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Introduction to Australian Contract Law

Critically evaluate the Australian Contract Law and its applications in Australia

The Contract law is the form of contract that is to provide the opportunity for expanding the mechanisms, that is to ensure the differential power between the parties that are doing contract and it helps in avoiding the unfair contract. The contract law is to ensure the fair contract among the parties that is made between the two individuals. It can also be called as the contract law by, which the law is encompassed by any regulations or law. In Australia, the contract law is regulated by the common law.

According to the views of McKendrick, (2014), Australian contract law is completely changing the judicial and social attitudes in the businesses. It is generally developing the law and legal practices for the business practices. Chen-Wishart, (2012) argue about the Australian Contract Law that consists of Agreement (Formation of Contract), Terms (content of contract) and Breach Frustration (Termination of Contract). The agreement refers to the parties that include the binding agreement. It includes offer, acceptance, consideration, estoppels, intention to create legal relations, and written evidence of the required contracts.  

Andrews, (2015) argue on the critical contract law that is within the legal academy and it depends upon the theories of different traditions. The contract law refers to the unpaid associations of the people in the moderate society. It is essential to commence the CLS by making the claim about the Australian contract law. According to the views of Porat (2012), Australian contract law refers to the enforcement of promise that was presented by entering freely into the legal relationship. The court decision is constituted by the Australian contract law. It is based on the English contract law with analyzing the principals in the certain areas as well as for the development of law with the help of the decisions of the Australian courts.

In order to form the contract, the five elements have to be taken into consideration according to the views of Farrington, and Palfreyman, (2012), it includes agreement, consideration, capacity, intention and certainty. The agreement refers to the contract between the two parties in order to make the contract. On the other hand, consideration refers to the undertaken thing for something of value. Intention refers to the relation that is legally bound by the contract. For the valid contract in Australia, the three elements are essential that includes offer and acceptance, party’s interest to generate binding the legal relations. According to Graw, (2012) offer refers to the willingness to have a contract with the other party. It can be called as the invitation to offer someone for something in order to make the contract. On the other hand, acceptance refers to the concept when the offer is accepted and the accepted offer becomes an agreement. It is essential to communicate in order to give acceptance to the agreement.

Moreover, according to the Australian contract law consideration refers to the act that is taken into consideration in order to provide the promise of purchase. For the consideration, it is necessary to bargain about the promise or act. Dixon, (2013) support of above author the Australian contract law also includes the termination or performance, and Remedies. Here, the performance of termination includes the proper end of the contracts that results in the positive obligations of the contract. Performance or termination is of different types such as discharge by agreement, discharge for breach and discharge of frustration. Remedies refer to the situation where the breach of contract occurs between the parties as they are blamed for damages while remaining in the contract.

Elements of Australian Contract Law

There are various cases of Australian contract law such as in the case of Dunton v Dunton they were entered into the written agreement hence, Mr. Dunton was ready to pay to his wife the allowance where she behaved in the sobriety, virtuous or respectable manner. But, it was not clear from the above discussion that it was the consideration or not. Furthermore, there was an argument by the plaintiff that acting in a respectable manner is the sign of good consideration. On the other side, Mr. Dunton argued that respectable manner refers to the promise to do as he himself has promised to make the payment.

Bishop, (2014) explained various other elements of Australian contract law such as misrepresentation that refers to the wrong information given by one party to the other party before the entrance into the contract. So, due to this, they suffer the loss as well as damages. For example, if the seller is expressing its property that cost $150,000, but on the other hand, he is expressing that he has paid $150,000 for its property. So, it is considered as the false statement between the seller and the buyer before entering into the contract.

Douglas (2017) discussed the four types of breach of contract such as material breach, minor breach, anticipatory breach, and actual breach. Material breach includes the key element in the contract that is not considered as agreed. For example, if the person buys the computer online but in the delivery, he receive only the monitor then, it can be called as the contract that is being materially breached between the parties. Aust, (2013) on the opposing of above author the material breach can be called as when the party who has suffered from the breach can claim remedies on the other are due to which the breach is being suffered.

