Contract Law Assignment: Analyzing Contracts, Remedies, and Disputes

This essay provides a comprehensive analysis of contract law principles through a case study. It begins by defining the essential elements of a valid contract, including offer, acceptance, consideration, and intention to create legal relations, applying these concepts to the scenarios presented. The essay then evaluates the legal positions of different parties, such as Allan, Damien, Bernard, and Charlene, examining whether valid contracts were formed and the remedies available for breach or misrepresentation. It delves into the concepts of counter-offers, misrepresentation, and the impact of domestic relationships on contract formation. The essay further explores dispute resolution methods, including mediation and arbitration, highlighting their advantages and disadvantages. Overall, the essay offers a detailed examination of contract law, providing insights into the complexities of contract formation, breach, and remedies, supported by relevant case law.

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Introduction
At the onset it is prudent to note that for a contract to be valid and enforceable, there are certain
essential conditions that must be met. This includes; offer acceptance consideration and an
intention to be legally bound. This essay will apply the principle s of contract law advising the
parties on their legal position and possible remedies. It will also establish whether there has been
a valid contract between each of the parties that are involved in the case study. Each legal
problem arising from the case study will be examined independently.
Question 1
The issue in this case is to determine whether there is a valid contract, the place the contract was
formed and the parties to the contract.
An offer is an expression made by a party to another party of a willingness to be legally bound
by the averments stated (Centrovincial Estates v Merchant Investors Assurance Company, 1983).
It has also been argued in Gibbons v Proctor (1891) that the person making the offer must
communicate the offer to the other parties in clear and certain terms. On the other hand,
acceptance is contract law is an expression made in words or conduct that a person agrees to the
terms that have been indicated in the offer. According to the court in HBF Dalgety Ltd v
Morton (1987) there are two conditions that must be certain for acceptance to be deemed to have
been made in contract law; Firstly, the offerree must assent to the terms of the offer. Secondly,
the information indicating the acceptance must be communicated to the party which made the
offer. The person making the acceptance must make it clearly and in unequivocal terms.
The court in Currie v Misa (1874) consideration is regarded is regarded as any profit, benefit,
interest, forbearance, detriment or loss that is either suffered or gained by a party to the contract.
Consideration must not necessarily be adequate but it must be evinced that it is sufficient
(Chappell & Co Ltd v Nestlé Co Ltd, 1960). Conversely, it must be shown that the parties to the
contract had an intention to be legally bound by the agreement. As rule in the case of Esso
Petroleum Co Ltd v Commissioners of Customs and Excise (1975) where parties are in an
agreement that is commercial in nature there is a rebuttable presumption that the parties have an
intention to be legally bound.

From the foregoing enumerated principles of contract law it can be argued that a valid contract
was formed between Allan and Damien. This stems from the fact that Allan made a clear offer
that was communicated to any party that may be of interest. On the other hand, Damien made a
valid acceptance. This is because his acceptance was clear and directly referred to the offer that
was made by Allan. It can also be contended that Damien’s acceptance was clear and
unequivocal. In addition Damien’s acceptance satisfied the conditions that have been set out in
the case of HBF Dalgety Ltd v Morton (1987) since he agreed to the terms of the offer that were
made by Allan and he communicated his acceptance to Allan. There was a valid consideration of
$ 200 that Damien gave Allan. Suffice to say, the consideration given was sufficient. Since the
agreement was commercial in nature it can be argued that Allan and Damien had an intention to
be legally bound. It gives added relevance to note that the contract was formed at Kaplan Higher
Education where Damien gave Allan $ 200 and stated that it was payment for the commercial
law material. Subsequently, Allan accepted the payment.
Question 2
The issue in this part is to determine Bernard’s legal position and establish any possible remedies
he may be entitled to.
It is a well established principle in the landmark case of Hyde v Wrench (1840) when a party
makes offer and the other party makes counter offer, the later cancel the original offer. This
implies that a counter offer cannot be regarded as a valid acceptance capable of making a
bonding contract. Lord Langdale in Hyde observed that there was no binding contract where a
defendant put up his property for sale and made an offer of $1000 but the plaintiff declined the
offer and offered to purchase the property for $ 950. It was held that the plaintiff is not entitled to
later revive the offer made by the defendant and make an acceptance of it. It was further held that
in such cases. Although there may be no binding contract in a case where a counter offer is made
a party who made payment can seek a remedy of restitution so as to be restored to the position
they were before the proposal for forming contract arose.
It is evident that Allan made an offer to sell his commercial law material for $ 200. However it
can be argued that Bernard’s response which suggested that he could pay $ 150 amounted to a
counter offer. In this sense, it can be conceded that Bernard’s response did also not amount to a

