1. Contracts
Whether or not, a valid contract was formed due to the actions of Rosanne?
A contract depicts that an agreement has been made, where the parties have made certain promise, where one party promises to do or not do something and the other party pays the consideration for the same (Ayres and Klass, 2012). A contract can be made by merely exchanging words, in form of a verbal contract; or by putting the promise into words and in a document, which the parties sign, to form a written contract (Clarke and Clarke, 2016).
The formation of any contract, whether verbal or written, requires the fulfillment of certain elements (Turner, 2014). These elements include the offer and acceptance, the consideration, intention to create legal relations, clarity with regards to the contractual terms, consent, and contractual capacity. Once all of these elements are present in a promise, it can be deemed as a contract and it has legal validity (Latimer, 2012).
The first requirement for contract formation is that an offer has to be made, which the other party can accept. Till an offer is made, the contract formation cannot begin. The advertisements which are contained in the newspapers can be deemed as offer, only when they contain a unilateral offer (Andrews, 2015). For instance, in Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, the advertisement in the newspaper stated that anyone who used the smoke ball prepared by the company, and still contracted influenza, would be given a sum of £100. Mrs. Carlill used the smoke ball and she still contracted the disease. The court held that a unilateral offer was made in this case, which was accepted by performing upon the offer. Hence, the defendant had to pay the promised sum to Mrs. Carlill due to presence of a valid offer (E-Law Resources, 2017a).
The facts of this case resemble Carlill v Carbolic Smoke Ball Company. Here also a unilateral offer was made, which could be accepted by anyone. This unilateral offer contained in the newspaper was accepted by Rosanne. Her performance of acceptance is evident from her daily blog. Due to these reasons, on the basis of quoted case, a contract was formed between Rosanne and the saloon. And Rosanne would have to be paid 5 years of free beauty treatment, as promised in the advertisement.
Conclusion
Due to the presence of a unilateral offer in this case, Rosanne would have to be given the 5 years of free beauty treatment due to her performance of the contract, and the fulfillment of terms of the promised advertisement.
Whether Ursula is under an obligation to sell the t-shirt to Sally at the price of $5.00 as advertised, or not?
As has been discussed in the previous part, the advertisements are only deemed as an offer, when they contain a unilateral offer. It is crucial that an offer and invitation to treat are differentiated. An offer denotes the intention to form legal relationship; and an invitation to treat denotes the willingness to initiate negotiations (Abbott, Pendlebury and Wardman, 2007).
1.1. Advertisement Offers and Contract Formation
In the case of Partridge v Crittenden [1968] 1 WLR 1204, an advertisement had been given by the defendant whereby some bramble finches were offered for sale. However, due to the applicability of section 6 of the Protection of Birds Act, 1954, offering birds for sale was an offence. Due to these reasons, he was not only charged, but he was also convicted for the offence. And an appeal was made by the defendant against this particular conviction. In this landmark case, it was held by the court that the conviction of the defendant had to be quashed. This was because the advertisement was deemed as an offer for sale in this case (E-Law Resources 2017b).
In Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401, it was held by the Court of Appeal that the goods which are kept on the shelf are not deemed as an offer, and instead are an invitation to treat. The offer is not made till the time the customer takes the goods and goes for the billing of the same. In such cases, the seller is not obliged to go through with the sale (Swarb, 2016a).
In this case, the goods were displayed at the wrong price. On the basis of Pharmaceutical Society of Great Britain v Boots, it can be stated that this displayed price was not an offer, but an invitation to treat. And due to these reasons, Ursula is not obliged to sell the t-shirt at lower price to Sally. So, an offer is made in this case when Sally went to Ursula to purchase the t-shirt at $5. At this time, Ursula can refuse to sell the t-shirt to Ursula at the lower rates.
Conclusion
To conclude, Ursula is not obliged to sell the t-shirt to Sally at the lower prices, due to an absence of offer in this case.
Whether the massage beds have been sold on the basis of electronic records, or not?
Once an offer has been made, the same has to be accepted. The offer has to be accepted as it was made, and in case any of the terms or details of the promise are changed, it is considered as a counter offer, instead of an acceptance (Lambiris and Griffin, 2016). The prime example of this is the matter of Hyde v. Wrench (1840) 3 Beav 334. Once a counter offer has been made, the original offer expires. The offer has to be revoked before an acceptance is attained on the offer (Marson and Ferris, 2015).
The offer is deemed as accepted only when the offering party receives the acceptance. In other words, the acceptance has to be properly communicated to be valid (Poole, 2016). However, when postal rules of acceptance are applicable, the offer is accepted as soon as the acceptance letter is posed by the accepting party (Blum, 2007). This is due to the fact that the postal office is the acceptance parties’ implied agent. Further, in case of postal rules of acceptance, the date of receiving is irrelevant (Mulcahy, 2008). Due to the applicability of the postal rules of acceptance, the contract was enforceable as per the court in Adams v. Lindsell (1818) 106 ER 250 (Swarb, 2016b).
