The Constituents of a Valid Contract
1.Explain how the contracts Avinash made with the café were formed.
2.Explain whether the café is legally entitled to rely on the clause printed on the ticket to avoid liability in relation to Avinash’s mishap.
3.n contrast to express terms found in a contract, implied terms can arise in a variety of ways and are beneficial to at least one of the parties to the contract. Some contracts may contain both express and implied terms, but the ways these two types of terms operate are significantly different from one another’.
Discuss this statement by reference to cases and legislation, providing examples of each.
1.A contract is known as an official agreement. A contract can either be in a written or oral form. Therefore, six significant constituents of a contract that are essential in the formation of a contract. If the these important elements are not present in a contract, it will not be considered to be a valid one. Firstly, during the formation of a contract an offer or a promise must be made at first. It is one of the basic elements that are required in a contract for it to be legally acceptable[1]. For making an offer, there must be two parties present in the situation. When an offer is being made by one party, the other party must accept. If the other party fails to or does not apply then it will not be considered to be a valid contract. However, both the parties must be aware of what is being offered to the other while the creation of a contract. Unless the other party involved accepts the offer, it will not be an invalid contract. Acceptance should be done from the other party once the offer is made as observed in the case of Brennan v Lockyer. A contract can be considered to be valid, only when there is acceptance from the other person. The person accepting the offer should be precise about the rules and clauses that are being offered in the contract. Therefore, the person accepting the offer should accept it in writing or orally. Consideration is a noteworthy ingredient of a contract. Consideration in a contract refers to a situation where one person is giving something in return[2]. Therefore, a contract cannot be formed when an object is not exchanged as mentioned in the case of Chappell v Nestle[3]. The base of a contract involves the process of consideration without which it will be considered to be invalid. It is treated as an exchange that is made between the promisee and the promissory. Consideration can be in form of an object or money. Fourthly, the parties forming the contract must have an intention to create legal relations. No existence of intention to form legal relations in a contract will result in a lawsuit. Certainty is another constituent of a contract that plays an important role. The terms and regulations that are formed in the contract should be mentioned clearly so that the parties are able to comprehend. Nash v Inmanf stated there is no certainty in the agreement, it will not be considered to be valid. Lastly, Capacity in a contract submits a situation where the parties to the contract are suppose to have the legal capacity for carrying out the duties. It has been observed in the case of Guardian Builders v Sleecon. This means minors are not applicable to form a legal contract with another person. Individuals who are above the age of 18 are legally allowed to create a contract with another individual who have attained the age of 18. Thus, these essential elements should be present in a contract. Such a situation can be observed in the case of Clifton v Palumbo[4]. The legal status of the given scenario has fulfilled and followed all the constituents of a contract. In this case, the offer was provided by the local café, which was accepted by Avinash who visited that café being a customer[5]. The contract was formed in writing and not orally. Thereafter, the consideration that was agreed upon was when Avinash purchased coffee and paid $4 for it. He had also ordered a pastry along with the coffee on the next day for $7.50. Intention to create legal relations was present and both the parties were capable enough to form a valid contract. Therefore, Avinash and the local café had formed a legally valid contract by involving all the essential constituents. Since all the elements were used, the contract was formed between Avisnash and the café.
Forming a Contract with Express and Implied Terms
The issue of this scenario is whether the café will be responsible to depend on the clause that was printed on the ticket to avoid liability in relation to the mishap.
As far as Common Law is considered, a legally valid contract was formed between Avinash and the local café. The contract that was formed between them was in a written form. On the other hand, according to Australian Consumer Law in Schedule 2 of the Competition and Consumer Act, 2010 a consumer is an individual who buys goods or services based on consideration and who uses such goods with the permission of the buyer[6]. When an individual purchases goods for commercial purposes and not personally, then he or she will not be treated to be a consumer as per the act. Australian Consumer Law defines the concept of consumer dispute where the person against whom a complaint has been lodged and denies the accusations included in the complaint. Thornton v Shoe Lane Parking [1971] discusses the situation of a consumer who was being negligent while forming a contract. Therefore, if both the laws are applied, when a contract was formed between both the parties, they must be aware of the rules and regulations mentioned in the contract. Negligence committed by one party will be held liable if he or she has been negligent on the terms and clauses mentioned in the contract. Under the Consumer Protection Act, a consumer has the right to claim for his damages if the other party has been negligent. There are certain exceptions in this case if the other party has already mentioned that he will not be liable and responsible for the damages of the consumer and the consumer has agreed upon it. Arumugam v Wong Kook Wah & Another [1987] is an example of the exceptions. However, penalties can be imposed on the trader or the person liable if the consumer has provided sufficient evidence.
