Case Study: Contract Law Issues - John, Span & Spic, Consumer Law

This case study analyzes a contract law dispute between John and a dry cleaner, Span and Spic. The assignment examines whether a contract was formed when John left his suit for dry cleaning, focusing on the elements of offer, acceptance, and consideration. It delves into the application of exclusion clauses printed on the receipt and assesses whether the clause is enforceable. Furthermore, the case considers John's rights under consumer law, evaluating whether he can seek remedies for any damage to his suit. The analysis considers relevant legal principles, including common law and consumer protection legislation, to determine the rights and obligations of each party and determine the outcome of the case.

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Contents
Part A....................................................................................................................................................1
Issue...................................................................................................................................................1
Law....................................................................................................................................................1
Application........................................................................................................................................2
Conclusion.........................................................................................................................................4
Part B.....................................................................................................................................................4
Issue 1....................................................................................................................................................4
Law....................................................................................................................................................4
Application.........................................................................................................................................5
Conclusion.........................................................................................................................................5
Issue 2....................................................................................................................................................5
Law....................................................................................................................................................5
Application........................................................................................................................................6
Conclusion.........................................................................................................................................6
Reference List.......................................................................................................................................7

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Part A
Issue
As per the facts, John has completed his graduation and is carrying on his job with a reputed
consultancy firm. John is very keen to bring Big Bank and make it one of the clients of his
firm. After much hassle, he was able to fix a meeting with the CEO of the Bank. The meeting
was fixed on 15th May 2:30 PM. He wants to get the suit dry cleaned and thus visited the local
drycleaner, Span and Spic and gave his suit in exchange of a receipt. Now, the facts reveal
that whether the contract is made by John with Span and Spic?
Rule
When any two people want to establish any contractual relationship, then, it is necessary that
they must follow all the rules of the contract formation so that they can bind themselves with
the contract. A contract is a legal document which portrays the rights and liabilities of the
contractual parties. It is not every document that can be termed as a contract when made by
two or more parties. Rather, there are few contractual elements which must be comply with to
hold any document as a contract and which has the enforceability of law.1
Now, the main elements for contract comprises of an offer supported with an acceptance and
enforced with a consideration which is made by the capable parties with legal intention.
To start the formation of any contract, there is a need of an offer which is made by an offeror.
The terms and conditions which any offeror wants to be comply with by any other person
(offeree), then, such terms must be communicated to the offeree. The act of the
communication of the terms by an offeror to an offeree is called a process of an offer under
the law of contract and is rightly evaluated in Harvey v Facey2. When any offer is made then
it is very necessary that the same must reach the offeree and is decided in Carlill v Carbolic
Smoke Ball Co3. The communiqué of offer can be made by conduct or by oral statements or
in written form. In the leading case of Carlill v Carbolic Smoke Ball Company an offer was
made by conduct and was held to be valid in law. Whatever may be the mode, the only
requirement is that the same must be communicated in order to hold the same as valid in law.
The offeree when comes in the acquaintance of the tender then the offer is considered to be
final and complete and is held in R v Clarke4
1 Paul Latimer. Australian Business Law 2012, CCH Australia Limited. 2012.
2 Harvey v Facey [1893] AC 552.
3 Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1.
4 R v Clarke [1972] 1 All ER 219.

