Contract Law Case Study: Analyzing Sunita vs. Mr. Property-Walla

This case study analyzes a contractual dispute between Sunita Smart-Walla and her uncle, Mr. Property-Walla, concerning a lease agreement for a commercial property. The core issue revolves around whether a legally binding contract exists despite the absence of a signed lease document. The analysis delves into the essential elements of contract formation, including offer, acceptance, legal intention, and consideration. The case explores the applicability of promissory estoppel, given Sunita's reliance on her uncle's promises, which led her to undertake costly renovations. The study concludes that a valid contract was likely formed due to the presence of all necessary elements, potentially enabling Sunita to pursue legal action for breach of contract. Desklib provides access to this and other solved assignments for students.

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Contents
Solution.......................................................................................................................................................2
Issues.......................................................................................................................................................2
Applicable Laws......................................................................................................................................2
Application of laws..................................................................................................................................3
Conclusion...............................................................................................................................................4
Reference List.............................................................................................................................................5

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Solution
Issues
The main issue is whether Sunita can sue her uncle Mr Property-Walla for breach of contract and
compel him to comply with his part of contractual obligations?
Applicable Laws
When any contract is made then there are few elements which form the basis of such contract
and without which no contract can be established. The same are agreement (offer and
acceptance), capacity, consideration and legal intention.
Offer is the prime factor in contract formation. When an offeror communicates his desires to the
offeree with an expectation that the offeree will approve the said terms then an offer is
considered to be made. In the leading case of Carlill v Carbolic Smoke Ball Co (1893) the
concept of offer was determined by the Court of Appeal. an offer can be made orally or in
written words. A contract can be made to a group or individual or to the world at large. (Graw
2012)
The office’s approval to the term of the offer is considered to be an acceptance in law (Empirnall
Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988). The acceptance so made must
correspond with offer and the acceptance must be conversed order to hold the same as valid in
law. (Graw 2012)
The combination of an offer and acceptance makes contract.
The third element that is required for the formation of contract is the presence of legal intention
amid the parties.
Legal intention means that the parties are ready to apply the terms legally and is held in Air
Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309. The basic
preposition regarding the presence of legal intonation is that when the parties are in domestic
relationship then they are not willing to enter into any kind of legal relationship and is rightly
held in Balfour v Balfour [1919] and Jones v Padavatton [1969]. But, when the parties are in
commercial relationship then it is generally presumed that the parties have legal intonation and
they want to establish a contractual relationship and is held in Rose and Frank & Co v Crompton
[1923]. (Latimer 2012)
But, it was held that at times these general prepositions can be rebutted by establishing evidence.
For instance in Simpkins V Pays (1955) the parties are in domestic relationship but as per the
evidence that are valid down the parties have legal intonation to make a contractual relationship
and thus there is valid contract amid the parties.

