LAW171 Assignment: Contract Law Analysis - Issue Identification

This assignment analyzes a contract law scenario involving Jane, who owns a landscaping business, and her interactions with Gardening Gadgets, Eric (a store manager), and her friend Grace. The assignment explores the legal rights and obligations arising from these interactions, focusing on the principles of offer, acceptance, invitation to treat, counteroffer, and revocation of offer. The analysis examines whether contracts were formed between Jane and each party, considering the timing and manner of communication (brochures, in-store discussions, emails, and letters). The assignment also delves into the essential elements of a contract, including consideration and the intention to create legal relations. The legal issues are addressed based on the provided facts, relevant Australian contract law, and case precedents, such as *Fisher v Bell*, *Entores Ltd v Miles Far East Corporation*, and *Hyde v Wrench*. The conclusion summarizes the legal outcomes for Jane in each scenario, determining whether enforceable contracts were created.

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Contents
Issue............................................................................................................................................................2
Relevant Law...............................................................................................................................................2
Application of law.......................................................................................................................................4
Conclusion...................................................................................................................................................7
Reference List.............................................................................................................................................8

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Issue
What are the legal rights of Jane against Eric, Gardening Gadgets and Grace?
Relevant Law
In Australia, if any party wish to establish a contractual relationship with any other party, then, it
is necessary that all the contract essentials must be comply with.
Offer – Any statement or action or conduct which is communicated by an offeror to an offeree
with the hope of approval is an offer in contract law1. An offer can be made to anyone specific or
to the public at large. As per R v Clarke2, it is necessary that the offer so made by the offeror
should comes within the notion/knowledge of the offeree to consider it complete and binding
upon the parties.3
Acceptance – When the offeree after receipt of the offer gave his approval to the same, then,
such an approval is called an acceptance in law4. An acceptance must be given by the person to
whom the offer is made and no one else.
An acceptance is complete only when the offeror is within the notion/knowledge of the
acceptance so made and is held in Felthouse v Bindley5. Silence is not regarded as an acceptance
in law. However, as per Adams v Lindsell6, when the acceptance is made by letter or post, then,
the acceptance is complete immediately and there is no need that the acceptance should come
within the knowledge/notion of the offeror.7
When the acceptance is made by email, then, the postal acceptance rule is not applicable. In
Entores Ltd v Miles Far East Corporation8 it was held that the postal acceptance rule has no
relevance in instant mode of communications for instance, emails. Thus, any acceptance send
through email is considered to be valid only when the same comes in the knowledge or read by
1 Carlill v Carbolic Smoke Ball Co [1893].
2 R v Clarke (1927).
3 Ewan McKendrick and Qiao Liu, Contract Law: Australian Edition, Macmillan International Higher Education, 25-Sep-2015.
4 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
5 Felthouse v Bindley (1862) 142 ER 1037)
6 Adams v Lindsell (1818) 1 B & Ald 681
7 Paul Latimer, Australian Business Law 2012, CCH Australia Limited, 2011.
8 Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3

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the offeror or receiver. If the email is not read then the acceptance is not held to be complete and
there is no contract formation amid the parties and is held in Re Imperial Land Co of
Marseilles9.10
Invitation to treat – When the person who desires to establish a contract does not make any kind
of offers, rather, he acts in such manner so as to receive offers, then, it is an invitation to treat in
law11. An invitation to treat is not an offer, rather, the person with the help of advertisements,
auctions, tenders, etc, seek offers from the intending persons. The persons who rely on such
advertisements etc can make an offer to the inviter and when the inviter affirms the offer, then,
there is an acceptance which results in the formation of a contract amid the parties. In Fisher v
Bell12, an advertisement is treated as an invitation to treat and the person relying on the
advertisement or the brochure must make an offer to the inviter.13
Counter offer – As submitted that when the offer is affirmed by the offeree, then, it is an
acceptance in law. But, when the offeree does not give his confirmation but brings changes in the
terms of the offer, then, it is not an offer in law and is considered as a counter offer. As per Hyde
v Wrench14, the counter offer cancels the original offer and the only offer that remains is the
counter offer which must be accepted by the original offeror to make a contract amid the
parties.15
Revocation of offer – Normally when an offer is made and the same is accepted then there is a
contract amid the parties. But, when the offer is made but the same is not accepted by the offeree
and the offer remains for certain time duration, then, it is necessary that the offer must be
accepted with such time frame otherwise the offer is considered to be revoked because of lapse
of time. In Dickinson v Dodds16 it was held that if any acceptance is received after the lapse of
time of offer then it is not an acceptance in law and there is no contract that is made amid the
parties.
9 Re Imperial Land Co of Marseilles (Wall’s Case) (1872) LR 15 Eq 18.
10Simone W. B Hill, Email Contracts - When is the Contract Formed?" [2001] JlLawInfoSci 4.
11 Pharmaceutical Society v Boots Chemists (1953)
12 Fisher v Bell (1961)
13 Andrew Burrows, A Casebook on Contract, Bloomsbury Publishing, 20-Sep-2018.
14 Hyde v Wrench (1840) 49 ER 132.
15 Michael Furmston and G.J. Tolhurst, Contract Formation: Law and Practice, OUP Oxford, 25-Mar-2010.
16 Dickinson v Dodds (1876).

