BLO1105 Business Law Assignment: Contract Law and Exclusion Clauses

This assignment analyzes a business law scenario involving a dry-cleaning service and a customer. Part A examines the formation of a contract between John and Span and Spic, applying Australian contract law principles. It discusses essential elements like offer, acceptance, consideration, intenti...Read More

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Part A
The issue in the given scenario is how the contracts might have been established between
the individual named John and the cleaning company named ‘Span and Spic’.
As per the law regarding contract of the nation of Australia, there are certain essentials
that must be fulfilled in order to establish a valid contract. Firstly, an offer must be forwarded by
a party, and that offer must be accepted by another party. The acceptance should be
unambiguous and the communication to the party forwarding the offer, in relation to the
acceptance, should be made in a timely manner. Secondly, an intention must exist in relation to
the involved parties for establishing a binding and an obligatory agreement. Thirdly, one party
must pay consideration in lieu of the promise forwarded by another party. A consideration may
not be necessarily money, it may be anything having a worth or value. Fourthly, the involved
parties in a particular contract must be legally qualified to establish the contract. A party should
be a major, solvent and mentally stable in order to establish a contract. Lastly, it must be
mentioned that a particular contract should be established only for legal purposes. No contract
can be established for illegal or unlawful purposes or objectives. For instance, no contract shall
be established for committing a murder (Hemming and Daniel 2018).
In the nation of Australia, a contract might be in an oral form, and contract might also be
in a written form. On certain occasion, a contract might be an amalgamation of both. An
agreement in an oral form is valued in the nation of Australia. However, it may be said that
certain contracts, such as contracts to purchase a car, purchase or sell land, and contracts
regarding door-to-door sales, should be established in a written form. A contract established
orally shall be enforced or implemented in a similar manner as a contract established in writing.

2BUSINESS LAW
However, it may be said that in case of contracts established orally, it may be problematic to
define the terms in relation to the contract accurately because of the nature of such oral
agreements (Stewart, Swain and Fairweather 2019).
The case of David v Baker [2015] NSWSC 393 shall be considered to be a relevant case
in this regard. In this particular case, it had been stated that in common law all promises are not
considered to be enforceable. Only those promises that are grounded on the principle of
‘assumpsit’ and the notions of reliance and motive, shall be considered to be enforceable.
The case of Beaton v McDivitt (1987) 13 NSWLR 162 shall be considered to be a
significant case in this regard. In this case, it had been mentioned that the exchange of promises
shall be considered to be a mandatory element in relation to a valid contract. It means that there
should exist a ‘quid pro quo’ in relation to the involved parties regarding a particular contract.
Such had also been mentioned in the case of Australian Woollen Mills Pty Ltd v The
Commonwealth [1954] HCA 20.
The case of Fisher v Bell [1961] 1 QB 394 shall be considered to be an important case in
this regard. This case concerns the necessities in relation to offer and its acceptance regarding the
formation and the establishment of a particular contract. In this case, it had been stated that
where goods or commodities are exhibited in a particular shop along with the price tag, such
exhibition shall be considered to be an ‘invitation to treat’ that has been forwarded by the seller.
It shall not be considered as an offer.
The case of Carlill v Carbolic Smoke Ball Company [1892] EWCA 1 shall be regarded as
an important case in this regard. In this case, it had been mentioned that a particular contract
should be certain, complete, clear, unambiguous, binding and obligatory. It had also been stated

