LAWS2111 L1 (v 2.0), 2011

Note: Optional Assignment topic may still appear on final exam. As such, additional study/effort on assignment will not be wasted exam preparation.

Case Study 1: Flood Insurance (terms of contract)

Case Study 2: Footballer sacked mid-contract (Termination requires substantial/recurring breach)

Division

Contracts A: Terms and Formation
Contracts B: Remedies and Breach (can largely ignore this semester)

Evolution of Contracts

  • Classical contract theory saw status based rights (upper class had rights, peasants had none) shift to a more hands-off ‘bargaining’ approach – you have whatever rights you can successfully negotiate others to agreeing to.
  • Ethics/Morality – modern approaches tend to look more at the disparity between parties (eg. consumer protection law)

There is no ‘Contracts Act’, but relevant standards/requirements comes from:

  • The common law (inherited but diverged from UK origins)
  • Various State statutes
  • Consumer Protection Acts
  • Impromptu standards adopted by certain industries
  • The choice of legal system decided on at time of contract formation by the parties (eg. a contract between Chinese and Australian companies can choose to use English law in the event of a dispute)

Offers (A sub-section of the ‘Agreement’ requirement)

  • Taxonomy – the offeror makes an offer to the offeree
  • An offer ultimately boils down to “a proposal capable of creating a contract if accepted”
  • Must appear to an objective “reasonable” person that the party intended for the offer to be binding on acceptance
  • Supplying information is NOT an offer (Harvey v Facey)
  • Invitation to treat (eg. displaying product in windows/on shelves) is NOT an offer (Fischer v Bell)
  • Self Service Stores – acceptance is made when the customer offers up the product at the check out, and the cashier accepts it (Pharaceutical Society v Boots)
  • ‘Mere puff’ in an advertisement is generally not an offer (Partridge v. Crittendon) but can potentially become an offer to the world if guarentees of some kind are given that would lead a reasonable person to believe it to be an offer (Carlill v Carbolic Smoke Ball Company)

Case Study 3: QR Share Sale

  • Inability to guarantee that the product would be available in the quantity demanded makes it unwise to make it an offer (finite number of shares, potentially infinite number of buyers)
  • Instead, it’s an ‘offer to apply’ to buy the shares that they can then accept or reject

Auctions

  • Advertisement that an auction is taking place is merely an invitation to treat, not a contract (Harris v Nickerson)
  • Auctioneer accepts the offer with the final banging of the gavel. The are under no obligation to accept (Warlow v Harriseon) unless they specify ‘no reserve price’ in which case an ancillary contract is implicitly created between the buyers and the auctioneer – failing to accept a price then lets the potential buyer sue the AUCTIONEER but not the actual owner of the product being sold (Ulbrich v Laidlaw)

Learning Guide Cases

Harvey v Facey E
Relevant To: Offer
Issue: Was ‘the lowest price we could sell for is 900 pounds’ an offer, or merely information given in response to a request?
Held: It was merely supplying information, and did not constitute a contractual offer.

Fisher v Bell E
Relevant To: Offer
Issue: Was merely displaying an illegal flick-knife in a shop window an ‘offer for sale’ for the purposes of selling illegal weapons?
Held: No, it was not – shop window displays are ordinarily only invitations to treat, not offers.

Wallace v Brodribb (1985)
Relevant To: Offer
Issue: Does refusing to sell a product to a particular purchaser under a reasonable (albeit mistaken) belief that to so would be unlawful violate ‘bait advertising’ laws?
Held: No, it does not, as long as there was a genuine intent to offer the advertised product to a class of lawful purchasers.

Pharmaceutical Society v Boots Cash Chemists E
Relevant To: Offer
Issue: Were sales in a self-service pharmacy taking place without the supervision of a qualified pharmacist?
Held: No, they were not – the actual offer was only made when the purchaser bought the goods to cashier, who then accepted it and the money offered for the goods.

Partridge v Crittenden E
Relevant To: Offer
Issue: Was an advertisement identifying birds and prices an offer, or merely an invitation to treat?
Held: It was merely an invitation to treat – no use of the word ‘offer’, combined with advertisements (as opposed to price lists) ordinarily being mere invitations to treat.

