TLAW-101 Business Law Assignment: Analysis of Contract Law Principles

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TLAW-101
Business Law
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Contents
Introduction......................................................................................................................................3
Question 1....................................................................................................................................4
Question 2....................................................................................................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Contract Law is mostly based on the principles of common law. In Australia, it is enforceable
only when a valid contract is established between the parties. There are certain requirements of
the contract which must be fulfilled for its enforceability. In the assignment, the principles of
contract law are discussed and analyzed with reference to the applicable case laws and
appropriate legal solution are recommended to legal problems specified in the given case
scenario.
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Question 1
Issue
An advertisement was placed by Mojo Beverage to catch Lord Harry, a trout from the lake.
Anyone who catches the fish was to be rewarded with $100000. However, it was later found that
there is a printing error in advertisement and the actual amount is $1000. The issue here is to
identify the liability of Mojo Beverage in case of acceptance of the offer.
Rule
Based on the principles of contract law, a contract can be made enforceable only when all the
essential contract terms are fulfilled. These terms include offer, acceptance, consideration, lawful
object and intention of parties (Poole, 2016). A contract is formed when the offer made is
accepted by the party to whom it is addressed and the transaction involves a valid consideration.
In addition, all other essential conditions are fulfilled.
Under contract law, when an offer is made to the public at large for providing a reward, which is
to be accepted by the fulfillment of certain conditions, it is called a unilateral offer (Law
Teacher, 2018). Such an offer is accepted when any person performs the conditions stated in the
offer. On performance, the offer shall be deemed to be accepted and is binding. The party
making the offer will then be bound to pay the promised reward to the other party.
Modification or Revocation of Offer
The terms of an offer can be modified or it can be revoked before acceptance. Once an offer is
accepted, no modification or revocation shall be valid and the offeror shall be bound by the terms
of the original offer. Such modification and revocation must be communicated by the same mode
by which the offer was originally made(MacQueen & Thomson, 2016).
Similarly, in the case of unilateral offers, modification or revocation cannot be made after an
offer is accepted but such modification or revocation shall be valid if made before acceptance.
However, unlike other offers, in unilateral offers, mode of communication of modification or
revocation need not be compulsorily same to the original offer. Mere notice of change of terms is
valid.
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Application
In the given case scenario, Mojo Beverages made a unilateral offer to the public at large, on
acceptance of which it shall be liable to pay $100,000. However, it was later announced that the
terms of the offer are incorrect and the actual amount is $1000.
For the purpose of the validity of the contract, a decided case of Australian Woollen Mills Pty
Ltd v. The Commonwealth (1954)can be considered(Stone, 2014). The High Court of Australia
in the given case stated that for a unilateral contract to be formed, there must be a promise made
‘in return for’ performance of the act. In the case of Mojo Beverages, the promise was made to
pay $100,000 in return of performance of terms i.e. catch Lord Harry. Therefore, it is a valid
unilateral contract.
With reference to terms of the offer, in a landmark judgment of case Hyde v Wrench [1840], the
court stated that in case a counter offer is issued, then it cancels the original offer and such
modified or counter offer is valid (Charman, 2013).
Ben performed the terms and caught Lord Harry. He was aware of the changed terms at the time
of performance of offer terms. Based on the contract law principles, the modified terms of the
offer are valid when they are communicated to the public, irrespective of the mode of
communication under the unilateral contract. Here, Ben has communicated the modified terms
and even though the representative of Mojo Beverage did not say anything, the communication
was valid. Therefore, the modified terms are enforceable.
Conclusion
With reference to applicable laws, it can be concluded that there was a valid unilateral contract
between Mojo Beverage and Ben and the liability of Mojo Beverage to pay the reward is limited
to $1000. This is because Ben had notice of the modified terms before the performance of stated
terms.
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Question 2
a) Issue
Is there a valid contract between Dorper Sheep Sellers Pty Ltd and Livestock Brockers when
Livestock Brockers gave its acceptance on 14 June through fax? What the rights and liabilities of
Livestock Brockers?
Rule
For a contract to be enforceable, there must be a valid offer and acceptance. An offer made must
be accepted by the offeree to form a valid contract. Such acceptance is deemed to be valid only
when it is communicated to the person making the offer.
Application
In the given case scenario, Livestock Brockers sent a letter on 6 June, inquiring about the terms.