The author Cuniberti, (2013) argue about the minor breach as it is to be clear that not every breach of contract is a material breach and the obligation of the wronged party is ended immediately. It can be related to the above-discussed example as if there is a missing of the some of the parts of the computer-delivered so, the contract between the seller and the buyer will not be canceled immediately but, there would be the remedy of the contract for the breach of the contract. Yang, (2012) mention the anticipatory breach of the contract includes the other party saying that they will not accomplish their contract side before they are voluntary to do so. The above author also discusses the actual breach as it is common that there is a breach of contract between the parties. The breach of contract occurs when there is a time of the party to perform their part of the agreement.

On the other hand, Nottage, and Weeramantry, (2012) discussed the negative aspects of the Australian contract law as it is mainly based on the several sources of law that includes the common law, as well as the equitable principles, as well as the consumer act. There are certain problems that arise in the current system that involves the large volume of cases in the law. The problem also includes the interrelationship between the common law as well as equity and legislation (Mattila, 2016). So, there are various proposals for the improvement of the current system in the Australian contract law that includes such as law reforming as it would be easy to understand as well easy to access. It also includes the improvement of the contract law certainty so that there would be clear and predictable legal consequences in the contract.

Breach of Contract

There are several recommendation that is being discussed by Mills, (2014) such as the law can be simplified by erasing the technical rules from the law for reduction of the cost of compliance. It also sets basic standard for the contractual party’s acceptable conduct like discouraging the behavior unconscionable. It also involves the problem solving of the current system in the Australian contract law as encouraging the digital economy participation where in order to do the business the law is considered as an online tool that facilitates as innovation for the company. Furmston, (2017) argue the requirements of the medium as well as small sized business for minimizing the disadvantages practically with larger corporations.

It also includes in increasing the law flexibility of law for encouraging the support as well as innovation of the long-term relationship within the contract. It also includes in harmonizing the statute law for all the states as well as territories. The other recommendation is included in order to solve the problem of a current system of law that includes the law internationalize in order to facilitate the investment as well as trade in order to erase the barriers of the indirect trade by various contract law systems.

Apart from this, Schulzke, Berger-Walliser, and Marchini,  (2013) stated that for entering into the contract it is essential to know the legal system as well as understand it as well by, which the contract is governed by the formation as well as the disputes. In the today’s world, there are various international marketplace contracts that are to be governed by the Australian law. There are no special forms as well as procedure required in doing the contract in the written form. In the Australian court, the oral expression can be considered by the court in order to have evidence for any of the case. Simultaneously, in the Australian contract law, there is no fundamental principle by, which the contract is prevented by the law. The various laws that are applicable online have the same non- virtual transactions. According to the Australian contract law, the person is not bound to the contract if it is the third party in the contract so, it can be called as the Privity rule in the Australian contract law. Seear and Fraser, (2014) argue about the general law such as it is to be agreed by the party for claiming of the damages and breach of the contract in between.

In the views of MacMillan, and Stone, (2012) according to the cases, the Australian contract law is where the single individual is attentive of the incidence and other party is unknown about the matter and depends upon the single individual. Thus, the party guarantees about solving the matter but actually there is a breach of contract. The law is applicable to the individuals in the Australia as  for example in the case of McRae v Commonwealth Disposals Commission, 1951 according to the Australian contract law the judgment of the court was in support of McRae thus, against the Commonwealth Disposals Commission as he was held responsible for the damages for plaintiff that is McRae.


Cartwright, (2016) argue about the Australian contract law, it is applicable for the businesses. Privity of contract plays an important role in the business or in the daily life. Privity of contract refers to the relation between the parties those who enter into the contract and they have the right to claim each other if any miss behavior or fraud exists but the third party is prevented from the sue. It is the common rule as the parties those who are in the contract have the rights as well as obligations. For example, in the case of Twiddle v. Atkinson (1861), the bride father promised the groom father to pay the dowry in the marriage. But, the father of the bride died before making up the promise of giving the dowry to the groom’s father. So, the case was sued by the bride’s father by the plaintiff but, there was a failure as he was not the contracting party. It is clear from the above case that the Privity of doctrine contract is taken into consideration only for the contractual rights as well as obligations. Andrews, (2016) mention about the Privity doctrine in Australia as there was doubt occurred about the Doctrine of Privity as it produces injustice as in the context of the third party it gains benefit from the contract.

