1.Invitation to treat or offer:
In this case, the advertisement is an offer and not an invitation to treat. Offer means an invitation by a person to another for accepting to do or not to do something under certain terms and conditions. An offer can be made to a person, to a group or to the world, according to the Carlill v Carbolic Smoke Ball Co. case. (Barnett and Oman, 2016). Invitation to treat, on the other hand, refers to an invitation to negotiate with an intention to make an offer (McKendrick and Liu, 2015.). Here, the terms of offer is quite clear and non-negotiable. Hence, in this case, it has to be classified as an offer to enter into an agreement.
Agreement between Bill and Frank:
There is no agreement between Bill and Frank even though Bill accepted Frank’s offer, for his acceptance did not meet the consideration amount quoted by Frank. Moreover, Frank gave no positive response to Bill’s acceptance either. Hence, there is no agreement between Bill and Frank.
Agreement between Mark and Frank: Rules of Communication: Rejection of offer
There is a binding contract between Mark and Frank even though there was no face-to-face communication between the two parties. It is so because he (Frank) deposited the cheque sent by Mark accepting his offer. The offer seems to be consciously accepted by Frank as he deposited the cheque given by Mark even though they did not have a conversation regarding the sale face to face and the consideration amount did not match up to Frank’s expectation. In spite of a lesser amount of consideration, Frank deposited Mark’s cheque and this marks the closure of a valid offer and acceptance.
The rules of communication under the Australian Contract Law say that an agreement is formed as soon as the communication of acceptance of the offer is received. Acceptance is believed to be acknowledged when it is communicated with the offeror, in case of instantaneous modes of communication. While, in case of non-instantaneous modes of communication like post, acceptance of an offer is believed to occur when the letter is posted as observed in the case Brinkibon v Stahag Stahl. (Kuhnel-Fitchen and Hough, 2017).
Frank cannot reject Mark’s offer anymore as he chose to deposit Mark’s cheque. Deposition of the cheque speaks about Frank’s wish to enter into a binding contract with Mark and complete the procedure of the sale. (McKendrick, 2014).
Agreement between John and Mark: Rule of Electronic Communication
There is no agreement between John and Frank even though John offered the exact amount demanded by Frank in his advertisement. There lies no agreement between them as John’s acceptance email was read by Frank after he had deposited Mark’s cheque as a sign of response to Mark’s acceptance.
The vital essence of an offer and its acceptance is the mode of communication. (Stone and Devenney, 2017). The general rule of communication under the Australian Contract Law states that an agreement takes its shape where and when the offeror receives the news of acceptance. In case of instantaneous modes of communication like communicating face to face or through email, acceptance is received when it reaches the offeror and the offeror responds to the same. A mental decision of acceptance of offer or maintaining silence after receiving an acceptance does not constitute a valid agreement. Moreover, communications of offer and acceptance is guided by the special rules of the Electronic Transactions Act 1999 (Australian Competition and Consumer Commission, 2018) which lays down provision regarding the matter in Part 2 and 2A. This enactment discusses about the validity of an electronic transaction, its requisites, its time and place of dispatch and receipt. The Act specifies that an electronic communication is complete only when it reaches the receiver end, unlike the Postal rule. Hence, as John’s email was not read by Frank before he responded to Frank’s acceptance, therefore, there lay no agreement between John and Frank.
Agreement between Tom and Frank: Electronic communication
There is no obligation between Tom and Frank. First, Tom had offered a lesser amount of consideration to Frank’s offer and second, Frank had not promised anything to Tom and mentioned that he was looking for a better offer until the end of weekend.
Frank responsibly emailed and let Tom know about the better offer he received from Mark. Here, the communication was made electronically which is guided by the Electronic Transaction Act (ETA) 1999 which lay down the rules and regulations of an electronic communication. Section 8 of the ETA 1999 discusses about the validity of electronic transaction, S. 9-12 lay down its requisites and S.14-15 points out the time and place of dispatch of such transaction. (Australian Competition and Consumer Commission, 2018)
Conclusion:
From the above facts of the case, it was be stated that a fair and proper communication of offer and its acceptance is a mandate to form a binding contract between two bona fide parties. It is also vital to notice the mode of such communication and its place and time of dispatch as the Australian Law of Contract.
