Discus About The Contract Certain Supervening Impossibility?
In the case of Jo and Rosie, Jo sued Rosie for breach of contract by not attending the dinner for which Jo had made preparations after receiving her acceptance to attend. In order to create a valid contract one of the essential element is the intention of the parties to enter into legal relationship which means in case of the breach of contract by either party the other party has right to take legal action. The case, here, falls under the category of social agreement as distinguished from a legally binding contract where in the former case the parties are merely under a moral duty. Social agreements entered into between members of a family, friends, colleagues etc. cannot be said to have been made with an intention to enter into legal relations. As was held by Lord Atkin a social agreement cannot be said to be a legally binding contract even if all the elements of a valid contract are present[1]. The reason these agreements are not contracts as the parties did not entered into the agreement with an intention that legal consequences shall follow their agreement. According to him such agreements should not be enforceable in the courts of law otherwise there will be institution of n number of cases for breach of such contracts. Therefore, such contracts have been kept out of jurisdiction of contract law. Following this observation it can be said in this case that there was no valid contract between the parties as there was no intention of the parties to enter into a legally binding contract, hence Jo cannot sue Rosie for not performing her moral duty[2].
In case where James made an offer to sell his snowboard to Liz and in case of silence on her part he will assume that the offer has been accepted by her. The general law regarding contracts says that an agreement comes into existence only when an offer is made by one person to the other and such offer has been accepted by the latter. The acceptance can be made verbally, in writing or impliedly i.e., by conduct of the latter[3].
The general rule regarding acceptance is that silence does not amounts to acceptance, for the reason that, to make sure that the offer was accepted by the acceptor willingly and was not imposed upon him. An exception to this rule is that the acceptor has expressly mentioned that his silence shall be considered as acceptance. Further it has also been held in a famous that the person making the offer cannot state that the silence on the part of the person to whom the offer is made will be considered as acceptance on his part and in that way cannot obligate the latter to positively reject the offer[4].
The rules mentioned above are applicable in this case whereby it can be concluded that James cannot enforce the contract as he has no right to impose an obligation upon Liz to reject the offer or otherwise make her bound by the same.
According to the facts of the case Neville offers to repay his debt of $100 to Paul by $20 and a new baseball cap in full settlement which was accepted by the latter. The issue is whether Paul can demand the balance after full settlement has been made.
The general rule regarding consideration is that it is one of the essentials to form a valid contract and can be in form of a right, interest or benefit. It sometimes includes a forbearance, loss or detriment also whereby if a party forgives another’s debt and a detriment is suffered by the latter it will be said to be a valid consideration. Further, the rule is that part payment of debt does not amounts to a good consideration[5] but where part payment is made along with something in addition for full and final settlement such part payment will be a good consideration[6]. Under Australian contract law the consideration will be valid and acceptable if it is sufficient and is not required to be adequate. The concept of sufficiency varies from case to case.
Accordingly, the settlement made by Neville in lieu of his debt amounts to valid consideration on part of the former and Paul has no right to demand the balance amount after the settlement as he has accepted a new baseball cap in lieu of the balance amount.
In order to form a valid contract the parties should have capacity to enter into the contract. In Australia, certain persons have been disqualified from entering into a contract viz., persons who are insane, under intoxication, bankrupts, minors, and companies.
a) Aliens: An alien is a person who is not a citizen of Australia. Such a person has capacity to enter into a valid contract in peace time. In times of war, if such an alien belongs to the State with which Australia is in war with, then such alien is restricted to sue but can be sued for any breach in an Australian court of law.
b) Bankrupt: A bankrupt has right to enter into a contract while a contract of unprofitable nature which has been made before he was been declared a bankrupt may be repudiated by the trustee. Further restrictions may also be put by way of legislations upon the nature of a contract to which a bankrupt may be a party and any contract entered into by a bankrupt person without disclosing his status will be an offence[7].
c) Companies: Under common law of Australia a company may enter into a contract if authorized under the constitution of the company. Further according to the Corporations Act 2001 a company can enter into a contract as an individual[8] and if a contract has been entered into by a company beyond the authority given by its constitution, it will be a valid contract[9].