1.2. Obligations under a Lease Agreement
The electronic communications in Australia are regulated by Electronic Transactions Act, 1999 (Cth). Under section 14 of Electronic Transactions Act, when the electronic communication leaves the creator’s information system, that is the time which has to be taken as the date of acceptance and offer. This is due to the applicability of the postal rules of acceptance. Hence, it remains irrespective that the communication was reached later or read later, the moment the communication is sent, is the date of offer or acceptance, as applicable (Legislation, 2011).
In the given scenario, an offer was made by Monica to Emily on Wednesday 5 pm for $ 3,000. A counter offer was made by Emily on 5:30 the same day, where the price was changed to $2,500. The next day, the acceptance and revocation of the offer was done at the same time. Hence, the date of the electronic communication has to be relied upon. The email of Emily came before the acceptance of counter offer which came ten minutes afterwards. However, as the original offer had expired when the $2,500 offer was made, the same cannot be deemed as acceptance, even when the same came earlier. So, this email would be deemed as a second counter offer, which would invalidate the original $2,500 offer. Hence, the acceptance has to be attained at the $2,500 counter offer made at 9:40 am. As an acceptance was never attained at the last counter offer which was made, the massage beds had would not be deemed as being sold as per the electronic records.
Conclusion
Hence, it can be concluded that the massage beds have not been sold on the basis of electronic records.
Whether Ursula is bound by the restraint clause which has been included in the employment contract, or not?
Restraint clauses are a common scenario in the case of employment contracts. These clauses denote that whenever an agreement has been made between two parties and the same comes to an end, the worker or the employer is not entitled to undertake the practice or work in the area which has been restricted through the restraint clause contained in the employment contract (Millington, 2015). Such clauses are held as valid, to safeguard the confidential information and the clients of a company, where the employee worked. In order to stop the worker from working with a competitor, it is crucial to show that the employee had crucial and material information, which could be misused by the employee and due to which the employee needs to be stopped. In Automotive Tooling Systems v Wilkens (2006) SCA 128 (RSA), the employee was permitted to work for the rival company as the court held that he did not have any specialized skills or the crucial information of the company, which needed safeguarding (SAMA, 2012).
However, the restrictive covenants could still be valid when the clause is reasonable with regards to the scope and the duration. Hence, the reasonableness of the clause has to be taken into consideration for making a decision regarding the restraint clause being bound or not (Find Law, 2017).
1.3. Formation of a Contract and Acceptance of an Offer
In the given case, the contract which was signed with Ursula contained a restrictive covenant as per which she was restricted from working for another beauty salon for twenty four months within a five kilometers radius. And still, she went to work with GOT Beauty Parlor which was a breach of this covenant. This covenant was reasonable on the basis of fact that it contained a reasonable time and jurisdiction clause. This clause was meant to protect the Friends business. So, unlike Automotive Tooling Systems v Wilkens, in this case, it is crucial that Ursula is stopped from working for competition as she has crucial information of the Friends business and can substantially have a negated impact over the client base of Friends business.
Conclusion
On these bases, it can be stated that Ursula was bound by the restraint clause as she signed the contract, which she remembered, and because the same was reasonable on basis of time and jurisdiction.
Whether anything has to be provided by the landlord for leasing the premises, or not? Whether any information is needed for this purpose, or not?
Whenever any premises have to be leased in Australia, it is crucial that the landlord gives the tenant the permission to inspect the accommodation which has to be rented, which could be a flat or a shop. This is done so that the tenant can judge the condition of the house, which includes the fittings and fixtures and the possible things which are missing or in need of repairs. The landlord has to agree to provide the tenant with the copy of agreement which is signed by both the parties. He also has to provide the landlord with the right that the premises can be occupied by the tenant during the tenancy (Just Landed, 2017).
With regards to any rental property, it is crucial that certain things are included. For the retail leases it is crucial that the lease is for a minimum period of five years or else, a certificate has to be provided to the landlord as per section 16 of the Retail Leases Act 1994 (NSW). The next requirement is that the costs of “fit-out” have been properly stated and it is also stated that which party would bear the costs of the same. It is crucial that all the information is properly disclosed in a retail lease, by the landlord in form of a Lessor’s Disclosure Statement, which has to be given seven days prior to the initiation of the lease. Once the tenant receives this, the tenant is required to provide the landlord with the Lessee’s (tenant’s) Disclosure Statement, within seven days period. It is also necessary that the outgoings have been properly discussed. So, the tenant has to be given the notification of the outgoings contained in the lease contract, along with the Lessor’s Disclosure statement (Small Business Commissioner, 2017).
These five are the specific aspects required for the retail leases. Apart from these five, it is crucial that it is clarified who would bear the costs, for instance, the property tax or the costs of maintenance. It is better to clear which party has what duties and the agreement needs to set out this in a clear manner. It is better to clarify each and every possible clause so that a dispute is not raised. And a clause with regards to dispute resolution should also be included (Gettler, 2016).
1.4. Restraint Clause in a Contract
All these clauses have to be properly inserted in the lease agreement which is to be drawn for the gift shop next door. And the landlord has to present the tenant with an opportunity to make an inspection.