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Another element that is very necessary in order to make any contract enforceable in law is the
presence of consideration. a consideration is nothing but value (monetary or non monetary)
which is excahmegd amid the parties and makes the contractual terms enforceable in law (Coulls
v Bagots Executor & Trustee Co Ltd (1967). There is no need that the consideration must be
plenty but it must be enough and is held in Biotechnology Australia Pty Ltd v Pace (1988).
At times the rule of promissory estoppel plays a relevant part in establishing consideration on the
part of the parties. promissory estoppel exists when anything is promised by the defendant and
induce the plaintiff to carry out certain action which the plaintiff would not have incurred if the
promise is not made, then, if the plaintiff have actually acted as per the wish of the defendant,
then, the defendant is not permitted to back out from his words and must comply his part of the
promise and is held in Central London Property v High Trees [1947] and Waltons Stores
(Interstate) Ltd v Maher (1988).
Lastly, the parties to the contract must have the capacity to establish a contractual; relationship,
that is, the parties must be major and must be of sound mind.
The law is now applied to the facts of the case.
Application of laws
Sunita Smart-Walla was a bright student. She is interested in setting up her own business as a tax
consultant. But, she does not have the adequate finance to support her business and is in need of
financial assistance. Sunita was living with her uncle Mr Property-Walla. Mr Property-Walla
owns a property in Harris Park, Parramatta that has been vacant for a long time. He is willing to
give the said shop on lease to Sunita for five years at a rent which is below the market rate.
Now, a contract is made amid Sunita and Mr Property-Walla mainly because:
A valid offer was made by Mr Property-Walla to Suita wherein he was willing to give the shop
of Harris Park, Parramatta to Sunita for five years at a rent which is below the market rate. This
offer was accepted by Sunita.
So, there is valid offer and acceptance resulting in the formation of an agreement.
Further, when Sunita vests the shop, she found that it was previously used as an Indian restaurant
specializing in Bombay-Chinese cuisine. The shops had lots of restaurant equipment fixed to the
walls. In order to run the business it is very much required that alterations must be made. Sunita
asked her uncle for a copy of the lease document so that she could sign it and secure the rental
shop for her use before she spent money on altering the premises. However, Mr Property-Walla
submitted that he trust Sunita and that she can start the renovation and that his solicitor will
email the lease to her in a short while for signature.
It is submitted that both Sunita and her uncle are in domestic and family relationship thus as per
Balfour v Balfour there cannot be any kind of legal intention that is present amid the parties.

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However, it is submitted that even though the parties are in domestic relationship but still the
uncle of Sunita is giving his property ob rent to her not free of charge but is seeking rental at a
price which is below the market value. The facts reveal that both the parties are willing to abide
by the terms of the contract with legal intention. Thus, as per Simpkins V Pays (1955) the
assumption is rebutted and there is presence of legal intention amid the parties.
Now, Sunita gathered quotations from the builders so that she can start with the renovation
process. Sunita has personal savings to pay for the renovation expense. After relying on the
words of Mr Property-Walla she initiated the alterations and completed the same.
It is submitted that it is on the wording of her uncle that Sunita has initiated the renovation and
alteration work. it is on the promise of her uncle that Sunita has indulge in certain actions which
he would not have undertaken if the promise is not made. Thus, a detrimental is caused to Sunita
which is caused by her uncle. Thus, there is promissory estoppel on the part of her uncle Mr
Property-Walla. This detrimental which is exchanged amid the arties is a valid consideration in
law.
Also, both Sunita and Mr Property-Walla are major and are of sound minds. Thus, the element of
capacity of the parties is also present in the given situation.
Thus, all the elements that are required for the formation of the contract are present in the given
situation and thus there is a valid contract that can be established amid Sunita and Mr Property-
Walla. Both the parties are obligated to comply with their terms of the contract.
But, even after the completion of work she has not received any document from her uncle. Later
Mr Property-Walla denied the existence of contract amid the two on the basis that there was no
signed agreement amid them.
It is submitted that Mr Property-Walla cannot consider that there ius no contractual relationship
amid Sunita and him as all the elements of contract that are required in the formation of a
contract are present.
Conclusion
It is submitted that there is a valid offer that is made by Mr Property-Walla which was duly
accepted by Sunita. Both the parties have legal intention and are capable to perform the
contracts. There is presence of consideration. The rule of promissory estoppel is also applicable
and thus Mr Property-Walla cannot consider that there is no contract amid the parties.

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Reference List
Books/Articles/Journals
Latimer, P 2012, Australian Business Law 2012, CCH Australia Limited.
Graw, S 2012, An Introduction to the Law of Contract, Thomson Reuters (Professional)
Australia.
Case laws
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309.
Balfour v Balfour [1919] 2 KB 571.
Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 13
Central London Property v High Trees [1947] KB 130.
Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460.
Carlill v Carbolic Smoke Ball Co (1893).
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
Jones v Padavatton [1969] 2 All ER 616.
Rose and Frank & Co v Crompton [1923] 2 KB 261.
Simpkins V Pays (1955).
Waltons Stores (Interstate) Ltd v Maher (1988).