LAWS1100 Study Guide - Final Guide: Parol Evidence Rule, Collateral Contract, Headache
Contracts
Topics:
• What is a contract?
• Requirements for the Formation of a Contract
o Agreement
o Intention
o Consideration
• Promissory Estoppel
• Capacity
• Privity and Time Limits
• Express Terms, Conditions and Warranties
• Implied Terms, Parole Evidence Rule and Collateral Contracts
• Disclaimers
CONTRACTS OVERVIEW
• Definition of "Contract"
• A legally binding promise or agreement.
• A promise or undertaking in respect of which a legal, contractual obligation has been
assumed by means which the law recognizes as effective for that purpose.
• An agreement between two or more people which is legally enforceable.
• What is a Contact?
• Contract Law falls into 2 main categories.
• Contracts can be classified as simple or formal.
o Simple contract: can be made verbally or in writing, or implied by the conduct of
the parties.
• Most common form of contract;
• Eg.) Buying lunch, purchasing an item of clothing, etc.
o Formal contract: requires legal formalities and is valid only when made according to
the form required by the law.
• Set down by law, it has to be in writing (not verbal);
• Eg.) Contract for land, deeds, etc.
• Sources of Contract Law in Australia?
• The main sources of Contract Law in Australia
• The bulk of contract law is Common law based
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ELEMENTS OF A VALID SIMPLE CONTRACT
REQUIREMENTS FOR THE FORMATION OF A
CONTRACT
• 3 Essential Requirements
o Agreement
o Intention to enter a Legal Relationship
o Consideration
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Requirement 1: Agreement
• A ageeet ioles a eetig of the ids o osesus etee o oe
paties…
• A ageeet is a staight foad legal te.
• AGREEMENT = OFFER + ACCEPTANCE
What is an offer?
• Offer: a proposal made by one party to another to enter into a legally binding contract.
• Offers can be written or spoken.
• Offers may be implied from the conduct of the offeror.
• A offe a e ade to oe peso, a people, o the old at lage.
o What are examples of this?
• There must be an intention/willingness to enter into a legally binding contract.
o Look at the words and conduct of the offeror.
• Courts use the objective test – ask whether a reasonable person standing in the shoes of
the recipient would believe the statement/conduct to be a promise in the form of an offer
(the reasonable person test).
• ASK YOURSELF:
o Was the offer firm?
o Was the offer certain?
o Was the offer communicated to the offeree?
o Was there an intention/willingness to enter into a legally binding contract?
• Many commercial contexts may suggest an intention to enter into a legally binding
contract.
• However, would all commercial behaviour be considered an offer?
o Would inquiring about something be an offer?
o What about when goods are displayed for sale?
What is an invitation to treat?
• An initial approach to others inviting them to deal or to instigate dealings on certain
specified terms.
• Basically, this is an invitation for potential customers to consider something.
• Most advertising is an invitation to treat.
• The last person to accept must be the seller
• EXAMPLES:
o Advertisements
o Goods displayed in shops
Case Law: Pharmaceutical Society of Great Britain v Boots
o Auction Sales
o Tenders, shares and debentures
o Price lists
Case Law: Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256
o FACTS:
o Advertisement by Carbolic Smoke Ball Co.
o Adetiseet poised that podut ould positiel ue a log age of
ailments: coughs, colds, asthma, influenza etc, headache, whooping cough etc.
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