Contract Law Assignment: Implied and Express Terms, Cafe Liability

This assignment delves into fundamental aspects of contract law, using a cafe scenario as a case study. Question 1 examines the formation of a contract between Avinash and the cafe, analyzing the elements of offer, acceptance, and consideration, while also considering the implications of the Smith v Hughes case. It further explores whether the cafe can rely on a printed clause on a ticket to avoid liability for Avinash's injury, focusing on implied and express terms, breach of contract, and consumer rights under Australian law. Question 2 contrasts express and implied terms, detailing how they arise and operate within a contract, including by conduct, law, and custom, and the legal obligations that arise from each, emphasizing the binding nature of both types of terms. The assignment applies relevant legislation, including the Competition and Consumer Act, the Sale of Goods Act, and the Civil Law (Wrongs) Act, to provide a comprehensive analysis of the legal principles involved.

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Contents
Ques 1. Explain how Avinash made a contract with the café......................................................................1
Smith v Hughes...........................................................................................................................................2
Ques 1.2 Explain whether the café is legally entitled to rely on the clause printed on the ticket to escape
liability in relation to Avinash’s accident....................................................................................................3
Issue........................................................................................................................................................3
Rule.........................................................................................................................................................3
Application/ Analysis...............................................................................................................................4
Conclusion...............................................................................................................................................4
Question 2...................................................................................................................................................5
‘In contrast to express terms found in a contract, implied terms can arise in a variety of ways and are
beneficial to at least one of the parties to the contract. Some contracts may contain both express and

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implied terms, but the ways these two types of terms operate are significantly different from one another’.
.................................................................................................................................................................... 5
1. By Conduct of the parties:...........................................................................................................6
2. By law:.........................................................................................................................................7
3. By Custom:...................................................................................................................................7
Bibliography:...............................................................................................................................................7
Ques 1. Explain how Avinash made a contract with the café.
A contract is a legally obligatory oral or written agreement among two or more people. For the
formation of contract there must be an agreement between two or more person in which one
party offeror creates a proposal to another party with certain terms and condition with the
intention to bind the other party who is accepting the proposal with the same terms and
condition. Contract must be definite and clear enough for the understanding of both parties. A
person who decided to accept the offer he must communicate his intention with the offeror
without communication of his intention of acceptance to the offeror there is no valid acceptance
of the offer.1
After the offer has been made or accepted by the both parties with intent to create a legal
obligation payment of consideration is required for the legally binding contract. In the contract,
consideration is a price of promise or offer made by the offeror. Every day we all are entering in
contract with each other. For example in a coffee shop when we buy a coffee we are making a
contract with the coffee shop in which they are offering a coffee as an offer, we accept a coffee
as an acceptance and we are giving them money as a consideration of the contract.2
Essential Legal Elements of the Valid Contracts are:
1 Jill Poole, Textbook on Contract Law (Oxford University Press 13th ed, 2016).
2 Linda A Wendling, Contracts: Legal Principles and Practical Applications for Paralegals, (Wolters Kluwer Law
& Business 2019).

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Agreement, Offer, Acceptance, Intention to make legal relationship and Consideration are the
legal elements of valid contract.
Agreement is first requirement for the formation of valid contract. And for the formation of
agreement there is an offeror who offers or promise to another party with intent to create a legal
relationship and acceptor accepts the offer or promise and consideration is a price for the offer. 3
Smith v Hughes
In the formation of an agreement intention for creating a legal relationship is that what is the
conduct of the party is it reliable for the reasonable person that he was agreeing to the terms
offered by the another party and on this belief other party entered into the contract, conduct of
the person is equally bind as he express his intention.4
Contract can be made in the form of either express or implied. In the express form of contract
offer directly express his intention to the another party but in the implied form of contract the
intention of creating a legal relationship is implied itself in the contract and the party accepting
the offer show his intention of accepting the offer with his conduct. If any party fails to perform
his duty or follow the terms and condition of the nature of the contract in that case it is a breach
of contract5
A promise which is enforceable by the law rises from the conduct of offeror and acceptor under
the legal obligation that one party will pay the price in form of consideration for the benefit he
received from the another party is an implied contract. In the implied contract verbal or written
confirmation is not required. Therefore it is very difficult to prove the existence of implied
contract as there is no evidence of the intention of creating any legal relationship. But if it is
enforced its effect is same as an express contract.
3 McKendrick Ewan, Contract Law (Macmillan International Higher Education, 11th ed. 2015).
4 (Australian contract law, 2016).
5 Helewitz J. A, Basic Contract Law for Paralegals (Aspen Publishers 6th ed, 2010). P-8-9.

