Topic: LawCommon Law

Last updated: January 21, 2020

Adam wishes to be advised about the legality of his claim upon the baler. To resolve this issue, it must be established as to whether an options contract had been formed between Adam and Bob, when Bob stated that he promised to wait until 5pm on March 8th. Courts have interpreted the conditions of an options contracts in several ways. Generally, an options contract occurs when the offeror has promised to the offeree to keep the offer open for a certain period, so that the offeree is able to decide as to whether they wish to accept. In the case of Goldsborough Mort v Quinn, Isaacs J noted that an options contract could constitute as an “irrevocable offer”. Courts no longer use this approach, adopting the reasoning that the offeree should provide consideration to permit the open offer to constitute as an options contract, allowing revocation of this nature to occur. But, courts applying equity may still acknowledge a negotiation as an options contract using the equitable estoppel rule, even without consideration. The equitable estoppel rule is where courts stop an individual from going back on what they have stated in the past. In disputes involving promises, the principle of promissory estoppel is used. This stops a promisor from retracting a promise they had made in the past despite the lack of consideration given by the promisee. In Adam and Bob’s case, Bob’s promise to keep the offer open may amount to a valid options contract due to the absence of consideration from Adam. Additionally, in the case of Dickinson v Dodds the courts rules that in addition to the lack of consideration from Dickinson, his knowledge of the property being sold before he purported to accept meant that no revocation was required. In the current case, because Adam had seen that Bob had sold the baler before accepting, the court may see this as a valid revocation. But, if the courts of equity were to apply the rule of promissory estoppel, Adam could have a legal claim over the baler, as it would stop Bob from stating that Adam had no interest in purchasing the land because no consideration was given. If this rule was to be applied, then Adam has the right to sue for breach of contract but because the baler was already sold to a third party, he would then be entitled to damages.

2. Zoe and Charlie:
In the present case we are advising Zoe, as to whether Charlie still has to buy Austral’s barley based on the original oral agreement. What needs to be established is whether a valid contract was formed and if so, whether the revocation given to Zoe by Charlie authentically. It can be established that the oral contract would not amount to a valid offer and acceptance because no consideration was provided on Charlie’s behalf. In this case it would become an unenforceable unilateral contract. For a valid offer to occur there needs to be promissory intent on behalf of the offeror – they are prepared to be legally bound by the contract. The letter that was sent by Zoe where she offered to sell 200 tonnes of barley to Charlie would amount to a valid offer because there was promissory intent. This is because when she agreed to procure the written offer, it can be said that she did it with the intent of being legally binded. Further, in terms of the acceptance and revocation of the offer by Charlie, the rules should be applied based on the postal acceptance rule. It is generally noted that acceptance of an offer by letter, takes place when the letter has been posted by the offeree. Further, we must also consider if the posting of the letter was: “reasonable, authorised and contemplated”. It may not be contemplated because we are aware that Charlie did not consult with his accountant on whether he was able to make the purchase, thus there would be no valid acceptance. If, however, acceptance was valid then the postal acceptance rule must be applied. It has various interpretations regarding the revocation of an offer – if it must be communicated before the letter of acceptance has been posted or, could it take place before the offeror received acceptance but after the acceptance letter was sent by offeree. In Wenkhein v Arndt, the court held that any revocation received before the acceptance letter was delivered to the offeror, did not amount to a valid revocation. However, this dispute involved a revocation sent by a non-authorised third party perhaps explaining the ruling. An article written by C. L. Pannam concluded that if revocation was to take place after acceptance was posted but before it was delivered to the offeror, the offeror would suffer no detriment thus, revocation would be valid. In the current case we can see that Zoe had made a valid offer. But because she had not received any acceptance when revocation took place, she suffered no detriment therefore it was a valid revocation. Zoe will not be able to sue for breach of contract.

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3. Austral and Dave:
In this issue the advice is being directed to Adam and Zoe, on behalf of Austral as to whether they have to pay Dave the extra $22,000. This promise of money was to provide an incentive for Dave to complete the bulk fertiliser shed before the launch of Austral’s fertilising business. It must be established as to whether a valid contract was formed and if so, whether the $22,000 needed to be paid because Dave was already performing an existing contractual duty. We can say that a valid contract was formed because the words “contracted” suffices as an insinuation of the agreement. This inadvertently portrays that they have both agreed to be contractually bound to each other and that revocation can no longer take place. Common law often takes the stance that if additional promises are made to the offeree by the offeror, it is not legally enforceable if it is provided to motivate the offeree to complete their prevailing contractual obligation. For the current case courts may not find the extra incentive to be legally enforceable because it was regarding a matter that Dave was already contractually bound to complete. However, as noted in the Williams v Roffey Bros ; Nicholls (Contractors) Ltd case such a promise may be considered as practical benefit. In this case Lord Glidewell found that an additional promise of money made by an offeror would be considered legally binding if the completion of the obligation causes a benefit or avoids a ‘disbenefit’. In regard to the present matter, the completion of the shed by Dave would provide practical benefit to Austral. This is because: if the shed was not completed on time, then the launch would have to be cancelled, which would disbenefit Austral’s business because they would not be able to generate sales as soon as they would like. It would also mean that they would have to cancel the catering for the launch and would lose the deposit they had made, they would consequently suffer economic disbenefit. Due to the practical benefit provided by Dave upon completing the shed on time, Adam and Zoe will be legally enforced to pay the additional $22,000, as the completion of the project amounts to good consideration.

4. Council and Austral:
Here we will be advising Austral pertaining to the matter of whether they will be able to sue the Eucalyptus Council for breach of contract for both the Rid-A-Pest program and the rates discount. It will need to be determined as to whether the program constituted a government policy, and whether the rates discount is a bilateral or unilateral contract. When governments enter into contracts they may or may not be legally bound to it. This is dependent on what their intention was when they entered into the contract. It can only be binding if the contract formed by the government was for a commercial agreement, not government policy. It can be determined that the Rid-A-Pest program was implemented as a government program because, it was a program created by the government for the public and there was no commercial transaction. A similar situation arose in Administration of the Territory of Papua New Guinea v Leahy. Here the court ruled that the agreement that was reached could not be held as being a contract because there was no intention on the behalf of the government to be legally bound as they were simply performing a governmental duty. Furthermore, a bilateral contract is a contract which both parties have to perform an act when the contract comes into existence. A unilateral contract is when only one of the parties has a responsibility to fulfil upon contract formation – a promise is exchanged on the performance of the act. Revocation of a unilateral offer is only legal if the withdrawal does not cause any detriment to the other party. The rates discount offer would only constitute a unilateral contract because it was simply a promise that would be exchange for an act upon contract execution. In the current case, the mere promise of a discount will suffice as a reward because it is giving the other party a monetary benefit. Moreover, the withdrawal of the rates discount by the council will be proper because it provided Austral with an environmentally favourable benefit. This is conveyed in Mobil v Lyndel Nominees where Mobil withdrew from a unilateral offer and the court ruled that despite the changes that Lyndel Nominees made was expensive it provided an overall benefit to their business and thus no damages had to be paid. It can be said conclusively that because the Rid-A-Pest program was implemented as a government policy, Austral will not be able to sue for breach of contract because there was no intention for the council to be legally bound. They will also not be able to sue for damages for the rates discount because the revocation of the unilateral contract will be accepted on the basis that the completion of the act by Austral was beneficial.


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