Rule
Issue
The issue to be determined is whether there had been any contractual agreement between Jonah and Charlotte regarding the payment of the additional 20,000 Australian Dollars.
Rule
Varying a contract or changing the terms and conditions can be oral as well as in writing. Nevertheless, most of the commercial contracts are supposed to contain a clause that would state the changes through the writing in the contract as it would be signed by or on behalf of the parties. It can be enumerated through the case of Harrop Engineering Australia v Beauville [2016] VSC 17. If they are not written or signed, they tend to be ineffective. Therefore, this is supposed to create a variation clause or no variation clause in contract. It can be highlighted through the instance in relation to the case of Alstom v Yokogawa Australia [2012] SASC 49. However, a non-variation clause is supposed to be a contractual provision that limits and restricts the variation as well as cancellation through an agreement as it stipulates the no variation through consensual cancellation of the agreement. It is perceived by the case of Mathews Capital Partners v Coal of Queensland Holdings [2012] NSWSC 462. This is supposed to be contained in an effect that would be reduced through writing and signing of the parties.
In order to make an offer and acceptance in a contractual obligation valid through the writings on a napkin, the piece of paper or a napkin needs to identify certain terms and conditions to the contract. It also needs to include a transaction where a specific good or service would be provided and along with such the money that is at stake in the business needs to be offered and specified for the benefit of the other party. It can be highlighted through the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523. In addition to this, the contractual terms and conditions need to have certain other requirements specified such as the jurisdiction or the area an individual is in or the terms of the contract as well as the nature of the contract if it deals with land transfer as it needs to meet certain standards. Furthermore, in order to enforce the contractual obligation, the clause or a part of the contract needs to be found unjust as it would be struck out of the contract. It can be elaborated through the case of AGC (Advances) Ltd v McWhirter (NSWSC, 1977) 1 BPR 9454. Nonetheless, in order to prevent the creation of an unenforceable contract statutory and regulatory requirements need to be addressed.
Capacity to contract is considered to be determined when the individuals are incapable of entering into contracts as the parties entering into contracts need to have contractual capacity. However, the rules of capacity are supposed to vary state by state in Australia as it needs a specific bit of advice and research as such would be applicable through the terms and conditions. In addition to this, it would also be determined through the circumstance of the parties while entering into a contract. Intoxication is deemed to be one of the most important components of comprehending the capacity of a contract as an individual fails to understand the contractual obligation that they are entering into. It can be elucidated through the English or common law instance of Gibbons v Wright (1954) 91 CLR 423. Therefore, while drinking or otherwise impaired, an individual is supposed to make poor decisions and this can affect their soundness of mind. Under the law, the contractual obligations are supposed to require certain things before determining the capacity and hence the validity. An offer must be made in spite of being drunk, and it needs to be accepted by the other party. It can be illustrated through the English or common law case of Blomley v Ryan (1954) 99 CLR 362. The material terms of the agreement need to be agreed upon by both the parties through intention and consideration needs to be present. Furthermore, the terms and conditions need to be clear as well as definite for the court to enforce them. In case of one party being drunk, the party needs to come up with defenses in order to show why the contract cannot be enforceable. Thus, the contract is voidable if the defense is proved.
Napkin Offer/ Acceptance
The case of Currie v Misa (1875) LR 10 Ex 153; (1875–76) LR 1 App Cas 554 is considered to be a case on consideration where a valuable consideration is supposed to be made in the sense that would consist of a right as well as an interest along with such profit and benefit as these are the conditions that would be accruing to one of the parties in case of loss or forbearance of the contract.
A practical benefit is not considered as a valid consideration as it acts as some new benefit that needs to be promised. As per the case of Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5, it had been decided that through a varying contract a promise needed to be performed through a pre-contractual obligation and this would be constituting good consideration as the benefit would be conferred through the promiseor. Therefore, it can be stated that the doctrine of practical benefit is supposed to make the principle of consideration much simpler as it would be satisfying the requirement of consideration through modification and alteration of a contract.
A clause in no variation is considered to be inserted through a written agreement as such is not just applicable to the contract of sale but it is applicable on all the contracts. Therefore, this particular clause is considered to be specified only through writing and signing of the parties as it would not be considered in any other manner. It can be understood through the scenario that, the additional payment of 20,000 Australian Dollars specified by Charlotte would only be valid if it was in writing and if it was signed by the party’s privy to the terms and conditions of the contract.
As per the analysis of the scenario, it can be understood that, the situation in which Charlotte wrote on the napkin specifying a particular part of the contract by offering an amount would be deemed as valid as it had been agreed upon by the two parties. Charlotte made an offer by specifying such in the contract and such had been agreed upon or accepted by Jonah. This constituted as a valid offer and acceptance. As per the afore-mentioned rule, it can be observed that, writing the terms and conditions on a napkin or any piece of paper would be valid and enforceable as long as specific conditions and requirements are being met with. Therefore, the napkin would be considered as a valid offer and acceptance.
As per the analysis of the scenario, it can be stated that, Charlotte while writing the terms and conditions on the napkin was intoxicated and such impaired her soundness of mind partially. However, as per the afore-mentioned rule, it can be understood that, in spite of intoxication, the contract can be enforced if offer and acceptance along with intention and consideration have been fulfilled. Intoxication can be used as a defense in order to state why the contract is unenforceable in a court. Charlotte can use it as a defense but that would have to be proved.
It can be understood through the scenario that, the doctrine of practical benefits would be applicable as Charlotte had tried to modify the contract while being intoxicated and due to such the consideration had been altered and it posed a benefit to Jonah. Therefore, through this doctrine, she would be liable to pay for the debt or the payment of 20,000 Australian Dollars to Jonah as it had been varied into the contract as a modified consideration.
Conclusion
Thus, to conclude, it can be stated that, the no variation rights in this scenario would be valid if such had been signed and agreed upon in writing by Charlotte and Jonah. The offer and acceptance on the napkin would act as valid and enforceable as the specific requirements for a valid offer and acceptance had been met with by the parties. Furthermore, Charlotte would be having the authority to use intoxication for capacity to contract as a defense in the court but she would have to prove its unenforceability. The doctrine of practical benefits would be applicable as variation had been made in writing and the consideration had been modified. Thus, through the instances, it can be stated that Charlotte had a contractual obligation to pay the extra 20,000 Australian dollars to Jonah.
References
AGC (Advances) Ltd v McWhirter (NSWSC, 1977) 1 BPR 9454.
Alstom v Yokogawa Australia [2012] SASC 49.
Blomley v Ryan (1954) 99 CLR 362.
Currie v Misa (1875) LR 10 Ex 153; (1875–76) LR 1 App Cas 554.
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523.
Gibbons v Wright (1954) 91 CLR 423.
Harrop Engineering Australia v Beauville [2016] VSC 17.
Mathews Capital Partners v Coal of Queensland Holdings [2012] NSWSC 462.
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5.
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