owner should be responsible for the supply of damaged cloth, which has given him for dry
cleaning.
Applying the case law, Darlington Future Ltd vs. Delco Australia Pty Ltd 1986, in this
scenario, the exclusion or limitation clauses in a contract should be interpreted and related to
every other provision in the entire contract. The exclusion clause should not dismiss the contract
entirely, and the core of that contract should not be changed for this clause. In this scenario, the
center of the agreement has been dismissed for the prohibiting clause describes in the back of
such receipt. The exclusion and limitation clauses of a contract, which is made between John and
the shop owner, can not be dismissed as it has done in the above-discussed case.

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Conclusion
Therefore, it can be concluded in this context that the shop ‘Span and Spic’ can not be
able to avoid its liability of delivering the damaged suit by showing the clauses contain in the
back of the receipt. The shopkeeper can not escape from his legal responsibility of damaging of
John’s suit, which John has given him for dry cleaning. John is entitled to get damages from the
shop owner if he has filed a lawsuit before the court of law praying for damages.

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References
Anderson, G., Boud, D. and Sampson, J., 2014. Learning contracts: a practical guide.
Routledge.
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20, 92 CLR 424, High
Court
Beaton v McDivitt (1987) 13 NSWLR 162
Blomley v Ryan [1956] HCA 81, (1956) 99 CLR 362, High Court
Currie v Misa (1875) LR 10 Ex 153
Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500
David v Baker [2015] NSWSC 393, Supreme Court (NSW).
Gibbons v Wright [1954] HCA 17, (1954) 91 CLR 423, High Court
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235, Court of Appeal (NSW)
Parker v South Eastern Railway [1877] 2 CPD 416
Pearson, G., 2017. Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development (pp. 287-305). Springer, Cham.
R v Clarke [1927] HCA 47, (1927) 40 CLR 227, High Court.
Stewart v Casey [1892] 1 Ch 104

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Tokeley, K., 2017. When not all sellers are traders: re-evaluating the scope of consumer
protection legislation in the modern marketplace. Sydney L. Rev., 39, p.59.
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd [1968] HCA 8,
(1968) 118 CLR 429, High Court
Westmelton (Vic) Pty Ltd v Archer and Schulman [1980] VicRp 16, [1982] VR 305.
Woolworths Ltd v Kelly (1991) 22 NSWLR 189