Contract and Consumer Law Assignment: Legal Framework Analysis

This assignment solution delves into the core principles of contract and consumer law, covering the fundamental differences between agreements and legally binding contracts. It explores various aspects including contracts requiring financial advice, the binding nature of agreements between spouses, and the interpretation of 'letters of intent' and 'letters of comfort'. The solution examines offer and acceptance methods, contract conditions for minors, intoxicated contracts, and the concept of undue influence. It also addresses commercial contracts, guarantees, and the significance of identifying contract terms, conditions, and warranties. Furthermore, it explores the impact of signatures, written document requirements, and standard form contracts. The assignment also analyzes third-party liability, assignment of rights, force majeure clauses, and e-commerce contracts. It further provides insights into agency relationships, misleading conduct, compliance with the Australian Consumer Law (ACL), and the application of the Competition and Consumer Act (CCA). The solution also covers topics such as cartels and the responsibilities of financial licensees.

Contract & Consumer
Law

Table of Contents
INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
1.1 Fundamental difference between an agreement and a legally binding contract..................1
Agreement...................................................................................................................................1
Legally Binding Contract............................................................................................................1
1.2 Contracts which requires advise form financial services provider.......................................1
1.3 Circumstances when a private agreement between a husband and wife be considered
contractually binding...................................................................................................................2
1.4 What is a 'letter of intent' ?....................................................................................................2
1.5 What is a 'letter of comfort'?.................................................................................................2
1.6 Methods of communication of offer and acceptance............................................................2
1.7 List some of the ways an offer may lapse.............................................................................3
1.8 ...............................................................................................................................................3
ACTIVITY 2....................................................................................................................................3
2.1 Conditions of contract act for minor.....................................................................................3
2.2 Intoxicated contracts.............................................................................................................4
2.3 Commercial contract.............................................................................................................4
2.4 In what relationship does the presumption of undue influence arise?..................................4
2.5 Guarantor and legal responsibilities of guarantor................................................................4
2.6 Circumstances to rely on guarantee.....................................................................................5
2.7................................................................................................................................................5
ACTIVITY 3....................................................................................................................................5
3.1 Why is it important to identify the ‘terms’ of a contract?.....................................................5
3.2 Differences between conditions and warranties...................................................................6
Conditions...................................................................................................................................6
Warranties...................................................................................................................................6
3.3 Effect of a signature on a contractual document?.................................................................6
3.4 Contractual transactions which are required to be recorded in a written document.............6
3.5................................................................................................................................................7

3.6 Standard form contract and its type......................................................................................7
ACTIVITY 4....................................................................................................................................7
4.1 In what circumstances can a third party (‘stranger’) to a contract be held liable in the event
of a breach?.................................................................................................................................7
4.2 When rights can be assigned due to operation of law...........................................................7
4.3 ...............................................................................................................................................8
4.4 What is the purpose of a force majeure clause and its application.......................................8
4.5 Employment Contract...........................................................................................................8
ACTIVITY 5....................................................................................................................................8
5.1 Define the term ‘E-commerce’..............................................................................................8
5.2 Are there any exceptions to the type of contracts which can be made electronically?.........8
5.3 (a) When making an offer over a website, to whom is the offer being made?.....................9
5.3 (b) With what legal requirements must Heidi comply?........................................................9
5.4 What are the requirements of electronic signatures under the ETA?....................................9
5.5 Explain the use and significance of Australian Business Number Digital Certificates........9
5.6 List three rules under which domain names are allocated....................................................9
ACTIVITY 6....................................................................................................................................9
6.1. Is the contract enforceable? If so, from what point in time?................................................9
6.2. Has Daniel done anything unlawful?.................................................................................10
6.3. Is Shona a Party to the contract to sell the business? Explain...........................................10
6.4 Explain how an agency relationship differs from that of an independent contractor.........10
6.5 Which party (agent, principal or third party) would not be held liable for fraudulent
misrepresentations where the agent acted outside their authority?...........................................10
6.6 Who will be held liable for the work performed by the agent to buy the cattle at higher
price...........................................................................................................................................10
ACTIVITY 7..................................................................................................................................11
7.1 Can omitting to provide information ever count as misleading or deceptive conduct? How
would you explain this concept to a client?..............................................................................11
7.2 Are the complaints of the consumers justified? How would you explain this to your client
and what advice would you give them to ensure they operate in compliance with the ACL?. 11

7.3 Anthea sold Bob some paper and pens for $65. Anthea did not give Bob a receipt. Has
Anthea done anything unlawful?..............................................................................................11
7.4 What argument could Marc make? Do you think he would be successful?.......................12
7.5 Who would be responsible for his miserable camping trip: Sebastian, the manufacturer or
the sales assistant?.....................................................................................................................12
ACTIVITY 8..................................................................................................................................12
8.1 Have Ting and Chrome done anything illegal? Explain your answer with reference to the
CCA...........................................................................................................................................12
8.2 Has the Bookworm Bookshop done anything unlawful? Has Harmony Publishers done
anything unlawful?....................................................................................................................12
8.3 Has Penny acted lawfully? Explain your answer................................................................13
8.4 Is it lawful to create problem in supply and demand? Why or why not?...........................13
8.5 Explain what is meant by a cartel.......................................................................................13
ACTIVITY 9..................................................................................................................................13
9.1 Has Jacob done anything unlawful?....................................................................................13
9.2 Has Rory fulfilled his obligations as an AFS licensee?......................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Law governing an agreement between two parties for creating a mutual obligations
enforceable by law is termed as contract law. A agreement must contain mutual assent, valid
offer and acceptance, adequate consideration, capacity and legality to become a contract.
