The Five Essential Elements of a Valid Contract

Whether Ben has a right to claim $100,000 from that Mojo Beverage.

The contract laws prevailing in Australia is concerned about the enforceability of promises under law, which was entered into by the parties by way of a freely consented bargain forming a legal relation between them. At its present form, the Australian Contract Law has deviated to a considerable extent from its initial English Common Law touch. An agreement to achieve the status of a valid contract needs to satisfy five essential elements, namely, an agreement, consideration for both the parties, capacity of both the parties to contract, the intention of the parties to create legal relationship and the certainty of the terms of the contract.

An agreement is created between two parties by way of an offer accompanied by an acceptance of that offer. The acceptance of an offer needs to be communicated by the offeree or by any person his behalf. However, in case of an offer made to the public an express communication of the acceptance is not mandatory, the offeree might accept the offer by acting upon the same. This principle has evolved with the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA 1. This can further be illustrated with the case of R v Clarke [1927] HCA 47. 

An offer can be extinguished by revocation of the same before the communication of the acceptance. In the case of Byrne v Van Tienhoven (1880) LR 5 CPD 344, the revocation is required to be communicated by the offeror or by any person on behalf of the offeror. However, an alteration in the terms of the offer results in the counter offer and an acceptance of the same forms a new contract. This can be illustrated by the with the case of Hyde v Wrench. Hyde v Wrench [1840] EWHC Ch J90. In the case of Dickinson v Dodds (1875) 2 Ch D 463, it has been held that the communication of the revocation is not necessarily to be conveyed by the offeree or a person acting on his behalf, the revocation communicated by a third party is also valid.

In the given situation, Mojo Beverages has placed an advertisement in a newspaper circulated in locally offering to pay $100,000 to any person who catches Lord Harry, a trout which they have tagged and released into the lake. This can be treated as an offer made to the public by applying the principle laid down in the case of R v Clarke [1927] HCA 47. The acceptance of the same can be effected by the offeree by simply acting upon the offer.

Offer and Acceptance in Contract Law

The offer has been communicated to the public and the same has made the public to show their willingness to act upon the same, as the people has gathered in the lake area with a view to catch Lord Harry. This shows the willingness of the public to be bound by the terms of the contract. In case, a person acting in the furtherance of the willingness catches the fish this will bind Mojo Beverages to the terms of the contract and they will be required to pay the consideration money to the person acting upon the offer. This can be supported with the case of Carlill v Carbolic Smoke Ball Company [1892] EWCA 1.

However, there was a rumour that has spread among the people in the lake area willing to act upon the offer that the money offered was $1,000 and the amount of $100,000 was an error in the advertisement. This has been confirmed by the Mojo Beverages by way of an announcement. This implies a counter offer as the alteration of the terms of the previous offer implies a counter offer. This can be illustrated with the case of Hyde v Wrench. Hyde v Wrench [1840] EWHC Ch J90. The person acting upon the terms of this counter offer binds himself with the terms of the counter offer.

Ben caught the fish after the revocation of the previous offer and the making of the counter offer. This can be implied as an acceptance of the counter offer but to imply the same Ben needs to be communicated with the revocation. Ben has been informed about the counter offer and the revocation of the previous offer from a stranger. This can treated as the effective revocation and an effective communication of the counter offer applying the principle laid down in the case of Dickinson v Dodds (1875) 2 Ch D 463. Hence, Ben will be entitled to the $1000 as he has acted in furtherance of the counter offer. 

Conclusion

Ben does not have a right to claim $100,000 from that Mojo Beverage. However, he may claim $1000.

Whether parties has any rights and liabilities in the light of the commercial interactions taken place between them. Whether these rights and liabilities also exists in case Livestock Brokers sent the fax on 14 June but because of a transmission error Dorper Sheep Sellers did not receive it.

The Postal Rule of Offer and Acceptance

An agreement is created between two parties by way of an offer accompanied by an acceptance of that offer. The acceptance of an offer needs to be communicated by the offeree or by any person his behalf. The same can be illustrated with the case of Clarke v The Crown [1927] WALawRp 12, (1927) 29 WALR 102. The acceptance of the offer is required to be unconditional and the offeree must make the acceptance with respect to the exact terms of the offer. The same can be illustrated with the case of Spencer’s Pictures Ltd v Cosens [1918] NSWStRp 1, (1918) 18 SR (NSW) 102. In case, the offeree accepts the offer with alterations in it, the same amounts to counter offer and the previous offer lapses. This can be illustrated with the case of Neale v Merrett [1930] WN 189. However, it has been held in the case of Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346, that mere enquiry does not amounts to counter offer.

