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contract law

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mikayla Tonna

on 3 October 2016

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Transcript of contract law


mental capacity
contract law

Agreement creating obligations
enforceable by law.

elements of a valid
* Intention to create a legal relationship

* Agreement

* Consideration
intention to create a legal relationship
- contract doesn't exist simply due to an agreement between two people

- must intend to enter legally binding agreement; rarely stated explicitly, but usually inferred

- to enfore a domestic or social agreement it needs to be proved that parties did not intend to create a legall binding agreement
- A contract is formed when one party makes an offer and the other party accepts

- clear understanding of what has been agreed shoud exist
- third element of a valid contract

- is the 'price' one party pays to buy the promise of the other party; must be something of value, however doesn't need to actually be money

- documents under seal (deeds) do not require consideration for there to be a binding contract
- must be definite, clearly stated offer to do something

- this doesn't include requests for proposals, expressions of interests or letters of intent
- only what is offered can be accepted; offer must be accepted exactly as offered without conditions

- can be many offers and counteroffers

- acceptance brings negotiations to a close by establishing terms and conditions of contract.

- contracts which cash is paid for goods or
services are enforceable

- In situations where minor is still to pay contract
will only be enforceable if contract is for
necessity items such as; food, clothing, place to live
and medicine.

- person who is mentally unsound, or
under the influence of alcohol or other
drugs, does not have the capacity to
enter into a binding contract

- A contract for matters other than
necessities can be voided by an impaired
person if it can be proved that he
or she did not understand what
was involved due to their condition

- In the case of inherent mistake, true consent of the parties does not exist

- not many types of mistakes which allow a person to invalidate a contract. for example; contract cannot be voided simply because the quality of an item is not to their liking

- If both parties make a mistake about the content of a contract then there has not been a true agreement so the contract is void
- representation= statement made by one party encouraging them to enter contract, therefore misrepresentation= untrue representation

- may be fraudulent, innocent or negligent
- one party makes a material misrepresentation regarding the contract, but has reasonable grounds to believe that their statement is true.

- To prove innocent misrepresentation:
◾* The defendant made a representation (statement) of one or more facts that are material to the contract’s subject matter;
◾* The representation was done in connection with contract formation between the parties;
◾* The representation was actually false (at the time it was made);
◾* The plaintiff would not have entered into the agreement if the defendant hadn’t made the representation or statement;
◾* The plaintiff suffered measurable losses as a result of relying on the representation and entering into the contract;
◾* The plaintiff’s loss(es) served to actually benefit the defendant

someone makes a statement without any grounds for knowing whether it is true or not, and an aspect of carelessness is involved. If a car dealer claims that it believes the previous car owner changed the oil without actually knowing it to be true, it may be committing this type of misrepresentation.
- When someone making a statement believes that a statement is true when it is not. This person may be relying on outdated information or incorrect information from someone else, which that person has reason to believe is true
- The statement is a lie and someone knows that it is a lie or disregards evidence that it is a lie

- Must have been made for the purpose of inducing another party to act or refrain from acting.

- In civil lawsuits, the misrepresentation must have resulted in actual injury or damage


Terms of
a contract

express terms
- Express terms are terms that have been specifically mentioned and agreed by both parties at the time the contract is made. They can either be oral or in writing.

- courts will ask whether or not a reasonable person in the same circumstances would conclude statement is enforceable
implied terms
- A term which has not been mentioned by either party will nonetheless be ‘included’ in the contract, there are two main types;
terms implied by courts
- If something's so obviously included that it didn’t need to be mentioned in the contract (has to have been obvious to both parties
- general considerations of public policy. For example, landlords of blocks of flats are ought to keep the communal areas (lifts, stairs etc) in a reasonable state of repair, therefore that term is implied into the rental contract
- Customary terms. Some terms are generally known to be included in contracts in a particular trade or locality. for example in terms of
bakers a dozen means 13 instead of 12.
terms implied by statute
◦ -the person selling the goods has to have the legal right to sell them.
- if you’re selling goods by description, e.g. from a catalogue or newspaper advert, then the actual goods have to correspond to that description.
◦- the goods must be of “satisfactory quality” –
-there’s an implied term that the goods are fit for that purpose.

conditions and
Condition= term that if breached enables injured party to end contract and receive damages
Warranty= less important, if breached allows for injured party to claim
* to determine difference; courts asks whether or not term is essential to contract , if yes its a condition

- That valid contract didn't exist; one of the elements was missing
eg. never intention to create legal relationship

- particular statement wasn't term in contract and therefore the statement is unenforceable

- Valid contract didn't exist, but is enforceable because;
- one party lacked capacity to form contract
- lack of genuine consent
- subject matter was illegal

defences and

1. Damages= sum of money awarded to compensate for loss or injury suffered
- general, specific, compensatory, exemplary, nominal, etc.

