Contract Law 1

Paris’ acceptance of Dell’s offer needed to be unqualified and there could not have been any further negotiations between them. Paris “must have been acting on the faith or in reliance upon (the) offer”  for the acceptance to be valid. This did not appear to be the case as Paris had requested Dell to provide the documentation so that her brother could look it over. This could have indicated that she was not as comfortable with the offer as she sounded, thus making her acceptance qualified and leaving it open to further negotiations once the documents were read over by her brother.

Unless there was a real consensus (meeting of the minds) between Dell and Paris in the terms and conditions of the offer and acceptance, a reasonable person would conclude that a contract could not have been formed. In this case the terms and conditions were unclear causing Paris to indicate to Dell that she wanted to see the paper work first before proceeding any further. While she may have agreed to the terms and condition in the paper work that Dell should have sent her, there was also a chance that she may have not been happy the terms in the agreement document.

In this case there may have been a conditional acceptance but there appears to be no clear meeting of the minds and the courts may rule that there was no valid acceptance.

Was there Consideration?

Consideration in this case would have been that Dell was to get the gig for Paris and act as her exclusive agent; in return Paris was to pay him a fee, “a little bit above the going rate in the industry”. This satisfies the benefit/detriment requirement of one party incurring a detriment and the other party getting a benefit. Dell would have benefited by receiving the fee and Paris would have benefited by getting the gig and future work. Paris would have incurred a detriment by having to pay Dell the fee and Dell would have incurred a detriment by having to spend time as her agent in getting work (gigs) for her.

If a legal contract was simply reliant on sufficient consideration, then it could be assumed that Paris and Dell had a legal contract. However, there appears to be some questions as to whether Dell’s offer and Paris’ acceptance were valid which could lead the courts to rule that there was no contract in the first place.

Did Dell and Paris Intend to Enter Legal Relations?

The presumption, in a commercial environment, is that parties to a contract intend to create legal relations and be legally bound. Does this apply to Dell and Paris? Their arrangement would have been of a commercial nature and Dell clearly intended that they be legally bound at the time of the phone conversation. However, Paris was more cautious and wanted to see the paper work before moving forward. If the documents were in order and Dell had managed to get the gig for her, then it appears that she would have intended to enter legal relations with Dell.

Was there Certainty?

Dell’s offer to Paris would have “only been effective if it identified with sufficient certainty the term of the proposed contract”. However, Dell’s offer did not clearly outline or even include the essential terms and conditions of the proposed contract so there would have been no certainty. The courts may have ruled that there was no binding contract between Dell and Paris because they had not reached any agreement on even the essential terms of a contract. 

Is there a Binding Contract Between Dell and Paris?

In this case the courts may find that because of the vagueness and lack of terms in Dell’s offer and the parties had not reached agreement on the essential terms and Paris’ request to see the documentation and getting the gig before she accepted unconditional, there was no meeting of the mind, so there could be no legally binding contract.

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Scenario 3 – Counter Offer

Did Paris make a counter offer?

Paris’ response may have been considered to be a counter offer if she had wanted to change the terms to something totally different to the ones in Dell’s original offer. She did not do this, she simply asked for the paper work so her brother could examine it and said to Dell that once he got the gig for her then she would take him on as her agent, this was subject to the documents being in order.

The courts may rule that there was no counter offer but rather a request for information when Paris asked Dell for the contract documents.

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Question 2 – Sloop Daggy and Bjërk Ludley

Did Bjërk Ludley make an Offer?

Sloop and Bjërk had been in negotiations before Sloop received the faxed offer from Bjërk. The faxed offer included all the essential terms and conditions they had negotiated and it was clearly defined what those terms and conditions were. The faxed letter from Bjërk also included a lapse of offer time and date and the method by which Sloop and Paris were to accept.

The faxed offer was clearly the result of previous negotiations between Sloop and Bjërk so the courts would most likely rule that Bjërk’s offer was valid.

Did Sloop Daggy and Paris Accept?

The fax from Bjërk clearly stated the essential terms and conditions agreed on during negotiation with Sloop. It also gave a lapse of offer date and directions on how Sloop was to accept the offer.

