Enactment Of Valid Contract And Liability Of Graphic Advertising Pty Ltd In Relation To Paying The Promised Increase In Salary Essay.

1.Frank, wishing to sell his car, put a sign in its window and parked it on the street outside his house. The sign said:
Car for Sale -- $2,000; Enquire at 3 Wood Street, Padstowing 0412 000 000

a. Bill walks by at 8:30 am and immediately calls Frank and offers him $1,600 for the car. Frank tells Bill he will think about it and let him know soon.

b. Mark drove by around 9:00 am and took a picture of the car and sign so he could show it to his daughter. That afternoon he posted a cheque for $1,950 with a note saying he would pick up the car on Friday at 6:00 pm.

c. John was walking his dog at around 10:00 am and saw the car and the sign. Using his mobile phone, he searches for Frank's contact details and then emails him: “I accept your offer of $2,000. I’ll bring cash Thursday evening and pick up the car”. John’s email was sent at 10:23 am.

d. Meanwhile at work, Tom, a work colleague, offers Frank $1,700 for the car. Frank promises him he’ll accept it if he doesn’t get any better offers by the weekend.

On Thursday whilst Frank was working from home, he received the letter and cheque from Mark and went to the bank and deposited the cheque. He then emailed Tom to say that he got a better offer. While sending the email, Frank noticed John’s email and read it. He wants to sell the car to John as he was the only person who met his price. With whom, if any, does Frank have an agreement? Explain your answer in relation to eachparty involved.

2.Advise Renee whether Graphic Advertising Pty Ltd is liable to pay her the promised increase in salary, and the back pay. 

Issue 1: Determining whom Frank has enacted an agreement with based on given case facts

1.Issue

The central issue is to determine with whom Frank has enacted an agreement based on the given case facts.

Rule

The two main aspects for the enactment of a valid agreement are the presence of lawful offer and acceptance with valid consideration. It is essential that the offeror should highlight valid offer to the offeree for the acceptance as highlighted in the verdict of Australian Woollen Mills v The Commonwealth (1954) 92CLR 424. Also, an acceptance would be termed as valid acceptance only when it has been communicated to the offeror within the given ambit of time or as per the instruction given by the offeror (Carter, 2012). No enforceable contract would be enacted between the parties when the valid acceptance for offer has not been communicated. It is noteworthy that where electronic mode of communication (mail, fax and so forth) is used for the negotiation of the contract then it is essential that acceptance for the offer would be enforceable on the offeror only when the mail has been opened by the offeror (Andrews, 2013). Also, it is imperative for an enforceable contract that when the offeror has received the valid acceptance for the object for which the offer has been made, then the offeror cannot reaccept another acceptance for the same offer (object) (McKendrick, 2013).

In case when the offeror has put an advertisement to sell their product or service then it is imperative to distinguish whether the advertisement would be categorised as invitation treat or offer.

Invitation to treat is also known as invitation to bargain in which the person who has posted an advertisement has invited the parties to bring their offers for the negotiation. In such cases, the person who is advertising is not bounded to sell their product even if the parties have made offers that fit the advertisement requirement. The verdict of Partridge v Crittenden [1968] 1 WLR 1204 is the evidence of this aspect (Gibson and Fraser, 2014). According to the judgement of this case, defendant who put the advertisement for the sale of protected birds in the newspaper was not contractually obliged to sell particular birds only. It means he would have the right to sell more goods than the person would actually have. In this scenario, the person who has put an advertisement has all the rights to do negotiation with the various offeror and can decide whom he is going to enter into legal relationship. According to the verdict announced in GB v Boots Cash Chemists Ltd [1953] case, the display of goods for sale would be categorised under invitation treat and not offer (Davenport and Parker, 2014). 

Rule: Presence of lawful offer and acceptance with valid consideration

Application

It is evident from the above facts that the sign put by Frank on the shop’s window to sell car for price $2,000 is an advertisement and also he invites parties to come up with offer and therefore, it can be said that the sign is invitation treat not offer.

• It can be seen that Bill has offered Frank a consideration price of $1,600 for the car. This offer has not been accepted by Frank because he has not given any acceptance for Bill’s offer. Therefore, no contract has been enacted between Bill and Frank.

• In second case, Mark has offered a price of $1,950 for the car and hence, has posted a cheque to the name of Frank. Further, it is evident that when Frank has received the offer of Mark then he went to the bank and has deposited the cheque. This is the indication of the aspect that Frank has accepted the offer of Mark and then only he has deposited the cheque to the bank. If Frank has not accepted the offer of Mark, then he must send back the cheque to Mark. Yes, it can be said that Frank has the right to reject the offer of Mark by sending the cheque back to Mark. This is because advertisement was invitation to treat and Frank has position to reject the offer of Mark. Therefore, the conclusion can be made that Frank and Mark have entered into an enforceable contract.