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Therefore when Avinash went to the coffee shop and they offered him for an order, he ordered
and paid a price for his order at that time coffee shop and Avinash fulfill all the essentials of a
binding contract and entered into the implied form of a contract.
Ques 1.2 Explain whether the café is legally entitled to rely on the clause printed on the
ticket to escape liability in relation to Avinash’s accident.
Issue
Avinash is a consumer who went to the cafe and ordered pastry in which a part of metal was
there and struck in to the tooth of avinash and broke his tooth now he is demanding the remedy
from the café. Is he entitled for the compensation for his lose?
Or
On the demand of Avinash, Manager of the café direct that there is a clause on ticket in which it
is clearly mentioned that café is not responsible if any damage is caused due to drinking and
eating any food of the café. Can a printed clause on the ticket avoid the liability of café regarding
mishap of Avinash?
Rule
For the formation of contract one person offers to any person and the person accept the offer
with the consideration of the offer, consideration is a price of offer in sum of money or any part
performance. In the case of avinash, at the time when avinash pay the price of pastry he came
into the contract with the café. And in the contract if there is any breach is in the part of any
party then the other party can claim the remedy from the wrongdoer6
Avinash and the café enter in to the contract with express and implied terms. Implied agreement
in the contract contradicts the express agreement of contract. Section 60, Schedule 2 of
6 Mindy Chan, Contract Law (Wishart Oxford University Press, 4th ed, 2018).

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Competition and Consumer Act of Australia, Sec 8 of Sales of Goods Act, Section 42 of Civil
law (Wrongs) Act 2002 and Contract Act all these rules were applied in this case.78
Application/ Analysis
A contract is a promise between two or more people in which one party makes a promise and
other party accept the promise and pay for the benefit arising from the promise as consideration
in the same case of Avinash, café makes a proposal of pastry and avinash paid a price of coffee
as consideration so that Avinash and the café are the parties of contract as they fulfil all the
essential elements of contract. By delivering defective food café breach the contract and avinash
lost his tooth because of the negligence of the café so that avinash has a right to claim the
remedy in the default of café. Breach of contract is a civil as well as criminal offence according
to the circumstance of the case. Here café due to his negligence liable for a civil offence and they
have to pay the remedy to the avinash for his injury caused by negligence.9
Sometimes we even do not know that we are entering into the contract but out conduct show that
we have an intention to create the legal obligation. Here it is the legal obligation of café that it
will provide a healthy and non-injurious food to the consumers and if any default is done by the
café they will be liable for that and consumers are also liable to pay the price of the offer.
In the Avinash case, Café cannot depend on the section of printed ticket as the express terms of
contract is contradicting by the implied terms and also these terms are violating the rights of
consumer which is provided in contract and consumer law10
In the Competition and Consumer Act of Australia the rights of consumers are mentioned by the
legislation. Section 60 of the act says that it is the duty of the supplier that his facilities will be
provided with all due caution and skills11
7 Competition and Consumer Act 2010 (Cth) Sec60
8 Sale of Goods Act 1954 (SA) Sec 8
9 (Legal Service Commission of Australia, 2011)
10 Angela Clark and Rosy Border, Your Consumer Rights, (Cavendish Publishing Limited 2013).
11 (Consumer Protection Act 2010 (Cth) Sec. 60)

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Conclusion
Avinash has a right to claim compensation for his injury caused by the café’s negligence and the
café cannot depend on on the terms of the printed ticket as the implied terms of contract is
overriding on the express terms of contract12
Question 2
‘Implied and Express terms of contract and the differences between these two terms with
the ways of terms of contract.
In the contract two terms are included by the legislation both terms are legally binding in a same
manner.
The express term consist of written or oral statement of the agreement.
The implied term of contract is where parties did not mentioned any term but court
believes that parties are agreed to the implied terms through their conduct.
All provisions of contract comprise with the terms of contract. If two or more parties come into
the contract in that case each term of contract establish an obligation for them. If any party
breach the terms of contract he will be liable in the court of law. It is not important that all the
terms of contract is expressly stated by the parties, some terms of the agreement are not argued
by the parties because these terms are implied with the contract but the obligation is same in both
terms.13
12 (CIVIL LAW (WRONGS) ACT 2002. Sec.40)
13 TT Arvind, Contract Law (Oxford University Press, 1st ed, 2017).