valid acceptance in contract law. By applying the reasoning of Lord Langdale in Hyde it can be
contended that Bernard was not entitled to later revive the offer made by the defendant and make
an acceptance of it. Acceptance of the original offer after a counter offer is made is invalid.
Precisely, there was no binding contract between Allan and Bernard because there was no valid
offer and acceptance. However, since Bernard made payment for the commercial law materials
later he is entitled to a remedy of restitution where he would put back in the position he was
before entering into an agreement that was not founded in law. On the other hand he could retain
the book and claim for damages, although not for breach of contract as there was no contract, for
the value of the commercial law materials that Allan omitted to give him as part payment.
Question 3
The issue in this part is to determine if there was an enforceable contract between Allan and his
younger sister Charlene and whether there are any possible remedies she may be entitled to.
For the contract to be enforceable all elements of contract must be satisfied. It must be evident
that there is a valid offer acceptance, consideration and that the parties had an intention to be
legally bound. Of particular significance to this part is analysis of intention to be legally bound.
As a matter of popular practice, intention of the parties was established suing the rebuttable
presumption test. According to the case of Jones v Padavatton (1968) where there is domestic
relationship between parties in an agreement, the presumption is that is no intention to be legally
bound. It bears noting that the rebuttable presumption test seems not be applicable in Australia in
modern legal practice. In Ermogenous v Greek Orthodox Community of SA Inc (Ermogenous)
(2002) the court suggested that an objective test should be applied in establishing if the parties
had intention to be legally bound. In support of this view, the court in Tadrous v Tadrous (2010)
observed that in establishing intention to be legally bound one must examine all circumstances of
the case including the conduct of the parties, the wording of the agreement and the nature of the
relationship of the parties.
With respect to Charlene and Allan it can be argued that there was a valid offer and acceptance.
However, what is at issue is whether there was an intention to be legally bound by the agreement
since the parties are siblings. By applying the conventional rebuttable presumption test, it can be
argued that Charlene and Allan by virtue of being siblings did not have an intention to be legally

bound. By applying the objective test as was in the case of Ermogenous and Tadrous it is evident
that Allan’s conduct did not reveal an intention to be legally bound. Although Charlene’s
conduct and wording revealed that she has an intention to be legally bound, ‘there was no
consensus ad idem’ meeting of the minds. It can be concluded that there was no intention to be
legally bound and hence no enforceable contract. Charlene is not entitled to any remedy under
contract law as there is no binding contract however she can seek the remedy of restitution so
that she can be put back to the position she was in before the purported contract.
Question 4
In this part the issue is to establish if Damien can sue for breach of contract since he was not
given the complete commercial law materials as was contemplated in the contract. Further it is
evident that the being sold was free of charge.
It is instructive to note that Allan and Damien had a valid contract. However, it can be argued
that Allan misrepresented the fact that the book was on sell. Therefore Damien can sue for
misrepresentation.
A misrepresentation is a vitiating factor in contract law. Ideally, a misrepresentation is a false
statement made about a certain fact concerning a contract. These are statements that are made
before a contract is signed. For a misrepresentation to be actionable in law the following
elements must be proved. Firstly, according to Avon Insurance plc v Swire Fraser Ltd (2000) the
statement made must be entirely false and should not contain any element of truth. Secondly
according to Horsfall v Thomas (1862) the false statement must induce the other party to sign the
agreement. It is imperative to note that in Yianni v Edwin Evans and Sons (1981) it was held that
a third party that has been induced through a misrepresentation made to another is also entitled to
take an action for misrepresentation. The remedy for misrepresentation is rescission. This is
where the contract becomes voidable. The injured party in an action for misrepresentation has
the option of affirming the misrepresentation or ceases to perform any contractual obligation.
With respect to Damien and Allan it can be argued that Allan made a false statement of fact
about the contract. This is evidenced by the fact that Allan stated that the commercial law book
was on sale yet it was being offered free-of-charge. Damien was induced by the statement and

