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Introduction to Contracts

BUSL250
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Sources of contract law
Contract law in Australia is derived from:
common law - developed in the English
common law courts, that is, case law decisions;
and

legislation such as the Statute of Frauds 1677
(Imp) and much later Commonwealth, state
and territory legislation which amended or
supplemented the common law rules.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 3
Creation of a simple contract
Essential elements:

Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 4
Creation of a simple contract
Steps for creation:

Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 5
Creation of a simple contract
Creation of an Apparent Simple Contract
Three elements required:
Intention to contract,
Agreement between the parties and
Consideration.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 6
Creation of a simple contract
Steps for validity:

Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 7
Classification of contracts
Contracts classified by promise
Depending on what the offeree must do to accept
the offers offer, may be classified as:
Bilateral - both parties have to perform their
promises; a promise for a promise;
Unilateral - the offeror still has to perform their part
of the bargain; it is a promise for an act.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 8
Classification of contracts
Contracts classified by enforceability:
Valid - a contract which the law will enforce.
Voidable - the contract remains valid and
binding unless and until it is repudiated by the
injured party.
Void - no legal rights or obligations from the
outset (void ab initio).
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 9
Classification of contracts
Contracts classified by enforceability:
Unenforceable - valid on its face but no legal
action can be brought on the contract, often
because of a procedural defect.
Illegal - the purpose of the contract
contravenes a statute or the common law, and
generally treated as void.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 10
Classification of contracts
Contracts classified by performance:
Executed contracts - where both parties
have completed their respective obligations at
the time of making the contract.
Executory contracts - relating to an
agreement where at least one of the parties
promises to do, or refrain from doing,
something in the future.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 11
Classification of contracts
Contracts classified by formation:
Express Contracts - wholly in writing, wholly
oral or combination of the two; all the terms
are agreed upon.
Implied Contracts - look at the circumstances
surrounding the acts or conduct of the parties.
Quasi-contracts - an obligation imposed by
law on a person, usually to pay money to
another on equitable grounds.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 12
Classification of contracts
Formal or simple contract?

Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 13
Classification of contracts
Note: the parol evidence rule
Where parties have reduced the agreement to
writing, the courts will assume that it is a
complete record of the contract.
Courts are generally reluctant to admit
evidence of acts or words of the parties prior to
the execution of the document that will add to,
vary or contradict the written agreement.
Copyright 2012 Pearson Australia (a
division of Pearson Australia Group Pty Ltd)
9781442547766/Gibson &
Fraser/Business Law/6e 14
Contracts and e-commerce
The Electronic Transactions Acts provide a legal
framework to encourage businesses and consumers to
use electronic commerce by providing that the law
shall treat electronic and paper-based commerce
equally.
Features of the Electronic Transactions legislation
include:
A transaction is not invalid because it took place wholly or
partly electronically;
A requirement to give information in writing can be satisfied
electronically;
Electronic signature is acceptable if certain requirements
are satisfied;

Features of the Electronic Transactions legislation
include:
Electronic form is equivalent to hard copy;
Recoding of information in electronic form is equivalent to
hard copy;
Establishing time and place of dispatch.