2.Oral agreement is valid according to the principles of Australian Contract Law (Poole, 2016). Only in cases where an oral contract is in dispute, written formalities is required for evidential and procedural matter. It is just a formality and not an essential factor for proving the credibility of a contract. In this case, Renee had an oral agreement with her boss regarding a salary hike, which her boss offered in lieu of her leaving the company for a better offer. Later on, her boss refused it saying that was a whimsical decision. A valid contract lies in this matter, as there was an oral agreement between Renee and her boss and there was a clear ‘consensus ad idem’ (meeting of minds) which made Renee reject a better offer from a rival company (Vettori, 2016).
Essentials of Contract:
The four essential requisites for a contract are:
Consideration offered to Renee:
The consideration amount offered by Renee’s boss however did not match up to the other offer of the rival company, yet Renee accepted it gladly as her boss promised to give her a back pay compensation, which would sum up to a handsome amount. Hence, it can be said that the consideration is valid and just in this context.
Case laws:
Stilk v Myrick (1809): This English contract law case was witnesses in the King’s Bench in context to consideration. It was held that where a person is under a contractual obligation to do a duty, such a duty could not be understood as a proper consideration for an existing contract (Andrews, 2015).
Williams v Roffey Bros & Nicholls (Contractors) Ltd (1989): In this matter it was suggested that circumstances previously managed by consideration could be handled by the doctrine of economic duress. It overruled the decision held in Stilk v Myrick. It was said that a promise to carry out a pre-existing contract would act as a good consideration as long as the benefit is conferred on the offeree. (Roberts, 2017.)
Musumeci v Winadell Pty Ltd (1994): In this case, it was pointed out that a contract to carry out an existing binding should not be sanctioned for three reasons. They are to protect the offeror from extortion, to protect the offeror from suffering any legal detriment and to establish the fact that benefit incurred from a contract cannot be held as a consideration. (Thampapillai, 2015)
Glasbrook Bros v Glamorgan CC (1924): There is no compulsion on the part of the Police to provide effective protection, however if someone demands for special protection, it would be payable. (Kuhnel-Fitchen and Hough, 2017)
Conclusion
To conclude, it can be chalked out from the above case references that Renee can sue her present company for such non-compliance of the agreement, which she entered into orally with her boss. Even though such agreement was a corollary of her pre-existing job with the same company, she was entitled to receive the pay increase as promised by her boss.
References:
Andrews, N., 2015. Contract law. Cambridge University Press.
Australian Competition and Consumer Commission. (2018). Lay-by agreements. [online] Available at: https://www.accc.gov.au/consumers/contracts-agreements/lay-by-agreements [Accessed 6 Aug. 2018].
Barnett, R.E. and Oman, N.B., 2016. Contracts: Cases and Doctrine. Wolters Kluwer Law & Business.
Cotutiu, A., 2015. The Essential Conditions for the Validity of the Contract of Carriage. Journal of legal studies, 16(29), pp.48-55.
Kuhnel-Fitchen, K. and Hough, T., 2017. Optimize Contract Law. Taylor & Francis.
McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International Higher Education.
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press (UK).
Poole, J., 2016. Textbook on contract law. Oxford University Press.
Roberts, M., 2017. Variation contracts in Australia and New Zealand: whither consideration?. Oxford University Commonwealth Law Journal, 17(2), pp.238-264.
Stone, R. and Devenney, J., 2017. The modern law of contract. Routledge.
Suff, M., 2013. Essential Contract Law. Routledge-Cavendish.
Thampapillai, D., 2015. Practical Benefits and Promises to pay Lesser Sums: Reconsidering the Relationship between the Rule in Foakes v Beer and the Rule in Williams v Roffey. U. Queensland LJ, 34, p.301.
Vettori, S., 2016. The employment contract and the changed world of work. Routledge.
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