Contract Law Assignment: Formation of Contracts, Semester 1

This assignment solution addresses two key issues in contract law. The first part examines the formation of a contract between Tom and Paul, and whether a subsequent contract between Tom and Sally is valid, focusing on the rules of offer, acceptance, and the postal rule. It concludes that a contract was formed between Tom and Paul via email, but not with Sally. The second part analyzes whether Greg can be held liable for undue influence and unconscionable conduct in a transaction with Mr. and Mrs. Rossi involving the sale of an olive grove. The solution defines undue influence and unconscionability, and concludes that Mr. and Mrs. Rossi can hold Greg liable for his actions. The assignment draws upon relevant case law and legal principles to support its conclusions.

RUNNING HEAD: CONTRACT LAW
Contract Law
Name of the student
Name of the university
Author Note

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Reply to question 1:
Issue:
The primary concern regarding the given case study is whether there is a formation of a
lawful contract between Tom and Sally.
The secondary concern regarding the provided case study is whether there is any form of
a legal contract between Paul and Tom.
Rule:
Postal Rule of Acceptance:
Offer and acceptance is the main element in a contractual agreement. It helps in
determining the existence and operation of agreement between the contractual parties. The postal
rule of acceptance was constituted as a rule of acceptance along with offer. According to the rule
of offer along with the acceptance, a proposal or any offer can be withdrawn and cancelled at any
period prior to the offer being accepted. It has been observed that there are different conflicts
between acceptance and revocation of an offer. Sending the offer and acceptance using post or
mail is named as ‘snail mail’ because it takes a lot of time to reach to the receiver. Several
problems emerge due to the formation and revocation of a contract (Carter, Harland and
Lindgren 1996). The offeror does not know when the formation and revocation of a contract take
place. The case study of Adams v Lindsell (1818) 1 B & Ald 68 can be taken into consideration
for supporting the above statements.

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Communication through e-mail forms a binding and immediate agreement between the
contractual parties. The essential requirement of acceptance and offer should be present to make
a contract valid. There should be clear evidence to the court that through the exchange of e-mail
and external conversation, both the contractual party has an intent of being guaranteed or bound
and to form an agreement (Cartwright 2016). The case scenario of Stellard Pty Ltd & Anor v
North Queensland Fuel Pty Ltd can be taken into consideration to support the above
statements. In this case, there was a formation of a lawful agreement for a sale of land. The
agreement was formed by the method of an e-mail exchange between the contractual parties. The
intentions in constructing a formal written contract do not invalidate the recent informal
arrangement that is agreed through the communication of e-mail (Priestley 1989).
Application:
From the above scenario, it has been observed that Tom gave an offer to Paul in the
context of selling a boat for $10,000. Paul has sent acceptance to the offer through e-mail within
the mentioned time limit. According to the rule of offer and acceptance, an offer can be
withdrawn and cancelled at any period prior to the offer being accepted. Paul tried to contact
Tom several times using telephone before sending the mail of acceptance, but it was engaged.
Finally, Paul decided to send the letter of acceptance through e-mail as he knows Tom check his
e-mail inbox daily.
The mail of acceptance is found to be delivered to Tom before the provided time limit.
Hence, it became a lawful agreement between Paul and Tom as soon as the mail was delivered to
Tom. The case study of Adams v Lindsell (1818) 1 B & Ald 68 can be applied in this particular
scenario. After receiving the mail of acceptance from Paul, it has been observed that Tom sold

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the boat to Sally. The mail of acceptance from Paul clearly states that he wants to buy the boat
from Tom at $10,000.
As a result, Paul became furious as he tried to contact Tom for binding a contract using
posting a letter of acceptance, messages and e-mail. It is known that as quickly as the letter for
any acceptance is posted and an e-mail was delivered to Tom, the formation of the contract takes
place. Therefore, it has been observed that there was a formation of a lawful contract between
Tom and Paul. This is because the main requirement for forming a contract is found in this
agreement of Tom and Paul. The formation of a contract with Sally is found to be illegal as offer
and acceptance is done with Paul, which is the essential element of forming a contract.
Conclusion:
From the above statements, it can be concluded that there is no formation of a lawful
contract between Tom and Sally.
It can be concluded from the above statements that there is a formation of a lawful
contract between Paul and Tom.

