LAW1500: Analysis of Contract and Estoppel in Fast Track Oils Case

This essay analyzes a legal case involving Fast Track Oils Ltd and Jumping Jack Darcy, focusing on contract law principles. The essay identifies two key issues: whether Darcy can claim the $750,000 prize under contract law and if promissory estoppel can enforce the promise. It examines the elements of a valid contract, including offer, acceptance, intention, consideration, and certainty of terms, referencing Australian legal precedents. The application section considers vicarious liability and the implications of a junior official's actions. The analysis concludes that a valid contract existed, entitling Darcy to his weekly payment but not the prize money, and explores the applicability of promissory estoppel to the situation. The essay provides a detailed discussion of the legal principles and their application to the facts of the case.

LAW

Issues
Issue 1: The issue in the given case study is to determine whether a successful claim can be
established by Jumping Jack Darcy for winner prize of $750,000, under the contract law.
Issue 2: The yet another issue in the given case study is to determine whether the doctrine of
promissory estoppel can be used for the enforcement of the promise by Jumping Jack Darcy.
Rules
Rule 1:
In Australian context, the Australian Contract Law as derived from the English common law
governs the matters of contracts between two parties, together with the statute law that is the
laws formulated by the Federal, State, and the Territory parliaments. The contract refers to a
legally binding relationship between two parties which may be in verbal or written form1. The
contract law has specified certain necessary elements to be established by the parties for the
valid contract to exist between them. These necessary elements are extension of an offer and
acceptance thereon; an intention of the parties to create a legal relationship and be bound by
it; presence of consideration; and certainty of terms in the agreement between the parties. The
conditions are explained one by one as follows in detail.
The first essential condition to the contract formation is the extension of offer by one party to
the other, and acceptance of the said offer. The offer is referred to as the proposal made by
one party to the other to do an act or not to do an act. It is imperative to note that an offer may
be a unilateral act or a bilateral act. When the other party provides his or asset to the proposal
made, the process is known as the acceptance of offer. Thus, an offer when accepted becomes
a definite promise by which the parties are bound. The second essential element to a contract
is the intention of the parties to create legal relationship, as stated in the case law of Air
Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd2. By the intention of the creation of a
legal relationship it is understood that the parties can sue each other for the non-performance
of agreed terms to the agreement. The said intentions must be expressed or implied and must
be understood by both the parties as was established in the case of Empirnall Holdings Pty
Ltd v Machon Paull Partners Pty Ltd3. The next essential element is the consideration which
refers to the price paid by one party to the other for the acts mentioned to be done or not to be
1 Paul, Latimer, Australian Business Law 2016 (CCH Australia Limited, 2016).
2 Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309
3 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523

done. It is imperative to note that the existence of consideration is essential, not necessarily
the same must be in monetary form, as was established in the case of Australian Woollen
Mills Pty Ltd v The Commonwealth4. The yet another essential term is that the terms and
conditions must be certain and must be agreed by both the parties in the same manner. Thus,
if the terms are vague, the said essential condition is not fulfilled. Apart from the above, the
basic objective of the contract must be legal as per the laws of the land and the parties must
possess the legal capacity to enter into the contracts.
Further, one of the yet another essential concepts of a contract where the employer and
employee relationship is found is the concept of vicarious liability. By virtue of the vicarious
liability, one person is responsible for the acts of the others due to an underlying relationship.
The most associated relationship with the vicarious liability is that of the employer employee
relationship where the employers are responsible for the negligent or the omitted acts of the
employees. The two essential elements in the said liability is the liability of negligence of
another and the imposition of strict liability or the liability without proof of fault as stated in
the case of New South Wales v Lepore & Anor5.
In addition, it must be noted in order to enforce a claim, the parties to the contract must
ensure that they acted within the terms and conditions of the contract. In addition, the parties
would be entitled to the payment agreed in the form of consideration in the terms of the
contract.
Rule 2:
The rule of promissory estoppel is based on the principles of equity and justice6. The rule of
promissory estoppel states that when one party has made a promise or a representation to
other either by his words or conduct, by virtue of which the legal relations of the parties were
to be affected by acting accordingly, then the parties cannot go back from the promises. The
principle has been established in the popular case law of Walton Stores (interstate) Ltd v
Maher7. The significant characteristics of such principle is that the party making the promise
must act upon it even if the same are devoid of any consideration in legal terms. In addition
to rely on the principle of promissory estoppel, there should be presence of consideration in
the original promise. Thus, when the aggrieved party has made a significant reliance and
acted in a certain manner, then the promisor cannot step away from the promise so made. Yet
4 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 (High Court)
5 New South Wales v Lepore & Anor (2003) 212 CLR 511
6 Amanda P. Stickley, Australian torts law (LexisNexis Butterworths, 2016)
7 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

