LAWS104 assignment - Grade: CR PDF

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Second assessment...

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Transaction 1 Issue 1. Whether Tony’s promise an option or gratuitous promise? 2. Whether Tony is bound to keep his offer open given that Adasm (council) has not given consideration for that promise in the absence of an option contract? 3. Can revocation take place at any time and was the revocation communicated? Law 1. In Dickinson v Dodds justice Mellish stated that “if the rule of law is that an offer is to sell property and can be withdrawn at any time, and it is dependent on the acceptance of the offeree then that is mere nudum pactum”. 1 Fundamentally a bare or naked offer that lacks legal enforceability. There needs to be consideration and the offeror in some way convey directly or indirectly to the offeree that they had changed their mind. 2. Goldsbrough Mort v Quinn,2 where revocation has to occur prior to acceptance unless in an option, where one pays to keep it open. If the offer is revoked when there is an option then damages may arise and revocation must be communicated directly to the offeror. Otherwise a gratuitous promise. 3. In the issue of revocation Routledge v Grant3 examines to withdraw from an offer within the same timescale of the other accepting the offer, they cannot be contractually bound. The court held an offer can be withdrawn within the timescale without any liability incurring as one party cannot be bound without the other. 4.

Financings Ltd v Stimson4 is another authority where an offeror must communicate an offer to offeree.

1 Dickinson v Dodds (1876) 2 Ch 463, 474. 2 Goldsbrough Mort & Co Ltd v Quinn (HCA 1910). 3 Routledge v Grant (1828) 4 BING 653. 4 Financings Ltd v Stimson [1962] 3 All ER 386.

Application 1. In this circumstance, we can apply the case of Dickinson v Dodds,5 as Tony’s promise to keep the offer for a minibus open for one week so that Adam can get approval from council regarding the price. Here there’s no consideration for this promise by Adam to keep the offer open, so not an option contract. After two days Adam noticed on Tony’s website that the minibus was ‘sold’, pursuant to Dickinson v Dodds6 revocation or changing their mind regards to the contract has to be conveyed directly or indirectly. Adam was aware of the revocation when he saw the minibus being sold on the website. 2. In an option contract revocation must be communicated and damages may arise. In the absence of an option contract pursuant to Goldsbrough Mort v Quinn7 revocation has to occur prior to acceptance. Adam accepted the offer after noticing the minibus sold to someone else on the website, thus not a valid acceptance. 3. Tony’s revocation after two days of one week time allowance is valid, in Routledge v Grant8 case, an offeror can revoke an offer at any time. Thus a valid revocation. 4. Financings Ltd v Stimson9, the court held that an offeror must communicate an offer to the offeree. Here Tony communicated the offer to Adam however due to lack of consideration the offer lapsed. Conclusion 1. It is deemed that the offer to be kept open by Adam or council lacked consideration, thus no option contract. 2. Revocation was valid as it occurred prior to Adam accepting the offer. 5 Dickinson v Dodds (1876) 2 Ch 463. 6 Ibid. 7 Goldsbrough Mort & Co Ltd v Quinn (HCA 1910). 8 Routledge v Grant (1828) 4 BING 653. 9 Financings Ltd v Stimson [1962] 3 All ER 386.

3. Within two days of the whole one week revocation took place, Tony could revoke the offer at any time within the one week. 4. Conclusively, a valid offer that was communicated by Tony to Adam however lacked consideration hence no option contract. Thus Adam or council is not entitled to the minibus. Transaction 2 Issue 1. Is there a clear intention by both parties to be bound by the ‘heads of agreement’. 2. Whether Betty and Zac’s preliminary agreement is a binding contract, being the final contract. Law 1. There are three categories to consider when determining a preliminary contract being the final contract, from Masters v Cameron.10 Parties agreed to bound immediately but details are finalised later, secondly, bound immediately but no performance until next contract is signed. Lastly, there is no contract but possibly later if entered into an agreement. Application 1. Betty agreed with Zac and typed up the main terms under ‘heads of agreement’. The first category is not negated here where the oral agreement bound them immediately. 2. There is nothing in this case to negate the second category . It is not arguable that the parties intend that the clauses are to have no effect until such a document is executed or performance is suspended until a time.