According to the facts of the case, Carlos purchased a jet ski from Ted which was in good condition according to the latter. A contract was signed by the parties whereby no declaration was made regarding the condition of the engine and a clause in the contract also waived the warranty regarding the condition of the craft and its parts. The engine of the Jet Ski stopped as its condition was not good. The issue here is that whether Carlos can seek damages from Ted.
In order to make a valid contract the parties must enter into the contract with free and genuine consent. A consent is said to be not free if it is affected by any external factors. In cases of false statement, where a party makes a false statement knowingly and with a dishonest intention to induce the other party to enter into the contract will give a right to the latter to repudiate the contract where such false statement was found to be the only reason to enter into the contract[10].
In the present case, the contract was entered into by Carlos on the false statement that was made by Ted who knew that the condition of the engine of the craft was not good. Therefore, the consent for entering into the contract by Carlos cannot be said to be a free consent as it is made under the influence of the false statement made by the counterparty. Carlos has right to recover damages for the loss accrued to him from Ted’s conduct.
In case of Rita and Peter, Rita gave away her flat to Peter, a prisoner escapee, to provide him place to hide. Peter refused to pay rent for two months of his stay in Rita’s house. The issue in this case is whether Rita has right to recover the rent overdue from Peter.
The general rule as to contracts lays down that a contract cannot be held to be valid the subject matter or the objective of which is illegal. If the promises, subject matter, objective or consideration of a contract is illegal the contract cannot be said to be a valid contract[11]. An act which is prohibited by law is said to be an illegal act and any person doing such illegal act or any person entering into a contract with such person for providing him aid in doing the illegal act, such contract will not amount to be a valid contract.
In the present case Peter was an escapee from a prison which is an illegal act. Rita was providing her aid in hiding from the State authorities. Therefore, the acts of both Peter and Rita fall under the category of illegal acts. Any loss or damage amounting from doing such acts are not enforceable in the courts of law. If such acts are given enforceability it will lead to encouragement to do illegal acts. Hence, Rita has no right to recover any rent from Peter.
In the case where Alana delivers her coat to Dennis’ for dry cleaning and when she came back to pick up her coat she found it was badly burnt. The ticket given by Dennis’ stated that it will not be responsible for any loss to the goods. The issue here is that whether Alana can sue Dennis’ for damages.
This case falls under the category of bailment which means when one party delivers goods to other party for some purpose, the latter is bound to take due care of the goods as a person would have taken of his goods in similar circumstances. It is required on the part of the bailee to take due care of the goods bailed to him by the bailor for a specific purpose. In case of any default or negligence on the part of the former will amount to breach of a contract and the latter will be entitled to sue him for the damages caused to him[12].
In the case of Alana she was the bailor whereby she delivered her coat to Dennis’ for the specific purpose of dry cleaning it. The Dennis’ was under a legal duty to take due care of the coat bailed to it. Dennis’ cannot escape from his liability to take reasonable care of the goods by entering a clause in the ticket, mentioning the terms of the contract, that was delivered to her after delivering the coat to it. Further, the facts that the coat was badly burnt shows negligence on the part of the bailee to take reasonable care of the goods bailed to it. Therefore, Alana can sue Dennis’ for recovering the damages for loss caused to her.
Len, a singer, who entered into a contract to perform on Christmas Eve, his contract frustrated due to occurrence of a cyclone. The issue is whether he can claim damages for the frustration of the contract.
Under law a contract may be discharged by an agreement or by frustration or by the breach of the contract. A contract gets frustrated when either or both the parties are unable to perform the contract due to certain supervening impossibility. One of such supervening impossibility where the parties are discharged from performing the contract is force majure or act of God. An act of God is a situation when due to certain acts which are beyond human control the parties are unable to perform the contract. In such cases neither party is liable for breach of the contract.
