LAW1500 S2 2019: Contract Law and Promissory Estoppel

This essay analyzes a contract law scenario involving Jumping Jack Darcy and Fast Track Oils. The essay explores the formation of a valid contract, examining the elements of offer, acceptance, and consideration, referencing key legal precedents such as Carlill v Carbolic Smoke Ball Compa...Read More

Running head: CONTRACT LAW
CONTRACT LAW
Name of Student
Name of University
Author Note

1CONTRACT LAW
Question 1
Can Jumping Jack Darcy claim for the winner’s prize
In the given scenario the primary issue is whether Jumping Jack Darcy can successfully
claim the winner’s prize under the law of contract.
Under the common law of contracts a contract can be defined as the agreement between
two parties that is recognized and enforced by law that establishes a relationship between the
parties. A contract would only become legally binding if there is a voluntary agreement by the
two parties existing. In Australia three elements are needed to be existing for the creation of a
valid contract. The three elements of a valid contract are: offer and acceptance, intention of the
parties to be creating relationship that is legally binding and paying for the consideration for the
promise made.
Under the common law of contract an offer has been described as the proposal of any
particular arrangement made by one party to the other. Under the common law of contract
acceptance of an offer is the communication to the offeror with a declaration of accepting and
willingness to be bound by the terms of the offeror either verbally or in written terms. The
provisions of a valid offer was seen as being discussed in the landmark case Carlill v Carbolic
Smoke Ball Company [1893]. In this case it was held by the Court of Appeal that an
advertisement that contained terms for reward would be considered as a binding offer for anyone
to accept. Further in the case Storer v Manchester City Council [1974] it was held by the court
that an offer, when made with an intention to create legal relationship would be legally binding
once the person to whom it has been addressed accepts the offer. In furtherance, as seen in the

2CONTRACT LAW
case Moran v University College Salford (No 2) [1993] an offeror is bound by the offer if his
conducts or words would induce any reasonable person to believe in the existence of the
intention for creating a contract. It has been further discussed in the case Dickinson v Dodds
(1876) that unless terminated by way of revocation by the offeror the offer would still be
effective.
Under the common law one of the essential elements to a contract is the intention of the
parties to be creating relationship that is legally binding. In the case Helmos Enterprises Pty Ltd
v Jaylor Pty Ltd it was held by the court that parties of the commercial agreements are presumed
as to be intending to legal consequences depending on the fact that who bears the onus of proof.
In the case Master v Cameron [1954] the legality of the contract was decided by the High Court.
This landmark case was seen to be establishing key principles for the determination of the
certainty and the determination of the fact that whether an intention could be considered as to be
legally bound in relation to the preliminary agreements. These principles of possibilities are-
although the parties are bound for bargain, they intend to be restating the deal in a formalized
way; parties are intended to be bound however the intention is suspended till the formalization of
their legal documentation; and the parties do not want to be bound unless there is a proper drawn
contract.
The third essential element in a valid contract is the payment of consideration against the
promise. As discussed by the court in the case Australian Woollen Mills Pty Ltd v The
Commonwealth [1954] a promise would only be enforceable if it had been supported by
consideration. This statement was further supported in the judgment of the case Beaton v
McDivitt [1987]. As per the judgment of the case Woolsworth Ltd v Kelly [1991] the

3CONTRACT LAW
consideration of a promise could be anything ranging from the exchange of money to a promise
to commit or refuse a certain act.
In the current scenario it is seen that Fast Track Oils sponsor car racing by two ways,
firstly by organizing a televised annual car rally named ‘East to West Rally’ where they offer to
pay $750,000 as a prize to the winner. Applying the judgment of the landmark case Carlill v
Carbolic Smoke Ball Company [1893] in this scenario it can be said that it is a valid offer for
anyone to be accepting. In this case it was held by the Court of Appeal that an advertisement that
contained terms for reward would be considered as a binding offer for anyone to accept. Further
observing the judgment of the case Storer v Manchester City Council [1974] where it was held
by the court that an offer, when made with an intention to create legal relationship would be
legally binding once the person to whom it has been addressed accepts the offer, it can be
commented that in the given scenario that they are legally bound by their terms to Jumping Jack
Darcy as they had made a valid offer for paying Jumping Jack Darcy a ‘generous’ weekly
payment for participating in any car races as directed by the Fast Track Oils, which Jumping
Jack Darcy had accepted. In furtherance applying the judgment of the case Moran v University
College Salford (No 2) [1993] Fast Track Oils can be said as being legally bound to the offer
made by them to Jumping Jack Darcy as the offer made by them can be considered as to be
inducing any reasonable person to believe in the existence of the intention for creating a contract.
Unless Fast Track Oils terminate the offer by way of revocation they would be legally bound to
follow the terms of the contract as observed in the case Dickinson v Dodds (1876) where it was
held by the judges that unless terminated by way of revocation by the offeror the offer would still
be effective.