Sloop and Paris both signed the faxed letter where indicated and returned the letter by fax to the number that the original fax was sent from. Paris and Sloop’s acceptance was unqualified and there appeared to be a meeting of the minds, so on the face of it, the courts would find that their acceptance was valid. However, there is more to acceptance then the parties simply sending their reply back to the offeror.

An acceptance sent by fax is “governed by the general rule that an acceptance is only effective when received by the offeror”. This means that Bjërk would have had to actually read Sloop and Paris’ acceptance for the agreement to be binding.

Was there Consideration?

Paris and Sloop were to work for Bjërk in return for payment. So Bjërk would have benefited by having Sloop and Paris working for his Channel and he would have incurred a detriment by having to pay their wages. Sloop and Paris would have benefited because they would have received wages and the detriment would they have incurred was they would have been contracted to the channel exclusively for a period of 12 months.

The courts would most likely find there was sufficient consideration in this case.

Was there Intention to enter legal relations between Sloop and Bjërk?

Sloop Daggy and Bjërk Dudley had been in negotiation before Bjërk faxed the offer to Sloop which would show that they wanted to setup a legally binding contract between each other. This was followed by Bjërk faxing through to Sloop the offer indicating Bjërk’s intention to enter legal relations with Sloop. Then Sloop contacted Paris and they both signed the letter and faxed it back to Bjërk as requested, indicating that they also intended to enter legal relations with Bjërk.

The court could look beyond the terms of the document which may include statements and actions of the parties involved to determine if there was clear intention. Also the courts would determine if the agreement was in a commercial context thus the presumption would be that they did intend to be legally bound. In this case the courts would most likely find that it was the intention of both parties to be legally bound.

Was there Certainty?

The contract between Paris, Sloop and Bjërk was sufficiently complete because they had reached agreement on the essential terms  The essential terms were certain and clear, all parties understanding their obligations, so the courts would most likely find that there was enough certainty for it to be a legally binding contract.

Do They Have Capacity to Enter a Legal Contract?

As the age of the parties was not given it can presumed that they are all over 18 years of age and they all appeared to have no impairments (of a sound mind and not drunk) so it can be assumed the Paris, Sloop and Bjërk have the capacity to enter a binding contract.

Do Paris and Sloop have a contract with Bjërk Ludley?

While each party has met their obligations sufficiently to ensure that the offer, acceptance, consideration, certainty were all valid, in this case the contract is not legally binding because Bjërk did not receive Sloop and Paris’ acceptance by the required time. In order for the agreement to be legally enforceable Bjërk would have had to actually read the fax from Sloop by the lapse of offer time, set out in the offer. This did not happen so the courts would most likely rule that their agreement was not enforceable.

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Question 3 – Paris and Sloop Daggy

As Paris and Sloop are family members, the courts would presume that there was no intention to enter legal relations.

The courts would look at the action and statements of the parties involved to determine intention and they would most likely find that when Paris made the statement about giving an agency fee to her brother, it was done so in a light hearted manner, they both laughed about it indicating that it was just a bit of banter between them and there was no real intention to enter legal relations. Because of the lack of intention and the presumption that between family members there is no intention to enter legal relation, the courts would most likely find that Paris had no intention to be legally bound to pay Sloop the 10% agent fees.

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Bibliography

Articles/Books/Reports

Bielefeld S & Nielsen J, LAW00503 Contract Law Study Guide, (Lismore: Southern Cross University, 2007)

Paterson J, Robertson A & Heffey P, Contract Cases and Material (Pyrmont: Thomson Lawbook Company, 10th ed, 2005).

Paterson J, Robertson A & Heffey P, Principles of Contract Law (Pyrmont: Thomson Lawbook Company, 2nd ed, 2005)

SCU School of Law and Justice, LAW00503 Contract Law Unit Information Guide, (Lismore: Southern Cross University, 2007)

Cases

Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Crown, The v Clarke (1927) 40 CLR 227

Currie v Misa (1875) LR 10 EX 153

Jones v Padavatton [1969] 1 WLR 328

Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401

Reese Bros Ltd v Hamon-Sobelco Australia Pty Ltd (1988) 5 BPR 11, 106

Smith v Hughes (1871) LR 6 QB 597, 607

Thorby v Goldberg (1964) 112 CLR 596

Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498

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