• John has sent an email to Frank regarding the advertisement that he is ready to pay $2,000 for car. It is apparent that Frank has not seen the mail before and already been entered into enforceable contract with Mark and therefore, the object for the contract has not been available. Hence, Frank cannot accept the offer of John and no contract would be formed between John and Frank.

• It is apparent that Frank has clearly stated to Tom that he would consider his offer of selling his car for $1,700 only when he would not get any better option. However, Frank has accepted the offer of Mark and enacted a contract with him. Therefore, no contract is enacted between Tom and Frank.

Conclusion

The conclusion can be drawn that Frank has valid contract only with Mark because he has accepted the offer of Mark by depositing the cheque in the bank.

2.Issue

The key issue is to opine if Renee with regards to liability of Graphic Advertising Pty Ltd in relation to paying the promised increase in salary.  In this context, the key question to deliberate is whether there is a valid contract between Renee and Graphic Advertising Pty Ltd with regards to salary increase. 

Rule

With regards to enactment of a valid contract, there are a few necessary conditions which ought to be satisfied (Taylor and Taylor, 2015).

• There needs to be a valid offer and valid acceptance which essentially leads to a valid agreement.
• Mutual consideration needs to be present for the contracting parties which need not be same.
• There has to be intention on the part of all the contracting parties to enter into a legal relation.
• The contracting parties should have the legal capacity to enact the contract.
• Mutual consent should be present on part of the contracting parties.

A key aspect of a valid contract as highlighted above is the presence of consideration for the contracting parties. A relevant case in this regard is Stilk v Myrick [1809) EWHC KB J58. The pivotal aspect that was indicated in the given case was that the duty of an individual under an existing contract cannot be highlighted as valid consideration for the enactment of a new contract (Paterson, Robertson and Duke, 2015). However, an opposite viewpoint was taken in the Williams v Roffey Bros & Nicholls (Contractors) Ltd [1989] EWCA Civ 5 where it was ruled that performance of pre-existing contractual obligation can be taken to constitute valid consideration provided the promisee is bestowed upon with some benefit. The following statement made by Glidewell LJ in context of the above case is relevant (Richard, 2013). 

“It is not in my view surprising that a principle enunciated in relation to the rigours of seafaring life during the Napoleonic wars should be subjected during the succeeding 180 years to a process of refinement and limitation in its application to the present day.”

Another relevant is Glasbrook Bros v Glamorgan County Council [1925] AC 270. In this particular case, a colliery manager asked for incremental police protection during a strike. Some additional security was provided but the Commissioner offered to provide any additional security only for charges which the manager agreed but later refused to pay. It was ruled that the police (plaintiff) went out of the way to render duty which was beyond that required as part of public service and therefore the defendant was ordered to pay the promised amount (Carter, 2012).

Application: The sign put by Frank on the shop’s window to sell a car was an advertisement and invitation to treat, not an offer

Application

The facts pertaining to the given situation need to be analysed in the light of the above law.  In the given situation, there is existence of a valid offer by Julius (representative of Graphic Advertising) since it is definite and directed towards Renee. Renee has granted acceptance to the offer whereby she would get an incremental pay of $ 150 more per week backdated from December 1.  Considering the existence of a valid offer and acceptance, it is apparent that there is a valid agreement. Also, taking note of the fact that the given transaction is commercial in nature and not a social or domestic agreement, hence it would be fair to assume that intention to form legal relation is present.  Besides, both parties have the legal capacity to enter into contracts with regards to raising the salary. Additionally, there is mutual consent on the part of both parties since there is no undue influence or duress. 

The critical question not relates to whether the fulfilment of pre-existing duty on part of Renee can be considered as valid consideration for enacting the contract for higher salary. To answer this question, the fact that needs to be looked into is that if Renee would have left at that time, then the company would have faced significant difficulty with regards to meeting the needs of the client. As a result, it is apparent that benefit is derived by the company by the decision on part of Renee to continue her job. Thereby, it would be fair to conclude that consideration also exists for both Renee and the company. Since, all the necessary conditions are fulfilled, hence it would be fair to conclude that there is a valid contract between Renee and the company with regards to salary hike.

Conclusion

Since there is a valid contract between Renee and the company, hence the company needs to pay Renee the promised incremental salary or else there would be breach of contract and Renee can potentially sue the company. 

References

Andrews, N. (2011) Contract Law 3rd ed. Cambridge: Cambridge University Press.

Carter, J. (2012) Contract Act in Australia. 3rd ed. Sydney: LexisNexis Publications.

Davenport, S. and Parker, D. (2014)  Business and Law in Australia. 2nd ed.. Sydney:LexisNexis Publications.

Gibson, A. and Fraser, D. (2014) Business Law. 8th ed. Sydney: Pearson Publications

McKendrick, E.  (2013) Contract Law 5th ed. Basingstoke:Palgrave.

Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law 5th ed. Sydney: Thomson Reuters.   

Richard, S. (2013) The Modern Law of Contract. 5th ed. London: Cavendish.

Taylor, R. and Taylor, D. (2015) Contract Law. 5th ed. London: Oxford University Press.