The essential elements of a valid contract shall be discussed in this section (Knapp, Crystal and Prince 2016). The section shall also examine the relation that existed between Avinash and the café. To constitute a valid contract, the essential elements that need to be considered are:
The offer is defined as the promise to do an act in return for a consideration to constitute a valid contract. the contract to be made enforceable, the terms of the contract need to be clear, concise and not ambiguous (Kotz 2017). In the case of AGC (Advances) Ltd v McWhirter, the court laid down the valid terms of the contract stating that to constitute a contract, the terms of the offer cannot be incomplete (Moyle 2017). For a offer to be enforceable, the terms cannot be uncertain. If the terms are not clear, the offer shall lose its essence and it will turn into an invitation to treat (Hough and Kuhnel 2017). This was upheld in the case of Pharmaceutical Society of Great Britain V Boots Cash Chemists(Southern) Ltd, where the court held that when the goods are displayed on the shelves of a store, they do not constitute an offer but merely an invitation to treat (MNNING 2016). Applying the same principles of offer and invitation to treat in the present case, it can be held that the self service menu that was presented by the cafe was an invitation to treat but when Avinash placed the order of pastry and the beverage from the self service menu which was digital, an offer was constituted. Therefore, Avinash can be said to be a valid offeror because he offered to pay in return of the orders to the cafe. The amount paid to the cafe is a valid consideration.
Acceptance is an important wheel in the contract because to constitute a valid contract, it is essential that there has been an acceptance of the offer. Once an offer is accepted by a party, it becomes legally binding but there are a few conditions that need to be met to constitute a valid acceptance (Sullivan and Hilliard 2016). The acceptance has to be clear from all ambiguities and it has to be acceptance on the same line of the offer, that is, no changes can be made to the already made offer. In cases when changes are made to an offer, it will be a counter offer and not a valid acceptance (Fried 2015). In the case of Masters v Cameron, it was held the acceptance has to be done in accordance with the terms of the offer. In the case of R v Clarke, it was held that once a person has accepted the offer he should be fully aware of the terms of the offer and the acceptance has to be done as per the terms of the offer. A silence will not constitute a valid acceptance and the offeror cannot maintain silence. This was held in the case of Felthouse v Blinley. The terms of the offer needs to be communicated to the offeror was decided in the case of Powell v Lee (Bjorklund 2015). Applying the same rules to the present fact scenario, it can be said that the cafe had accepted Avinash’s offer and the acceptance was done in terms of the offer. The printed ticket given by the cafe can be considered a valid communication of the offer. Therefore, Avinash got the printed ticket from the cafe which is a proof that the acceptance was communicated to Avinash.
Intention of the parties to constitute a legal relation: the aprties need to have an intention to create a legal relation and it was held in the case of Carlill v Carbolic Smoke Ball. This case laid down the reasonable man test which held that the intention to create legal relation has to be assessed from the point of a reasonable man and how he would have viewed the legal relation (Wilkinson and Hoffman 2015). The Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd held the objective test (McColl 2017). Applying both the tests held in the landmark judgments, it can be said that both the parties, that is, the cafe and Avinash had the intention to create a legal relation. The printed tickets prove that both the parties had the intention to enter into a legal relation and they were aware of the terms of the contract.
Consideration the amount fixed by the parties which form the most important element of a contract. The price is decided by the offeror for the fulfilment of a promise. Chappell & Co Ltd v Nestle Co Ltd held that the promisor has to fix the promise and the case also decided what constituted a valid consideration (Abrahamson 2014). Avinash paid the price of the beverage and the food to the cafe. Therefore, the amount paid by Avinash can be considered a valid consideration in return of the food. The conditions required to constitute a valid contract has been upheld in the factual situation (Stone and Devenney 2017). A consideration can be both paid in the present or as per agreement, a consideration can be paid at a future date after the completion of the contract. In this case, the consideration as paid at the moment, that is while purchasing the beverage and the food from the cafe.
Assessing the fact scenario, it can be said that all the valid constituents of a valid contract are present and therefore there existed a contract between Avinash and the cafe. Both the parties has acted in accordance to the terms of the contract and the essentials to constitute a valid contract were present.
The issue is whether the cafe has to pay damages to Avinash or the cafe is bound by the exclusion clause mentioned in the ticket.