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Reply to question 2:
Issue:
The primary concern regarding the provide case study is whether Greg can be held liable
by Mr and Mrs Rossi for undue influence and unconscionable conduct.
Rule:
Undue Influence:
It is seen that the contractual parties sometimes have some pre-existing relationship. For
instance, two members of a family can agree with one another. When the contractual parties have
the bargaining power which would be equal, this should not be a difficulty. Unfair result emerges
when one of the parties has a degree of effect or impact and authority over the other and exploits
to take undue advantage of the weaker party (Cheung et al. 2005). In this situation, the stronger
party is said to be exercising undue influence over the weak party. If the weak party can explain
clearly that the contract is in favor of the resilient party, then the court can announce the contract
as a contract which is voidable and can command for restitution in favor of the party which is
considered to be weaker.
If an old man has an affair with the housekeeper, who can take some advantage for
convincing him for selling his house to her daughter, in this situation, the man agreed to sell his
house less than the worth of the house by signing a sale contract. Before transferring the title of
the land, the son of the owner stopped him from selling the house. In this scenario, if the
daughter of the housekeeper can take a step for legal proceedings. It has to be clear and evident

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that the sale of the house was enforced due to the dominance of the housekeeper, and then a
better judgment can be expected.
Unconscionability:
If any contractual party suffers from disadvantage and if this is found to be misused for
favoring their position, the court can set aside the agreement on the ground of unconscionability
or unconscionable conduct. Unconscionability is immoral and dishonest conduct that favors the
wrongdoer at the expense of the disadvantaged party. For instance, an agent of real estate
consults an aged widow for selling her house, where the widow was suggested by the agent that
her property worth $300,000. The advice was found to be accepted by the widow. A purchaser
was found for buying the property, and the aged widow signed the document of contract for
selling the house at $300,000. Before transferring the land ownership, the widow came to know
from his friend that the original worth of the property is $600,000. After knowing this, she
refused to sell the property (Drahos and Parker 1990). If the widow is found to be sued by the
buyer, then the court will set aside the agreement of sale by declaring dishonest conduct of the
agent and his friend. The case study of Commercial bank of Australia v Amadio 151 CLR
447; 1983 can be taken into consideration for the supporting the above statements. In this case
study, the main issue was whether the contract was considered to be binding for Amadios for the
agreement of guarantee keeping the account the conditions as well as the situations in which they
signed. The court has held that if the stronger party can provide the evidence to the court that the
contract was considered to be fair as well as reasonable, then the deal will not be considered as
impugned (Poole 2014). It was a case of unconscionable conduct, which attracts the censure, and
gives the justification to the Court for granting fast relief to the sufferers.

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Application:
It has been observed that Greg is the business consultant and financial planner who
offered to purchase an olive grove from his client Mr and Mrs Rossi for $850,000. They did the
acceptance of the offer in the belief that it is a fair deal. They dealt with Greg and trusted him in
every business aspect. Mr and Mrs Rossi told Greg that they want to sell their property. It has
been observed that Mr and Mrs Rossi sold the property at a lower rate compared to the market
value. Greg sold the property by advertising at $ 1.5 million after purchasing the property. If any
contractual party suffers from disadvantage and if this is found to be misused for favoring their
position, the court can set aside the agreement on the ground of unconscionability or
unconscionable conduct. Unfair result emerges when one of the parties has a degree of effect and
authority over the other and exploits to take undue advantage of the party which is weaker. If the
party which is weak can explain clearly that the agreement is in favor of the resilient party, then
the court can proclaim the contract as voidable and can command restitution in favor of the party
which is weaker.
Conclusion:
It can be concluded from the above statements that Mr and Mrs Rossi can hold Greg
liable for undue influence and unconscionable conduct. The court can levy a penalty upon Greg
for illegal conduct.

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Reference:
Carter, J.W., Harland, D.J. and Lindgren, K.E., 1996. Contract law in Australia. Sydney:
Butterworths.
Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing.
Cheung, F.Y.K., Rowlinson, S., Jefferies, M. and Lau, E., 2005. Relationship contracting in
Australia. Journal of Construction Procurement, 11(2), p.123.
Drahos, P. and Parker, S., 1990. Critical contract law in Australia. J Contract Law, 3(1), pp.30-
49.
Poole, J., 2014. Casebook on contract law. Oxford University Press, USA.
Priestley, L.J., 1989. A Guide to a Comparison of Australian and United States Contract
Law. UNSWLJ, 12, p.4.