Conclusion
To conclude, the landlord is required to present the above mentioned things for leasing the premises and is also required to present the information stated above for this purpose.
What are the obligations and liabilities of the tenant with regards to the premises pursuant to Clause 5.1, or not?
In New South Wales, the standard forms with regards to the statements have been provided. Due to the applicability of such standard clauses, certain obligations and liabilities have been imposed over the landlords and the tenants. With regards to the addition or alteration of the premises, it is an obligation of a landlord to refrain from giving the permission in an unreasonable manner when the tenant wants to install or make any minor additions, renovations or alternations in the premises. In the same manner, it is also the duty of the tenant to not unreasonably refuse the permission sought by the landlord. It is the liability of the landlord to not force the tenant to give written permission for altering, adding or renovating the premises. The landlord is also under the obligation to allow the tenant to enjoy the property which has been leased and not to enter without the permission of the tenant in the property, save for emergency purposes. Whenever a clause under the lease agreement requires the landlord to take the permission of the tenant, the same has to be taken, so as to safeguard the rights of the tenants (Fair Trading, 2010).
In the given case study, the landlord has been given the right to enjoy the property and in case any changes have to be made, his permission is required. The landlord is under the obligation to honor the terms mentioned in Clause 5.1 of the standard lease. So, if the tenant does not want the landlord to make the changes, he cannot do the same, as they are not for emergency purpose. Though, the tenant also is required to not unfeasibly hold back the permission. In this study however, the tenant would have to bear economic loss if the permission is given. The work of the tenant would be affected if the renovation is undertaken. Hence, the tenant has the right to refuse to give the permission on the basis of reasonability and the landlord is under an obligation to refrain from carrying the modification work, owing to lack of tenant’s permission.
Conclusion
To conclude, Clause 5.1 has imposed obligation over the tenant, but due to the reasonableness of this case, the tenant can refuse from giving the requisite permission.
References
Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press
Ayres, I., and Klass, G. (2012) Studies in Contract Law. 8th ed. New York: Foundation Press
Blum, B.A. (2007) Contracts: Examples & Explanations. 4th ed. New York: Aspen Publishers.
Clarke, P., and Clarke, J (2016) Contract Law: Commentaries, Cases and Perspectives. 3rd ed. South Melbourne: Oxford University Press.
E-Law Resources. (2017a) Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-Co.php [Accessed on: 05/06/17]
E-Law Resources. (2017b) Partridge v Crittenden (1968) 2 All ER 421. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Partridge-v-Crittenden.php [Accessed on: 05/06/17]
Fair Trading. (2010) Residential tenancy agreement. [Online] NSW Government. Available from: https://www.fairtrading.nsw.gov.au/pdfs/Tenants_and_home_owners/Residential_tenancy_agreement.pdf [Accessed on: 05/06/17]
Find Law. (2017) Non-Competition Agreements: Overview. [Online] Find Law. Available from: https://employment.findlaw.com/hiring-process/non-competition-agreements-overview.html [Accessed on: 05/06/17]
Gettler, L. (2016) 9 things to remember when taking out a commercial lease. [Online] Real Commercial. Available from: https://www.realcommercial.com.au/news/9-things-to-remember-when-taking-out-a-commercial-lease [Accessed on: 05/06/17]
Just Landed. (2017) Rental Contracts. [Online] Just Landed. Available from: https://www.justlanded.co.in/english/Australia/Australia-Guide/Housing-Rentals/Rental-Contracts [Accessed on: 05/06/17]
Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH
Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.
Legislation. (2011) Electronic Transactions Act 1999. [Online] Legislation. Available from: https://www.legislation.gov.au/Details/C2011C00445 [Accessed on: 05/06/17]
Millington, P. (2015) Employment Law 2015. Oxford: Oxford University Press.
Mulcahy, L. (2008) Contract Law in Perspective. 5th ed. Oxon: Routledge.
Poole, J. (2016) Textbook on Contract Law. 13th ed. Oxford: Oxford University Press.
SAMA. (2012) Restraint Of Trade Clauses In Employment Contracts. [Online] SAMA. Available from: https://www.samedical.org/images/attachments/guideline-on-restraint-of-trade-clauses-in-employment-contracts-jul012.pdf [Accessed on: 05/06/17]
Small Business Commissioner. (2017) Small Business Info Kit. [Online] NSW Government. Available from: https://www.smallbusiness.nsw.gov.au/__data/assets/pdf_file/0006/41595/12277_SBC-Retail-Tenancies_1-Before-Signing_v2.pdf [Accessed on: 05/06/17]
Swarb. (2016a) Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd: CA 5 Feb 1953. [Online] Swarb. Available from: https://swarb.co.uk/pharmaceutical-society-of-great-britain-v-boots-cash-chemists-southern-ltd-ca-5-feb-1953/ [Accessed on: 05/06/17]
Turner, C. (2014) Unlocking Contract Law. 4th ed. Oxon: Routledge.
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