4CONTRACT LAW
Applying the judgment of the case Helmos Enterprises Pty Ltd v Jaylor Pty Ltd, where it
was held by the court that parties of the commercial agreements are presumed as to be intending
to legal consequences depending on the fact that who bears the onus of proof, it can be discussed
in the given scenario that the agreement between Fast Track Oils and Jumping Jack Darcy is a
commercial agreement and hence it would be intending to create legal consequences. Applying
the key principles laid down under the judgment of the case Master v Cameron [1954] it can be
seen that both Fast Track oils and Jumping Jack Darcy had intended to create legal relation.
Applying the case Australian Woollen Mills Pty Ltd v The Commonwealth [1954] and
Beaton v McDivitt [1987] where it was held that a promise would only be enforceable if it had
been supported by consideration, it can be observed that the promise of the weekly payment to
Jumping Jack Darcy in return for him competing in car races as Fast Track Oils may direct is a
consideration in exchange for the agreement made between Fast Track Oils and Jumping Jack
Darcy. Further, applying the judgment of Woolsworth Ltd v Kelly [1991] it can be observed that
the conversation of the junior rally officer who let him in the race despite of him not having the
roadworthy certificate as per the requirements of the race because he was ‘an amazing racer’ and
people would get ‘great delight’ to see him participating in the rally can be considered as a
consideration.
Thus from the above discussions it can be observed that all the essential elements of a
valid contract have been fulfilled in the given case and hence it could be concluded that Jumping
Jack Darcy can successfully claim the winner’s prize under the law of contract.

5CONTRACT LAW
Question 2
Is Jack eligible to use promissory estoppel
Under the common law of contract a promissory estoppel can be defined as a legal
principle by way of which a person can be stopped from going back on a promise even in
absence of a legal contract.
It was decided in the case Legione v Hateley that to give rise to an estoppel a clear
and unequivocal promise is required. In the case Walton Stores (Interstate) Lt v Maher [1988] it
was held by the judges that for the establishment of an estoppel the plaintiff is required to be
proving that there was an assumption of legal relationship to be existing between them and that
there was no scope for the defendant to be withdrawing from that particular legal relationship;
that the assumption was made by the plaintiff because of the conduct of the defendant; the
plaintiff’s act or omission was based on the assumption and the defendant had been aware of the
act or omission; the act or omission would be detrimental towards the plaintiff if the defendant
does not work on the assumption; and the defendant had failed to be avoiding the detriment of
the plaintiff. As per the judgment of the case W v G [1996] a promise as principle of an estoppel
can be giving rise to an enforceable obligation even when there is an absence of consideration. In
the case Austotel Pty Ltd v Franklins SelfServe Pty Ltd [1989] it was held by the courts that
unless there is a binding agreement present an estoppel could not be raised.
In the given case it can be seen that there had been a promise of $750,000 by Fast Track
Oils to the winner of the ‘East to West Rally’. The winner of the rally is Jumping Jack Darcy
who had an agreement with the Fast Track Oils Ltd to be participating in any car race that Fast
Track Oils Ltd would be directing him to participate in return for a ‘generous weekly payment’.
However the prize was refused by Fast Track Oils on the grounds that Jumping Jack Darcy did

6CONTRACT LAW
not have the roadworthy certificate that was required as an entry condition and because there had
been many critical comments on the media outlets.
Applying the judgment of the case Legione v Hateley in the given scenario it can be
observed that there was a clear and unequivocal promise by the Fast Track Oils when they
declared $750,000 prize money to the winner of the car rally. Applying the judgment of the case
Walton Stores (Interstate) Lt v Maher [1988] Jumping Jack Darcy is required to prove that he
assumed for a legal relation with Fast Track Oils when they directed him to participate in the
rally and if the assumption is not fulfilled by Fast Track Oils Ltd he would be in detriment as he
would lose the $750,000 promised to the winner of the rally. Even if there was no consideration
between Jumping Jack Darcy and Fast Track Oils Ltd, the mere promise made by Fast Track
Oils to be paying $750,000 to the winner of the rally would be giving rise to an estoppel as seen
in the case W v G [1996]. As discussed in the case Austotel Pty Ltd v Franklins SelfServe Pty Ltd
[1989] there should be a binding agreement between Fast Track Oils Ltd and Jumping Jack
Darcy to raise an estoppel.
Thus from the above discussion it can be concluded that Jack could use promissory
estoppel for enforcing the promise.

7CONTRACT LAW
Reference
Austotel Pty Ltd v Franklins SelfServe Pty Ltd [1989] NSWLR 582
Australian Woollen Mills Pty Ltd v The Commonwealth [1954] HCA 20; (1954) 92 CLR 424]
Beaton v McDivitt [1987] 13 NSWLR 162
Carlill v Carbolic Smoke Ball Company [1893] EWCA Civ 1
Dickinson v Dodds (1876) 2 Ch D 463
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235
Legione v Hateley [1983] 57 ALJR 152 CLR 406
Master v Cameron [1954] 91 CLR 353
Moran v University College Salford (No 2) [1993]
Storer v Manchester City Council [1974] 1 WLR 1403
W v G [1996] 20 Fam LR 49
Walton Stores (Interstate) Lt v Maher [1988] HCA 7, (1988) 164 CLR 387
Woolsworth Ltd v Kelly [1991] 22 NSWLR 189