Australian Law Features of Contract Law

Question: Describe about the Australian Law for the Features of Contract Law. Answer: 1. Introduction This case study has three parts in which all the features are same except the amount which is paid to other party. In all the three cases one person is offering a car to other party and other party has also accepted the offer in all cases. The only difference point is the consideration which is paid by the party who accepted the offer. In the first instance there was no consideration offered, in the second instance consideration was offered at the same price which was offered in the market and in the third instance it was offered at just 10% of the market price. Hence in all these case we would discuss whether consideration is present and whether the said contract is enforceable or not. Part a) Issue: Jane has given an offer to Jack to take her Lotus Super 7 Sports Car at no price i.e. free of cost. If the same car in a better condition was purchased from the market then the price would have been $25,000. Even Jack has accepted the offer given by Jane. Rules regarding this case are discussed below. Rule: Consideration is an amount paid from one party to the party for the performance. A contract is not enforceable when consideration is not present in it. There are some features of consideration which should be present to make it a valid consideration. The features are discussed below:(Nolo.com, 2016) Promise must be present to make consideration valid. Consideration should not at all be from past. It should be present. Consideration should not be adequate instead it should be sufficient. Consideration should be paid in full. Part payment is not considered as consideration. No taxes should be included in consideration. Consideration paid should be the basic amount.(Study.com, 2016) For a contract to be considered as enforceable following features must be present: Offer Acceptance Consideration Legal Capacity Legal Mutual Obligation Application: Jane has offered her Sports Car to Jack at a price which is not mentioned in the case. Hence it is assumed that no price was offered for the car, instead it is given as a gift. A gift is never considered as a consideration. There should be an amount involved for a consideration to be present. Conclusion: On the basis of the terms of consideration and enforceable agreement and as per Australian Contract Law, the said case is not having any consideration and even the contract is not enforceable. Part b) Issue: This case is similar to the first case discussed above except the consideration which was paid to Jack. In the first instance car was given as a gift but in this case there was an amount given by Jack to Jane. The price at which Jack has accepted the offer was $25,000 which was same as the price offered by other sellers in the market. Rule: Consideration is an amount paid from one party to the party for the performance. A contract is not enforceable when consideration is not present in it. There are some features of consideration which should be present to make it a valid consideration. The features are discussed below:(Nolo.com, 2016) Promise must be present to make consideration valid. Consideration should not at all be from past. It should be present. Consideration should not be adequate instead it should be sufficient. Consideration should be paid in full. Part payment is not considered as consideration. No taxes should be included in consideration. Consideration paid should be the basic amount.(Study.com, 2016) For a contract to be considered as enforceable following features must be present: Offer Acceptance Consideration Legal Capacity Legal Mutual Obligation Application: Here Jane has offered her car to Jack at a price amounting to $25,000. The price is similar to what is offered in the market. Price offered by Jane was same as the price which was offered by other vendors in the market. Now we need to check whether contract is enforceable or not. The discussion is given below in detail: Offer was made by Jane to Jack so offer exists. Acceptance was given by Jack on the offer made by Jane so acceptance exists. Amount paid by Jack was same as the amount in market, hence consideration is present. Contract was also legal as per law. Both the person involved has the obligation. Obligation to provide the car was with Jane and obligation to give the money lied with Jack. Hence Mutuality of obligation condition is also fulfilled Conclusion: Since all the mentioned conditions are satisfied contract is considered to be enforceable and even consideration is present. Part c) Issue: in this case car was offered by Jane to Jack at $2,500. Jack had also accepted the offer. But the price at which the car was offered in the market was $25,000. The price offered by Jane was just 10% of the market price. Rule: Consideration is an amount paid from one party to the party for the performance. A contract is not enforceable when consideration is not present in it. There are some features of consideration which should be present to make it a valid consideration. The features are discussed below: Promise must be present to make consideration valid. Consideration should not at all be from past. It should be present. Consideration should not be adequate instead it should be sufficient. Consideration should be paid in full. Part payment is not considered as consideration. No taxes should be included in consideration. Consideration paid should be the basic amount.