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Now, the offeree when receives the offer and when desires to gave his consent to the same,
then, an acceptance is sad to be made and is held in Masters v Cameron5. When any
acceptance is made then it is very necessary that the same must reach the offeror and is
decided in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (NSW)6. The
communication of acceptance can be made by conduct or by oral statements or in written
form. In the leading case of Van Den Esschert v Chappell7an acceptance was made by
conduct and was held to be valid in law. Whatever may be the mode, the only requirement is
that the same must be communicated. In Felthouse v Bindley8 silence was not considered to
be a valid mode of conveying an acceptance and the same was held to be invalid in law.9
When an acceptance is made by deviating with the terms of offer then it is counter offer
which revokes offer (Hyde v Wrench10. But, it was held in Stevenson, Jaques, & Co v
McLean11that when the party’s only exchange information’s between them then it is not an
act of either offer or acceptance, but, did not affect the sanctity of any of the promises.
When any offer and acceptance is made, then, a valid agreement is made by the parties. Now,
when any promises are made then it is necessary that the promises must be made with legal
intention. If the parties do not have any legal intention, then, there is no enforceable contract.
In Balfour v Balfour12the parties with family relation do not hold any kind of legal intonation
and as per Murphy v Simpson13 the parties with commercial relation do have legal relation.
But, if evidence can be laid down then the legal presumptions are rebuttable in nature.
Further, the promises which are made by the parties should be supported with some kind of
real value which has sufficiency in the eyes of law and is called consideration and is held in
Roscorla v Thomas14. When there is no consideration, there can be no enforceable contract in
law.
Also, the parties must be capable to contract and is held in Nash v Inman15.
5 Masters v Cameron (1954) 91 CLR 353.
6 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (NSW) (1988) 14 NSWLR 527.
7 Van Den Esschert v Chappell [1960] WAR 114.
8 Felthouse v Bindley (1862) EWHC CP J 35.
9 David Parker and Gerald Box, Business Law for Business Students, (Lawbook Company, 2013).
10 Hyde v Wrench (1840) 49 ER 132.
11 Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346.
12 Balfour v Balfour [1919] 2 KB 571.
13 Murphy v Simpson [1957] VLR 598.
14 Roscorla v Thomas (1842) 3 QB 234.
15 Nash v Inman (1908)

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Application
A step by step approach is taken to understand as to whether there is a contract.
John fixed a meeting with the CEO on 15th May 2:30 PM. Till now there was no
communication that took place amid John and Span and Spic which has resulted in any kind
of contractual relationship between the two of them.
In order to look best for the meeting John wishes that he must wear his suit. He wants to get
the suit dry cleaned and thus visited the local drycleaner, Span and Spic. The suit which John
wants to wear is a tailor made suit and is very costly.
Till now also, there was no communication that took place amid John and Span which has
resulted in any kind of contractual relationship between the two of them.
Now, when John enters the shop of Span and Spic, there was a notice board that was
displayed which gave all the details of the services that are set out by Span and Spic and the
various charges that are laid down by the dry cleaner for every service.
John selected the premium clean option. He communicated with the shop assistant and sought
information as to whether the finest tidiness is the right choice for the suit as the suit is a
hand craft superfine merino wool suit.
Now, at this stage it is submitted that it is only a query that was sought by John from the shop
assistant. By applying the law laid down in Stevenson, Jaques, & Co v McLean any
communication of seeking information of query was never regarded as an act of making offer
or confirmation offer.
Thus, the shop assistant responded that they use the premium excellence equipment and
compounds and thus there will be no damage that can be suitable to the suit of John.
So, the repose of the shop assistant is also the reply to the query of John and thus there was
no offer or any kind of acceptance that was made by the shop assistant.
Now, John decides that he must get his suit cleaned from San and Spic. He hands over the
suit to the shop assistant. Thus, at this stage it is submitted that the handing over of suit by
John to the hop assistant is an offer that is made by him through conduct as per Carlill v
Carbolic Smoke Ball Company. Thus, at this stage a valid offer was made by John.
Also, the shop assistant took the suit of John and issued him with the receipt. Thus, the shop
assistant also have given his consent by conduct and thus as per Carlill v Carbolic Smoke
Ball Company a valid acceptance was made between the parties.
It is now submitted that when an offer is made by John by conduct and when the same is
received by the shop assistant, then, an acceptance is made by conduct. When the promises

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are made then both the parties have legal intention. They are sharing a commercial
relationship and thus as per Murphy v Simpson there is legal intention amid the parties.
Further, when John and the shop assistant have exchanged the promises, then, the shop
assistant has handed over a receipt with the presence which John has to pay for the service.
Thus, there is presence of consideration amid the parties to hold the contract enforceable as
held in Roscorla v Thomas.
Also, both the parties are capable to make contracts.
So, all the contractual elements are present.
Conclusion
To conclude, it is submitted that an offer and acceptance are made by John and the shop
assistant by conduct and thus the promises are made validly.
Part B
Issue 1
Whether John can avoid the application of the exclusion clause that was made part of the
receipt that was issued by the shop assistant of Span and Spic in order to hold the dry cleaner
for the loss that is caused to his suit?
Rule
The present issue is resolved by applying the principles under common law and the
Consumer protection Act.
Common law
The formation of any contract results in establishing a biding relationship amid the parties
and the parties to the contract must comply with the terms of the contract. One of the terms
which are normally made part of the contract and which is normally applied by the parties is
exclusion clause.
The terms which excludes the liability of the parties to the contract is considered as an
exclusion clause.
i. It is necessary that the exclusion clause must be included in the contract before the
formation of the contract and is held in Olley v Marlborough Court Ltd 16.
ii. If the contract in which the exclusion clause was made part of is a signed
document, then, it is settled that the exclusion clause is applicable on the parties
irrespective of the facts whether the contract or the exclusion clause was read by
the parties or not.
16 Olley v Marlborough Court Ltd [1949] 1 KB 532.

