Western Sydney University: Contract Law Problem Solving Essay

This essay delves into various aspects of Australian contract law, addressing three distinct legal issues. The first issue examines the formation of a valid contract between Graham and a shop assistant, analyzing the elements of offer, acceptance, and consideration within the context of an antique purchase. The second issue evaluates whether an agreement between Andrew and Susan is enforceable, considering the intention to create legal relations, particularly in the context of a domestic agreement following separation. The third issue explores the potential for Chris to set aside a contract for the sale of dogs, focusing on the concepts of undue influence and duress, examining whether Bruce's actions impacted Chris's ability to freely contract. The essay applies relevant legal principles and case law to each scenario, offering a comprehensive analysis of contract law principles.

Issue 1
The issue in the given case is to examine whether there was a valid contract in
existence between Graham and the shop assistant at the antique shop.
Rule 1
The Australian Contract Law calls for the compliance of five key conditions for a valid
formation of a contract. The first condition is that an agreement must exist between
the parties, that is a valid offer and acceptance thereon must be present. An offer
refers to a communication whereby a promise for something to be done or not to be
done has been made by one party to the other, as was pronounced in the case of
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
In return the other party must communicate the acceptance and thus leading to the
meeting of the minds as necessitated for an agreement to be formed. However, it
must be noted that an offer must be distinguished from an “invitation to treat.” An
invitation to treat refers to a mere willingness of the parties intending to enter into a
“negotiation” and not a contract. Apart from this, an agreement must be mandatorily
supported by a consideration, which is an amount paid in exchange of the promise,
as held in Beaton v McDivitt (1987) 13 NSWLR 162. In addition, the terms of the
contract must be certain, the parties must have a legal capacity to enter into the
contract and have intentions to enter into a legally binding relationship. The same
was held in the leading case of Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty
Ltd [1989] 2 NSWLR 309. Thus, if all the above conditions are present, it can be
concluded that a legally enforceable contract exists between the parties.

Application 1
The application of the above determined rules to the given situation is as follows.
The fact that the antique dining table has been kept in the shop is an invitation to
treat for further negotiation among the parties. As Graham asks the details of the
table, he is extending an offer to the shop assistant. The fact that the shop assistant
agrees to terms of payment and delivery highlights his acceptance to the offer. In
response to the offer, not only the consideration of the table has been stated, but
also other terms are mentioned in clear terms. A promise has been made by Graham
by stating the address and mentioning the desired terms of the payment. Thus, not
only the consideration exists of $ 5000, but also terms are certainly specified. In
addition to state that the commercial contracts by their very nature depict the
intention to be legally bound. Thus, all the five condition of the valid contract
formation are fulfilled.
Conclusion 1
The study of rules and application to the given situation lead to the observation that
all the legally prescribed conditions of the contract formation are complied with the
parties, a valid contract existed between Graham and Shop Assistant.
Issue 2
The issue is to examine whether Andrew is correct in stating that the concerned
agreement was not enforceable as the same was in nature of the domestic contract.
Rule 2
One of the essential conditions of the contract formation is intention of the parties to
enter into legally bound relation. This means when the said intention is missing, an

agreement though valid in other terms may not be enforceable at the courts of law. It
is to be further noted that it is presumed by the courts that there is an absence of the
contract in nature of the domestic agreements (Latimer, 2016). These agreements
are in nature of the harmonious relationship between the parties who are otherwise
connected by blood (parents, siblings and others) or through other kinds of
relationship such as one between husband and wife. The significant point to be
noted is that the relationships are amicable based on mutual affection and trust, as
was held in the leading case of Jones v Padavatton [1969] 1 WLR 328. Thus, in such
cases, the courts disregard the existence of the legal intentions between the parties
on the lines of mirroring the parties’ wishes. Apart from the intentions to be in a legal
relationship, it is essential that an agreement is supported by an offer and
acceptance, consideration, legal capacity, and the certainty of the terms. The
fulfilment of above would lead a contract to be enforceable.
Application 2
The application of the above stated legal principle to the case study is as follows.
The agreement between Susan and Andrew is comprised of the promises of acts to
be done on part of both parties. The acts to be performed are the payment by Susan
for the interest portion in the matrimonial home, and payment by Andrew for the
contribution towards the mortgage payments on the home. The consideration is the
amount of $250,000 and of $1000 per month, as the same is of the monetary value.
Further, the parties are capable and terms are certain. It is to be essentially noted
that the intentions of the parties cannot be adjudged to be in the nature of domestic
agreement as both of them have got separated in the year 2018 and it is been 12
months for the same. This means apart from other conditions, there is an intention to

create a legal relationship based on absence of a mutual loving relationship between
the two.
Conclusion 2
It can be concluded from the discussion of the rule and application above that there
is an absence of a domestic arrangement among the parties, based on their present
relationship status of separation. Thus, Andre is wrong in his contention and the
above agreement in legally enforceable in the eyes of law.
Issue 3
The third issue is to examine whether contract for sale of the dogs can be set aside
by Chris, and thus identifying the legal principles that would guide in the formation of
the argument.
Rule 3
One of the prime conditions for a valid contract to be formed is that the parties must
provide acceptance to the terms and conditions of the agreement absolutely and
without any pressure. This means that the parties must be willing absolutely to
perform the obligations of the contract, and the same must not be forced. However,
often a stronger party is known to influence the weaker party for its own benefit. This
leads to two important terms in the Contract Law that are the undue influence and
duress. Undue influence arises when where the dominant party acts in a manner that
would lead to the other party to the contract being deprived of the free will as
necessary for the acceptance of the contract, as was established in the case of
Johnson v Buttress (1936) 56 CLR 113 at 126. The important point to be noted here
is that the dominant party must also be party to the contract. In addition, the duress

is known to occur when an illegitimate kind of pressure is being extended by one
party towards the other, leading them to contract for their disadvantageous position.
Here also the parties extending the pressure must be a party to the contract or must
have been in connection with the party to the contract to sought advantageous
position for himself.
Application 3
In the given case Bruce has an intention to buy the greyhound dogs, owned and
raced by Chris. On trying to negotiate the terms of the purchase, it has been
observed that not only did the Bruce offered a higher price for the sale, but also
pressurized Chris after repeated attempts. Later, Bruce extended undue influence by
stating that “dogs can easily die if one was not too careful with what they fed them.”
Thus, in the fear of safety of the animals, Chris engages himself into a quick as well
as a low value sale of the said dogs with another dog owner George. Thus, while the
undue influence is evident, Bruce is not directly party to the contract.
Conclusion 3
It can be concluded that Chris cannot make to set aside the contract for sale of the
dogs which he did believing the statements of Bruce, as Bruce was not the party to
the contract. It is highly unlikely that Chris would succeed in his claim. The only way
out id if Chirs can prove Brue and George are related to each other.

References
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309
Beaton v McDivitt (1987) 13 NSWLR 162
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527
Johnson v Buttress (1936) 56 CLR 113 at 126
Jones v Padavatton [1969] 1 WLR 328
Latimer, P. (2016) Australian Business Law 2016, CCH Australia Limited: Australia.