Background Information

Whether a contract has formed between Adventure Tours and Jared?

In order to form a legally binding contract, its parties have to comply with certain elements. The first element is an offer; in Gibson v Manchester City Council case, it was held that an offer is made to do or not do a certain act which has the capability to enforce the offeror into its terms and it must have the authority to bind the offeror by the contractual terms. Generally, advertisement posted by parties did not constitute as a valid offer as given in the case of Carlill v Carbolic Smoke Ball Co. The advertisement were considered as an invitation to treat which are different from an offer since the acceptance of an invitation to treat did not form a valid contract between parties. However, in this case, the court provided that the advertisement posted by the defendant is not a mere sales puff since it was a unilateral offer which has the authority to be accepted with communication of the acceptance. The second element is acceptance of the party. Without a valid acceptance, a contractual relationship is not constructed between the parties. The acceptance of the parties must be certain as well. It must match the terms of the offer which is given by the offeror.

In the case of Brinkibon Ltd v Stahag Stahl, the court provided an essential element of the acceptance. It was held that the communication must be accepted by the party before it is effective. Moreover, the silence of a party is not considered as a valid contract to form a contractual relationship between parties as given in Felthouse v Bindley case. In this case, a nephew wanted to purchase the horse from his uncle, and he said to him that if he did not hear from him by the weekend that he will consider that he has the right to purchase the horse. The issue arises whether a valid contract has constructed between the parties. The court provided that no contract has been formed since silence is not considered as a valid acceptance.

In the given case study, an advertisement was posted by Meg in order to find a new tour guide on behalf of Adventure Tours. This advertisement was not a unilateral offer, and it was an invitation to treat which did not have the authority to bind the parties into legal relationship (Carlill v Carbolic Smoke Ball Co). Jared saw the advertisement, and he wanted the job. Since he lacked the experience in conducting tours in Finland, Meg was a bit concerned. She told Jared that they would try it for a bit to see whether he is a good fit for the organisation. She also provided that she might cancel the contract if she did not think that Jared is suitable for the job. Moreover, she told Jared that her lawyer would send him the employment contract. She told him that if she did not hear from her by tomorrow, then she will consider that Jared has accepted the offer. As discussed in Felthouse v Bindley case, silence did not amount for a valid acceptance; therefore, the silence of Jared did not form a valid contract between the parties.

Elements of a Valid Contract

Conclusion

A valid contract has not formed between Adventure Tours and Jared because silence did not consider as valid acceptance.

Whether a legally binding contract has formed between Adventure Tours and Trish?

A valid contract can be oral or written. Both oral and written contract has the authority to legally bind their parties into contractual obligations based on which they can enforce the contractual terms on each other. In both of these contracts, the consideration is an essential element of a contract which must be present while forming of a valid contract. The consideration is referred to the bargain of the contract. It means that one party of the contract gains and the other party suffered a detriment. There are certain elements of a contract. A valid consideration which forms a legal relationship between parties must be some value in the eyes of the law (Australian Woollen Mills Pty Ltd v Commonwealth). The court provided that a valid consideration excludes factors such as gaming, betting, love, and affection between parties and others. The consideration given in a contract must be sufficient; however, it does not necessary to be adequate as provided in Woolworths Ltd v Kelly case.

Another key element of a valid consideration is that it must not be past. The court provided in the case of Roscorla v Thomas. that a consideration which is past did not form a valid contract between parties. In this case, a horse was purchased by Roscorla from Thomas. After selling the horse, Thomas told Roscorla that the hose is in a sound condition. It was later found out by Roscorla that the horse was not a sound condition. The horse was ferocious, and it had a very bad temper. Roscorla filed a suit regarding the breach of the contract against Thomas. The court provided that the claimant did not have the right to file a suit against the defendant because the statement that the horse is sound was made after completion of the sale. Since the promise was made after the sale, the claimant did not provide consideration for the same; therefore, the claim is not valid. An exception was given in Lampleigh v Brathwait case. In this case, the defendant asked the plaintiff to get the pardon of the king, and after receiving the same, he promised to pay £100, however, he never did pay. The court provided that it was a past consideration, however, the original request of the defendant contained an implied promise to pay for the efforts of the plaintiff based on which it is valid. Certainty of the terms is another key element which must be present in a contract. It means that all the terms of the contract must be certain and no ambiguity should exist.

Contract Analysis for Jared

In the given case study, Meg asked Trish to distribute promotional flyers in the local area. Meg told Trish that she would be good to her if she completes this work. After completing the work, Trish demanded money from Meg. An oral agreement was formed between the parties regarding the completion of the job. However, the parties did not agree for consideration, and Trish told Meg that this work is no problem. After completing the work, the consideration is demanded by Trish that is considered as a past consideration which is not considered as valid by the court (Roscorla v Thomas). Moreover, the element of certainty was missing as well since the parties did not decide how much will Meg pay to Trish after completion of this job. However, as per the exception given in Lampleigh v Brathwait case, the request made by Meg contained an implied promise since she told Trish that she would be good to her. She agreed to pay $20 for her efforts after the trouble which Trish goes through, thus, Trish has the right to demand the money from Meg based on the contract formed between the parties.