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Apart from offer and acceptance, there must be presence of consideration, legal intenation of the
parties (generally legal intention is not present in domestic relationship but can be rebutted with
the help of evidence) and the capacity of the parties
(major and of sound mind) in order to establish a contract which is legally enforceable in law.
Application of law
Jane and Eric/Gardening Gadgets
Jane is the owner of a landscaping and land care business in NSW. He requires a trailer, ride-on
mower and chainsaw for the business.
Gardening Gadgets is a retail franchise and has advertised gardening and landscaping equipment
at sale prices which includes:
i. 9x5 Tandem Trailer Grey/Blue Colour Hydraulic Brakes Carry Capacity 2000kg
Cheq Plate Floor & Sides Slipper Suspension. Normal Price $3500 SALE PRICE
$2990!!!!
ii. Jameson 1050 Ride-on Mower 20 HPTwin Cylinder OHV Engine, Zero Turn radius,
50" (1169mm). Normal Price $4500 SALE PRICE $3990!!!!
iii. Chainsaw 20" Bar Two Stroke Engine, 3.5 HP, 58cc capacity, Weight of 4.8Kg, 2
Piston rings, Anti vibrating system, Electronic Ignition. Normal Price $600 SALE
PRICE $499!!!!
It is submitted that an advertisement is issued by Gardening Gadgets in the form of a brochure
which is issued to the public at large. As per Fisher v Bell an advertisement or the brochures are
considered to be invitation to treat and thus Gardening Gadgets is an inviter. Any person who
wishes to buy the products that are advertised must make an offer to Gardening Gadgets and if
such an offer is accepted by Gardening Gadgets then there is a contract amid the parties.
So,
Jane found the brochure of Gardening Gadgets in her letter box. After two weeks, Jane on
Tuesday was passing Gardening Gadgets and wishes to investigate the sale items. Jane intends to
buy the items at sale price.

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Thus, Jane by relying on the brochure has made an offer to Gardening Gadgets. Thus, the acts of
Jane is nothing but an offer that is made and if the same is accepted by Gardening Gadgets then
there is a contract amid the parties.
But, she was told by the sales person that the sale is over and that the products are available at
the normal price.
Thus, the offer that is made by Jane to Gardening Gadgets is not accepted by the sales persons of
Gardening Gadgets and hence there is no contract that is made amid the parties.
But,
Jane has a discussion with the store manager (Eric) and submitted that she intends to buy the
articles at a price mentioned in the brochure. However, later Eric submitted that even though the
sale is over, however, if Jane is willing to buy all the three items, then, he will gave trailer and
mower for the normal price but will gave chainsaw for free.
At this stage, there is a new offer that ids made by Eric to Jane apart from the brochure that is
issued b y Gardening Gadgets. It is new necessary that Jane must accept the offer of Eric in order
to make a contract amid the parties.
But, this offer that is made by Eric is not accepted by Jane immediately and she submitted that
although she appreciate the offer but she needs to check with her overdraft and it is then only she
can send her acceptance. So, there is no acceptance.
At this point, Eric submitted that the offer that is made by him is only open till Thursday night
and of no acceptance is received by then, then the offer stands terminated. Thus, the offer is
considered to be revoked if the acceptance is made post Thursday.
Now,
On Wednesday, Jane decided that she will buy all the three items. She finds the website of
Gardening Gadgets and sends an email to Eric’s store. She wrote that she is willing to buy the
trailer, mower and chainsaw for $8000 and that she will visit the store on Thursday afternoon to
pick up the goods.