Exclusion clause is defined as a term in the contract which restricts the liability of a person who is already a party to the contract. With the help of the exclusion clause, a party can excuse himself from any liability. The exclusion clause restricts the liability and the concept is essential in the present fact situation. This principle was laid down in the case of L'Estrange v Graucob. For an exclusion clause to be enforceable the parties need to be aware of the terms of the contract and they should know about the exclusion clause while entering into the contract. In the case of Darlington Futures Ltd v Delco Australia Pty Ltd, it was held that the exclusion clause should be given the same treatment like any other clause of the contract. What is important to consider whether a reasonable notice of the exclusion was given or not to the other party is an important matter of consideration (Lee and Tang 2015). The exclusion clause cannot be enforced retrospectively and the parties cannot be said to be bound by an exclusion clause after they have entered into the contract. The exclusion terms needs to be told to the parties at the time they are entering into the contract (Andrews 2016). The parties need to be aware that an exclusion clause exists between the parties and that they have signed the contract knowing very well that there is an exclusion clause in the contract which shall bind the rights of the parties. Olley v Marlborough Court Ltd held that exclusion clause cannot be enforced against the parties after they have signed the contract. Hornton v Shoe Lane Parking held Ltd an exclusion clause at the back of a ticket will not be construed as a restriction on the liability of a party. Section 3 of sch2 of Competition and Consumer Act holds that to be a consumer, a person has to consume any good or service of an object whose amount does not exceed a sum of 40,000. To be a consumer, the goods need to be consumed for personal or domestic purpose. Under section 64 of the Australian Consumer Law that the terms of a contract can only be modified if they are aligned towards the interests of the suppliers and aims to give them remedies relying on the terms of the exclusion clause. The rights and warranties given to a party cannot be taken away by any terms of the contract. By the provision of section 260 of the ACL, it can held that the manufacturer is obligated to a customer to ensure that his services comply with the provisions of section 60 of the Act.
By applying the principles of L'Estrange v Graucob, it can be stated that Avinash was not told about the exclusion clause and it can also be held that a valid contract was existing between the parties. Avinash was not aware of the exclusion clause that was mentioned in the ticket. The exclusion clause cannot be said to be a restriction on the liabilities of the cafe and they cannot escape liability. Any provision of law that takes away the consumer guarantee that are accorded to a consumer will be considered a violation of section 64 of the ACL.
The exclusion clause cannot be said to be enforceable and the cafe cannot limit its liability by showing that the exclusion was existing and therefore Avinash can claim damages.
Contract term is the duties and obligations of the parties to a contract and the contract terms are enforceable against the parties. A contract can be either written or oral or both. The terms of the contract can be either express or implied and a valid contract can be both.
when the terms for the contract are not expressly mentioned but the terms of the contract can be understood from the conduct of the parties, it is an implied contract. An implied contract term is binding on the parties and the Court adjudges if the contract is valid and the terms are essential for the performance of the contract. The Court will deem an implied term enforceable if it understands that the terms of the contract are binding on the parties and such terms of the contract are necessary for carrying out the functions (O’Leary 2017). This was held in the case of Moorcock (1889) 14 PD 64. It was held in the case of Balmain New Ferry Co Ltd v Robertson, it was held that the court understands the enforceability of an implied term from the conduct of the parties and whether they have dealt in the past. From the trade and practice, the implied contract terms can be concluded (Dressler 2015).
An express term in a contract is provided in writing or a written contract is entered between the parties.
The terms of the contract are binding on the parties and non fulfilment of the terms of the contract is considered to be a breach of contractual terms.
In cases of non fulfilment of warranties, the party can claim damages but they are not considered as important as conditions. If the warranties are not fulfilled, it is not that the contract does not get affect but the ultimate goal of the contract may be affected.
Therefore, applying the same rule to the above mentioned factual scenario, it can be said that the exclusion clause was invalid. Avinash ordered from the cafe and as per the terms of Avinash, the cafe accepted the order. The order was placed by Avinash from the self service menu and therefore, the terms were expressly mentioned. Both the parties were aware of the terms of the contract and they were expressly known to them. Apart from the express term of the contract, there was also an implied term which was implemented by the ACL. These conditions were not expressly mentioned and they could be gauged from the conduct and the behaviour of the parties. These implied terms can be held to be providing the consumer guarantee to Avinash.
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Bjorklund, A.K., 2015. Contract without Privity: Sovereign Offer and Investor Acceptance. Chicago Journal of International Law, 2(1), p.37.
Dressler, J., 2015. Problem in the Contract Law Bundle PAC.
Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford University Press, USA.
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Knapp, C.L., Crystal, N.M. and Prince, H.G., 2016. Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.
Kötz, H., 2017. European contract law. Oxford University Press.
Lee, F.C.J. and Tang, V., 2015. Exclusion of Liability and Unfair Contract Terms in Hong Kong Travel Contracts: Problems and Solutions. Journal of Law, Technology and Public Policy®, 1(3).
Manning, C., 2016. Contracting by E-Mail and the Statute of Frauds: A Hypothetical Irish Case Study.
McColl, R., 2017. Words, words, words! what did you mean? contractual interpretation and the reasonable business person. Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia, 31(3), p.17.
Moyle, J.B., 2017. The contract of sale in the civil law. ????? ???????.
O’Leary, L., 2017. Introduction. In Employment and Labour Relations Law in the Premier League, NBA and International Rugby Union (pp. 1-18). TMC Asser Press, The Hague.
O'Sullivan, J. and Hilliard, J., 2016. The law of contract. Oxford University Press.
Stone, R. and Devenney, J., 2017. The modern law of contract. Routledge.
Wilkinson-Ryan, T. and Hoffman, D.A., 2015. The common sense of contract formation. Stan. L. Rev., 67, p.1269.
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