2. Injunctions= court order restricting actions of person or party to do something

3. Order of specific performance= order requiring defendant to comply with terms of a contract

4. Rescission= order to cancel a contract

5. Restitution= order compelling return of property

"An Overview of Contract Law (By William Markham, 2002)." Markham Law Firm RSS. N.p., n.d. Web. 7 Sept. 2014. <http://www.markhamlawfirm.com/law-articles/contract-lawyer-san-diego/>.
"An Overview of Contract Law (By William Markham, 2002)." Markham Law Firm RSS. N.p., n.d. Web. 15 Sept. 2014. <http://www.markhamlawfirm.com/law-articles/contract-lawyer-san-diego/>.
"Baltic Shipping v Dillon." Australian Contract Law. N.p., n.d. Web. 15 Sept. 2014. <http://www.australiancontractlaw.com/cases/baltic.html>.
"Contract." LII / Legal Information Institute. N.p., n.d. Web. 15 Sept. 2014. <http://www.law.cornell.edu/wex/contract>.
"Elements of a contract." Elements of a contract. N.p., n.d. Web. 15 Sept. 2014. <http://www.lawhandbook.org.au/handbook/ch12s01s02.php>.
"Implied Contract Terms Definition | Investopedia." Investopedia. N.p., n.d. Web. 15 Sept. 2014. <http://www.investopedia.com/terms/i/implied-contract-terms.asp>.
"Innocent Misrepresentation in a Contracts Claim." Find a Lawyer. N.p., n.d. Web. 15 Sept. 2014. <http://www.legalmatch.com/law-library/article/innocent-misrepresentation-in-a-contracts-claim.html>.
"Sec. 1. - Of Mistake As Precluding True Consent." Sec. 1. - Of Mistake As Precluding True Consent. N.p., n.d. Web. 15 Sept. 2014. <http://chestofbooks.com/real-estate/Law-Purchase-Real-Estate/Sec-1-Of-Mistake-As-Precluding-True-Consent.html#.VAfrJnm_mUk>.
"What Is Negligent Misrepresentation?." wiseGEEK. N.p., n.d. Web. 15 Sept. 2014. <http://www.wisegeek.org/what-is-negligent-misrepresentation.htm>.
"fundamentals of contract law." zinearticles. N.p., n.d. Web. 25 Aug. 2014. <http://ezinearticles.com/?Fundamentals-of-Contract-Law&id=82686>.

case study
coles bakery: misleading and deceptive conduct
Coles has been declared guilty by the Federal Court of misleading shoppers with claims its bread and other baked goods were “freshly baked” when that was not the case.

The Australian Competition and Consumer Commission launched proceedings against Coles in June last year, accusing the supermarket giant of misleading consumers into thinking bread was made on the day at the store when, in some cases, the bread had been partially baked months earlier in overseas factories.

Federal Court chief justice James Allsop said Coles had breached three sections of Australian Consumer Law, in his ruling, handed down on Wednesday.

Furore: the case was triggered when former Victorian premier Jeff Kennett discovered his 'freshly baked' breads and muffins were made in Ireland.
Furore: the case was triggered when former Victorian premier Jeff Kennett discovered his 'freshly baked' breads and muffins were made in Ireland.

"There has been, in my view, a misleading representation available to be understood that these goods have been baked on the day of sale, or baked in a fresh process, using fresh, not frozen, product. Thus, in my view, there has been a contravention of section 29, 1a, also," he said in his judgement.


During the court case, Coles’ barrister Philip Crutchfield SC, said the supermarket did not intend to suggest the bread was baked on the day with the labelling.

“What is happening with this ‘baked today, sold today’ in a Coles supermarket is that a consumer is being given the choice between the juxtaposition, the commercially manufactured bread, which has preservatives and keeps for longer, with the bread that is baked in-store and doesn’t have preservatives,” he told the court earlier in the year.

“The bread that is baked in-store is crunchier, and smells and has the flavour of freshly baked bread. That’s what we submit it is.”

Coles could face fines of up to $1.1 million per breach.

The offending breads were sold under the brands ‘Cuisine Royale’ and ‘Coles Bakery’, with labelling and advertising claims that they were “Baked Today, Sold Today” and/or “Freshly Baked In-Store”.

ACCC investigators said the goods had in fact been made months earlier on the other side of the world, namely, Denmark, Germany and Ireland, before being frozen and transported to Australia.

The former Victorian premier Jeff Kennett triggered the furore after discovering his “freshly baked” Cuisine Royale breads and muffins were made in Ireland. He mailed the offending items to the chairman of the ACCC, Rod Sims, and vented on talkback radio for a year, garnering enough public support to prompt the watchdog into action.

Mr Kennett said he took no personal pleasure from the decision handed down today.

"The ramification is wider than just to Coles - it's to every advertising agency, every marketer, every promoter of goods and services. They must accurately portray what they're offering or be prepared to pay a penalty," he said.

Mr Sims said: “Today’s decision confirms that Coles misled consumers about the baking of these bread products. Consumers should be able to rely on the accuracy of credence claims made by businesses like Coles to promote their products, especially where those claims are used to compete with smaller businesses which are genuinely offering a differentiated product."

Coles said it accepted the guilty verdict, conceding that it could have done more to explain how products were baked.

“We certainly never set out to deliberately mislead anybody,” a statement by the Coles Group said. “We are already well advanced in changing product packaging and other information.”

In a separate legal battle launched by the ACCC in May, Coles is fighting allegations it engaged in unconscionable conduct towards 200 small suppliers to reap $16 million in rebates

Full transcript