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Overview

Contracts are very useful in daily business activities and transactions in ensuring that the

business terms and promises are honored by the involved parties. However, contract is not

limited to business environment while it shows a lot of importance in non-business environment.

A contract is agreements of promises between parties that is legally abiding. According to

Ardagh, 20161 contract acts as a mean of ensuring obligations and expectations are met between

business and business or business and its customers. Lack of honoring the terms of the contract is

regarded as breach of contract and is punishable by law2. There are several consequences as

determined by the contract law when the breach of contract from one or more parties occurs.

Mr. Brendan who is a longtime friend of Mr. Shen promised to find a rental penthouse to his

daughter who was coming to Sydney for studies in two weeks. Due to their long professional

relationship in the past, Mr. Shen relies on Brendan to fulfill his promises in ensuring a better

house for his daughter Cici. Ariana agrees to sell her penthouse to Brendan who was her

longtime friend and a former classmate. Ariana signed the document which Brendan says is

subject to a contract as she relies on her lawyer on such matters. Ariana had her car to the

employee of Bar-a-Lager resort and social club to take to the car wash and she was not happy

with the outcome she got as her car was filled with graffiti. Inst-a-clean is a company who has

rented in the building of Bar-a-Lager to provide car wash services. Dino, an employee of Bar-a-

Lager who was given the car by Ariana was quick to tell her to look at the receipt she had

received.

1 Ardagh, A. (2016). Business law- questions and answers (2nd ed.). LexisNexis.

2 Jeannie Paterson, A. R. (2015). Principles of Contract Law (5th ed.). Lawbook Co., AUSTRALIA.
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Brendan claims to Ariana

Issues

Ariana had agreed and signed to sell her property to Brendan at a price and at a given

time which was pleasing to her. Does Brendan owe any claim Ariana and to what extent? Is

Ariana legally responsible for Brendan business losses?

Rules

The initial stage of a contract which forms the foundation of a contract law is offer and

acceptance3. The offer and acceptance forms the agreement part of the contract which can be oral

or written. Brendan told Ariana that that is the best deal she can make and challenged her to take

it or leave it. When Brendan said that they the agreement is subject to a contract, he shows

intention to create legal relation in their deal. Ariana had accepted the offer made by Brendan and

signed to it by commitment. The acceptance is an abiding factor of a contract and the offeree has

to know the legal issues involved in acceptance before doing so4. The acceptance can be done in

communication (oral or written) or by performance Carlill v Carbolic Smoke Ball Co [1893] 1

QB 2565. Carlill accepted the offer by performance where he used smoke ball as offered.

The representations, which are the entry statements of the contract forms the obligation

statements called the terms. These are the legal abiding entities that forms the contracts.

Damages are paid upon determination of breach of the terms of the contract6. The signature rule

3 Fitzroy Legal Service. (2016). The Law Handbook- Elements of a contract. Victoria: Fitzroy Legal Service. Retrieved
from http://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/

4 Dr Julie Clarke. (2016, February). Australian Contract and Consumer Law. Retrieved April 26, 2017, from
Australian Contract Law: https://www.australiancontractlaw.com/

5 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.

6 Hughes, D. (Oct 2011). The Interpretation of Contracts in Australia. Thomson Reuters, AUSTRALIA.
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states that the parties signing a document are bound by the terms regardless of whether they have

not fully understood the terms.

Application

Brendan and Ariana entered a contract upon the signature which are legally binding. Upon

signing the contract one is bound to keep them to the lapse of time. In case Toll (FGCT) Pty Ltd

v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]7, the judge quoted that The representation is

that the person who signs either has read and approved the contents of the document or is willing

to take the chance of being bound by those contents, whatever they might be. The only

exemption to the signature rule is when there is a misrepresentation of which the court would

term is as void8.

Conclusion

The agreement between Brendan and Ariana was fully bound by the contract law since it

meets all the requirements of a contract. Ariana is bound to the document she signed accepting

the terms offered by Brendan to sell her property to him. She therefore will be liable for damages

from Brendan loss. She however is not liable for his future loss of businesses as that is not a part

of their contract or agreement.

2. Arianas Damaged Car

Issues

Ariana had given her car to Dino who is an employee of Bar-a-Lager to park but he asked

her for carwash services in which she had to add $10. After the payment, she is handed a receipt

7 In case Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].

8 Michael Lambiris, L. G. (2014). First principles of business law : a blended learning approach (7th ed.). North
Ryde, Sydney,: CCH Australia Limited.
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written sign NO RESPONSIBILITY TAKEN FOR LOSS OR DAMAGE TO CARS LEFT AT

THE INST-A-CLEAN CAR WASH. After she finishes her meeting with Brendan, who is a

member of Bar-a-lager, she finds her car with many graffiti on the tyres and the windscreen. She

is reminded of the receipt that states that the car wash company takes no responsibility of any

loss that occurs in their car park.

