Victoria University: Analysis of Contract Law in Scenic Views Case

This case study examines a contract dispute between Vincenzo Franco and Scenic Views Resort. Vincenzo, who doesn't speak English well, booked a room with a private balcony and scenic views, as advertised by the resort. However, the room did not meet these specifications. The analysis addresses whether a valid contract was formed, considering elements like offer, acceptance, and consideration. It further explores if Vincenzo can enforce the contract, focusing on potential issues of misrepresentation, undue influence, and unconscionability due to Vincenzo's limited English proficiency and reliance on the resort's manager. The study also investigates whether the contract can be discharged due to a breach of contract by Scenic Views and if Vincenzo is entitled to remedies. The solution also presents how the contract was constructed between Vincenzo and Mr George.

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Contents
Solution 1 A................................................................................................................................................2
Issue i......................................................................................................................................................2
Rule.....................................................................................................................................................2
Application..........................................................................................................................................3
Conclusion...........................................................................................................................................3
Issue ii.....................................................................................................................................................3
Rule.....................................................................................................................................................3
Application..........................................................................................................................................4
Conclusion...........................................................................................................................................5
Issue iii....................................................................................................................................................5
Rule.....................................................................................................................................................5
Application..........................................................................................................................................5
Conclusion...........................................................................................................................................6
Issue iv....................................................................................................................................................6
Rule.....................................................................................................................................................6
Application..........................................................................................................................................6
Conclusion...........................................................................................................................................7
Solution 1 B.................................................................................................................................................7
Issue i......................................................................................................................................................7
Rule.....................................................................................................................................................7
Application..........................................................................................................................................7
Conclusion...........................................................................................................................................7
Issue ii.....................................................................................................................................................7
Rule.....................................................................................................................................................8
Application..........................................................................................................................................8
Conclusion...........................................................................................................................................8
Solution 2....................................................................................................................................................8
Reference List...........................................................................................................................................11

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Solution 1 A
Issue i
Whether the contract that is formed between Scenic view (Mr George) and Vincenzo comprises
of all elements of contract?
Rule
A contract is such a legal document which comes into existence on proposal being accepted by
the parties who are capable to make a contract with legal intent and some benefits/detriment that
are exchanged to support the proposal1.
Thus, a contract is made not because of the presence of some single element. But, it is the
formation which comes into existence when all elements are present.
Offer ignites the formation of contract. Any statement or proposal made by offeror specifying his
intention in the form of terms which is transferred to the offeree in the structure of words,
conduct or in textual form is offer and is held in Carlill v. Carbolic Smoke Ball Co 2.
The offeree consent to the terms of the offer is acceptance which in order to be valid should be
clear and unambiguous and must communicate to the offeror and is held in Latec Finance Ltd v
Knight3.
When the offers are invited with the help of advertisements, actions, tenders then such are
invitations and the approval of invitation by the inviter (offeree) makes a contract and is held in
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd4. as per
Partridge v Crittenden5, an advertisement is an invitation.
The combination of offer and acceptance makes an agreement but it is only when something of
value is present at the time of making the promises that makes them enforceable and is called
consideration. Anything which is beneficial or detrimental to the parties when making the
promises is consideration and it is the presence of consideration brings legality to the promise
made and is held in Currie v Misa6.
Every promise so made should have legal intention, that is, the promises can be proved in court
if any conflict will arise. Intention if present in commercial contract and normally not in
1 John Cartwright, Formation and Variation of Contracts: The Agreement, Formalities, Consideration and Promissory Estoppel,
Sweet & Maxwell, 2014.
2 Carlill v. Carbolic Smoke Ball Co (1891).
3 Latec Finance Ltd v Knight (1969).
4 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA Civ 6 .
5 Partridge v Crittenden [1968].
6 Currie v Misa (1975).

