- Information
- AI Chat
Tutorial 3 Weekly submission
LAWS (1100)
University of Queensland
Preview text
Issue
Did Tony form a contract with the store to buy the electronic drill?
Law
Formation of a Contract: There are three essential elements to a basic contract:
Requirement 1: Agreement
An agreement involves a meeting of the minds (or consensus) between two or more parties.
In a straightforward legal term, an agreement is an offer + acceptance.
An offer is a proposal made by one party to another to enter into a legally binding contract.
Acceptance is a final and unqualified assent to all terms of the offer. Acceptance must be communicated to the offeror; however, the offeror can waive communication. (Carlill v Carbolic)
Requirement 2: Intention
For a contract to exist, the parties to an agreement must intend to create legal relations.
For commercial agreements, parties can expressly intent not to be bounded by the agreement by saying that the agreement is binding.
Requirement 3: Consideration
An agreement is not a contract unless both parties to the agreement have paid or promised to pay a price for each other’s promise.
The common law requires that for an agreement to be binding, the promisee must provide consideration for the promise they have received.
Consideration need not be adequate or fair, only a price of some legal value. (Thomas v Thomas)
Consideration must be sufficient and not a past consideration. (Roscorla v Thomas)
Application
Requirement 1:
An agreement involves a meeting of the mind or consensus between two or more parties and can be simplified into agreement = offer + acceptance. In the case, Tony has accepted the offer of the store selling the electric drill at $250, saying that he is going to buy the drill. Acceptance must be communicated to the offeror; however, the offeror can waive communication (Carlill v Carbolic). For the promisee, the acceptance is considered to be communicated to the promisor only when the promisor has received it or come to know about it. When Tony proclaimed that he was going to buy the drill, it was to a sales assistant that was not Lisa, therefore, we can consider that the acceptance has not been communicated to Lisa, so the agreement is invalid and requirement 1 was not met.
Requirement 2:
For a contract to exist, the parties to an agreement must intend to create legal relations, and in a commercial agreement, there is a presumption that parties have the intention to enter a legal relation. However, this presumption can be rebutted by presenting evidence to the contrary. In this case, the agreement is not intended to be legally binding as both Tony and the shop did not intend the arrangement as a legally binding contract, therefore Tony did not have an obligation that he must buy the drill from that particular hardware store. Thus, requirement 2 was not met.
Requirement 3:
The common law requires that for an agreement to be binding, the promisee must provide consideration for the promise they have received. Tony did provide consideration for the promise that he made, therefore Requirement 3 was met. Consideration need not be adequate or fair, only priced of some legal value (Thomas v Thomas) and it is stated that Consideration must be sufficient and not a past consideration (Roscorla v Thomas). The only consideration that Tony had given was past by the time he was going to make the payment, and yet he decided not to when it was his turn at the counter.
Conclusion
Based on the requirements needed to be met for a contract to be valid, a contract was not formed between Tony and the store as only 1 out of the 3 requirements are met.
Tutorial 3 Weekly submission
Course: LAWS (1100)
University: University of Queensland
