PASS Notes Week 6 PDF

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LAWS3040/6140 WEEK 6 PASS: PROBLEM SOLVING

The university bookshop has decided to run a competition to encourage Contracts students to do their case readings. The competition is advertised on a poster stuck to the front window of the bookshop. The poster reads: ‘Attention all Contracts students. The first 3 students who do all their case readings for this week’s topic and successfully answer a random question asked by one of our staff members about the cases will win a brand new book on the law of Contracts which has just been released.’ Sven, Sylvester and Solomon all see the notice posted on the bookshop window and rush to their respective homes in order to do their Contracts readings. Sven is the most studious of the three boys and completes all his readings by the end of the afternoon. He rushes back to the bookshop and demands the girl working at the cash register ask him a question. The girl asks Sven the question she was directed to ask, namely, ‘what did the court say about the postal acceptance rule in the Reese Bros Plastics case?’. Sven, who unfortunately cannot quite remember, responds by stating ‘ A postman can never enter into a contract with another postman’ . The cash register is dubious as to whether this is the correct answer but decides to give Sven one of the copies of the new Contracts book anyway. Solomon is always finding himself in trouble. Before he has a chance to begin his case readings, he receives a text message from Satan, his arch rival (and fellow Contracts student), asking him to meet him in the tunnel. Solomon goes to the tunnel and Satan produces a knife and threatens Solomon that he will hurt him and his family if Solomon does not do all of the case readings and send Satan a summary of each and every case. Fearful for his life, Solomon goes home and completes all the readings and summaries for Satan. He next day, Solomon sees the poster again, and rushes into the shop to answer a question. The cash register girl asks him the same postal acceptance question and Solomon answers correctly. The cash register girl shrugs and points to a stack of contracts books in the corner. Solomon rushes over to take a copy but soon realises the books are actually from 1975 and so leaves empty handed. On his way home, he bumps into Satan who is very apologetic about the knife incident. Satan, it turns out, actually has a copy of the new Contracts book and tells Solomon “ I will give you the book mate if you promise to be my best buddy for the next 50 years ”. Solomon, elated that he will getting the new Contracts book after all, responds by saying “Sure I’ll be your friend for the next 50 years”. Sadly, the boys soon have a falling out and Satan refuses to give Solomon the book. Over the weekend, the cash register girl panics and decides the competition will have to be terminated, given that nobody at the bookshop is knowledgeable about the intricacies of contract law. When she returns to work on Monday, the girl takes down the poster and replaces it with a new poster which reads: ‘The University Bookshop is sorry to announce the competition for Contracts students has now ended.’ Sylvester never sees the new poster and after compelling all the case readings over the weekend, eagerly travels to the bookshop and asks to be given the random question. The cash register girl points to the poster on the window and tells Sylvester the competition has ended. Meanwhile, Sven gets home and realises he has not actually been given the new Contracts textbook, but one of the 1975 books. Infuriated, Sven rings up the bookshop and demands the Contracts textbook be sent to his house. The cash register girl tells him the competition has now ended and he should be grateful he received anything at all. Luckily for Sven, he often does business with Satan. Satan offers to see him his copy of the book for ‘a fair amount’. Sven agrees and the boys shake hands. However, Satan is in a hurry at the time, and tells Sven to find him the following day so they can discuss the logistics of their exchange. Unfortunately, the next day Satan tells Sven he has changed his mind and will never part with his beloved Contracts textbook. Advise Sven, Sylvester and Solomon.

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Advice for Sven: Is there a contract with the bookshop? Issue – agreement   

Unilateral contract Offer – is it intended to be promissory? Was it communicated appropriately? Acceptance – did he perform the act requested? Did he comply with the terms of the offer? Was it in reliance of the offer? o Is ‘correct enough’ sufficient acceptance or does it need to be what is actually correct?

Rule – agreement o Crown v Clarke – performance has to be in response to the offer. o AWM v Commonwealth – unilateral contract is an offer made to a number of people whereby acceptance is constituted by performance of an act. o Mobil Oil v Wellcome – acceptance is confirmed by conduct. o Cavallari – unequivocal acceptance. Application – agreement  An offer was made by the bookshop to provide a textbook for any person who completed their case readings and could answer a random question. This is an offer open to any contracts student and can only be accepted via performance of the above tasks. Therefore, it is a unilateral contract.  The offer does appear to be promissory. They have specifically stated that they will give a textbook to anyone who undertakes the task, and they’ve advertised it so that these students will see it and perform the acts required.  Sven does appear to be acting in reliance upon the offer. He read about the offer and immediately went home and did the readings and returned as quickly as possible to answer the questions.  Argument -> However, it may be possible that Sven’s performance was not in response to the terms of the offer. His answer was technically incorrect and the offer specified that the question had to be ‘successfully answered”, which clearly was not done. Alternatively, it could be argued that because the store person accepted his answer and provided the textbook, this could constitute a “successful answer’.