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iii. Whether the clause was made part of the signed or unsigned contract, the party
can exclude only such liability which was covered by the exclusion clause. If the
liability is not covered by the clause then the liability will be borne by the
breaching party.
iv. If the exclusion clause was unilaterally imposed by the party to the contract the he
must reasonably bought the same in the notice of the other party in order to rely
on the clause and is held in Parker v South Eastern Railway Co17.
Application
A valid contract was made amid John and the shop assistant of Span and Spin. Now, a receipt
was provided by the shop assistant wherein a statement was made according to which the dry
cleaner will have no responsibly for the damage if caused to the garment. Thus, an exclusion
clause was contractual part. It is submitted that the receipt was not a signed document. Also,
the clause was already part of the receipt when the same was issued to John.
Now, the shop assistant incorporated the clause on their own. Thus, as per Parker v South
Eastern Railway Co it becomes the duty of the Span and Spin or the shop assistant to bring
the clause within the knowledge of John by rational means. Since, no such attempt was made
by the shop assistant to bring the clause within the knowledge of John thus the exclusion has
no relevance.
Conclusion
John can sue Span and Spin for the loss that is caused to him. This is because the exclusion
clause has no relevance. The clause was made part of the receipt without bringing the same in
the knowledge of John
Issue 2
Whether John has any right under the Consumer Law?
Rule
Consumer Protection Law
Under the consumer protection Act, any person is said to be the consumer provided he has
acquired the goods of worth not more than $40,000 OR if the goods are more than the worth
$40,000, then, the same are acquired for private and domestic use and is rightly established
under section 3 of the Act.
17 Parker v South Eastern Railway Co (1877) 2 CPD 416.

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Now, as per the Australian Consumer law, there are obligations that must be comply with the
parties to the contract. one of the obligation of every service provided under section 60-62 of
the Act is that the services that are cater by him to the consumer should be such that are of
best and adequate superiority and the service must be provided with all due care an diligence.
This obligation is compulsory. As per section 64 of the Act, the obligations that are marked
under section 60-62 of the Act cannot be excluded by relying on any kind of clause and thus
is not valid.
Application
Also, by applying the Australian Consumer law, it is submitted that John has took the
services from Span and Spin and considering that the services sought by him s not more than
the value $40,000, thus, as per section 3 of the Act, John was held to be the consumer. Also,
if the service is for more than $40,000 still the services are sought for personal use, thus, John
has held to be the consumer. Now, it is an obligation under section 60-62 upon Spin and Span
that the services so provided by him must be of acceptable quality. However, when John took
the delivery of his coat on 13th May he found that the jacket was damages and the colour has
changed. Now, the services under section 60-62 of the Act are compulsory obligation of the
service provider. Thus, by applying the section 64 of the Act, such services cannot be
excluded by relying on any exclusion clause. Thus, the clause has no applicability.
Conclusion
That the clause also has no relevance under the consumer law.

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Reference List
Books/Articles/Journals
Latimer, Paul. Australian Business Law 2012, CCH Australia Limited. 2012
Case laws
Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1
Harvey v Facey [1893] AC 552
Balfour v Balfour [1919] 2 KB 571.
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (NSW) (1988) 14 NSWLR 527.
Felthouse v Bindley (1862) EWHC CP J 35.
Hyde v Wrench (1840) 49 ER 132.
Masters v Cameron (1954) 91 CLR 353
Murphy v Simpson [1957] VLR 598.
Nash v Inman (1908)
Olley v Marlborough Court Ltd [1949] 1 KB 532
Parker v South Eastern Railway Co (1877) 2 CPD 416
Roscorla v Thomas (1842) 3 QB 234.
R v Clarke [1972] 1 All ER 219.
Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346.
Van Den Esschert v Chappell [1960] WAR 114.