Consumer law is considered as an area of law that regulates private law relationships between
individual consumers and the businesses that sell those goods and services. Through this law a
equitable balance is created among buyers and sellers to prevent sellers from using unlawful
tactics in the process of dealing with various consumers (Ayres and Schwartz, 2014). In this
project legal principles in contract and consumer law, formation of contract, contractual
performance and principles of R-contracts are mentioned. Trade practices and financial services
for consumer protection and different areas needs to be explored.
ACTIVITY 1
1.1 Fundamental difference between an agreement and a legally binding contract
Agreement Legally Binding Contract
Agreement is just a promise forming a
consideration.
Contract is an agreement enforceable by law.
Only offer and acceptance is required for
agreements.
All the essentials like offer and acceptance,
consideration is required for contract.
Agreements possess wider scope then
contracts.
Narrow scope is available for contracts.
Agreement= Offer + Acceptance Contract= Agreement + Enforceability by law.
1.2 Contracts which requires advise form financial services provider
Contracts which involves agreements in relation to different types of finances are
required to be made with advise of financial service provider (Bar-Gill and Ben-Shahar, 2013).
Name of these contracts are as-
 Fixed price contract
 Unit pricing contract
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 Cost plus contract
 Time and material
1.3 Circumstances when a private agreement between a husband and wife be considered
contractually binding
In this case various private agreements are entered by husband and wife when they are
together and after their separation these agreements will become contractually binding when
three components will be available in it. These components are offer, acceptance and
consideration. Each agreement must be entered with free consent and a adequate amount of
consideration must be provided for the same to make it binding in each circumstances.
1.4 What is a 'letter of intent' ?
Letter of Intent (LOI) is a document which outlines the general plans of an agreement
between two or more parties before a legal agreement is finalized. Through this a serious
commitment form one involved party to another. Such document is likely to be used in lease
negotiations, providing scholarships and more (Brulez, 2013). It is also used to facilitates the
start of a business deal or project between the parties involved by identifying the key business
and contractual understanding to form final contract.
1.5 What is a 'letter of comfort'?
It is a written document through which financial assurance is provided that the obligation
will be met appropriately. Through this latter financial soundness of a business is identified and
it is signed before pricing decision of business organisation. Different forms of comfort letter are
Bank comfort letter, Companies Conform letter and Underwriters conform letter. A commercial
situation where letter of comfort is used is where the issuer is unable or unwilling to give
guarantee but wishes to give some amount of comfort to the leaders.
1.6 Methods of communication of offer and acceptance
In the process of making an offer and acceptance communication can take place with
physical presence or it can be made through digital medium. Some of the methods are as-
 Oral conversation
 Telephone calls
 Letter
 E-mails
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 Telegraphs
1.7 List some of the ways an offer may lapse
An offer is lapsed with any of the following ways-
 Revocation of the offer by the offeror
 Counter offer made by the offeree
 Rejection of offer by offeree
 Time of offer lapse
 Death and disability of either of the party
1.8
It is a case of Counter offer when an offer is made to buyer and that offer is not accepted
and counter offer can be made to seller. The seller can again make an offer to buyer. Here the
same situation has arises and Valentine and Tristan made counter offer. At the time when Tristan
made an offer for 4000 then this offer was rejected and after making counter offer it is accepted
(Cherednychenko, 2014). Valentine offer of acceptance was not supported by Tristan and her
claim for the book care for having a contract is not correct. As a contract requires a proper offer
and acceptance to become legally binding and this feature was missing in this case and
Valentine's claim is not correct.