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Conclusion – agreement While the offer and acceptance seems to meet the prescribed features of a unilateral contract, it is arguable that Sven’s acceptance was not in line with the actual terms of the offer as he did not correctly answer the question. Therefore, the agreement may not be valid.

Issue – certainty “Successfully answers” – slightly uncertain – vague/ambiguous term. Rule – certainty o o

Biotechnology v Pace – look to an objective standard particularly if more than one meaning. Whitlock v Brew – objective test of meaning.

Application – certainty o o

We could apply an objective standard of whether the answer that is given is technically correct, as this would provide meaning for successfully. Alternatively, a reasonable person may think that if the store person is satisfied with the answer then this could constitute ‘successfully answer”.

Conclusion – certainty

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The term can be made sufficiently certain by using the objective standard of what is technically correct in accordance with contract law.

Is there a contract between Sven and Satan? Issue – intention  Do the parties intend to be legally bound to this agreement?  They have potentially made a deal but is seems to be subject to contract – is it valid? Rules – intention  Ashton v Pratt – factors for intention  Ermogenous – look at the objective circumstances to determine intention  Social relationships do not ordinarily intend to create legal relations  Masters v Cameron – three categories of subject to contract + fourth category comes from Helmos v Jaylor. Application – intention  The presumption for social relationships suggest that the parties would not be bound. They are two contracts students who socialise reasonably regularly and the circumstances in which they are meeting are not commercial in any sense. Looking at the circumstances objectively, it does not appear that either of them want to be legally bound by this agreement, as they are two students engaging in an exchange of a textbook. They also have not obtained any independent legal advice.  Under Masters V Cameron, class 3 specifies that a contract will not be binding where the intention of the parties is not to make a concluded bargain until they execute a formal contract. Clearly the parties wanted to make an exchange, but as Satan was in a hurry, they decided to delay the contract until the following day when they had more time to discuss the terms and come to an agreement. This is made clear by the facts and furthermore that they had not yet sorted out the price for the textbook. Conclusion – intention  It does not appear that the parties objectively intend to be legally bound by this agreement. Furthermore, the agreement was not likely intended to form a contract yet as it seems to be a class 3 contract under Masters V Cameron. Issue - certainty  “A fair amount” – vague or ambiguous – could potentially argue that it is deferred to what Satan thinks is a fair amount.  Can we sever it if it is not certain? Rule – certainty  Biotech v Pace – objective standard  Whitlock v Brew – severance – cannot sever consideration Application – certainty  We could compare the term to the objective cost of a new textbook and this would provide us with a clearer idea of what a fair amount might constitute.  It cannot be severed if a meaning cannot be obtained, as it forms Sven’s consideration for the contract. Conclusion – certainty  By comparing it to an objective standard, we can gain sufficient certainty for the term “a fair amount”.

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Advice for Sylvester: Contract with bookshop Issue – agreement  Offer has been revoked – has it been validly revoked?  Partial acceptance – he had completed the readings and did the preparation work

Rule – agreement  Mobil Oil – can still revoke an offer after partial acceptance – depends on circumstances.  Revocation also has to be communicated in a similar medium to the offer.  Revocation does not have to be confirmed to have been communicated to the person who has completed partial acceptance. Application – agreement 

Arguably, there has been a valid revocation of the offer as Sylvester had not yet completed performance of the acts required for acceptance. Furthermore, revocation was communicated in the exact same form as the offer, namely in the form of a poster. It does not matter that Sylvester did not see this poster.

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Therefore, while there was a valid offer and partial acceptance, the offer was validly revoked so Sylvester has no contract to rely on.

Advice for Solomon Contract with bookshop Issue – agreement  He only did the readings because he was threatened to do so. Rule – agreement  Crown v Clarke – performance needs to be in response and in reliance on the offer. Application – agreement  As he was threatened to do the readings, and he was not merely doing them so that he could validly accept the bookshops offer, then Solomon’s acts were not done in response to the offer. Conclusion – agreement  Therefore, there was not a sufficient agreement and there is no valid contract. Contract with Satan Intention is an issue – social relationship and the points made above. Issue – consideration 

Is friendship sufficient consideration for a contract?

Rule – consideration  Consideration has to have legal value it does not have to be proportionate to the opposing party’s consideration. Application – consideration

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As friendship does not have any legal value, we would treat this instead as a conditional gift or something similar to that. Sufficient consideration is required for a contract and friendship does not constitute this as it is not quantifiable.

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