Conclusion

A valid contract has formed between Adventure Tours, and Trish and Trish can demand $20 from Meg.

Whether a legally binding contract has formed between Adventure Tours and Jane?

While forming a legally binding contract between parties, it is important that all the elements of the contract are present between the parties. The offeree must accept the offer given by the party within a reasonable time. The acceptance must match the terms of the offer or else a counter offer is formed which terminates the original offer. After formation of a counter offer, the parties did not have the right to accept the original offer. The court provided in the case of Latec Finance Pty Ltd v Knight that acceptance is considered as valid if it is communicated to the offeror while the offer is effective. An acceptance which is communicated after the offer become ineffective did not count. The offeror must receive the acceptance of the party before the offer becomes ineffective.

Moreover, the element of intention is also necessary while forming a valid contract between parties. It provides that both the parties must have the intention to bind themselves by the contractual terms while giving the offer and acceptance. In case the intention of the parties is not valid, or the intention is given based on external influence, then it is not considered as valid a contract did not form between the parties. In Todd v Nicol case, the court provided that the agreements which are formed between the parties in social or domestic settings are not considered as legally enforceable. The court provided that it is presumed that the parties did not have the intention to bound each other by the terms of the contract in social settings.

Contract Analysis for Trish

In the given case study, Meg and Jane are friends since they knew each other from the book club. Jane told Meg that the offer of Adventure Tours is a bit expensive, and she asked for a discount of 25 percent. A counter offer was given by Meg to Jane when she told her that she could give her ‘mate’s rate’ which includes a discount of 15 percent. She also specified various details regarding the trip which includes accommodations and others. Both the parties have the intention to bound a legal contract, thus, the element of intention was present (Todd v Nicol). After deciding on all the terms, Jane told Meg that she would make the payment after completing her shopping. When Jane later check out the website, she found out that all the tickets are sold out, and she cannot go on the trip. The acceptance of Jane was to be communicated by making the payments on the website as specified by Meg. However, she failed to communicate her acceptance within appropriate time due to which all the tickets were sold out (Latec Finance Pty Ltd v Knight). Since a valid acceptance is not present in the case, a legally binding contract has not formed between Adventure Tours and Jane based on which she cannot take legal action against the company for failing to provide her the tickets.

Conclusion

A valid contract has not formed between Adventure Tours and Jane since the acceptance was not communicated by Jane before the offer become ineffective.

Whether a valid contract has formed between Adventure Tours and Callie?

The offer made by the offeror for a contract must be certain which mean that ambiguity must not be present in terms of the offer. The acceptance given by the party must also be certain, and it must not contradict with the terms of the offer. Therefore, the certainty in the terms is a key element while forming a contract between parties. As discussed above, the consideration of a contract is referred to the bargain of the contract. A valid consideration requires that the gain of a party must be the detriment of another. When a party agrees to do something for specific payment, then it is considered as the consideration for the contract. The court provided in the case of Stilk v Myrick. that an existing contractual duty is not considered as a valid consideration to for a legally binding contract between parties. In order to introduce or demand “new consideration”, the promisee has to give up something new as well. The party cannot demand extra consideration for an already exist promise, and the introduction of new promise is required to demand more consideration. For example, if A agrees to paint the house of B for $50 and A demands extra $20 from B for completing the work, then B did not have to make the payment. Therefore, the consideration for an existing contractual duty to do an act is only valid if the party does before their existing duty given in the contract as given in the case of Hartley v Ponsonby.

Contract Analysis for Jane

In the given case study, Callie called the office of Adventure Tours, and she was redirected to their website in which the offer for the trip to Finland was given. It was clearly specified in the offer that parties have to make a payment of $2996 in which all accommodations are included. Callie made the payment, and a contract is formed, however, the next day, an email was sent in which an additional $500 was demanded for providing same services. As per the element of certainty, the terms of the offer must be certain. This element is violated by the company by demanding an additional $500 from Callie. Moreover, a contractual obligation already exists between parties regarding the trip which the company has to provide at a price of $2996, therefore, it cannot demand additional $500 from Callie since the company is not providing any additional facilities or services to Callie (Stilk v Myrick). Moreover, as discussed in Hartley v Ponsonby case, the parties are required to go beyond existing duty in order to consider as existing contractual duty as the consideration. Since the duty of Adventure Tours did not exist beyond the existing obligation, it did not have the authority to demand addition $500. Since Callie has already paid the amount, she can recover it back from the company.

Conclusion

A contract has formed between Adventure Tours and Callie, however, the company cannot demand an additional $500 based on which Callie can recover the paid amount.

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Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424

Brinkibon Ltd v Stahag Stahl [1983] 2 AC 34

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Felthouse v Bindley (1862) 11 CBNS 869

Gibson v Manchester City Council [1979] 1 WLR 294

Hartley v Ponsonby (1857) 7 El & Bl 872

Lampleigh v Brathwait (1616) Hob 105

Latec Finance Pty Ltd v Knight [1969] 2 NSWR 79

Roscorla v Thomas (1842) 3 QB 234

Stilk v Myrick (1809) 2 Camp 317

Todd v Nicol [1957] SASR 72

Woolworths Ltd v Kelly (1991) 22 NSWLR 189