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Express terms of contract are directly recognized and specified by the parties of contracts.
Consent of the both parties in the express terms of contract must be required and when both
parties give their assent to the express terms in that case these terms are binding on both parties.
Formation of the express terms of contract with the understanding of both parties can be made in
form of written agreement or oral statement. It is important that the conducts of the parties are
reflecting the intention of the parties to create a legal obligation. The express contract some
implied terms are already included by the conduct of the parties or by law or custom. The
implied terms of the express contract do not need to be mentioned in as contract either oral or
written. The effect of the implied terms is equivalent to the express contract.14
An implied contract is grounded on the conduct of the both parties. In the implied contract there
is no written agreement among the parties and not even expressly discussed the terms of contract.
Though, a contract is presumed to legally occur due to the activities or conduct of the parties
who are tangled in the situation. As implied term of contract is fully based on the conduct of the
parties therefore it is important to prove the existence of contract that the consent of the both
parties is clear in there conduct. Both parties are under the contractual obligation because the
conduct of the parties confirms their assent to the contract. If there is breach of contract in the
part of any party and remedy is claimed by the other party there is no need to prove any written
or oral agreement among the parties. Contract may be breached by any party due to any
negligence of fact or law.15
For example, an implied contract survives when any product is purchased by customer. At the
time of purchasing the product, terms of the buyer and seller is implied in the actions of the both
party, they never expressly discussed the all terms of contract. If any default is done by either
party at the time of performing contract the party has a right to claim the maintenance or the
remedy which is raised due to the default of other party.
In some manners implied term of the contract is treated like express contract. There are a few
differences in the treatment of implied and express contracts implied by law. Implied in fact is a
14 Hugh Collins, The Law of Contract, (Cambridge University Press 4th ed, 2003).
15 Chris Turner, Contract Law (Routledge Taylor & Francis Group 2014).

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term of implied which is also referred as a quasi-contract. Quasi contract is applied when any
dispute arises in implied contract among the parties and one party is taking unfairly benefit from
the other party.
In the contract, formation of implied terms can be in three ways:
1. By Conduct of the parties: In contract both parties express their terms according to the
nature of contract but the implied contract covers behaviour and actions of both parties
which describe that they are agree to the terms of contract and bind themselves with the
behaviour and action towards contract.
While examining the existence of implied terms in the contract Court might consider the
following points.
1.1. What is the conduct of the parties when they come in the contact with each other?
1.2. Dealing between the parties must be reliable for a reasonable person.
1.3. And the implied terms of contract is contradicting the express terms.
2. By law: For the interest of justice some implied terms are direct by law. Law imply these
terms for saving the rights of party, if another party is taking the unfair advantage of the
other party. For example if any time is not mentioned in the contract in these type of
contract, performance of the contract must be performed in a reasonable time.
3. By Custom: Custom implies some implied terms which covers the standard of common
industry. For the implication of implied terms of contract by custom it is important that
custom must be in the existence when parties come into the contract. And parties of the
contract must reasonably assume that it is a part of an agreement. Such implied terms
does not contradict the express terms of parties in the agreement.16 (McKendrick & Liu
2015)
16 Ewan McKendrick and Qiao Liu, Contract Law (Macmillan International Higher Education, 2015).

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Bibliography:
1. Poole Jill, Textbook on Contract Law (Oxford University Press 13th ed, 2016).
2. Wendling Linda A, Contracts: Legal Principles and Practical Applications for
Paralegals, (Wolters Kluwer Law & Business 2019).
3. McKendrick Ewan, Contract Law (Macmillan International Higher Education, 11th ed.
2015).
4. Australian contract law, Contract law, Last updated: September 2018 Retrieved From
https://www.australiancontractlaw.com/contractlaw.html
5. Helewitz J. A, Basic Contract Law for Paralegals (Aspen Publishers 6th ed, 2010).
https://www.australiancontractlaw.com/law/formation-agreement.html
6. Chen Mindy, Contract Law (Wishart Oxford University Press, 4th ed, 2018).
7. Competition and Consumer Act 2010 (Cth) Retrieved From
https://www.legislation.gov.au/Series/C2004A00109
8. Sale of Goods Act 1954 (SA). Retrieved From
http://classic.austlii.edu.au/au/legis/act/consol_act/soga1954128/
9. Legal Service Commission of Australia Consumer Protection (2011, JANUARY 7).
Retrieved From
https://lawhandbook.sa.gov.au/print/ch10s03.php

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10. Clark Angela and Rosy Border, Your Consumer Rights, (Cavendish Publishing Limited
2013).
11. Competition and Consumer Act 2010 (Cth) Retrieved From
https://www.legislation.gov.au/Series/C2004A00109
12. Civil law (wrongs) Act 2002
13. Arvind TT, Contract Law (Oxford University Press, 1st ed, 2017).
14. Collins Hugh, The Law of Contract, (Cambridge University Press 4th ed, 2003).
15. Turner Chris, Contract Law (Routledge Taylor & Francis Group 2014).
16. McKendrick Ewan and Qiao Liu, Contract Law (Macmillan International Higher
Education, 2015).