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Question:
Discuss about the Australian Contract Law.
 
 
Answer:
Introduction

Consideration is the price that is asked by the promisor in exchange for their promise – the price for a promise. However, the common law requires that, for an agreement to be binding, the promisee (or promisees) must provide consideration (payment of some kind) for the promise they have received (Clarke, 2015).

Consideration is the price paid or something which is in existence and has value is given by one party to another. It may be pecuniary, such as a cash or fund, or it may be some kind of good or any service performed (Emery & Associates, 2016).

Elements essential to make a Contract Enforceable are as follows:

  • Agreement must be related and connected to all the elements required in an agreement..
  • The agreement should be valuable "consideration".
  • The parties must show a intention to be legally bound by the agreement (Redlich, 2014).
 
Case Analysis

In this first case consideration is not there and it is not enforceable by Jack. Jane is going outside the country and she offers to Jane give her car to Jack. The price of the vehicle in similar conditions in the market is $ 25000. Jack accepts. There is an offer made by Jane which is accepted by Jack because acceptance is given by Jane but in this case consideration is not present reason behind that is Jane has not describe any price for the car which he has offered to Jack only market price of car in similar condition is given which is not a valid consideration. If Jane describes any price for the car and then Jack accepts the offer made by Jane then a contact is created between both Jane and Jack with consideration. So in this case there is only an offer is made and it is accepted by Jack there is no consideration present and the agreement is enforceable. So it is only an offer which is accepted by the parties. only a proposal is made which is accepted but a contact is not created between the parties because it is without consideration .so from the above discussion it is clear that when an offer is accepted by the parties but the consideration is not present the contract is not enforceable. If Jane provides any price for the vehicle than Jack accepts it then a legal contact is created and it is binding.

In the second case Jane offers to sell her car for $ 25000.the market value for similar type of car in good condition is around $ 25000.Jack accepted the agreement offered by Jane .Consideration is there and the contact is enforced because Jack accepted the offer made by Jane and the value that is 25000 $ is present, there is an offer made by Jane and it is accepted by Jack and the consideration value is 25000 $ which is a valid consideration. Market value of the vehicle is more or less it does not affect the contract. When a offer is made by the promisor and it is accepted by the promisee and the consideration is also present than it is a valid contact .So the monetary value that is $ 25000 is a valid consideration in this case which is offered by Jane and accepted by Jack in the same manner .so in this case consideration is present and because a valid contract is created between both the parties with consideration present so the contract is enforceable by Jack in this case. If the market value is more but it is accepted between the parties and the contract is created between them then it is an enforceable agreement in this case Jack can enforce the agreement in court against Jack (Melmerley Investments Ltd v McGarry, 2001).

 


In this case also consideration is there and the agreement is enforceable. Jane one of the parties to the contract offers to Jane to sell her car for $ 2500. The price of similar type of car in the market is $ 25000.Jack accepted the contact offered. in this case there is an offer made by Jane which is accepted by Jack .because Jack accepts the offer made by Jane the market value of the vehicle is 25000 but Jane offers it to Jack at less price which is 2500 so offering the car at low market price to Jack is not a ground that consideration is not present in this case.  Market value of the vehicle does not affect the contract made between Jack and Jane. So it is an enforceable contract .vehicle is provided at less price to Jack but there is a consideration in this that is 2500 $.market value is more or less of the vehicle does not affect the agreement. The market value of the vehicle is known to Jane also when she is offering that car to Jack and she has also in mind that she is offering the car at less price than the market price and it is accepted by Jack on the same terms so it is a valid agreement is made between the parties with consideration present and enforceable by law. Both the parties know the fact that the cars is offered at less price. So it is a valid contact with consideration and enforceable also. From the above discussion it is clear that it is case of enforceable agreement between Jane and Jack and consideration is present. when a offer is made and it is accepted and  a agreement is created between the parties market value of a things is more or less does not effect on their enforcement so in this case also market value is more is known to both Jane and Jack at the time of creating the agreement by them.  So in the present case consideration is present and Jack has an enforceable agreement.  When an agreement is created between the parties and the value of thing is increasing or decreasing it does not have any effect on their enforceability once it is created (Coulls v Bagots Executor and Trustee Co Ltd, 1967).

Economic duress is established in law which permits the victim to escape their contractual obligations by rendering the contract voidable. When one of parties of the contact put pressure on the weaker party and due to that pressure the weaker party enters into a contact with that party this is a case of economic duress.

Monetary pressure in contracts is the point at which a man has no other alternative generally to acknowledge the conditions so expressed by the inverse party it should be possible by method for debilitating or putting a man in such a circumstance, to the point that the individual have no chance other than to acknowledge the same (Schubert, 2016).

In the present case north ocean tankers is the buyer he is operating the fleet of ships the buyer has to deliver the ship on a forwarded date to someone and at the time of making the contract between ship builder and buyer there is no clause mentioned in the contact if the value of dollar is decreased or increased what will be the effect on gain or loss but after working on the contact approximately halfway the value of dollar is decreased by 10%. 10% value is huge amount this is known as devaluation now the shipbuilder is demanding more amount as an escalation to cost because now iron is more cost than before to the ship builder if he not demanding the amount loss will occur to him. North ocean tankers (buyer) is ready to pay the amount to the shipbuilder but under protest which means money has been given but the dispute will be settled afterwards because he has to deliver the ship on a definite date as he has already a contract for the tanker and it is essential that the tanker should be delivered on time. The buyer has not taken any action against the seller to recover the excess payment after nine months of delivery (North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd and Another, 1978).