In case of Stevenson v. Maclean [1880], the court stated that when an offeree makes an inquiry
to the offeror with reference to the offer made with the intention of seeking further clarification,
then it does not qualify as a counteroffer or an acceptance (Chen-Wishart, 2012). By such acts,
the original offer is not invalidated and therefore it remains active.
Based on the above-mentioned case, it can be stated that when an inquiry was made by Livestock
Brockers on June 6 and no response was given by Dorper Sheep, the original offer was still in
existence.
Further, in the decided case of Hyde v. Wrench [1840], it was stated that there is a duty of
offeree to either confirm or deny the offer. Such acceptance must be given without bringing any
deviation to the terms of the original offer and must be given in the stipulated time period. If any
acceptance is given according to the terms stated in the offer, then it shall be deemed that a valid
contract is enforced between parties (Graw, 2012). When applying the principles of this case to
the given case scenario, it can be stated that the acceptance was given by Dorper Sheep in
accordance with the terms stated in the offer and within the stipulated time. Therefore such
acceptance shall be held valid.
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Conclusion
Based on the applicable principles of contract law, it can be stated that there is a valid contract
between Dorper Sheep Sellers Pty Ltd and Livestock Brockers and Dorper Sheep is bound to sell
the Dorper Sheep to Livestock Brockers. In other words, Livestock Brockers have a right of
enforceability of the contract.
b) Issue
Is there a valid contract between Dorper Sheep Sellers Pty Ltd and Livestock Brockers when the
acceptance was given by Livestock Brockers through fax on 14 June but due to a transmission
error, it was not received?
Rule
Based on the principles of common law, the Postal rule is applicable to acceptance. It is an
exception to the rule of communication of acceptance. In the postal rule, communication is
deemed to have been made when the letter containing acceptance is posted (Turner, 2014).
However, in case of using means of instantaneous communication such as e-mail or fax, the
acceptance is deemed to have been given only on receipt of such communication.
Application
Based on the principles established in the case of Brinkibon Ltd v Stahag Stahl GmbH [1983],
acceptance shall be valid only when it comes to the knowledge of the offeror. Without
knowledge, no acceptance can be held valid (Ramlogan & Persadie, 2012). However, the postal
rule is an exception to this rule and in the communication of acceptance by post, it is deemed that
the acceptance is made when the letter containing it is posted.
Further, the postal rule does not apply in cases when the mode of communication used is
instantaneous. In decided case of Entores Ltd v. Miles Far East Corporation [1955], it was held
that when an instantaneous mode of communication is used for communication of acceptance,
then the normal rules of acceptance shall be made applicable without any exception. In other
words, the acceptance shall be deemed to have been made when it comes to the knowledge of the
person who made the offer (Kadir, 2012). When the decision of this case is applied on the case of
Dorper Sheep Sellers Pty Ltd and Livestock Brockers, it can be stated that the acceptance given
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by Livestock Brockers shall not be deemed to be valid unless it comes to the knowledge of
Dorper Sheep.
Conclusion
It can be concluded that in case the fax containing acceptance is not received by Dorper Sheep
due to a transmission error, the acceptance shall be deemed to have not been given. As a result,
there is no contract formed between the parties.
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Conclusion
The principles established under common law determine the validity of an offer or acceptance.
Without any valid offer or acceptance, a contract cannot be formed. Here, it can be concluded
that communication plays a significant role in evaluating the validity of a contract. Without
appropriate communication, the contract cannot be held valid.
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References
 Charman, M. (2013). Contract law. Willan.
 Chen-Wishart, M. (2012). Contract law. Oxford University Press.
 Graw, S. (2012). An introduction to the law of contract. Thomson Reuters.
 Kadir, R. (2012). Communication of acceptance in an electronic age. Advances in
Natural and Applied Sciences, 6(6), 715-723.
 Law Teacher, (2018). One-sided contract. [Online]. Available at:
https://www.lawteacher.net/free-law-essays/contract-law/one-sided-contract.php
[Accessed on 30 March 2019].
 MacQueen, H., & Thomson, J. (2016). Contract law in Scotland. Bloomsbury Publishing.
 Poole, J. (2016). Textbook on contract law. Oxford University Press.
 Ramlogan, R., & Persadie, N. (2012). 5.4 Email. In Commonwealth Caribbean Business
Law (pp. 92-97). Routledge-Cavendish.
 Stone, R. (2014). Offer and Acceptance. In Q&A Contract Law. Routledge.
 Turner, C. (2014). Key Cases: Contract Law. Routledge.
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