ACTIVITY 2
2.1 Conditions of contract act for minor
As per section 8 of Australian contract act, 1970 a minor is a person under the age of 18
years for the purpose of Civil acts and contracts are termed as civil acts. A minor is not bound by
the contract unless the following circumstances arises. Some of the situations are as follows-
 Contracts necessary to ensure health and safety such as food, shelter and clothing of
minor.
 At the time of entering into banking agreements, contact with minor is valid.
 Employment contracts of minor is valid for example- in entertainment industry and for a
contract based on personal talent (Cseres, 2013).
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2.2 Intoxicated contracts
As per contract act a when a intoxicated person enters into a contract, the contract can
either be enforceable by law or can be held voidable by the intoxicated person. These contracts
can be held voidable when-
 Intoxication was severe enough that the person entering into contract was incapacitated.
 Other party to the contract was aware of the intoxication at the time (Hartkamp, 2015).
Intoxicated contracts will always be voidable by the person who was cheated because the
other party was aware of the default and manipulated terms of the contract for undue advantages.
2.3 Commercial contract
In this case a contract was entered in relation to construction and a clause was made for
the payment of $15000 when builder will be in breach of National Construction Code. This
amount was recovered from builder on the basis of alleged breach. This is invalid because of an
inconsistency with environmental protection legislation. In this case as no compliance was made
with the specific conditions mentioned in the clause of construction contract then Tom can
recover the amount of $15000 paid for breach.
2.4 In what relationship does the presumption of undue influence arise?
Undue influence is when an individual is induced to act otherwise than by their own free
will or without adequate attention to the consequences. A presumption of undue influence arises
once it is shown that the relationship between two parties are well recognised. Also for undue
influence parties must act on the facts, constitutes a relationship of trust and confidence among
themselves (Howells, Ramsay and Wilhelmsson, 2018).
2.5 Guarantor and legal responsibilities of guarantor
Guarantor is a person who grantees to pay a borrower's debt to the third party in the event
when borrower is not able to meet provided loan obligations. In the contract when grantee is
provided following are the legal responsibilities provided to guarantor-
 Guarantor are bound to meet the accepted debt obligation for which grantee was
provided.
 All the litigation in case of non payment of debt amount will be faced by the guarantor of
the transaction.
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2.6 Circumstances to rely on guarantee
In the given case some of the conditions must be fulfilled so that bank could successfully
rely on the grantee provided by Chinese parents of young couple on default of their loan and
some of the circumstances are-
 Concurrence of all the parties to make surety that all the parties got agreed with the
contract of loan.
 Guarantee must be maid with a main purpose to ensure that a debt is paid between
parties.
 A consideration must be their among young couple and guarantor to make guarantee
valid.
 When all these requirements with no misrepresentations and concealment is made then in
that case bank will rely on such guarantee.
2.7
It is a case of contract law which specifies some conditions which leads to validate the
contract entered by two individuals. As per contract act a contract when entered by an individual
who does not possess sound mind will be termed void and invalid. As Tara possess a mild mental
disability and this make her incapable to enter into any legal agreement. In this case legal
representative of Tara is legally supported to recover the amount which Dawn made Tara invest
in some business (Howells and Wilhelmsson, 2017). Dawn can take action against legal advisor
Angle for providing advise based on absolute information. On the contrary Dawn is liable to
return amount of $20000 to Tara for her contribution towards investment.
ACTIVITY 3
3.1 Why is it important to identify the ‘terms’ of a contract?
Understanding a contract is important to clearly understood various elements of contract
for which it is entered. Terms in a contract are the legally binding statements in a contract that
provides specified criteria for a business to perform. Terms can be in written or oral form and
they provides basis to parties to make judgement for entering into the contract. Terms define all
the conditions of the contract in detailed manner and at the time of breach it becomes easy for
each individual to identify the party in default.
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3.2 Differences between conditions and warranties
Conditions Warranties
These are the essential to the main purpose of
the contract.