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domestic, but, this assumption can be disapproved if evidence is laid down and is held in Balfour
v Balfour7.
As per Clements v London and North Western Rly Co8, the parties should also be capable.
Application
Vincenzo visits Victoria. Scenic Views has placed an advertisement providing services. As per
Partridge v Crittenden, it is an advertisement. So, Scenic views are the inviters and the interested
parties must make an offer. Mr George is the manager of Scenic Views and is in direct contact
with when Vincenzo visited the office of Scenic Views. Mr George specifies that the room is
available @$350 per night and all the terms of the advertisements remains. So, Vincenzo makes
an offer to Mr George for booking of the room. This offer was confirmed by Mr George. The
acceptance is made clearly by Mr George. The promises amid the parties are exchanged on the
value of 4350 per night which is a consideration. The parties are capable and have legal
intention.
Conclusion
A contract is framed between Vincenzo and Scenic Views (by Mr George) as all elements of a
contract exists.
Issue ii
Can Vincenzo enforce the contract against Scenic views (Mr George)?
Rule
One of the prime elements that is required to be present in every contract is that the parties who
are giving their assents should gave with their own minds and not because of the influence or
domination of some other party. It is then only their consent is considered to be valid. Many a
times, all contractual elements are present but still the consent that is given by the parties are not
genuine as they suffer from some kind of influence or false representation, then, the aggrieved
party has every right to terminate the contract. The contract which is valid can become voidable
at the option of the aggrieved party9.
7 Balfour v Balfour [1919];
8 Clements v London and North Western Rly Co [1894] 2 QB 482
9 Peter MacDonald Eggers, Vitiation of Contractual Consent, CRC Press, 13-Sep-2016.

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When the offeror and offeree are related with each other on account of trust, honesty, good faith
and there is presence of fiduciary relationship amid the parties, then, if the stronger party misuses
his position and relation to bring gain to himself and loss to the weaker party by exploiting the
relation of trust, then, it is an act of undue influence and any contract made in undue influence
can be avoided by the aggrieved party and is held in Johnson v Buttress10.
At times the parties are making promises but one of the parties is inferior from another because
of his age, knowledge, understanding, etc. In such situation, if the superior party knowing the
fact that the inferior party is suffering from some weakness, uses such weakness at his own gain,
then, the acts are unconscionable and are not allowed resulting in termination of contract and is
held in Commercial Bank of Australia v Amadio11. 12
At times, one party before making contract makes several statements which are factual in nature.
The representor knowingly makes false representation so that the other party is induced to make
a contract with him. Any contract which is formulated on the basis of such untrue representation
suffers from misrepresentation and the contracts are voidable at the option of the aggrieved and
are held in Smith v Land & House Property Corp13. 14
Application
A contract is made between Mr George (on behalf of Scenic View) and Vincenzo. There are
various communications and negations that take place between the two before the contract is
made. But, the contract can be rescinded by Vincenzo because:
i. Vincenzo is not very good in English. He hardly understands the same and is
relying on the capability of Nr George. Mr George is aware of the said fact and he
instead of helping Vincenzo, took advantage of his superiority. He makes no attempt
to make Vincenzo understand the terms that are made part of the contract or the terms
which are part of the advertisement. The nature of the terms is not able to be
understood by Vincenzo. So, the acts of Mr George are totally unconsiousable.
10 Johnson v Buttress (1936).
11 Commercial Bank of Australia v Amadio (1983).
12James O'Donovan, 2005, Lender Liability. Sweet & Maxwell.
13 Smith v Land & House Property Corp (1884).
14 Richard Stone and James Devenney, The Modern Law of Contract, Routledge, 14-Jul-2017.

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ii. Since is not very pro in English and Mr George is fully aware of the meanings of
the terms that are exchanged amid them and are made part of the contract, thus,
Vincenzo is not at a superior position in comparison of Mr George. Vincenzo is trust
Mr George that he will be provided a private balcony with scenic view. Mr George
made statements to influence Vincenzo so that a contract is made. So, Mr George by
taking the superiority of his position took undue advantage of Vincenzo, thus, the
consent of Vincenzo endure from undue influence.
iii. Lastly, Mr George and Scenic View has made numerous representation prior the
making of the contract which primarily includes that a private balcony with scenic
view is available which in fact was not available and this facts was in the knowledge
of Mr George. Knowing the said fact, Mr George still made no attempt to bring the
same in the knowledge of Vincenzo but canceled the facts so that a contract can be
made. So, this is clear case of misrepresentation.
Conclusion
Though a valid contract is made between Scenic View (Mr George) and Vincenzo, but, the
consent of Vincenzo is not genuine and clear but it is based on misrepresentation, undue
influence and unconscionability. So, Vincenzo has the authority to terminate the contract.
Issue iii
Is there any manner in which the contract made by Vincenzo and Mr George View can be
discharged?
Rule
The presence of elements of contract makes a valid contract. The parties have an obligation to
comply with contract terms. When the parties fulfill their obligations as defined in the contract
then the contract is comply with as per the performance of the contract. However, when the
parties did not abide by the terms that they must comply with, then, the contracts stands
terminated because of breach.15
15Paul Latimer, Australian contract law. Federation Press 2012.

