1 Part A
Issue:
Had a valid contract been formed between the Magda and Avinash?
Rule
A contract can be defined as an agreement which is legally binding upon the parties to the contract. However, for a contract to be legally binding upon the parties it must have the essential elements of a valid contract. They are:
As opined by McKendrick (2014), it can be stated that any of the parties, who wishes to enforce the contract, must prove that the contract contained all the essential elements at the time it was entered into by the parties. If any of the aforementioned elements is missing, the contract would be void or voidable by the parties. It is worth mentioning that offer and acceptance are two preliminary essentials of a valid contract. Offer and Acceptance can be considered to be a meeting of the minds of people.
It is to be mentioned that for the purpose of entering a valid contract an offer has to be made by an offeror. An offer can be described as the promise made by the offeror to the offeree to pay a consideration for the fulfillment of the terms of the offer. As held in the case Carlill v Carbolic Smoke Ball co [1893] 1 QB, an offer must be distinguished from an invitation to treat. In the case Smith v Hughes it was held that offeror must have intended to be bound by the offer. In the case Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401, it had been held that once an offer has been accepted a valid contract can be formed, however acceptance of an invitation does not give rise to a contract.
It can be mentioned in relation to the decision of the case Hyde v Wrench (1840) 49 ER 132, that any change in the terms of the offer while accepting will not constitute valid acceptance but a mere counter offer. In the case Entorres v Miles Far East [1955] 2 QB 327, it had been held by the court that for an acceptance to be considered valid, the news of the acceptance has to be communicated to the offeror.
Mere enquiries do not constitute valid offers as held in the case of Scammell & Nephew v. Ouston [1941] AC 251. Further it can be stated in accordance with the decision of the Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109 case that an offer must be accepted before it gets expired.
Application
In this given scenario the events of the days as provided in the case study can be analyzed to assess whether a valid contract had been form between Avinash and Magda.
Sunday 19th February
Avinash emailed Magda giving her an offer to buy the portrait at a price of $1600. In the case Smith v Hughes the court held that an offer will be only be considered to be valid, if the offeror intended to bind the other party and the if the offer is complete in its terms. Therefore, by the application of the decision of the Smith v Hughes case, it can be stated that Avinash made valid offer.
Magda replied to the Avinash’s offer stating that she could not give the Potrait for less than $1800. Thus, according to the decision of the case Hyde v Wrench case, it can be stated that Magda’s reply to Avinash’s offer did not constitute valid acceptance but a mere counter offer. She did not accept the offer on the original terms of the offer. This means the offer made by Avinash was terminated.
Avinash after receiving Magda’s reply indicated that he was ready to buy the portrait for 1800 dollars however, he added a condition that he needed to consult with his wife and that he could not give a confirmation prior to 21st Feb. Thus, it can be inferred that Avinash did not accept the counter offer of Magda on the original terms of the offer.
Subsequently, Magda sent Avinash a formal offer stating that she was willing to sell the portrait to 1800 dollars. It was mentioned in the offer that, the offer must be accepted 11:59pm on 21st February. This can be considered to be a valid offer as per the decision of the Smith v Hughes case.
March 20th February
After receiving Magda’s formal offer on 19th February, Avinash replied to Magda stating that he required a certificate of Authenticity with the portrait. Thus, it becomes evident that the formal offer which had been given by Magda on 19th February becomes terminated as Avinash changed the terms of the offer as per the decision of the Hyde v Wrench case.
Magda, further replied to the mail that she was willing to provide the certificate of authenticity only if Avinash replied within 4pm on Monday 20th February. Avinash did not reply within the stipulated time. Therefore as per the decision of the case Ramsgate Victoria Hotel v Montefiore, it can be stated that the offer expired prior to its acceptance and that no valid contract had been formed.
February 21st
No contract had been formed between Avinash and Magda even though Avinash sent the confirmation to her.
Conclusion
No valid contract had been formed between the parties.
1 Part B
Issue:
In the given set of circumstances the issues that can be identified are whether the Magda breached any of the provisions of the Australia Consumer Law and whether Elton has any rights in relation to the purchase of the portrait.
Rule:
In accordance with section 3 of the Australian Consumer Law which has been provided in schedule 2 of the Competition and Consumer Act 2010, it can be stated that any person who acquires goods and services less than $40,000 dollars for domestic, household and personal purposes can be defined as a consumer in context of Australian Consumer Law. It has been further provided in this section that this section does not apply to any person who acquires goods to resupply and reproduce such goods and services.
Section 56 of the Australian Consumer Law provides the consumer certain guarantees to consumers in relation to the purchase of goods. It has been clearly specified in this section that goods sold by description must match with their description.
It has been further provided in section 18 of the ACL that manufacturer of goods must not engage in any conduct which is misleading and deceptive or is likely to mislead or deceive the people. The case ACCC v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181 considered the provisions of the section 18 in relation to misleading and deceptive conduct. In the aforementioned case the court discussed when an advertisement can be considered to be misleading and deceptive in nature.
Section 260 of the Australian Consumer Law states that in case of major breach of consumer guarantees, the innocent party has the right to reject the goods and claim refund.