These are collateral to the main purpose of the
contract.
Non- performance of the conditions may leads
to failure of the contract.
Failure to perform warranties will not involve
breach of contract.
Breach of conditions may be treated as breach
of warranties when both the parties will be
agree to this.
Breach of warranties can not be treated as
breach of conditions.
Example- 500 Christmas decorations will be
provided with a condition that order will be
made before 10 October to make delivery of
goods in December.
Example- Contract for supply of this
decoration was made to be provided in three
different colours and all made in red colour.
3.3 Effect of a signature on a contractual document?
A document is a legally binding element which can be upheld in court. A contract when
entered among two parties in written form and signature on that document by the parties involves
binds them towards terms and conditions of the contract. Signature possess a positive effect as a
signed document is valid and held both the parties responsible to perform a contract. When one
party do not read terms and conditions of the contract and signs it then also liability can be
established which is not possible when signature to the contract was not made (Liao, 2014).
3.4 Contractual transactions which are required to be recorded in a written document
As per Australian legislation there are certain types of contract that needs to be in writing
and they are-
 Contracts related to land transactions.
 Sale of goods when made in excess of $500.
 Contracts lasting for more then a year is advisable to be provided in written form.
 Contracts that are entered to become responsible for someone else debt (guarantee
contracts)
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3.5
In this given case Rolando is correct for not accepting liability for loss or damaged goods.
As condition for non acceptance of liability in any condition was printed in his shop and also it
was their in the slip which was provided to Michele at the time of depositing electronic items. As
it was a oral agreement to repair electronic appliances and at the time of transaction both the
parties got agree to the conditions mentioned. So, Rolando can not be held liable for any amount.
3.6 Standard form contract and its type
Standard form contract is termed as a legally binding agreement among the parties
involved in the contract. One party possess all the bargaining power and uses it to write the
contract primarily for personal benefits.
Commercial Standard Form Consumer Standard Form
This form of contracts are applicable for
performing various contractual agreements
among two business enterprises.
For example- charging a 10% rate of interest to
all businesses for loan amount.
These are the non negotiable contracts through
which two consumers can enter into contract
but can not make change to contract.
For Example- purchase of goods are made on
prices prevailing in market.
ACTIVITY 4
4.1 In what circumstances can a third party (‘stranger’) to a contract be held liable in the event of
a breach?
A stranger to the contract can not be sued even if the contract is for benefit of the third
party and this is known as doctrine of privity of contract. Circumstances when third party can be
held liable for breach includes contracts involving trusts, insurance companies, agent-principal
contracts and case involving negligence. Copyright is an intangible asset for a business as it
provides businesses right to enjoy competitive advantage for their original work.
4.2 When rights can be assigned due to operation of law
Rights are assigned due to operation of law in following situations-
 When situations become adverse and to make lawful settlement operations of legal
system needs to be performed.
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 When the issue involved is related to the estate and person holding estate died.
 When a issue arises in the contract of joint tenancy.
4.3
In this case a situation of partial compilation of contract is created. Payments were made
in certain steps and at the time of completion of one step and payment is made then it will be
termed as completion of contract. Here Sheila's claim to get back the first two progress claims
will not be successful as they are made after completion of the terms for the payment.
4.4 What is the purpose of a force majeure clause and its application
It is a contract provision through which parties of the contract are relieved form
performance due to arising of some specified circumstances beyond their control. It is applied in
the situation when circumstances arises which makes performance of contract inadvisable,
commercially impracticable, illegal and impossible (Loos, 2016). All the activities made the
contract performance irrelevant and non performance is validated.
4.5 Employment Contract
This is a case involving a issue under breach of employment contract as Paige and Annie
entered into 2 years employment contract. Breach of this contract by Annie will incur damages to
Paige. In order to access damages period of non employment that Paige will face and all other
losses that will incur will be compensated so that re-establishment can be made.
ACTIVITY 5
5.1 Define the term ‘E-commerce’
E-commerce can be explained as the electronic process where buying and selling of any
of the products takes place with the help internet. It is one of the easy process for conducting the
business as physical presence is not necessary in it (Mak, 2018).
5.2 Are there any exceptions to the type of contracts which can be made electronically?
According to the terms and condition of Electronic Transaction Act, 1999 it is needed to
be understood that any of the contract will not be counted as valid until and unless it has been
signed in the physical presence of two or more then two witness.
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