8397-sample - Week 7 Introduction to Contract Law •...

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Week 7 Introduction to Contract Law CONTRACT: o An AGREEMENT between TWO OR MORE PARTIES giving rise to LEGAL OBLIGATIONS which are enforced or recognised by law CONTRACT vary in complexity and size: o Can range from buying a newspaper, building a house, getting a bank loan o Different rules apply, depending on types of contract Can be wholly in writing, partly written and partly oral or wholly oral Can be divided into SIMPLE CONTRACTS and FORMAL CONTRACTS (contracts under seal) o Contracts under seal = DEED and must be in WRITING, SGINED, SEALED and DELIVERED o All other contracts are called SIMPLE CONTRACTS Sources of Australian Contract Law Common law (Judge-made law found in UK and Australian Legal cases) Statutory Law (i.e ACL, Sale of Goods Act) Important Contract Law Principles FREEDOM OF CONTRACT (gradual erosion by legislation, but still the general rule) o Has its roots in the individualistic and self-reliant ethic prevailing in 19 th century England PACTA SUNT SERVANDA (agreements are to be kept) o Courts are willing to imply terms into contracts and seek for meaning when parties have not made clear their intentions COURTS ADOPT AN OBJECTIVE APPROACH TO SEARCH FOR INTENTIONS o Intention ascertained from communication between parties, understood in the light of the context and surrounding circumstances o Not the role of courts to examine inmost states of minds of the parties Essential Elements of a Contract Parties must have INTENTION to create legal relations Must reach AGREEMENT Agreement must be supported by CONSIDERATION Parties’ CONSENT must be genuine Contract must be LEGAL and possible Agreement must be in necessary LEGAL FORM Agreement Agreement means a meeting of minds on essential terms needed for a workable transaction: o i.e in a sale contract, there must be an agreement on the thing sold and price Traditional approach is to look at NEGOTIATIONS that have occurred to see if one party has made an offer which the other party has accepted If preceding negotiations are COMPLEX and PROTRACTED, the courts will see if the parties’ conduct show a tacit understanding or agreement
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Agreement (Offer) OFFER: o Proposal by one party to enter into a legally binding contract with another (without further discussion/negotiation) o May be oral, in writing or implied by conduct Requirements for valid offer: o Must be PROMISSORY in nature o Sufficiently complete (contain essential terms) o Intended to result in a contract if accepted o Addressed to a particular person or identified group of persons, or to world at large (Carlill v Carbolic Smoke Ball Co) o The person making the offer is called the OFFEROR and the person to whom it is made is called the OFFEREE Following are not offers, though can be mistaken for one: o INVITATION TO TREAT (i.e INVITATION TO MAKE OFFERS). EXAMPLES: § Depends on the wording of letter (Gibson v Manchester City Council) § Advertisements § Catalogue (Grainger v Gough) §
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