 


The buyer will not succeed for claiming the excess amount from the seller this is because there is a contract exists between the two parties, the shipbuilder and the buyer. Terms of the contact should be observed by both parties. Since they have agreed on the price at the time of making the contact any party should not change afterwards. In this case the buyer paid excess because already he was to deliver this ship and any failure to pay excess could make shipbuilder to stop and this is what he was preventing. He can sue the shipbuilder in court and will recover the amount.

 time is not a barrier to recover the excess amount in this case  to north ocean tankers (buyer) because at the time of making the contract between shipbuilder and buyer there is no clause of currency devaluation in the contract .the buyer paid the extra US $ 3 million to the shipbuilder because as he has already had a charter  for the for the tanker and   it was essential that it be is delivered on time after passing of nine months he has not take any action against the shipbuilder but the buyer can take legal action against the shipbuilder and recover the excess amount of US $ 3 million because the buyer has reluctantly agreed under protest to pay. As he has charter for the tanker and it is essential that the tanker should be delivered on time.

When a contact is created between the parties and at the time of making the contact it is not mentioned regarding price fluctuation then the buyer can claim the money from the seller. The meaning of under protest means the money is given once to  the seller but the dispute will be settled later on between the parties .the buyer will recover the excess payment since he agreed to the inclusion of a clause after being notified of the fluctuation by the ship builder. In this case since there was an agreement and buyer agreed under protest to pay, he can recover the excess payment. Under protest to pay law, the buyer typically makes the payment with notice to the payee that the payment is being made under protest, thereby reserving the right to object to the obligation later. Consequently, the buyer can recover the excess.

 


so from the above discussion it is clear that when  at the time of making the contact between the parties there is no clause of currency devaluation in the contract agreed  by the parties then afterwards due to currency devaluation any party or the ship builder( seller in this case) cannot claim an extra mount  due to currency devaluation.  But if at the time of framing of contract there is a clause agreed between on currency increase or decrease between the parties then the buyer has to pay the increase or decrease amount he cannot go to the court to take any legal action.

So in the present case legal action can be taken by north ocean tankers against the shipbuilder and north ocean tankers can recover the extra amount of US $ 3 million from the shipbuilder even after passing of 9 months time.  Time is not a barrier in this case to take legal action. If legal action is taken by north ocean tankers he will succeed.

So we can say that the north ocean tankers (buyer) will succeed. In this case he can claim the extra money of US $ million (North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd and Another, 1978).

 
References

(Carlill v Carbolic Smoke Ball Co Court of Appeal, 1893). Retrieved on 19th August, 2016 from: https://netk.net.au/Contract/02Formation.asp

Carlill v Carbolic Smoke Ball Co Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1. Retrieved on 19th Aug, 2016 from: https://www.australiancontractlaw.com/cases/carlill.html

Emery, R. P. & Associates. (2016). Is a verbal agreement legally binding? Retrieved on 19 August 2016 from: https://www.findlaw.com.au/articles/5626/is-a-verbal-agreement-legally-binding.aspx

Melmerley Investments Ltd v McGarry CA141/01, 6 November 2001 at [21]. Retrieved on 19th Aug 2016 from: https://www.otago.ac.nz/law/research/journals/otago036314.pdf

Stewart.A, (1984)  Economic duress - legal regulation of commercial pressure. 410-441Available at:https://www.austlii.edu.au/au/journals/MelbULawRw/1984/3.pdf. [Accessed on: 19 August 2016].

North ocean shipping co ltd v Hyundai construction co ltd and another Atlantic baron Queen’s Bench division [1978] 3 all er 1170, [1979] 1 Lloyd’s rep 89 20 July 1978. Retrieved On 12th Aug, 2016 from: https://www.icab.org.bd/images/stories/icab/campus/study_materials/knowledge_level/The%20Atlantic%20Baron%20Case%20QB%20.pdf.

Australian Contract Law (2015), Consideration, Available at: https://www.australiancontractlaw.com/law/formation-consideration.html [Accessed on: 19 August 2016].

Schubert, J.(2016). Economic Duress in Contract Law: Definition & Cases. Retrieved on 19th august  2016 from: https://study.com/academy/lesson/economic-duress-in-contract-law-definition-cases.html

Study .com (2004) Rules of Consideration in Contract Law: Elements & Case Examples Available at: https://study.com/academy/lesson/rules-of-consideration-in-contract-law-elements-case-examples.html.[Accessed on: 19 August 2016].

Law teacher (2016) Consideration Cases, Available at:https://www.lawteacher.net/cases/contract-law/consideration-cases.php.[Accessed on: 19 August 2016].

Redlich, H. (2014). Australia: When is a done deal not done?: a legally enforceable contract, Retrieved on 12 August 2016 from: https://www.mondaq.com/australia/x/291480/Contract+Law/When+is+a+done+deal+not+done+a+legally+enforceable+contract

E -law resources.co.uk, Economic dureness cases(N.D.), Contracts Entered Under Duress [Online] Available at :https://e-lawresources.co.uk/Duress.php.[Accessed on: 19 August 2016].

Stewart.A, (1984) Economic duress - legal regulation of commercial pressure. 410-441at:https://www.austlii.edu.au/au/journals/MelbULawRw/1984/3.pdf. [Accessed on: 19 August 2016].

Clarke.J (2013), Australian contract act [Online] Available at https://www.australiancontractlaw.com/cases/carlill.html.[Accessed on: 19 August 2016].

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