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Application
Since a contract is made between Scenic View (through Mr George) and Vincenzo, so, they
should have complied with the terms. But, Scenic View (through Mr George) has not provided
the private balcony room with scenic view to which is the primary term of the contract. so,
Scenic View (through Mr George) failed to fulfill the term and thus the contract stands
discharged.
Conclusion
Failure on the part of Scenic View (through Mr George) ti comply with contract terms results in
discharged of contract.
Issue iv
Is Vincenzo authorized to seek remedies from Scenic Views?
Rule
Every contract formation needs agreement (offer plus acceptance) supported with value
(consideration) by capable parties (capacity) with intention (legal). All these elements make a
contract. When the contract confers from not genuine consent then the aggrieved has the power
terminate the contract and seek damages. But, damage is only attainable depending upon two
factors, that is, Firstly, the damages that is caused is because of breach of contract and not
because of any other reasons and is held in Voli v Inglewood SC 16; Secondly, the loss so caused
is the direct result of the breach and is held in Hadley v Baxendale17 and Gates v. City Mutual
Life Assurance Society Ltd18.19
Once the loss is found to be caused because of the breach, then, the level of damage depends
upon the type of term violated. The terms are divided into two categories on the basis of
importance, firstly, the root terms which are heart of the contract and no contract can be
performed without the compliance of such term and are called conditions and is analyze in
Poussard v Spiers 20; Secondly, the terms required for adequate performance of contract and are
not its essence are warranties and is held in Bettini v Gye21
16 Voli v Inglewood SC (1963).
17 Hadley v Baxendale [1854].
18 Gates v. City Mutual Life Assurance Society Ltd (1986).
19Peter Gillies, ‘Business Law’ , Federation Press, 2004.
20 Poussard v Spiers and Pond (1876).
21 Bettini v Gye (1876).

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Application
When Scenic View (Mr George) establish contract with Vincenzo then apart from several terms
one term that was part of the contract was, the availability of rooms with private balcony and
scenic views. Vincenzo made contract on this particular term. This term was the core of the
contract. But, Mr George did not comply with the terms, thus, the contract is violated. Vincenzo
suffers damages as a result of the breach of the said term. The term is the contract essence and is
thus condition. So, Vincenzo has every right to cancel contract and sue for damages.
Conclusion
Breach of the essential term (condition), the availability of rooms with private balcony and
scenic views, results in contract termination by Vincenzo and sue Mr George for damages.
Solution 1 B
Issue i
How the contract amid Vincenzo and Mr George is constructed?
Rule
The compliance of all contract terms result in the formation of the contract. The parties decide
the terms of the contract with which they must comply with. But, the terms are formulated after
parties undergo negotiations. As per Oscar Chess Ltd v Williams22, whether the term is the part
of the contract or depends upon parties intention.23
Several representations are exchanged amid the parties before contract formation. the
representations which are not included in the contract are not terms, but, which are part of the
contract are terms and the parties should abide by the same24.
Application
Before the contract formation, negotiations are exchanged amid Vincenzo and Mr George, such
as room with private balconies spa, bathroom, fire space etc and all are made part of contract and
thus are terms of the contract.
22 Oscar Chess Ltd v Williams [1957].
23 Stephen Graw, An Introduction to the Law of Contract. 2012, Thomson Reuters (Professional) Australia.
24 Toll (Fgct) Pty Limited v.Alphapharm Pty Limited & Ors [2004]).

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Conclusion
The parties must comply with the representations that are part of the contract.
Issue ii
Can Vincenzo enforce collateral contract against Scenic View?
Rule
The negotiations that are exchanged prior the contract formation but are promissory in nature and
are not in contradiction with the express contract terms are binding as they are collateral
contracts25.
Application
Both Vincenzo and Mr George are binding with the contract terms but any oral terms which are
promissory and are not in contravention with the written contract are also brining as collateral
contract.
Conclusion
The parties are bound by oral terms if they are part of collateral contract.
Solution 2
Can Vincenzo claim under Australian Consumer Law (ACL) for breach of consumer guarantees
by Mr. George?
Section 3 of the ACL defines a consumer as a person who for personal use purchases
goods/services which are not more than $40,000. As per Section 7 of the ACL, a manufacturer or
a supplier must comply with the guarantees.
Now, Vincenzo had taken a room for 7 nights @ $350 per night from George who was the
marketing manager of Scenic View. Hence Vincenzo is a consumer as per Section 3 as the
services availed by him are less than $40,000 and scenic View is a service provider and thus a
supplier under section 7, so, must comply with implied guarantees.
The various implied guarantees which must be provided by a service provider are:
25 Shepperd v The Council of the Municipality of Ryde (1952).

