Essentials of Contract Law: Case Analysis and Consumer Guarantees

This assignment analyzes the essentials of contract law through a case study involving a cafe and a customer, Avinash. It examines the formation of a valid contract, including offer, acceptance, consideration, and intention to create legal relations. The assignment then delves into the validity of an exclusion clause under the Australian Consumer Law (ACL), focusing on misleading conduct and consumer guarantees, particularly regarding acceptable quality of goods and services. The solution concludes by differentiating between express and implied terms in a contract, referencing the Moorcock case and the ACL's statutory implied terms. The assignment highlights the importance of implied terms, especially those related to consumer protection, ensuring that goods and services meet acceptable quality standards. The analysis incorporates relevant case law and statutory provisions to support its conclusions.

Running Head: ESSENTIALS OF CONTRACT
Essentials of contract
Name of the Student:
Name of the University:
Author Note

1ESSENTIALS OF CONTRACT
Table of Contents
Answer 1..........................................................................................................................................1
Answer 2..........................................................................................................................................3
Bibliography....................................................................................................................................6

2ESSENTIALS OF CONTRACT
Answer 1
Issue
The issue in this case is to identify whether Avinash and the cafe have entered into a
valid contract through the fulfilment of its elements.
Rule
For the contract to be validly found it has to comply with all legal requirements which
includes the fulfilment of its elements such as offer, acceptance, consideration and intention to
create legal obligation.
A valid offer has been described by the case of AGC (Advances) Ltd v McWhirter1.
The court stated that an expression which is complete in nature so that another person may be
lured by its terms to get into a contract is an offer. However if such expression is incomplete it
becomes an invitation to offer.
In the case of Carlill v Carbolic Smoke Ball Company2 the court stated that there must
be an intention to create legal obligation between the parties in order to establish that a valid
contract has been formed between them. The court finds out such intention through the objective
test.
In R v Clarke3 the court stated that acceptance can only be in relation to an offer and its
terms must be totally same as that of the offer.
Application
1 (1977) 1 BLR 9454
2 [1893] 1 QB 256
3 (1927) 40CLR 227

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As discussed in the above case the menu which has been provided by the restaurant in
this situation would be an invitation to an offer as it does not have complete terms. When
Avinash came into the restaurant and ordered through the menu it was an offer. The offer was
duly accepted by the cafe. There was a valid consideration in this case of food and payment.
There for a valid contract has been found between the parties.
Conclusion
There is a valid contract between Cafe and Avinash.
Issue
Whether the exclusion Clause is valid in this case according to the provisions of the
Australian Consumer Law.
Rule
Provisions in relation to consumers are governed by the Australian Consumer Law
provided through The Australian Competition and Consumer Act 2010 (Cth) schedule 2.
Section 18 of the ACL states that there must be no misleading and deceptive conduct by a
person in relation to trade and Commerce . Consumer guarantees with respect to the supply of
goods by seller has been provided through section 51 to 59 of the ACL. It has been stated by
section 54 that any goods which has been purchased has to be of quality which can be accepted
by a reasonable person.
In relation to the supply of services provisions has been provided through the provisions
of section 60-64 of the ACL. The failure to comply with the provisions of consumer guarantees
results in penalties for the seller under the provisions of section 260 of the ACL.

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A person is not allowed to add exclusion clause in a contract which may restrict the
consumer guarantees provided to a consumer.
Application
There has been contract between Avinash and the cafe in relation to goods in form of
food and services in from of the services in relation to the services provided by the restaurant.
According to the provisions of the ACL these goods and services have to be of an acceptable
quality. In addition the cafe is not allowed to include an exclusion clause which may limit it's
liability towards consumer guarantees as provided through section 64A of the ACL.
Conclusion
Avinash is not bound by the terms of the exclusion clause incorporated by the cafe.
Answer 2
Introduction
The provisions of a contract govern the obligation and rights imposed and provided to
parties in relation to the contract. Every contract has two kinds of terms which are divided into
Express terms and implied terms4.
Main body
Terms which are not agreed by the parties in an express Manner are known as implied
terms. The court has a duty to analyse whether such terms are present in a contract or not.
Implied terms are said to be present in a contract only in situation where the court finds the
4 Bartling, Björn, and Klaus M. Schmidt. "Reference points, social norms, and fairness in contract renegotiations."
Journal of the European Economic Association 13.1 (2015): 98-129.

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incorporation of these terms as necessary in order to ensure the continuation of the contract.
These terms cannot be incorporated only because they may make the contract just or fair. One of
the primary cases in relation to implied terms is the The Moorcock5 case.
A term the party to the contract expressly agree upon is known as an express term. These
terms can come in form of both oral and written contracts. The parties to the contract are aware
of express terms before the contract is entered upon into6.
The primary difference between an implied term and express terms is that and express
term is written into a contract where as an implied terms is not present in the contract with
respect to the knowledge of the parties7. There are various factors which lead to the incorporation
of an implied turn into a contract. As discussed in the case of Balmain New Ferry Co Ltd v
Robertson8 an implied term may be included into a contract with respect to past deals or
customs9. The Australian consumer law also governs implied turn and in this situation they are
called statutory implied terms.
In relation to the first question it can be stated that there is a presence of both implied and
express terms. The express terms in relation to the first question is that the restaurant would
serve beverages and food to Avinash and Avinash in return would pay price for them. This term
is also the condition of the contract as it is fundamental to the formation of the contract between
the parties. No the parties have not agreed to the fact that the food provided to Avinash would be
5 (1889) 14 PD 64
6 Parker, David, and Gerald Box. Business Law for Business Students 2008. Lawbook Company, 2008.
7 Bayern, Shawn. "Offer and Acceptance in Modern Contract Law: A Needles Concept." Cal. L. Rev. 103 (2015):
67.
8 (1906) 4 CLR 379
9 Parker, David and Box, Gerald, (author.) Business law for business students (Third edition). Pyrmont, N.S.W.
Lawbook Co, 2013

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of acceptable quality however this would be incorporated into the contract between them as an
implied term as without it the contract would not be able to function properly10. This provision is
also required under the rule stated in section 54 of the ACL. Also this term is not present in the
contract it would be held by the court that this contract has to incorporate such terms in form of
implied terms.
10 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.

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Bibliography
Bartling, Björn, and Klaus M. Schmidt. "Reference points, social norms, and fairness in contract
renegotiations." Journal of the European Economic Association 13.1 (2015): 98-129.
Bayern, Shawn. "Offer and Acceptance in Modern Contract Law: A Needles Concept." Cal. L.
Rev. 103 (2015): 67.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Parker, David and Box, Gerald, (author.) Business law for business students (Third edition).
Pyrmont, N.S.W. Lawbook Co, 2013
Parker, David, and Gerald Box. Business Law for Business Students 2008. Lawbook Company,
2008.