As per the Australian contract law, the third party cannot sue against each other in the terms of Doctrine of Privity. It can also be called as the legal term for the mutual relationship between the contracting party for enforcing the warranty or promise. The Doctrine of Privity is not considered as the common law in the English Law but it is the similar concept that was introduced with the party’s right act, 1999 McLennan, and Handmer, (2012).  The Australian contract law refers to the contractual good faith of the obligations in Australia. It refers to the god faith in the jurisdictions in the contract law by, which the good faith is incorporated.

Hence, there are various measures that are discussed by Marshall, (2012) that can overcome by the third party as the Doctrine of Privity of contract and it includes when the contracting party is agreed. It also includes right performance that identifies the party’s intention in the contract. Samuel, (2013) argue about the Australian contract law principle that is based on the contract of freedom but, there are some limitations of the freedom contract. It is based on the concept of the English common law and it does not depend upon the statute law. It can be called as the good contract that is considered as the good practice in the contract. There are certain restrictions that depend upon the legal obligations of the contract law.

Tom v Steve, in this case, there was an agreement between the Steve and Tom as Steve offered Hino Cargo Master to Tom. Here, Tom agrees to buy the Cargo on the same day of cost $200 per day. But, there was a mistake that was made by Steve as he did not notice the truck specifications. Due to the mistake of Steve, the financial loss was suffered by Yom. So, according to the Australian contract law, Steve is being responsible for the loss of Yom. 

Challenges Faced by the Current System

In the case of R v Clarke (1927), there was an offer that was for everyone as if anyone will provide information about the murders to women to the policemen that person will get the reward. Here, the Clarke gave information about the murder as to protect himself from the in charge of murder. So, according to the contract law, he will not get a reward as he himself was claimed of the murder.

According to Goldsworthy, (2012) the Australian contract law the contract is basically divided into five categories such as formation, scope and content, avoidance, performance and termination and remedies. The formation includes the requirements in order to make the valid contract. Hence, scope and content are linked to the contractual terms as well as its scope. Avoidance includes in dealing with the parties that avoid the valid contract. On the other hand, performance and termination include the contract to be performed. Simultaneously, remedies include the occurrence of the breach of contract. It includes damages and liquidation of claims. Australian Contract Law is applicable in the business to business contracts as for when the purchase of goods as well as services in the contract.

There are various laws of Australia that are taken into consideration by the people of Australia such as Criminal Law. It is administered in the Commonwealth of Australia by the individual jurisdiction. The six states are included by the jurisdiction like the Commonwealth and self-governing territories. Siliquini-Cinelli, (2015) argue about the Australian human rights act that includes the following

There are various effects of the bad contracting behavior that is as follows:

Issues for Insurance: Uninsured Risks: The losses are recovered in the best way when there is a valid policy of insurance in the Australian Contract Law in order to make the payment of damages. It also explains different things that explain the poor contractual behavior. If, there is a contract of consultant without the liability limit then, it will not cover the value of insurance policy.

Risk management practices: According to the contract law, the business includes the contract between the purchaser and the seller. There are various risks that are implemented by the Law in order to avoid the illegal system.

The cost of negotiating and managing a contract: In order to have the valid contract it is essential to negotiate and manage the contract.

Loss of innovation: For taking project risk in the contract it is associated with the great financial risk. This is out of control that deals with the consultant becoming conscious about the product and it leads to not offering an inventive solution that is helpful in lowering the cost of the project or gaining to good outcomes in the longer term.

DiMatteo, (2013) state about the accessibility of the Australian Contract Law as it is essential to enter into the contract. As for the small business organizations, it is important to have the legal advice of the specialist in the house or in the law practice. So, the consultant will enter into the contract without making judgments. Andrews, (2015) argue about the codification of the Australian contract law as it is worth to be considered for identifying the level of the parties to the contract. It is important to codifying the contract law as it makes the law accessible. Under the contract law, the liabilities there are various laws that include Personal injury or death, fraud lent and intentional tort.

Recommendations for Law Reforms


From the above discussion of Australian contract law, it can be concluded that in order to make a contract the elements of the contract such as offer and acceptance is essential for the parties. It has also been analyzed that the legal system in the contract plays an important role. There are various cases discussed like R v Clarke case that includes offer and acceptance. It can be recommended that the law is essential for the contract.  


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