Discuss about the Contract Law for Aircon Ltd.
In law, an agreement which has validly in law is said to be a contract. An agreement is the combination of an offer and acceptance. An offer is made by an offeror to an offeree through which he transfers his intention with an expectation that such an offeree will indulge in actions or omission as desired by an offeror. When such offer is approved by an offeree without making any changes then it is an acceptance. (Clark 2013)
An acceptance must be the mirror image of offer in order to be valid Brogden v Metropolitan Railway Co. (1877). Also, an acceptance must be made by an offeree to an offeror and must be communicated by an offeree to it valid (Powell v Lee (1908). However, when an acceptance is made without any intention then such acceptance has no value in law and is not enforceable and is held in R v Clarke (1927). Such acceptance lacks knowledge and such confirmation holds no value in law. An offeree must be aware of the offer prior its acceptance and must intent the same in order to make such an acceptance valid. (The Law Teacher 2016)
When an offer and acceptance is made by the parties then an agreement is made. In order to convert an agreement in a contract, then, there must be presence of legal intention and consideration.
Consideration is the gain which is moved from one party to another to lieu of the promises which are exchanged amid them. However, in Australian contract law, there is no value for past consideration, that is, a gain must move amid the parties only for promises which are either present or future in nature. Any consideration which is promised for a promise which is already performed by the party is not a good consideration and is thus not enforceable in law Harrington v Taylor (1945). (Clark 2013)
Also, the common law of misrepresentation submits that when one person makes a statement of fact, with the sole intention to persuade another person, so that he enters into a contractual relationship with the person who is making such statement then, the defaulting party can be held accountable for the losses sustained by the aggrieved party and must pay damages. The aggrieved party can also cancel the contract on account of breach. (Clark 2013)
Under section of Competition and Consumer Act 2010, when any commercial relationship exist amid two persons, then, the person who is carrying on trade and commerce should make sure that he must not be indulged into any action which is misleading/deceptive In Google Inc v ACCC (2013), it was held that any breach of section 18 imposes liabilities on the defaulting party in the form of composition and damages. (Richardson 2012)
Also, when there is some event which is outside the scope of the parties to the contract and on the happening of which the contract cannot be performed, then, the contract is said to be terminated on account of frustration Taylor v Caldwell (1863). The events which can be categorized as frustration are when the subject matter itself ceases to exist, when war occurs, death, incapacity, natural disaster etc. (Jaani 2016)
The laws are now applied to the given case scenarios.
Tom needs to hire a truck from Steve. He specifies that he needs a truck which can load ten tons of cargo. Based on the information received from Tom, Steve provided a truck on an assurance that it can carry twelve tones of load. Thus, Steve made a statement of fact which was not true and thus persuaded Tom to make a contract with him. Steve deceived and mislead Tom in trade and is thus in violation of section 18 of the Act and has misrepresented Tom by making false statements.
Now, when Steve was on holiday, then, in his absence Pamela used to give water to his garden. However, there is no exchange of promise that was made amid the parties. But, one day, Steve promises her to give his own car against the actions that are undertaken by Pamela. But, the promise that was made by Steve was against an act which was already performed by Pamela. So, the promise made by Steve was not a good consideration which is valid in law as it is against an act which is past in nature.
Danny and Steve make a contract under which Steve has to provide Danny a car. A valid contract was established amid the two. However, the car which is the main subject matter of the contract was already destroyed by some previous customer of Steve when the contract amid Steve and Danny was initiated. This fact was not within the knowledge of Steve.Thus, the contract cease to exist on account of frustration because the main subject matter of the contract, that is, the car was already destroyed and thus the contract is not capable to be performed in any situation.
Also, Steve negotiated contract terms with Cool It Aircon Ltd (Trisha). Steve received a draft contract from Cool It Aircon Ltd. However, he never signed the contract and put it aside. But, the contract was later signed by Steve under mistake of some other document and the same was faced to Cool It Aircon Ltd.
In such scenario, Steve never intended the acceptance that was sent by him under mistake and such acceptance has no value in law.
Steve has violated both common and statutory law and hence Tom can terminate the contract and sue for compensation and damages.
The actions of Pamela were not supported by good consideration and are thus not enforceable in law. So there is no contract amid Pamela and Steve.
Now, the main subject matter of the contract, that is, car was not in existence when the contract was made amid Steve and Danny. Thus, he contract is not valid on account of frustration and Danny cannot sue Steve for breach of contract.
Also, there is no contract amid Steve and Trisha and Trisha cannot enforce Steve to perform the contract as there is no legal intention that was present and the acceptance was communicated without any intention to abide by the same.
Brogden v Metropolitan Railway Co. (1877).
Clark J, 2013, Australian Constrict Law- formation, Retrieved on 12th August 2016 from https://www.australiancontractlaw.com/law/formation-agreement.html
Clark J, 2013, Terms of a contract, Retrieved on 16th August 2016 from < https://www.australiancontractlaw.com/law/scope-terms.html>.
Clark J, 2013, Consideration, Retrieved on 16th August 2016 from < https://www.australiancontractlaw.com/law/formation-consideration.html#considpast>.
Findlaw, 2016, how can contracts be discharged from further performance, Retrieved on 17th August 2016 from https://www.findlaw.com.au/articles/4551/how-can-contracts-be-discharged-from-further-perfo.aspx.
Google Inc v ACCC (2013).
Harrington v Taylor (1945)
Jaani, 2016, Termination by Frustration, Retrieved on 17th August 2016 from https://www.jaani.net/resources/law_notes/contracts/11_Termination_by_frustration.pdf
Powell v Lee (1908).
Richardson M, 2012, Before the High Court Why Policy Matters: Google Inc v Australian Competition and Consumer Commission Retrieved on 16th August 2016 from < https://sydney.edu.au/law/slr/slr_34/slr34_3/SLRv34no3Richardson.pdf>.
R v Clarke (1927).
Taylor v Caldwell (1863)