Avinash being the consumer broke a tooth by consuming the Danish pastry from the local café. He had ordered coffee along with it and in total paid $7.50 for both. There was a metal piece in the pastry that he had ordered from the café. Thereafter, due to this loss, Avinash lodged a complaint to the management and asked for compensation for the anticipated dental repair[7]. The manager of the café informed Avinash that the ticket, which he had received from them while ordering the coffee had a clause mentioned saying that the café is not liable for any kind injury or damage that has been caused to customers because of consuming food or drinks sold. However, if the applicable law is applied in such a situation, Avinash cannot exercise his consumer rights. This is because while the contract was being formed between Avinash and the local café, the consideration and clauses were stated clearly. Therefore, it can be observed that Avinash was alert enough to notice the clause mentioned and understand the consideration. Avinash was proved to be negligent in this scenario. As per the law, he will fail to exercise his rights as a consumer since Avinash who was at fault as he had agreed upon the conditions[8]. Thus, he cannot claim for compensation of his dental repair, as the local café was clear about their clauses from before.
The Role of Implication in Contract Law
Conclusion
It can be concluded stating that the mentioned café will be legally permitted to depend on the clause that was printed on the ticket to justify their acts and avoid liability in the mishap of Avinash.
2.The terms used in a contract are both express and implied. The express terms are referred to as those terms that have been mentioned particularly and both the parties have agreed upon it during the time a contract was being formed. The terms can either be used orally or in a written form[9]. When a contract is being drafted and it covers all the provisions and terms of the agreement, the court assumes certain terms to be intended that consists in a contract. This means that the terms are not clearly mentioned in the contract[10]. However, not every contract consists of both the express and implied terms. They are used differently depending on the nature and kind of the contract. Implied and express terms are mainly used differently as they can be differentiated from each other[11]. Few of the contracts use express terms as the rules, regulations, clauses and consideration are mentioned during the formation of a contract. Implied terms are implied in the contracts by the courts and not by the parties forming the contract[12]. Therefore, implied terms are not expressed and mentioned at the time of the formation but express terms are used particularly during the contract formation time. Hence, both express and implied terms are significantly different from each other[13]. For instance, all the employees involved in an employment contract, should have made it either verbally or in a written form. A verbal contract is can also be put into writing. Therefore, if an employee is covered by an agreement of the workplace, it is normal for them to rely on the contract formed verbally. This is because the agreement of workplace produces the details of the maximum of the conditions of employment. Therefore, if an employee is not covered by the agreement of a workplace, it is better to have a written contract of employment. In a written contract, express terms are chiefly used as compared to the implied terms. Express terms means the duties of an employee, location of the site, wages, time period of the employment and probationary period if any. Thus, the express terms of a contract are particularly those that have been agreed upon between the parties whether the contract was formed verbally or in a written method. Not every term is mentioned when a contract is formed, some of the terms are implied. Implied terms can be classified under two categories[14]. One is referred to as the terms implied by law and the other category are when those terms are implied by circumstances. Implied terms cannot be applied in situations when they are contradicted by an express term. Express terms are expressly stated in the contract for the parties to comprehend the nature, consideration and clauses of the contract as mentioned in Gibson v Manchester City Council. Implied terms distinctive from the express terms as implied terms exists without having to expressly state so in the contract but it is often an assumption of law or the terms that are applicable by law. Implied terms generally vary from contract to contract and party to party. Therefore, implied terms are not used to establish the intention of the parties. The basic and common difference between express and implied terms are that in case of an express contract, the acceptance and proposal results in that kind of an agreement that are enforceable by law. It must also be expressed verbally. On the other hand, implied contract signifies that contract where proposal and acceptance, leads the contract and is expressed non-verbally that is through other means[15]. Expressed terms are created with the help of words whereas, implied contracts are formed by behavior of the parties. An example of a contract that uses express terms is a leasing agreement and an instance of a contract with implied terms is a contract of sale put in an auction sale as observed in the case of Harris v Nickerson. Hence, implied terms are beneficial to either of the parties of a contract as these terms can change the pattern and nature of the contract.