Rules

A document that is not signed by the parties involved is not binding to the parties. The general

rules and signature rules are used in such a case where signs are used. One must be made to

clearly understand and sign the document for a show of agreement with the terms. Case

Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 (16

December 1986)9 was ruled against the defendant due to negligence. The statements must not be

misleading, fraudulent, duress or undue influence for any parties. A reasonable and sufficient

notice which is signed is accepted by the court as a binding document.

Application

Any warning notice must be signed, not be misleading for it to be legally accepted. In a

case Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB10, Curtis signed a document stating

that the Dry cleaner company will not be liable for any damage that occurs in their service and

the dress was stained. It was ruled that the signature was obtained by a misrepresentation leading

to signature rule being inapplicable. The dry-cleaning services had to pay the damages. A

business is bound by a duty of care to its customers and a breach to it leads into legal actions11.

9 Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 (16 December 1986).

10 Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805.

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Conclusion

Inst-a-clean car wash Company is liable for damages that occurred on Ariana car. They are

responsible for a duty of care to their clients who they offer services to. A business must be

responsible for any action that happens in their premises in the act of service to the customer. Act

of negligence is regarded as an offence and the offender is liable for damages12.

3. Mr. Shen Claim against Brendan

Issues

Brendan agreed to reserve a pent house for Mr.Shens daughter who was coming to study in

Sydney in two weeks time. However, Brendan did not keep his promise to Mr.Shen. Do Mr.Shen

have any legal claim against Brendan?

Rules

An agreement is different from a contract since the latter is legally abiding. A contract is

enforced by the contract law which checks on the qualification of all the legal aspects of a

contract13. Business dealings uses a contract to legally abide the parties for responsibilities of

their promises. Foran v Wight [1989] HCA 51; (1989) 168 CLR 38514 case was ruled against the

plaintiff due to lack of a clear contract terms signed.

11 J. W. Carter. (2011). Carter's guide to Australian contract law (2nd ed.). Chatswood, N.S.W. : LexisNexis
Butterworths.

12 Charles Mitchell, P. M. (2008). Landmark cases in the law of contract. Oxford ; Portland, Or. : Hart.

13 Harrison, J. (2017). The Relations between the Courts and the Law. (P. J. Allan, Ed.) The University of Queensland
Law Journal, Volume 35 No. 1.

14 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

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Application

Brendan told Mr.Chen that he had a house to sell to him at an amount which Mr.Chen had no

objections paying as long as the house was available. The promise was wrong since he had no

such house available at Sydney at two weeks time. There was a misrepresentation of information

by Brendan who misinformed his longtime friend. According to J. W. Carter, 201315, the court

looks at the situation from a perspective of the legal responsibilities from the parties involved.

There was no abiding contract between the two which will make it difficult for Mr.Chen to claim

any damage from Brendan.

Conclusion

Brendan is not legally bound by the terms they held with Mr.chen since there was no contract

signed by the two. This makes it difficult to use the court process due to no base of legal terms

being involved.

15 J. W. Carter, (. W. (2013). Contract law in Australia (6th ed.). Chatswood, N.S.W. :

LexisNexis Butterworths .
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References

Ardagh, A. (2016). Business law- questions and answers (2nd ed.). LexisNexis.

Carlill v Carbolic Smoke Ball Co, QB 256 (1 1893).

Charles Mitchell, P. M. (2008). Landmark cases in the law of contract. Oxford ; Portland, Or. :

Hart.

Curtis v Chemical Cleaning & Dyeing Co, KB 805 (1 1951).

Darlington Futures Ltd v Delco Australia Pty Ltd , HCA 82; (1986) CLR 500 (161 December 16,

1986).

Dr Julie Clarke. (2016, February). Australian Contract and Consumer Law. Retrieved April 26,

2017, from Australian Contract Law: https://www.australiancontractlaw.com/

Fitzroy Legal Service. (2016). The Law Handbook- Elements of a contract. Victoria: Fitzroy

Legal Service. Retrieved from

http://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/

Foran v Wight, HCA 51; CLR 385 (168 1989).

Harrison, J. (2017). The Relations between the Courts and the Law. (P. J. Allan, Ed.) The

University of Queensland Law Journal, Volume 35 No. 1.

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Hughes, D. (Oct 2011). The Interpretation of Contracts in Australia. Thomson Reuters,

AUSTRALIA.

J. W. Carter. (2011). Carter's guide to Australian contract law (2nd ed.). Chatswood, N.S.W. :

LexisNexis Butterworths.

J. W. Carter, (. W. (2013). Contract law in Australia (6th ed.). Chatswood, N.S.W. : LexisNexis

Butterworths .

Jeannie Paterson, A. R. (2015). Principles of Contract Law (5th ed.). Lawbook Co.,

AUSTRALIA.

Michael Lambiris, L. G. (2014). First principles of business law : a blended learning approach

(7th ed.). North Ryde, Sydney,: CCH Australia Limited.

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, 219 CLR 165 (40 2004).