Contract Law 1510 Assignment PDF

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Co n t r a c t L a w L a w1 5 1 0

CONT RACTLAWASSI GNMENT LAW1 5 1 0

SUBMITTED BY

ARBAB ZEESHAN

SUBMITTED TO

ANDREW STEWART

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Co n t r a c t L a w L a w1 5 1 0

Introduction The purpose of this assignment is to find out whether Cho and Mia have a binding contract and whether emails can form a contract between two parties, what Electronic Transaction Act 2000 says about email acceptance. The second question of an assignment is to find out whether Ken conversation with his daughter Mia, offering her to pay for additional study costs and an extra $ 10,000 for starting her own business is a binding contract between Ken & Mia.

Background Cho was developing a new app and one of the technology companies was interested in licensing and distributing her app. Mia an old school friend agreed to develop a logo for her app. Cho asked Mia to send her the hi-res logo design within a week and once she received the logo design she will ask her mum’s law firm to come up with the formal contract. They both agreed if Mia develops a logo for an app within a week, Cho will give her 10% income from an app’s profits.

Issues 1. Did Cho and Mia enter a binding contract for the development of an app logo? 2. Were the terms of any contract agreed upon? 3. Can email correspondence result in a binding contract? 4. Was the contract certain and complete? 5. Did Ken and Mia have a binding contract? 6. Can family members enter into a legally binding contract without intention? 7. Does rebuttal presumption play any role in a family contract?

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Cho Arguments

My email on 10 August clearly stated that Mia should email me hi-res version of the logo within one week and once I get that I will ask my mum’s law firm to draw up a formal contract, meant we will have a binding agreement once we are done with the design logo and formal contract will follow, and it is equivalent to phrases such as “subject to contract”. I would like to quote Dixon CJ, McTiernan, and Kitto JJ in Master V Cameron (1954) 91 CLR 353, 362-363.

This being the natural meaning of “subject to contract”, “subject to the preparation of a formal contract”, and expressions of similar import, it has been recognized throughout the cases on the topic that such words prima facie create an overriding condition, so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract.1

Mia Arguments I have a legal contract with Cho as our contract fulfills common law requirements for a binding contract. Cho made an offer to make a logo design within one weekend I accepted the offer for an income of a minimum of 10 % of total profit from an app. Intention and consideration to form a binding contract were clear as the contract would benefit both of us. The terms of the contract were expressly agreed between us. I replied to her email on time and finished the project within the designated time.

1 Tirnemann v Kaza Investments Pty Ltd [2011] SASCFC 77.12

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Co n t r a c t L a w L a w1 5 1 0 Cho Argument I never received an email in my inbox, I did not read that email and I was not aware that an email was in the junk folder. It was her responsibility to inform me that she won’t be reachable through phone or email. I tried calling her and sent her text messages but I did not get any reply from her. I simply couldn’t risk my career and business by waiting for her reply. We did not have any formal contract; we did not sign any contract. If I would have received her email into my mailbox than Mia could argue I did not read her email or I deliberately ignore to read her email. As per Electronic Transaction Act 2000 13A, the time of receipt of electronic communication is when the electronic communication becomes capable of being retrieved by the addressee at an electronic address designated by the addressee or the addressee has become aware that the electronic communication has been sent to that address. I was never informed by Mia through text or call that she sent me an email.2 I would like to quote from Hill, Simone W. B - "Email Contracts - When is the Contract Formed?" [2001] JlLawInfoSci 4; (2001) 12(1) Journal of Law, Information and Science 46, which states receipt of an email will occur when the email is received in addressee’s electronic mailbox. For the purposes of Commonwealth laws, the Act addresses the time of dispatch (s 14(1) and (2)) and time of receipt (s 14(3) and (4)) of electronic communications. Because the crucial time in the formation of contracts is acceptance, and the general communication rule requires actual communication of that acceptance (and we argue that this rule applies to email acceptance), the receipt provisions are most relevant for our purposes. The time of receipt is deemed to occur ‘when the electronic communication enters [the] information system [designated by the 2 Electronic Transactions Act 2000 (14a).

