Contract tute 1 Question 3 PDF

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Download Contract tute 1 Question 3 PDF

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LAW251

Tutorial assignment 1 (week 3)

467522

Parties Plaintiff - Ambergris

Defendant- KIA

Issue

Can the order form for the sale of the Evante be considered void due to uncertainty?

Rule

A contract is void for uncertainty if it is incomplete in terms of its significant and essential terms not having been agreed upon; Thorby v Goldberg1

Application

KIA- Defendant

Completeness

The order form could be considered uncertain due to its incompleteness, it lacks the essential terms that have not been agreed on; Australian Goldfields NL v Northern Australian Diamonds2. The essential terms include the price, the parties and the subject matter of the contract; Hall v Busst3. KIA would argue even though the parties have agreed on the process, the price and the description of the contract has been agreed upon, therefore, rendering the contract void.

1 Thorby v Goldberg (1964) 112 CLR 597, 607. 2 Australian Goldfields NL v Northern Australian Diamonds (2009) 40 WAR 191,199. 3 Hall v Busst (1960) 104 CLR 206,222.

LAW251

Tutorial assignment 1 (week 3)

467522

Instead KIA can argue that the order form is an expression for an agreement to agree. As the case of Masters v Cameron4 states the term “subject to” can be recognised as what is agreed upon and could be regarded as a basis for the future contract and therefore not a binding contract. The court in the case above found the contract to be unenforceable as the contract was not in is final form. The clause “subject to contract” illustrated that the parties lacked an intention to be immediately bound.

Similarly, KIA would argue that the order form was not a contract in its final form and it was a form agreed as to a future contract for the sale of the Evante. Furthermore, KIA can argue that the term “subject to” indicates that Mr Ambergris had no “intention to be bound immediately” for the purchase of the car because of the ambiguity in the wording; Masters v Cameron.5

Mr Ambergris- Plaintiff

Mr Ambergris would argue that the order form is not uncertain and therefore cannot be void. KIA was under a contract to provide the vehicle to him.

Parties intention to be bound

In Upper Hunter County Council v Australian Chilling and Freezing Co Ltd 6, Barwick CJ stated a contract cannot be deemed uncertain as long as it is capable of meaning and it further depends on the parties’ intention to be bound. Mr Ambergris could argue the email sent by the local KIA dealer which states “noting your order of the first Evante allocated at our dealership” could be considered an intention to carry out the contract as the dealership acknowledges that the first Evante car would be sold to Mr Ambergris. Furthermore, in regard to Mr Ambergris’s intention he would argue that the action of handing a 25% deposit and the signing of the order form shows his genuine intention to purchase the car. 4 Masters v Cameron (1954) 91 CLR 353. 5 Ibid. 6 Upper Hunter County Council v Australian Chilling and Freezing Co Ltd (1968) 63 CLR 429, 436.

LAW251

Tutorial assignment 1 (week 3)

467522

Severance

Moreover, the courts would be reluctant to void commercial contracts for uncertainty; Barbudev v Eurocom Cable Management Bulgaria EOOD 7, instead the courts would severe the uncertain provision. In this case the term ‘price’ where it is capable of being separated with regards to the ‘intention of the parties to be gathered from the instrument as a whole’ as stated in Life Insurance Company of Australia Pty Limited v Philips 8. Therefore, it can be established that Mr Ambergris would be likely to argue that if the term “subject to price” is uncertain, the court can severe that term and contract could still be enforceable. Thereby, resulting in KIA being under a contract to provide the vehicle.

KIA’s Rebuttable

Additionally, KIA could rebut the argument regarding the severance of the term in “subject to price” because the dealership may argue that price is an essential term in the contract as stated in the case of Hall9. Further, KIA may argue that the term ‘price’ is so essential to the contract as whole that it should be void due to its uncertainty. If severance of the essential term occurs, it would alter the nature of the contract as a whole; McFarlane v Daniel10.

Conclusion

7 Barbudev v Eurocom Cable Management Bulgaria EOOD (2012) EWCA Civ 548,31. 8 Life Insurance Company of Australia Pty Limited v Philips (1925) 36 CLR 60,72. 9 Above n 3. 10 McFarlane v Daniel (1938) 38 SR (NSW) 337,345.

LAW251

Tutorial assignment 1 (week 3)

467522

In summary, KIA is likely to succeed in the argument. They would argue that the terms of the order form were uncertain due to its lack of completeness because the form does not include an essential term of a contract, price....