The time within which an acceptance is required to be communicated is the time prescribed in the offer. In case the offer does not have any communication time stipulated in the offer, the an acceptance is needed to be effected within a reasonable time or before the revocation of the offer has been effected. In case the offer not been acceptance within reasonable time, the same can be construed to be rejected. This can be illustrated with the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52.

The mode of acceptance of an offer needs to in accordance with the method specified in the offer. In case there is no prescribed method of the acceptance in the offer, it can be accepted by any reasonable method. In case of an acceptance effected by post, the acceptance is complete when the acceptance has been posted by the offeree. The knowledge of the offeror is not relevant in such a case. This rule can be illustrated with the case of Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 93. 

In the given situation, on 1st June, Dorper Sheep Sellers sent a letter to Livestock Brokers, setting out the number of sheep for sale and the price per head. This can be regarded as the valid offer applying the postal rule of making an offer. It asked Livestock Brokers to reply within 14 days. This requires the them to accept the offer within 14 days as the same has been illustrated with the case of Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52.

Counteroffers and Their Binding Nature

Livestock Brokers sent a letter by reply dated 6 June, inquiring whether the sale could be financed on the ‘usual terms’. This can be viewed as an additional condition to the offer applying the rule contained in the case of Neale v Merrett [1930] WN 189, but the same cannot be treated as a counter offer. This is because the additional condition was communicated as an enquiry and not as an offer. This can be explained with the case of Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346.

However, on 14^th June, the offer has been accepted by the Livestock Brokers by sending a fax. This can be regarded as a valid acceptance and the same can be illustrated with the help of the postal rule. This makes the contract effective and the terms of the same binding upon the parties to the contract. Hence, the parties has rights and liabilities in the light of the commercial interactions taken place between them.

In case the transmission error in the fax Dorper Sheep Sellers did not receive the acceptance, the same can be construed as a valid acceptance as the knowledge of the offeror is not relevant in such a case. This rule can be illustrated with the case of Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 93.

Conclusion

The parties has rights and liabilities in the light of the commercial interactions taken place between them. In case the transmission error in the fax Dorper Sheep Sellers did not receive the acceptance, the same can be construed as a valid acceptance. 

Court Visited:

Downing Centre Court Complex

Judge Name:Court Location:

Liverpool Street Sydney

Date(s) of observation:

18.03.2019

Type(s) of proceedings observed:

Criminal Jurisdiction

Was the judge aware of this observation?

Unknown

1. How would you describe this judge’s ability to be neutral, principled and consistent?

The judge was considering both the sides of the proceeding and was not biased by any of the sides interest. He did not have any conflict of interest in the proceeding.

1. How would you describe this judge’s respect for people and their rights?

The Judge was providing equal chance, to everyone connected to the case, of being heard. The judge was not extending any disrespectful gesture towards the people.

1. How would you describe this judge’s skill at providing the participants a voice in the proceedings?

All the witnesses and the parties to the case were provided with a chance of being heard and the judge has not deprived the participants of the case of their rights ot present their sides in relation to the proceedings.

1. If you were to appear before this judge as a litigant, would you have confidence that this judge would treat you fairly? Why or why not?

Yes, this judge will treat me fairly as he is unbiased and is conversant about the procedure that is needed to be followed in a proceeding. He abides by the conduct that is required to be followed. He extends a fair chance to the person of being heard. 

References

Byrne v Van Tienhoven (1880) LR 5 CPD 344

Carlill v Carbolic Smoke Ball Company [1892] EWCA 1

Clarke v The Crown [1927] WALawRp 12, (1927) 29 WALR 102

Dickinson v Dodds (1875) 2 Ch D 463

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 52

Hyde v Wrench [1840] EWHC Ch J90

Neale v Merrett [1930] WN 189

R v Clarke [1927] HCA 47

Spencer’s Pictures Ltd v Cosens [1918] NSWStRp 1, (1918) 18 SR (NSW) 102

Stevenson, Jaques, & Co v McLean [1880] 5 QBD 346

Tallerman & Co Pty Ltd v Nathan’s Merchandise (1957) 98 CLR 93