3BUSINESS LAW
in this case that the presence of a particular agreement regarding the involved parties is generally
analyzed and examined with the help and assistance of the rules in relation to the offer and the
acceptance of such offer.
The case of R v Clarke [1927] HCA 47 shall be considered to be a relevant case in this
regard. In this case, it had been stated that a clear indication, that is offer, should be made by a
particular party who shall be regarded as the offeror. It had also been stated that a clear
communication in relation to the offer, that is acceptance, shall be made by another party who
shall be regarded as the offeree.
The case of Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 shall
be considered to be a significant case in this regard. In this case, it had been said that an offer and
an acceptance of such offer indicates and specifies an intention regarding the involved parties to
be bound by the contract without additional negotiation or discussion.
In the given scenario, John is an individual who is a business graduate who works for a
reputed consultancy organization and is looking forward to bring a big client for the
organization. For a meeting with the client John decides to wear an expensive suit that he needs
to dry clean. For such purposes John gives his suit to ‘Span and Spic’ dry cleaning. The dry
cleaning assures John that his expensive suit shall be washed with proper care.
The law regarding contract of the nation of Australia shall be applied in the given
scenario. The essentials must be fulfilled in order to establish a valid contract. Firstly, an offer
must be forwarded by a party, and that offer must be accepted by another party in a timely
manner and in an unambiguous manner. Secondly, an intention must exist in relation to the
involved parties for establishing a binding and an obligatory agreement. Thirdly, one party must

4BUSINESS LAW
pay consideration in lieu of the promise forwarded by another party. A consideration may not be
necessarily money, it may be anything having a worth or value. Fourthly, the involved parties in
a particular contract must be legally qualified to establish the contract. Lastly, it must be
mentioned that a particular contract should be established only for legal purposes. It may be said
that all the aforementioned essentials exist in the given scenario.
The case of Fisher v Bell [1961] 1 QB 394 shall be applied in the given scenario. In this
case, it had been stated that where goods or commodities are exhibited in a particular shop along
with the price tag, such exhibition shall be considered to be an ‘invitation to treat’ that has been
forwarded by the seller. It shall not be considered as an offer. Hence, in the given scenario, it
may be said that the notice board that has been demonstrated by ‘Span and Spic’ for the
customers, shall be considered to be an ‘invitation to offer’.
The case of Carlill v Carbolic Smoke Ball Company [1892] EWCA 1 shall be applied in
the given scenario. In this case, it had been mentioned that a particular contract should be certain,
complete, clear, unambiguous, binding and obligatory. It had also been stated in this case that the
presence of a particular agreement regarding the involved parties is generally analyzed and
examined with the help and assistance of the rules in relation to the offer and the acceptance of
such offer. Hence, in the given scenario, when John opts for the premium clean choice, it may be
said that John becomes the offeror and ‘Span and Spic’ becomes the offeree. The offer forwarded
by John should be unambiguously accepted by ‘Span and Spic’. The case of R v Clarke [1927]
HCA 47 shall be also be applied in the similar sense as mentioned above. In this case, it had been
stated that a clear indication, that is offer, should be made by a particular party who shall be
regarded as the offeror. It had also been stated that a clear communication in relation to the offer,
that is acceptance, shall be made by another party who shall be regarded as the offeree.

5BUSINESS LAW
The case of Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 shall
be applied in the given scenario. In this case, it had been said that an offer and an acceptance of
such offer indicates and specifies an intention regarding the involved parties to be bound by the
contract without additional negotiation or discussion. Hence, in the given scenario, it may be said
that John and the dry cleaning organization had the intention to establish a contract and be
legally bound and obligated by such contract.
The cases of Beaton v McDivitt (1987) 13 NSWLR 162 and Australian Woollen Mills Pty
Ltd v The Commonwealth [1954] HCA 20 shall be applied in the given scenario. In these cases, it
had been mentioned that the exchange of promises shall be considered to be a mandatory
element in relation to a valid contract. It means that there should exist a ‘quid pro quo’ in relation
to the involved parties regarding a particular contract. Hence, in the given scenario, it may be
said that John promised to make payment to ‘Span and Spic’ and ‘Span and Spic’ promised to
properly wash and dry clean the expensive suit of John without any kind of damage. Therefore, a
‘quid pro quo’ exists between the two parties. It may also be said that the component of
consideration is present between the two aforementioned parties.
As per the law regarding contract of the nation of Australia, it may be said that in the
given scenario, John and the dry cleaning company are legally entitled to establish a contract and
they have established a contract for lawful purposes.
To conclude it may be said that in the given scenario, contract might have been
established between the individual named John and the cleaning company named ‘Span and
Spic’ in accordance to the process discussed above. All the necessary requirements in relation to
a valid contract are present in the given scenario.

