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Contract Law

Legal SAC

Kimberley Leopoldo

on 9 October 2013

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Transcript of Contract Law

Contract Law
Elements of a valid contract
Capacity to contract means having the ability to enter into a legally binding contract.
1. Intention
2. Agreement
3. Consideration
1. Intention
Only some contracts are binding legally
Non-legally binding contract
A father agrees to pay his child $20 to mow the lawn
Legally binding contract
Business agreements are intended to create a legal relationship
Business contracts:
Contracts form the basis of most business activity in the world of commerce
2. Agreement
A clear understanding of what has been agreed to must exist
offeror makes an offer to the offeree
offeree has the power to choose to accept the offer and create a legally binding contract
A consideration is something of value given by one party to a contract to the other party
An offer is the first step in reaching an agreement
An offer must be clear enough so the offeree understands the situation and can choose to either accept or reject the offer
Offers can be in writing, oral or made by action and can be made too:
1. Individuals
2. Specific groups
3. Globally
It is the price one pays to to buy the promise of the other party
Contract law makes a distinction between a valid contract and promises that are made when no consideration is given
Gratuitous promise
It is a gift that is freely given with nothing given in return
Acceptance can also be made in writing, orally or by actions made
For acceptance to occur, it must conform to any conditions set by the offeror
Acceptance must also be clearly communicated to the offeror
Invitation to treat
It is not an offer, but instead, it is a communication that invites offers from parties wishing to enter into a contractual agreement
It is a new offer from the other party after the original offer has been made
I will sell you my iPhone for $300
I will give you $200
Should I accept or decline?
The original offeror has now become the offeree and has to decide to either accept or decline the offer
offeror makes an offer to the offeree
the offeree makes an offer and now becomes the new offeror
4. Capacity
5. Formalities
6. Certainty
The intention to create a legally binding contract
A person under 18 years of age
Necessaries are items considered essential for minors (food, clothing, shelter)

A contract is valued on importance by how it was produced

It can be orally although majority are in writing
Some contracts may need to be in writing, depending on the severity of the outcome if part or all of the contract is breached
These requirements have been put in place to protect consumers from preventing acts of fraud
For a contract to be valid, there must be certainty in the agreement to ensure that the parties rights and obligations can be identified and enforced
1. The agreement may be incomplete due to lack of reaching an agreement
2. The agreement may be uncertain because the terms may be too vague
Resolving contractual disputes
Civil Division
court system
court system
Civil Claims
Tenancy List
Building List
Consumer Affairs Victoria
Consumers who have been unable to settle a dispute with a business can formally request assistance of the CAV
ADR methods can then be used or the matter moves to the courts or VCAT
CAV are concerned with dodgy door salesmen due to consumers entering invalid contracts
Remedies under contract law
1. Damages
2. Injunctions
3. Order of specific performance
4. Recission
5. Restitution
sum of money awarded to Plaintiff (compensatory)
court order restricting actions of a person or requiring someone to do something
order requiring defendant to comply with the terms of the contract
an order to cancel a contract
order compelling the return of property
Mentally Impaired
This can be both short or long term impairments
The contract may be voidable if the person can prove that they did not understand what was involved due to their condition
This can only occur if if they do so within a reasonable time after the contract was formed
Not all contracts entered into by minors are binding
Oral contracts are as enforceable as written contracts
What is
Contract Law?

Contracts are legal agreements that can be enforced by law
Terms of a contract
An express term is a promise that parties to a contract have agreed to
An implied term is one that is not expressed but exists and the parties are bound by it
Conditions are essential contractual terms whereas warranties are terms of lesser importance
Standard form contracts are pre-prepared contracts that are regularly used in business
A party to a contract may try to limit contractual liability by inserting an exemption clause in a contract
A party to a contract may avoid being bound by the agreed terms by arguing a defence
A contract cannot be enforced if the parties did not freely give their consent
Genuine consent may not exist if duress or undue influence has been applied to one party
A contract for an illegal matter is not enforceable
Issues in Contract Law
The Electronic Transaction Act 1999 supports e-commerce in Australia and was ammended in 2011 to further improve the law relating to e-commerce
Kuzmanovski v. New South Wales Lotteries Corporation [2010] FCA 876
Facts of the case
Mrs Elizabeth Kuzmanovski purchased a $5 scratchie lotto ticket for her husband's birthday
Lotto ticket was based on the game Pictionary
When Mr Kuzmanovski scratched the ticket, he uncovered the image of a person swimming overarm and the word beneath was 'bathe'
He immediately assumed he won the $100,000 and that night, began considering how he would spend his winnings
However, the next day when he went to claim his prize, he was informed that the word and the image did not match
The Federal Court referred to five different dictionaries and found that the natural and ordinary meaning of the word 'bathe' includes 'swim'
Outcome of the case
Mr Kuzmanovski's claim in contract succeeded and NSW Lotteries were ordered to pay him $100,000 plus interest from the date they refused to honour their obligations under the contract
7. Consent
8. Legality
Full transcript