*Carlill v Carbolic Smoke Ball Co E
Relevant To: Offer, Acceptance, Consideration
Issue: Was an advertisement promising 100 pounds (with 1000 lodged as security) to anyone who caught a cold after using the smoke ball 3 times a day for 2 weeks sufficient to constitute a binding contract?
Held: Yes, the offer was sufficiently clear, and the statement of a security deposit separated it from mere advertising fluff. It could be offered to all the world, much like a bounty, and the only acceptance required was notification that the conditions had been met. The fact that they benefited from sale/use of the smoke balls was sufficient consideration.

Harris v Nickerson E
Relevant To: Offer
Issue: Was an auctioneer advertising that an auction would take place on a specific day warranting that it would actually occur?
Held: No, the advertisement was not a contract, and there was no warranty that the sale would take place. It would be bad policy to hold everyone accountable for every statement of intended sale.

*Sale of Goods Act 1896 (Qld) s. 59
Relevant To: Offer
States: Auction’s are only finalised when the final bid is knocked down, and bids can be withdrawn prior to that point. Reserve prices are legal, and the owner of the goods (or their agents) can only bid if special notice has been given to that effect.

Warlow v Harrison E
Relevant To: Offer
Issue: Can an auction without reserve be cancelled prior to completion due to interference by the owner?
Held: Yes, it can – the owner can withdraw the goods at any time before the acceptance of final offer (highest bid) by the auctioneer. However there MAY have been a collateral contract between the bidders and auctioneer.

Ulbrick v Laidlaw
Relevant To: Offer
Issue: Is there a ‘collateral’ contract with the auctioneer to fulfil all the conditions promised? (Specifically the promise to re-auction if there was a dispute as to who was the highest bidder)
Held: Yes, there was – by failing to re-auction, the auctioneer breached this collateral contract.

Spencer v Harding E
Relevant To: Offer
Issue: Was a tender to sell actually a contract to sell to the highest bidder?
Held: No, it was not – the tender did not state anywhere that it would be sold to the highest bidder, merely that they were accepting offers.

*Blackpool & Fylde Aero Club v Blackpool BC E
Relevant To: Offer
Issue: Was an invitation to tender that set out a specific process and terms actually a process contract that that process would be followed and the tender considered?
Held: Yes, it was – the terms/process (with few parties offered a chance to tender, specific deadlines/processes outlined, and existing relationship between the parties) contained an implied offer that any tender adhering to it would be considered (but not necessarily accepted) and failing to consider one was a breach of that contract.

Hughes Aircraft Systems v Airservices Australia
Relevant To: Offer (and lots of other things)
Issue: The relevant issue was the question of whether an invitation to submit tenders was merely an invitation to treat, or subject to its own process contract (as per Blackpool)
Held: The question of a process contract turns on the factual matrix of a specific case. In this instance, the facts were such that the letter set out the procedures to be followed and criteria to be applied to the tenders.

Ipex v Victoria
Relevant To: Offer
Issue: Was there a process contract as part of the Governmental request for tenders?
Held: Yes there was, but there was no evidence that they had failed to act in good faith or to consider the tender.

*MacRobertson Miller Airline Services v Commissioner of State Taxation (WA)
Relevant To: Offer, Consideration
Issue: Is a ticket an agreement or ‘memorandum of agreement’ of a contract for the purposes of stamp duty?
Held: No, it was not – a ticket in these circumstances (pre-purchased airline transport) was merely an offer that was only accepted after the passenger examined the terms contained on it or failed to reject them after a reasonable time. (Stephen J) – really broad clauses denying any obligation may also cause a failure of Consideration (Barwick CJ)

Thornton v Shoe Lane Parking E
Relevant To: Offer, Exemption Clauses, Incorporation of Terms.
Issue: Did terms mentioned on a ticket/billboard next to the ticket machine at the entrance to the Carp Park constitute part of the contract for parking?
Held: No, they did not. There was no time to consider the ticket before being forced to drive forward, so terms on the ticket were unable to constitute part of the contract. Additionally, unexpected exemption clauses require reasonable notice be given prior to the contract (acceptance of the ticket/entry) being established, and that did not occur here.