Analysis of a Case Study
As mentioned above, an express term is considered to be a term that is agreed upon by the parties to the contract formed. In case of the oral agreements, there should be existence of a particular term that is treated to be an instance of evidence. Secondly, the terms included and mentioned in written agreements are the statements that sets a particular standard of conditions that can be applied and incorporated in the contract[16]. In certain cases, it can be both oral and written. Usually, it is assumed that in relation to commercial contracts, the written agreement is the contract where the oral terms are excluded unless either of the parties can show it in the contract. Such a situation was proved in the case of SS Ardennes (Cargo Owners) v Ardennes (Owners) [1950] 2 All ER 517 where it was held that an express oral warranty had overruled the terms in the Bill of Lading[17].
The common examples of an express contract includes contract of sale and purchase, contract of agency, oral contracts for the purpose of paying the services of the garden and written contract for purchasing a property. An implied contract on the other hand is formed by the activities instead of an oral or written agreement of the parties. An example relating to such a situation is when a written lease has been expired but the tenant kept making the rent payments and the landlord continued accepting the payments. Thus, it can be observed in this situation that these parties have an implied contract for continuing the rental. Due to these instances, an implied contract can be easily differentiated from an express contract. British Crane Hire Corp. Ltd. v Ipswich Plant Hire Ltd. [1975] QB 303 had allowed the clause the contract to be a part of the contract despite knowing that the contract did not express its attention during that time when the verbal contract was created between the parties[18]. Davey v Cosmos Air Holdings [1989] sets as an example of a contract where implied terms are used[19]. It was held in this case that the implied term used in this situation was not considered to be hazardous to the environment.
References:
Articles and Journals
Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.
Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.
Bridge, Michael G. The international sale of goods. Oxford University Press, 2017.
Davies, Paul S. “CONTRACT FORMATION AND IMPLIED TERMS.” The Cambridge Law Journal 77.1 (2018): 22-25.
Fried, Charles. Contract as promise: A theory of contractual obligation. Oxford University Press, USA, 2015.
Hartzog, Woodrow. “Reviving Implied Confidentiality.” Ind. LJ89 (2014): 763.
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business, 2016.
Marsh, Peter. “Contract law.” Contracting for Project Management. Routledge, 2017. 65-80.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.
O’Leary, Leanne. “Introduction.” Employment and Labour Relations Law in the Premier League, NBA and International Rugby Union. TMC Asser Press, The Hague, 2017. 1-18.
Stone, Richard, and James Devenney. The modern law of contract. Routledge, 2017.
Varandani, Gursharan. “52_The Law of Contract.” (2016).
Willett, Chris. Fairness in consumer contracts: The case of unfair terms. Routledge, 2016.
Cases
Chappell & Co Ltd v Nestle Co Ltd [1959]
Clifton v Palumbo [1944] 2 All ER 497
Davey v Cosmos Air Holdings [1989]
Hire Corp. Ltd. v Ipswich Plant Hire Ltd. [1975] QB 303
SS Ardennes (Cargo Owners) v Ardennes (Owners) [1950] 2 All ER 517
Arumugam v Wong Kook Wah & Another [1987]
Thornton v Shoe Lane Parking [1971]
Legislation
Australian Consumer Law
Schedule 2 of the Competition and Consumer Act, 2010
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), (2014).
O’Leary, Leanne. “Introduction.” Employment and Labour Relations Law in the Premier League, NBA and International Rugby Union. TMC Asser Press, The Hague, (2017). 1-18.
Chappell & Co Ltd v Nestle Co Ltd [1959]
Clifton v Palumbo [1944] 2 All ER 497
Davies, Paul S. “CONTRACT FORMATION AND IMPLIED TERMS.” The Cambridge Law Journal 77.1 (2018): 22-25.
Knapp, Charles L., Nathan M. Crystal, and Harry G. Prince. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business, (2016).
Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, (2016).
Marsh, Peter. “Contract law.” Contracting for Project Management. Routledge, (2017). 65-80.
Willett, Chris. Fairness in consumer contracts: The case of unfair terms. Routledge, (2016).
Stone, Richard, and James Devenney. The modern law of contract. Routledge, (2017).
Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, (2017).
Willett, Chris. Fairness in consumer contracts: The case of unfair terms. Routledge, (2016).
Fried, Charles. Contract as promise: A theory of contractual obligation. Oxford University Press, USA, (2015).
Bridge, Michael G. The international sale of goods. Oxford University Press, 2017.
Varandani, Gursharan. “52_The Law of Contract.” (2016).
Hartzog, Woodrow. “Reviving Implied Confidentiality.” Ind. LJ89 (2014): 763.
SS Ardennes (Cargo Owners) v Ardennes (Owners). [1950] 2 All ER 517
Hire Corp. Ltd. v Ipswich Plant Hire Ltd. [1975] QB 303
Davey v Cosmos Air Holdings. [1989
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