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Now, as per Entores Ltd v Miles Far East Corporation it is necessary that Eric must read the
mail in order to consider the acceptance to be completed. The postal acceptance rule does not
apply to emails.
The mail was sent to Eric but Eric did not check his mails on Wednesday or Thursday. Thus, the
acceptance is not complete which is made via email.
Jane visits the store on Thursday afternoon buy before anything is said to Eric, Eric submitted
that he now does not wish to sell the items and that the offer is withdrawn. Now, before any oral
acceptance could be made by Jane, Eric withdraws his offer.
Thus, there is no acceptance that is made to the offer of Eric which was with drawn by Eric.
Jane and Grace
Grace and Jane are close friends. Grace wishes to sell her property and wanted to live near her
son Ignatius. Jane always wishes to buy the property of Grace. Grace rings Jane and told her that
she is willing to sell her house for $700,000 and whether Jane is interested or not.
Thus, an offer is made by Grace to Jane wherein the offer price is settled @$700,000. This offer
must be accepted by Jane in order to establish a contract amid the two.
At this, Jane submitted that she is very interested in buying the property but she needs to see her
finances. Thus, there is no immediate acceptance that is made by Jane to Grace.
However, Grace submitted that she will leave next week and Jane can communicate her decision
as soon as she can. So, a time frame is provided by Grace to Jane that she must communicate her
acceptance with the week.
After a week, Jane told Grace that she can only afford a 5% deposit and the rest of the balance
can be paid only after three months. She also expresses to move in the property early so that she
can stop paying the rent.
Now, the acceptance that is made by Jane is not the mirror image of the offer that is made by
Grace. Thus, the acceptance is not valid rather the same is treated as counter offer wherein Jane

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has changed the terms of the offer. Now, the only new offer that is valid is the new counter offer
that is made by Jane.
This new offer must be affirmed by Grace in order to make a binding contract amid the two.
Then, Grace agrees to the same. Thus, the counter offer that is made by Jade is affirmed by
Grace. Thus, there is an acceptance that is made Grace, resulting in a contract amid the parties.
Next day, Jane sends a letter with a cheque of $35,000 stating that the cheque is for the 5%
deposit for the sale of your house. The sending of letter and the cheque is nothing but the
affirmation that is made amid the parties.
Later Grace submitted that she is writing back as an acknowledgment for the letter and a cheque.
She further stated that she is cashing the cheque for the deposit, which is for the purchase of 25
Elm Avenue, Armidale.
There is a contract that is created amid the parties when Grace affirmed to the counter offer of
Jane.
Also, though Jane and Grace are friends and there is generally no legal intention in cordial
relationship, still, there is legal intention that was present amid them and they are bound by the
promises legally.
Further, the promises are supported with legal consideration of $35,000 and the parties are major
and are sound.
Thus, there is presence of all the contractual elements.
Later when Jane moves in the property and spends $70 000 in renovations. After two months.
Grace has a fight with her son and now she wants to cancel the sale.
However, the contract is already concluded amid the parties and it makes no difference e whether
Grace later cancels the contract.
There is a binding contract amid the parties

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Conclusion
It is concluded, that Jane has no legal rights against Eric/ Gardening Gadgets as there is no
acceptance that is made by Jane to the offer of Eric. Rather, the offer was withdrawn by Eric
before the same is accepted. Thus, there is no contract amid Jane and Gardening Gadgets/Eric.
Further, there is a binding contract mid Jane and Grace and Jane has every right not to move out
of the property and consider the contract as binding. The contract stands concluded when Grace
accepted the counter offer that is made by Jane.
So, Jane can sue Grace for breach of contract and is entitled to remain in the property.

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Reference List
Books/Articles/Journals
Burrows, Andrew, A Casebook on Contract, Bloomsbury Publishing, 20-Sep-2018.
McKendrick, Ewan and Liu, Qiao, Contract Law: Australian Edition, Macmillan International
Higher Education, 25-Sep-2015.
Latimer, Paul, Australian Business Law 2012, CCH Australia Limited, 2011.
Hill, Simone, Email Contracts - When is the Contract Formed?" [2001] JlLawInfoSci 4.
Furmston, Michael and Tolhurst, G.J, Contract Formation: Law and Practice, OUP Oxford, 25-
Mar-2010.
Case Laws
Adams v Lindsell (1818) 1 B & Ald 681
Carlill v Carbolic Smoke Ball Co [1893].
Dickinson v Dodds (1876).
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3.
Fisher v Bell (1961)
Felthouse v Bindley (1862) 142 ER 1037).\
Hyde v Wrench (1840) 49 ER 132.
Pharmaceutical Society v Boots Chemists (1953)
R v Clarke (1927).
Re Imperial Land Co of Marseilles (Wall’s Case) (1872) LR 15 Eq 18.