Contract Law: Problem-Solving with Legal Principles and Cases

This assignment presents a series of contract law problems, each addressing different aspects of contract formation, breach, and remedies. The first problem examines the breach of a condition in a business sale agreement, focusing on the implications of violating a non-compete clause. The second problem explores the element of consideration in a contract with the police, determining whether a promise to pay for services already legally required is enforceable. The third problem analyzes whether an agreement to settle a debt for a lesser amount constitutes valid consideration. The fourth problem discusses the enforceability of an unusual term in a DVD rental agreement. The fifth problem focuses on exclusion clauses and their incorporation into a contract with a dry cleaner. Finally, the sixth problem assesses the rights of a buyer under the Sales of Goods Act when a purchased copier does not meet the specified requirements. Each problem provides a concise issue statement, relevant legal rules, applicable case law, and a clear decision based on the analysis.

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Contents
Problem 1....................................................................................................................................................2
Issue........................................................................................................................................................2
Legal Rules..............................................................................................................................................2
Cases applicable......................................................................................................................................2
Decision...................................................................................................................................................2
Problem 2....................................................................................................................................................2
Issue........................................................................................................................................................2
Legal Rules..............................................................................................................................................2
Cases applicable......................................................................................................................................3
Decision...................................................................................................................................................3
Problem 3....................................................................................................................................................3
Issue........................................................................................................................................................3
Legal Rules..............................................................................................................................................3
Cases applicable......................................................................................................................................3
Decision...................................................................................................................................................4
Problem 4....................................................................................................................................................4
Issue........................................................................................................................................................4
Legal Rules..............................................................................................................................................4
Cases applicable......................................................................................................................................4
Decision...................................................................................................................................................4
Problem 5....................................................................................................................................................5
Issue........................................................................................................................................................5
Legal Rules..............................................................................................................................................5
Cases applicable......................................................................................................................................5
Decision...................................................................................................................................................5
Problem 6....................................................................................................................................................5
Issue........................................................................................................................................................5
Legal Rules..............................................................................................................................................5
Cases applicable......................................................................................................................................6

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Decision...................................................................................................................................................6
Bibliography................................................................................................................................................7

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Problem 1
Issue
If Ali sues Charlie for breach of contract, will she win in court?
Legal Rules
When any contact is made then the parties must fulfill the contractual terms. The contract terms
can be conditions or warranties.
A condition is root to the contract and if not performed result in hampering the contract essence.
Violation of condition results in contract termination and damages recovery.
A warranty is not contract essence and if violated will only allow recovery of damages. (Gillies
2004)
Cases applicable
Hong Kong Fir Shipping v KKK [1962].
Commonwealth v Amann Aviation Pty Ltd (1991).
Decision
Charlie is the owner of a flower shop and sells the same to Ali for $45,000. One of the terms was
that Charlie cannot operate similar business in next 2 years and within 2 KM. But, Charlie
violated both the terms as he opened a flower shop in 6 months which is one KM away.
The terms were the basis of the contract and are its essence. Thus, these are conditions. The
conditions are violated so Ali can terminate the contract and sue Charlie for damages.
Problem 2
Issue
Whether the Police can sue Nick for $1,000?
Legal Rules
Consideration is one of the significant elements in contract formation. Consideration is monetary
benefit which moves amid the contractual parties to substantiate the promises and make them
enforceable. However, there must be some promise to be performed against which consideration

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is promised. No consideration is requited against the promises which the promisee is legally duty
bound to perform. (Clark 2015)
Cases applicable
Pao On v Lau Yiu Long [1979].
Stilk v Myrick (1809).
Decision
Nick is throwing a party and does not want any drug addicts and Brisbane Bronco supporters and
thus approached police for security purposes. However, Nick demanded extra services, that is,
one officer present at the party throughout the evening in exchange of $1000.
However, the contract made is not enforceable as there is no consideration involved. The act of
the officer is the act that he is duty bound to perform and thus no consideration should be
charged for the same.
So, Police cannot force Nick to pay $1000.
Problem 3
Issue
If Helen sues Mike for breach of contract will she win in court?
Legal Rules
When an offer is accepted then it results on an agreement which combined with consideration
results in contract. A consideration is a gain (monetary/non-monetary) which is exchanged amid
the promisor and the promisee wherein promisor gave something of value in turn of something
of value provided by the promisee. There should be some alternation in the position of the parties
to consider that ‘something’ as consideration. If there is no alteration, then, there is no
consideration. (GIANCASPRO 2014)
Cases applicable
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body
Care (Australia) Pty Ltd (2000).