6BUSINESS LAW
Part B
Issue
The issue is whether ‘Span and Spic’ shall be entitled by law to depend on the exclusion
clause that is provided on the backside of the receipt given to John in order to evade
accountability regarding the damage that has been caused to the suit of John.
Rule
The case of Curtis v Chemical Cleaning Co [1951] 1 KB 805 shall be considered to be an
important case in this regard. A wedding dress was given by the plaintiff to the defendants for
the purpose of cleaning the dress. A receipt was signed by the plaintiff after being informed that
it relieved the cleaners from any kind of accountability regarding damage caused in relation to
sequins and beads. However, the receipt actually stated a clause that excluded accountability any
damage that may ascend. When that particular dress was given back to plaintiff, it was acutely
tainted. It was held that the cleaners shall be held accountable regarding damage in relation to the
material and substance of the cloth with the help of the exclusion clause because the scope of the
clause had been distorted by the assistant of the defendant.
The case of White v John Warwick [1953] 1 WLR 1285 shall be considered to be a
relevant case in this regard. A cycle of a trade man had been hired by the plaintiff from the
defendants. In the written or transcribed agreement it was stated that the owners shall not be
accountable in relation to any kind of injury. The plaintiff was injured while riding the trade
man’s cycle. It was held by the Court of Appeal that the indefinite wording regarding the
exemption clause would efficiently provide protection to the defendants in connection to their

7BUSINESS LAW
stringent contractual accountability, however, they shall not be exempted from the accountability
that arises through negligence.
The case of Causer v Brown [1952] VLR 1 shall be considered to be a significant case in
this regard. In this case, a dress was given for cleaning purposes. It was mentioned that the dress
would be given back in perfect condition. However, the dress was returned and a stain was
present on the dress. A suit was filed for violating the contract and for negligent actions. A
clause provided on the front side of the ticket stated that the cleaners shall not be accountable
regarding any kind of damage or loss. It was held that it shall depend on the fact that what a
particular individual perceives to be a portion of the offer and its acceptance. There shall be no
difficulty if the client or the customer is aware about the restriction and agrees to the restriction.
Application
In the given scenario, John gives his suit to ‘Span and Spic’ dry cleaning. The dry
cleaning assures John that his expensive suit shall be washed with proper care. However, when
the suit was returned, the jacket was tainted.
Applying the case of Curtis v Chemical Cleaning Co [1951] 1 KB 805 it may be said that
in the given scenario, the dry cleaning company shall be held accountable for the damage caused,
because the exception clause was not adequately communicated to John by the dry cleaning
company prior to the establishment of the contract.
Applying the case of White v John Warwick [1953] 1 WLR 1285 it may be said that in
the given scenario, ‘Span and Spic’ shall be held accountable for the damage, because the
exception clause was not adequately communicated to John by the dry cleaning company prior to
the establishment of the contract.

8BUSINESS LAW
The case of Causer v Brown [1952] VLR 1 shall be applied. In this case, it was held there
shall be no difficulty if the client or the customer is aware about the restriction and agrees to the
restriction. In the given scenario, John was not explicitly made aware about the exception clause
prior to the creation of the contract.
Conclusion
In conclusion it may be said that ‘Span and Spic’ shall be accountable regarding the
damage that has been caused to the jacket of John.

9BUSINESS LAW
References
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20.
Beaton v McDivitt (1987) 13 NSWLR 162.
Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61.
Carlill v Carbolic Smoke Ball Company [1892] EWCA 1.
Causer v Brown [1952] VLR 1.
Curtis v Chemical Cleaning Co [1951] 1 KB 805.
David v Baker [2015] NSWSC 393.
Fisher v Bell [1961] 1 QB 394.
Hemming, A. and Daniel, M., 2018. Halsbury's laws of Australia: contract GC I_II_V. Update of
contract GC I, II, and V.
R v Clarke [1927] HCA 47.
Stewart, A., Swain, W. and Fairweather, K., 2019. Contract law: principles and context.
Cambridge University Press.
White v John Warwick [1953] 1 WLR 1285.