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Co n t r a c t L a w L a w1 5 1 0 addressee]’ (s 14(3)). The essence of the section means that receipt would occur in the case of email when the message enters the addressee’s electronic mailbox. Hence the question of when a communication is received is answered under the Act as receipt at the addressee’s mailbox3 Mia Argument It was Cho responsibility to check her junk email and she cannot pretend that she did not receive my email. An email is an instantaneous form of communication and if a person deliberately ignores an email or decides not to read it or himself or his employee’s failure to act like a normal businesslike manner, which in normal circumstances any email or correspondence would be acknowledged and read promptly on time, an email received in their inbox will be considered to be received and read.4

Advise Mia we have gone through all the arguments and counter-arguments that Cho might come up in her defense. Your case fulfills the essential terms of a contract. Cho gave you an offer to make a logo for her app and you accepted her offer by designing a logo for an income of a minimum of 10% from the total profit from an app.The intention to enter into a contract was clear between both of you from correspondence. Consideration was given in the form of a minimum of 10% of income from the app profits. The terms of the contract were clear and agreed between you and Cho. Based on all the facts that we gone through I concluded that, Mia you have a binding

3 Journal of Law, Information and Science (Web Page) http://www5.austlii.edu.au/au/journals/JlLawInfoSci/2001/4.html#fn15 4Tenas Steamship Co Ltd v Owners of the Motor Vessel ‘Brimnes’ (The Brimnes) [1974] EWCA Civ 15; [1974] 3 All ER 88 per Megaw LJ at 113.

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Co n t r a c t L a w L a w1 5 1 0 contract with Cho, the first of three categories of a contract referred to in Master V Cameron (1954) 91 CLR 353 at 360 is identified in your circumstances. Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.5 In a case Lucke v Cleary, the court held that this was an agreement that fell within the first class in Masters v Cameron. It was not an agreement to agree at some time in the future. There were no further matters to be agreed. All that had to occur was that the deed had to be prepared consistently with the terms of the settlement agreement.6 Another example where an unfulfilled requirement for the execution of a deed as part of a settlement agreement was held not to be an obstacle to the court finding the existence of a binding contract is Needlework Warehouse Pty Ltd v Chansonette Pty Ltd (2006) 226 ALR 252.

5 Stirnemann v Kaza Investments [2011] SASCFC 77. 6 Lucke v Cleary (2011) 111 SASR 134. 7

Co n t r a c t L a w L a w1 5 1 0 Advise to Ken Since there was no intention on your part to have a formal legal binding contract with your daughter Mia, therefore you do not have a contract with Mia. To have a binding contract both the parties should have a clear intention to enter into a legally binding contract. There is a presumption of no intention to create legal relations for family, social or domestic agreements. For example, if parents decided to give their daughter an allowance on the condition she keeps her grades up, it is unlikely this will be regarded as a contractual arrangement7

In a leading contract law case Balfour v Balfour [1919] 2 KB 571, it held that there is a rebuttable presumption when it comes to intention to create a legally binding contract among family members.8 According to Lod Justice Atkin, the agreement was not enforceable because the parties did not intend to create legal relations. This is so even though there may have been a consideration. 9 Lod Justice Danckwerts held there was no intention here; this was ‘one of those family arrangements which depend on the good faith of the promises which are made and are not intended to be rigid, binding agreements.’ 10

7Contracts – intention to enter into a legally enforceable relationship (Web Page) h t t p : / / www. c r a d d o c k . c o m. a u / Do c u me n t / Co n t r a c t s + e 2 8 0 9 3 +i n t e n t i o n + t o + e n t e r + i n t o + a + l e g a l l y + e n f o r c e a b l e +r e l a t i o n s h i p . a s p x

8Balfour V Balfour (Web Page) https://en.wikipedia.org/wiki/Balfour_v_Balfour

9Balfour v Balfour [1919] 2 KB 571, 574-580. 10Jones v Padavatton [1968] 2 All ER 616 7

Co n t r a c t L a w L a w1 5 1 0 Fenton Atkinson LJ in his judgment in a case of Jones v Padavatton states, when there is no intention on part of the parties to enter into a legally binding contract, then in such circumstances no contract exists between them. Just a mutual promise is not enough to have a contract. 11

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