was thus convinced that the book was on sale. Therefore, he can opt to remain with the
commercial law book materials or take an action to rescind the contract.
Question 4
Mediation
Mediation is legal process where the parties appoint a third party referred to as a mediator to
settled their dispute. One of the primary advantages of mediation is that parties are accorded
privacy. Therefore, the issues that are canvassed remain to be confidential. On addition the
parties have a greater control of the affairs of the dispute resolution process. Parties decide how
the process is going to be carried out. Final resolutions are sometimes fixed in way that all
parties become satisfied. The disadvantage of mediation is that parties cannot be compelled to go
through the process if they are not interested. Further, mediation is not based on good faith as
such parties cannot be compelled to disclose truthful information
Arbitration
Arbitration is also method of resolving disputes outside the courtrooms. The advantage of
arbitration parties are a free to chose the person who is going to moderate the process of the
dispute resolution, who is referred to as an arbitrator (Mazirow, 2008). The decision that is made
during the process is binding on the parties. Arbitration is less costly than court trial and the
process may be conducted more expeditiously than court trials. In addition arbitration is also
conducted in private sessions where parties enjoy confidentiality of their information. On the
other hand, the disadvantage of arbitration is that the parties are unable to appeal any decision
that is made at the arbitration tribunal because of the binding nature of the resolutions (Mazirow,
2008). Further there is a high risk of abuse of the process by parties and absence of impartiality.
It has been argued that arbitration may be very costly because of the amount fee that is required
to pay arbitrators. The modus operandi of the process is not clear since arbitrators may opt to
apply the law but in other cases apply apparent fairness.
Conclusion
From the first case it can be conceded that there was valid contract between Allan and Damien.
In fact the contract was formed at Kaplan Higher Education where Damien gave Allan $ 200 and

stated that it was payment for the commercial law material. Subsequently, Allan accepted the
payment. However Damien can sue for misrepresentation since the book was not for sale but
rather was being offered for free. It is also a plausible conclusion that there was binding and
enforceable contract between Allan and Bernard and Allan and his young sister Charlene since
all the elements of a contract were not satisfied. Conversely, if the parties opt to settle the matter
out of court using alternative dispute resolution mechanisms they can opt to use mediation or
arbitration. However, they must be conscious to the fact that the alternative dispute resolution
mechanisms have their pros and cons as enumerated above.

References
Avon Insurance plc v Swire Fraser Ltd [2000] 1 All ER
Brogden v Metropolitan Railway (1877) 2 App Cas 666
Centrovincial Estates Plc v Merchant Investors Assurance Co Ltd (1983) WL 215645
Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 97
Currie v Misa (1874) LR 10 Ex 153
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8
Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1975] UKHL 4
Gibbons v Proctor [1891] 64 LT 594
HBF Dalgety Ltd v Morton [1987] 1 NZLR 411
Horsfall v Thomas (1862) 1 H & C
Hyde v Wrench (1840) 49 ER 132
Hyde v Wrench [1840] EWHC Ch J90
Jones v Padavatton [1968] EWCA Civ 4
Mazirow, A. (2008). The advantages and disadvantages of arbitration as compared to
litigation. Retrieved on May, 27, 2019.
Tadrous v Tadrous [2010] NSWSC 1388.
Yianni v Edwin Evans and Sons [1981] 3 All ER 593