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i. When a consumer purchases goods/ service then the supplier is duty bound to provide
the service diligently and carefully as per section 60.
ii. When the consumer specifically upraises to the supplier the purpose for which he is
purchasing the product, then, the supplier is duty bound to supply the product to the
consumer which suits his purpose under section 61;
iii. The service to be provided by the service provider must be provided within a
reasonable time if no time frame is stated in contract as per section 62.
Now, Scenic View was the service provider and Vincenzo was consumer. Hence all the implied
guarantees must had been complied with by Scenic View. Scenic View must had acted diligently
and with care (section 60) but the guarantee was breached as the room was not having a private
balcony with scenic view. Moreover the said defect in service was also not cured hence there is
breach of section 62.
If In case the implied guarantee is not comply with then the consumer can sue supplier for
breach. The compensation depends upon the kind of injury to the consumer.
When the implied guarantees under section 60-62 are breached then the breach is major breach
(section 260). When the breach is not major then it is minor under Section 259.
In case of breach of section 60-62 by the supplier a consumer can terminate the contract or get
his money refunded and he can also claim penalty of $220,000. In case of major breach the
consumer can reject the product claim damages (section 271) and anticipated loss (section 259
(4) of ACL). Exclusion clause cannot modify or get away with the guarantees which are absolute
in nature (section 64) Now, Vincenzo can get his contract cancelled and can seek damages along
with refund of his amount paid.
Also, any acts of the manufacturer or a supplier if lead to deception or misleading of the
consumer is misrepresntation (section 18)26. When a supplier makes representatiuon regarding
the origion, novelty, safety or duarbility of the goods which is false then such representations are
misleading and false and hence breach of section 29.
26 Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993).

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Mr. George made various statements which are in turn false and are made by in order to deceive
Vincenzo to enter into contract; hence there is clear breach of section 18. Also, Mr. George told
Vincenzo that he will be provided with private balcony and panoramic view but the said
statement made by Mr. George is false and thus misleading and hence violation of section 29.
In given case Vincenzo is a consumer of Mr. George, hence Mr. George must take care of all the
consumer guarantees. Vincenzo can get refund, along with compensation and can also back out
of the contact and penalty will be levied on Mr. George.

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Reference List
Books/Articles/Journals
Cartwright, John , Formation and Variation of Contracts: The Agreement, Formalities,
Consideration and Promissory Estoppel, Sweet & Maxwell, 2014.
Eggers, Peter, Vitiation of Contractual Consent, CRC Press, 13-Sep-2016.
Graw, Stephen, An Introduction to the Law of Contract. 2012, Thomson Reuters (Professional)
Australia.
Gillies, Peter, ‘Business Law’ , Federation Press, 2004.
Latimer, Paul, Australian contract law. Federation Press 2012.
O'Donovan, James 2005, Lender Liability. Sweet & Maxwell.
Stone, Richard and Devenney, James, The Modern Law of Contract, Routledge, 14-Jul-2017.
Case Laws
Balfour v Balfour [1919]
Bettini v Gye (1876)
Carlill v. Carbolic Smoke Ball Co (1891);
Commercial Bank of Australia v Amadio (1983).
Currie v Misa (1975).
Clements v London and North Western Rly Co [1894] 2 QB 482;
Gates v. City Mutual Life Assurance Society Ltd (1986)
Hadley v Baxendale [1854] EWHC J70
Johnson v Buttress (1936).
Latec Finance Ltd v Knight (1969);
Oscar Chess Ltd v Williams [1957] EWCA Civ 5
Poussard v Spiers and Pond (1876);
Partridge v Crittenden [1968];

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Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] EWCA
Civ 6 .
Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993);
Smith v Land & House Property Corp (1884)
Shepperd v The Council of the Municipality of Ryde (1952) 85 CLR 1.
Toll (Fgct) Pty Limited v.Alphapharm Pty Limited & Ors [2004] HCA 52.
Voli v Inglewood SC (1963)