10 Masters v Cameron [1954] 91 CLR 353.

3. The third category is evident where Betty and Zac agreed through a handshake that they will give the preliminary document for the lawyer to finish it. Conclusion In this case Betty or the council’s intention to bound with Zac the manager of Zac Cleaners Pty Ltd is negated on the third category of Masters v Cameron11, where they agreed to execute the preliminary agreement into a formal contract. Transaction 3 Issue Whether Dick finishing the renovations in time were part of an existing duty, if not is Charlie liable to pay the extra amount. Law The pre-existing legal duty rule is that performance of an existing contractual obligation will not be good consideration unless some additional benefit is conferred. Pursuant to Williams v Roffey12 case, there needs to be a practical benefit by offeror and it needs to be proven. It is good consideration when the offeror obtains a benefit or obviates a disbenefit and the offeree’s promise is not given as a result of offeror’s economic duress or fraud. Musumeci v Winadell13, the court held that there needs to be a practical benefit or detriment to the offeror and that benefit needs to outweigh the benefit of another remedy. Wigan v Edwards14 case examines how performance of an existing duty will be good consideration where there is a bona fide grievance or if there are additional risks. Also there needs be a consideration for the new contract or agreement. 11 Ibid. 12 Williams v Roffey Bros and Nicholls (Contractors) (1990) 1 All ER 512. 13 Musumeci v Winadell Pty Ltd (1994). 14 Wigan v Edwards (1974) 1 ALR 497.

Application Similar to Williams v Roffey15, Charlie entered into a contract with Dick for the supply of goods and services in return of $1.25 million. There was doubt in Dick finishing the renovations due to financial problems and for this Charlie promised to pay an extra $250,000 to finish the renovations on time before the jubilee celebrations being one of the main terms of the contract. As a result the renovations were finished on time and Charlie benefited here. Due to the benefit to the council, the consideration is good and not part of a pre-existing legal duty. Two new rules were added in Musumeci v Winadell16, which are evident here as Charlie didn’t promise Dick under duress, fraud, undue influence or unconscionable conduct nor any unfair pressure. Also the benefit outweighs the benefit of any another remedy. Unlike in Wigan v Edwards17 case, the consideration was $250,000 in order to finish the work on time which Dick did. Conclusion Therefore, Charlie is liable to pay the extra amount of $250,000 to Dick based on the rules on pre-existing duty and practical benefit. Transaction 4 Issue Whether Daisy or council and Feel the Grains (FTG) transaction is a commercial contractual agreement or an administrative arrangement involving the implementation of policy or program. If commercial contract, is there an intention to be legally bound by Daisy to FTG and vice versa. If there is intention was the consideration sufficient. Law 15 Williams v Roffey Bros and Nicholls (Contractors) (1990) 1 All ER 512. 16 Musumeci v Winadell Pty Ltd (1994). 17 Wigan v Edwards (1974) 1 ALR 497.

The objective test is, has the party manifested or shown to manifest an intention to be legally bound, not whether it actually had the intention to be so. In Merritt v Merritt18 it was discussed that the court is not interested in finding the intention rather it looks at whether the reasonable person in that agreement would intend to be binding. The presumption in agreements with government is that in political and administration settings there’s no contract except when the government is entering into a commercial transaction expressed in contractual language. This was discussed in Australian Woollen v Commonwealth19, the way to distinguish statements from policy or requests which are not binding is through three features. First, there is limited provisions, second there is little detail in the agreement or program and lastly there is a lack of fixed price. In Administration of PNG v Leahy20, it was discovered that the Administration of Agriculture to exterminate ticks on Leahy’s property was just an assistance which failed to completely exterminate. The court held that the Administration did not enter into a contract, as it was providing gratuitous assistance to execute a policy of exterminating ticks which was just a social service. Application In Daisy and FTG’s transaction there is no evidence of manifestation by both parties to be legally bound. The presumption is upheld in this circumstance as it clearly stated that Daisy is helping FTG under the ExVerminate program. The council was just giving effect to that program through vermin eradication when it agreed to help FTG. There is no commercial interest and no fall back to a legislation to make payments by council. The program was invoked by Daisy who was reprimanded later due to lack of authority to obligate the council into any expenditure. The local tyre recycling plant acting on the request of the advertisement

18 Merritt v Merritt [1970] EWCA Civ 6. 19 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424. 20 Administration of Papua New Guinea v Leahy (1961) 105 CLR 6.

made on the newspaper is just an invitation to treat lacking consideration which was retracted later.21 Conclusion No contract as it’s a social service which in its contractual nature has no basis to have a legal relationship. The local tyre company cannot claim damages from the council as the targets are not supported by consideration plus it is not a commercial agreement in nature.

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