another important feature of said rule in Australian context is that the same can be enforced
only in relation to pre-existing lawful affiliations.
Applications
Application 1:
On the application of the above stated rules, the following points are noteworthy. There is a
valid contract between the parties namely Fast Track Oils Ltd and Jumping Jack Darcy. The
terms of the contract stated Jumping Jack Darcy to participate in the car races as directed by
the company Fast Track Oils Ltd. Thus, there is a valid terms and conditions to the contract.
In addition, the above terms are supported by a valid consideration that is the weekly
payment to be made by the company to Jumping Jack Darcy in order to participate in the
rallies as directed by the organisation. Apart from this, there is evidence of intention of
creation of legal relationship by the parties as both the parties have legal capacity to contract
and have agreed to associate with each other for the benefits to be derived from the said
capacities. Thus, it can be stated that there is a legally valid contract between the parties
mentioned in case scenario.
In the given case, Jumping Jack Darcy participates in a rally as directed by a junior rally
official in the absence of the possession of roadworthy certificate. It can be stated that the
said participation is valid as it is within the terms and conditions of the contract. It was
mentioned in the terms of the contract that Jumping Jack Darcy must participate in the rallies
as per the directions of the organisation. The rule of vicarious liability comes into play here.
It is vital to note here that the employer is responsible for the acts of negligence committed
by its employees. In the given case scenario, possession of roadworthy certificate was the
essential condition for the participation. However, on the insistence of junior rally official,
Jumping Jack Darcy was allowed to participate in the rally. Hence, organisation is
responsible for the same negligent act.
However, the terms of the contract stated the weekly payment to be made to Jumping Jack
Darcy for the participation and not the price amount of the rally itself. This is because the car
and driver are sponsored by the organisation itself.
Application 2:
The rule of the promissory estoppel when applied to the given case leads to the following
observations. As stated in the rules regarding the application of the promissory estoppel it is

evident that the same are meant to prevent the parties from the disadvantage caused due to the
reliance on the statement of the other party. In the given case, Jumping Jack Darcy relied on
the statement made by the junior official and participated in the rally. As the organisation is
denying the claim of the prize on the basis of non-production of the required certificate,
Jumping Jack Darcy is in a disadvantageous position as he his participation is dependent on
the reliance of the official in his professional capacity.
Conclusions
Conclusion 1: The application of the rule 1 to the case scenario in context of the issue 1, as
discussed in the previous parts leads to the following conclusion. It can be concluded that as
there was an existence of a valid contract between Jumping Jack Darcy and Fast Track Oils
Ltd, both the parties are bound by the terms of the contract. On application of one of the term
to the contract that is “participation as directed” the participation of Jumping Jack Darcy is
valid, because the same was directed by the junior official of the rally, the organiser of which
was Fast Track Oils Ltd itself. Thus, the entity’s reliance on Jumping Jack Darcy not showing
the roadworthy certificate at the start line is invalid. This is because, junior rally official is
stated to be acting in his professional capacity and the organisation is liable for the acts of its
employees. Thus, it can be stated that the Jumping Jack Darcy’s participation is fair.
Accordingly, he must be paid.
The yet another conclusion is that as the terms of contracts are enforceable both ways,
Jumping Jack Darcy would only be claiming the weekly payment that must have been paid
by the enterprise to him for the participation as stated in the terms of contract. Thus, Jumping
Jack Darcy cannot claim the winning amount of $750,000 prize. However, he can still claim a
reasonable weekly payment for his participation was fair and within the terms of the contract
between the two parties.
Conclusion 2:
On application of the rule of promissory estoppel it can be stated that the said condition is
applicable on the allowance of the participation of Jumping Jack Darcy and not on the
amount of the consideration. This means that when Jumping Jack Darcy participated in the
rally, he had relied on statement of junior official of rally for participation and not the change
in the amount of the consideration as was agreed in the earlier contract. Hence, it can be
stated that claim for consideration can be imposed but not for the prize of $750,000.

Bibliography
Books
Latimer, P., Australian Business Law 2016 (CCH Australia Limited, 2016)
Stickley, A. P., Australian torts law (LexisNexis Butterworths, 2016)
Case Laws
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309
Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 (High Court)
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
New South Wales v Lepore & Anor (2003) 212 CLR 511
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387