Application
In the given case study, it has been provided that Magda had sold the portrait to Elton. However, the portrait was not printed in high quality paper. Thus, it can be inferred that there was a possibility of the colors of the painting to fade out. Further, it has been provided in the given case study that advertisement of the portrait claimed the portrait to be a limited edition one. However, such advertisement was not true as Magda, had already sold
Thus, in this case it is evident that the provision of section 56 of the ACL, which state that goods must correspond and match with the description, has been breached as it Magda described the portrait was a limited edition one in the advertisement and also claimed that the portrait had been printed on high quality paper.
Further it can be stated accordance with section 18 and the decision of the ACCC v Reckitt Benckiser case that Magda, engaged in misleading and deceptive conduct when she claimed the portrait to be a limited edition one, whereas in reality she had sold many copies of the portrait in.
Therefore, in this context Elton can reject the goods and Magda would be liable to refund the money in accordance with section 261 of the ACL.
Conclusion
Thus, in conclusion it can be stated that Elton can reject the goods as they breached her consumer guarantees.
2 Part
In my opinion the statement ‘Consideration provided under a contract is not always valid. This can have unfortunate consequences for a party seeking to enforce the contract’ is true.
Consideration in the law of contracts can be defined as the remuneration promised to be paid by the offeror to the offeree for the fulfillment of the terms of the offer. In the case Thomas v Thomas) (1842) 2 QB 851, it had been held hat that consideration has to be something of value in the eyes of the law. It has been further stated by Knapp, Crystal and Prince (2016), that every party to a contract must provide a benefit and a detriment to the other party in the contract. It is to be stated that a one sided promise does not constitute a valid consideration and is generally treated as a gift. . Each party to the consideration has to be a promisor and a promise. There are several rules in relation to consideration which are imposed by common law. They are:
Past Consideration: A valid consideration must not be past consideration as held in the case Re McArdle (1951) Ch 669. However as held in the case Lampleigh v Braithwaite [1615] EWHC KB, past consideration can also considered to be valid if it was proceeded by a request.
Consideration must be sufficient and not adequate- As held in the case Chappell v Nestle [1960] AC 87, it is not required for a consideration to be of market value any nominal amount would be adequate consideration.
It can be stated that consideration in a contract must move between the parties as held in the case Tweddle v Atkinson [1861] EWHC QB J57
Existing public duty As held in the case Collins v Godefrey (1831) 1 B & Ad 950 an existing public duty does not constitute valid consideration. However, if the proimisor goes beyond her public duty, consideration would considered to be valid as held in the cases Ward v Byham [1956] 1 WLR 49 and Glasbrook Bros v Glamorgan County Council [1925] AC 270.
Existing contractual duty- It has been provided in the case Stilk v Myrrick [1809] EWHC KB J58, that if a party to a contract already has an existing contractual duty to the party, such existing contractual duty cannot be considered to be a valid consideration for a new promise. However as held in the case Hartley v Ponsonby [1857] 7 EB 872, if a party to the contract who has an existing contractual duty to the other party exceeds their duty, the act of exceeding their duty will be considered to be valid consideration. It was further held in the case New Zealand Shipping v Satterthwaite [1975] AC 154, that in case a contractual duty is owed to a third party such duty may be used as a valid consideration for a new promise. This had been further illustrated by the court in the case Scotson v Pegg [1861] EWHC Exch J2.
Part payment of debts- It can be mentioned in accordance with the decision of the case Pinnel’s case 1602 5 Rep, 117 that part payment of a debt cannot be considered to be valid consideration for a promise to release the entire debt. However part payment of debt can be considered to be a valid consideration if the promisor required the part payment before the due date, required the part payment with a chattel and requiring the part payment at a different location.
Promissory Estoppel- The doctrine of promissory estoppels does not allow a promisor to back on his promise as held in the case of Central London Property Trust Ltd v High Trees Ltd [1947] KB 130.
Therefore, it can be inferred that consideration is not valid on several instances and can cause unfavorable consequences for the promise.
Reference:
Carlill v Carbolic Smoke Ball co [1893] 1 QB
Smith v Hughes
Entorres v Miles Far East [1955] 2 QB 327
Scammell & Nephew v. Ouston [1941] AC 251
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
Competition and Consumer Act 2010
Thomas v Thomas) (1842) 2 QB 851
Re McArdle (1951) Ch 669
Lampleigh v Braithwaite [1615] EWHC KB
Chappell v Nestle [1960] AC 87
Tweddle v Atkinson [1861] EWHC QB J57
Collins v Godefrey (1831) 1 B & Ad 950
Ward v Byham [1956] 1 WLR 49
Glasbrook Bros v Glamorgan County Council [1925] AC 270
Stilk v Myrrick [1809] EWHC KB J58
Hartley v Ponsonby [1857] 7 EB 872
New Zealand Shipping v Satterthwaite [1975] AC 154
Scotson v Pegg [1861] EWHC Exch J2.
Pinnel’s case 1602 5 Rep, 117
Central London Property Trust Ltd v High Trees Ltd [1947] KB 130.
Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Poole, J., 2016. Textbook on contract law. Oxford University Press
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