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Decision
Mike owns $5000 to Helen by 24th June 2018. Helen submitted that if he brings $1000 on 24th
June and check her BMW steering then she will settle the debt. Mike does accordingly. Thus,
there is alteration in the position of Mike as per the promise made by Helen. Thus, there is
exchange of promises which alters the position of the parties. So, there is valid consideration and
Helen cannot sue Mike.
Problem 4
Issue
If The DVD store sues Lizzie for breach of contract will the store win in court?
Legal Rules
A contract can be oral or written and the terms are binding upon the parties. If contract is written
and signed by the parties then the terms are binding even if not read, but, if the contract is written
but not signed by the parties and comprises of some unusual term then the party relying on the
term has the accountability to bring such term in the knowledge of the other to make the term
enforceable and binding. (KAPNOULLAS AND CLARKE 2006)
Cases applicable
Thornton v. Shoe Lane Parking Ltd (1988).
Decision
The video shop has made an offer of giving ‘100 overnight DVDs for the next three months for
only $100’ along with other terms mentioned on a sign. Lizze takes the offer but does not return
the DVD for eight days.
As per one of the terms not read by Lizzie, the DVD agreement is ‘restricted to overnight hire
only’ and if not return by 3PM results in penalty of $20 per day.
The term is unusual as the normal penalty in the similar business is $5 per day. The contract is
written but not signed, thus, this unusual term should be bright in the knowledge of Lizzie by the
store. However, the store failed to do so. Thus, the term is not enforceable and Lizzie will not
pay $ 140.

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Problem 5
Issue
If Tori sued the dry cleaners for the destruction of her dress would she win in court?
Legal Rules
One of the contractual terms that normally made part of the contract is exclusion term. The term
limits/excludes the obligation of one of the party to the contract as and when the same arises and
is pre decided by the parties mutually. If the term is incorporated unilaterally, then, the relying
party should bring the term in the knowledge of the other by reasonable means.
Cases applicable
Curtis v Chemical Cleaning Co [1951].
Decision
Tori was given a small document by the dry cleaners to sign when she took her stained dress to
them. as per the document the cleaners are not responsible for any loss/damage of whatsoever
nature. it is a kind of exclusion clause made part of the document individually and thus should be
brought in the knowledge of Tori by reasonable means. But no such efforts are made.
So, the clause in not applicable and Tori can sue the cleaners for loss.
Problem 6
Issue
Does Sandra have any rights against Smith’s?
Legal Rules
The implied terms under Sales of Goods Act 1958 (Vic) is applicable:
i. Every seller is the rightful seller and the buyer must have quite use of the goods
which are not have any encumbrances (section 17);
ii. Goods supplied should correspond description;
iii. Merchantable quality should be maintained (section 19);

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i. If the buyer specifies the requirements then the goods should meet the socifictaion
and should be fit for use (section 20)
Cases applicable
Rick Shelton Mobile Mechanic. v. Oaktech pty ltd (2010)
Decision
Sandra specifies to Mr Smith that she requires a copier which is quick and deal with large
volume. Smith suggested a copier worth $12,000. But, the copier was slow, overheats and cannot
handle large volume. So section 20 is violated as the copier is not fit for use. Also, the goods are
having defect and is not as per description thus violates section 17 and 19.

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Bibliography
Books/Articles/Journals
MARK GIANCASPRO (2014) The Rules for Contractual Renegotiation: A Call for Change <
http://classic.austlii.edu.au/au/journals/UWALawRw/2014/1.pdf..
Peter Gillies (2004) Business Law, Federation Press.
KAPNOULLAS AND CLARKE (2006) Incorporation Of Unusual Or Unreasonable Terms Into
Contracts: The Red Hand Rule And Signed Documents <
http://www5.austlii.edu.au/au/journals/DeakinLawRw/2006/12.pdf>.
Case Laws
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64.
Curtis v Chemical Cleaning Co [1951] 1 KB 805
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body
Care (Australia) Pty Ltd (2000) 201 CLR 520
Hong Kong Fir Shipping v KKK [1962].
Pao On v Lau Yiu Long [1979] 3 WLR 435.
Rick Shelton Mobile Mechanic. v. Oaktech pty ltd (2010)
Stilk v Myrick (1809) 2 Camp 317.
Thornton v. Shoe Lane Parking Ltd (1988) 1 All ER 348, 358.
Online Material
Julie Clark (2015) Consideration, Australian Contract Law (Online). Available at:
https://www.australiancontractlaw.com/law/formation-consideration.html#existingduty.
Accessed on 20th April 2018.

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