In the instant case, the contract was cancelled due to occurrence of cyclone which is an act of God. There was no breach of contract on the part of the party organizing the concert. Len cannot ask for compensation due to breach of contract or for the reason that he could have taken employment somewhere else as his payment might be doubt. The organizers could not have been able to foresee the occurrence of the cyclone. Therefore no liability can be imposed upon the organizers and Len cannot seek compensation for the frustration of contract by act of God.
According to the facts of the case Jenn, the supplier of clothes made negotiations with Kirsty, the purchaser of the consignment of clothes through electronic mails. An offer was made by Jenn on 20th April, 2016 and asked her to make an acceptance by 13th May, 2016. Kirsty sent a mail on 22nd May, 2016 accepting the offer. The issue here was whether there was a proper offer and its acceptance to form a valid contract and whether Jenn was bound by the contract, if any.
In Australia, the rules that are applied in case of a paper contract are applied in case of an electronic contract which requires an offer been made which has to be duly accepted and should follow a lawful consideration. According to the law of contract a valid offer is said to have been made when it comes to the knowledge of the person to whom it is made. And an acceptance is said to have been made as soon as it is accepted by the offeree.
In the instant case, the offer made by Jenn did not came to the knowledge of Kirsty till 22nd May, 2016 the stipulation period for which was already over on 13th May, 2016. Therefore, no offer could be said to have been made to Kirsty as it did not came to her knowledge and further, when no offer has been made, it cannot be said to have been accepted by Kirsty. As there was no offer and acceptance, no valid contract is made and therefore no one is under any contractual liability against the other.
References
Balfour v Balfour (1919) 2 KB 571.
Felthouse v Bindley (1862) 142 ER 1037.
Foakes v Beer (1884) 9 App Cas 605.
Corporation Act 2001 (Cth).
Julie Clarke, Balfour v Balfour (2010) Australian Contract Law <https://www.australiancontractlaw.com/cases/balfour.html>.
Julie Clarke, Capacity to Contract 2013 Australian Contract Law <https://www.australiancontractlaw.com/law/formation-capacity.html>.
Julie Clarke, Consideration (2015) Australian Contract Law < https://www.australiancontractlaw.com/law/formation-consideration.html>.
Law Handbook, Elements of Contract 2017 The Law Handbook 2017 <https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/>.
R P Emery and Associates, Legal Contract, Legal Agreements, Contracts and Forms (2013) WordPress <https://legalcontract.wordpress.com/2010/05/11/fundamental-principles-of-contract-law/>.
Shane Simpson, Duty of Care to Lenders 2013 Simpsons <https://www.collectionslaw.com.au/34-duty-of-care-to-lenders>.
Simpsons, The Principles of Contract (2010) Simpsons Solicitors <https://www.simpsons.com.au/documents/v
[1] Balfour v Balfour (1919) 2 KB 571.
[2] Julie Clarke, Balfour v Balfour (2010) Australian Contract Law <https://www.australiancontractlaw.com/cases/balfour.html>.
[3] Simpsons, The Principles of Contract (2010) Simpsons Solicitors <https://www.simpsons.com.au/documents/visarts/visarts89/1Princip.pdf>.
[4] Felthouse v Bindley (1862) 142 ER 1037.
[5] Foakes v Beer (1884) 9 App Cas 605.
[6] Julie Clarke, Consideration (2015) Australian Contract Law < https://www.australiancontractlaw.com/law/formation-consideration.html>.
[7] Julie Clarke, Capacity to Contract 2013 Australian Contract Law <https://www.australiancontractlaw.com/law/formation-capacity.html>.
[8] Corporation Act 2001 (Cth) s 124.
[9] Corporation Act 2001 (Cth) s 125.
[10] Law Handbook, Elements of Contract 2017 The Law Handbook 2017 <https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/>.
[11] R P Emery and Associates, Legal Contract, Legal Agreements, Contracts and Forms (2013) WordPress <https://legalcontract.wordpress.com/2010/05/11/fundamental-principles-of-contract-law/>.
[12] Shane Simpson, Duty of Care to Lenders 2013 Simpsons <https://www.collectionslaw.com.au/34-duty-of-care-to-lenders>.
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