(contracts.uslegal.com, 2016) For a contract to be considered as enforceable following features must be present: Offer Acceptance Consideration Legal Capacity Legal Mutual Obligation Application: Jane has offered her car to Jack at a price which was very low as compared to the price offered by other vendors. Price offered was hardly 10% of the market price, hence as per contract law consideration is not present in this case. As per definition of consideration it should be legal sufficient. But in this case consideration offered in not sufficient. Hence consideration is not present. Now since consideration is not valid, contract is not enforceable by law. Conclusion: in the case of Jane and Jack consideration was not present and even the contract was not enforceable by law. This was proved as per Australian Contract Law. 2. Issue: This case also highlights the provisions of contract law. With the help of this case we would understand about the breaches in a contract. Two parties are involved in this contract. A shipbuilder has taken a contract to build a tanker for North Ocean Tankers. The terms and conditions of the contract were: Amount paid to the shipbuilder would be in U.S. Dollars. If there is any change in the currency then price paid would not get affected. It does not contain provisions for currency fluctuations. When fifty percentage of the contract was completed U.S. had devalued Dollar by 10%. Now since the contract didnt contain provisions regarding currency fluctuations, shipbuilder suffered losses. Due to the loss suffered shipbuilder demanded an extra amount of $3 million and if the amount is not paid then the construction would be stopped. Buyer didnt want the construction to be stopped since they had a charter for the tanker and it was essential that it should be delivered on time. Buyer agreed to pay the demanded extra amount under protest. Buyer decided not to take any action until the entire construction is completed. As soon as the construction was completed buyer wanted to recover the extra money which was paid. We need to see that whether buyer would be successful in claiming back the extra amount which was paid by them or not (Lawhandbook, 2016) Rule: A contract is an agreement between two parties where both the parties need to deliver their promises. It is said to be valid only when it contains all the elements. The elements which needs to be present are discussed below:(Clarke Clarke, 2016) Acceptance and offer Agreement should be legal as per the respective State Laws. Both the parties must have the intention to create binding relations. Consideration must be paid for the promise, which is made by the party. Both the parties must have the genuine consent. Legal capacity of the parties to act. If all the above-mentioned elements are present in a contract then it is considered as a contract. If any of the party has breached the terms of contract then other party is liable to pay damages to the party who has suffered damages. As per Australian Contract Law if a breach is a total breach the plaintiff has the right to recover an amount which is equal to the value, plaintiff would have received had the contract been fully performed by the defendant. He could also recover the profits lost due to the non-performance of the contract. But if the breach is just partial then he could recover damages, which is equal to the cost of hiring someone else to complete the performance of the contract (Fairhall, 2012) Application the parties, shipbuilder and North Ocean Tankers have entered in a contract. The said contract is said to be enforceable by law since all the required elements are present in the given case. The elements which were present in a contract are discussed below: North Ocean Tanker has given an offer to shipbuilder to build for tank for them. For the tank price was offered by them in U.S. Dollars. Shipbuilder has accepted the offer to build a tank for the company. Consideration is also present since North Ocean Tankers has offered a price to them in U.S. Dollars. In this case both the parties also have an obligation to perform. Shipbuilder has to perform by building the tank and company has to perform by paying an amount in U.S. Dollars. The terms and conditions of the contract are legally enforceable. As per the terms payment will be made to the shipbuilder only in U.S. Dollars and it will not contain any provisions regarding currency fluctuations. Since all the required elements were present the said contact is enforceable by law.(Contractstandardscom, 2016) But there was a breach committed by the shipbuilder. As per the terms of the contract there was no provision regarding currency fluctuations. But when there was a change in the dollar currency shipbuilder had to suffer losses. Due to this they have also demanded some extra charges for the loss suffered. If shipbuilder had any problems with the terms then they should not have agreed at the time of the contract or contract should have been altered. There was a breach which was known as minor breach. As per the minor breach the suffered party has the right to sue the other party for the damages. So in this case suffered party is the company and the other party is the shipbuilder. Company has suffered by paying an extra amount of $3 million to the shipbuilder. As per the Australian Taxation Law company has the right to sue the shipbuilder and the recover the amount which was paid by them. They had paid the amount under protest Conclusion: As per the Australian contract Law buyer would succeed in recovering the excess amount, which was paid to the builder. The excess amount was only paid since at that situation the charter was ready and tank was also immediately required. Even the terms and conditions of the contract were in favour of the buyer. There was nowhere written in the contract that if there were any fluctuation in the currency then the payment terms would change. Payment terms were fixed so buyer has the right to recover the excess amount, which was paid to the builder. Hence Buyer would be successful in recovering the excess amount paid to the builder. (legalvision.com, 2016) References Consideration: Every Contract Needs It | Nolo.com. [Online] Nolo.com. Available at: https://www.nolo.com/legal-encyclopedia/consideration-every-contract-needs-33361.html [Accessed 23 Aug. 2016]. Businessdictionary.com. (2016).What is consideration? definition and meaning. [online] Available at: https://www.businessdictionary.com/definition/consideration.html [Accessed 23 Aug. 2016]. Study.com. (2016).Rules of Consideration in Contract Law: Elements Case Examples - Video Lesson Transcript | Study.com. 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