Task: Problem based letter of advice using ILAC methodology
The issue in present part of Business law assignment is to assess whether the contract exist or not.
In accordance with provisions of Australian Contract Act, a contract can be referred as “agreement enforced by law or a set of promise which will be enforced by court”. It is necessary for a contract to be agreement as all agreements are not legally enforceable (Keyes, 2016). The essentials variants of a valid enforceable contract are as follows:
Offer and acceptance: It is necessary that one party has offered to pay or to agree on an act which has been accepted by other party appropriately (Giancaspro,2017.). The offer and acceptance develops form of final agreement and in case it does not exist than there is no contract. It is necessary that parties must understand the agreement and provide voluntary acceptance. In case ambiguity exists in contract than it will be considered as no consensus ad idem. Thus the decision of case of Raffles v Wichelhaus  could be applied. The decision of specified case asserts that in order to bind a contract existence of consensus ad idem is necessary. In absence of same contract cannot be enforced due to existence of ambiguity i.e. incomplete terms of agreement or acceptance.
Purpose of being legally bound: The parties relating to contract should be intended to be enforced by law or court. If, the element is not available than it is something other than enforceable contract (Graziano, 2019). It has been specified section 3.44 of contract law that in case offer and subsequent communication are not finalized than contract can lead to legal nullity.
Consideration: Both the parties should agree to exchange something of value or a valuable promise in order to bind some other party (McDermott, 2017). In accordance with rules relating to consideration it has been provided that consideration required existing in order to make simple contract enforceable.
Capacity to contract: It is necessary that the parties making the contract should be able to legally enter into the contract.
An enforceable contract is one which bounds the parties to carry out the action which has been agreed upon between them, by the threat of action if necessary (Hiscock, 2018.). It has been provided in section 2.8 that contracts made by corporations is required to be in form of formal deed in order to be enforceable. Moreover, it is necessary to provide details relating to identification of parties, subject matter of contract, consideration and material terms on which both the parties have agreed. Section 4 of Australian contract law specifies that no action shall be brought unless some deed or memorandum has been provided in writing by a lawful authorised person.
Applicability In present case of Business law assignment, it could be assessed that since no final agreement has been formed and mere discussion relating to acquisition of business of Rigby Corporate Function Planner were made between the parties. The draft was not even communicated to the seller of business which means that no final acceptance has been received by another party. In this situation, it could be assessed that all the essential variants in order to make a contract enforceable are not available.
The decision of case Raffles v Wichnelhaus can be applied to case study of Rigby Corporation Function and Events Management Ltd. In case of Raffles v Wichnelhaus, the plaintiff did not specified that the name of ship leaving from Bombay with cargo of cotton and two ships named Peerless were leaving from Bombay. Thus, ambiguity existed in terms of contract and defendant refused to make delivery. The argument was provided by the defendant that the contract stated that ship named ‘Peerless’ and at the moment of contract it presented two ships and the terms were not clear this the contract was not binding (Raffles v Wichelhaus. (1864) 2 H & C 906;  EWHC Exch J19; 159 ER 375, 2015). The situation is same in case of acquisition of Rigby Function Planner. The negotiations were made between both the parties but final contract was not formed. Moreover, final draft was not communicated to another party. Thus, as the terms of contract were not finalized nor both the parties provide consent on all the terms relating to agreement; the agreement is not enforceable by law. It would be appropriate to state that mere negotiations could not lead to enforceability of contract.
Parol evidence rule asserts that in case contract is in writing than all the terms are required to be contained in written document (McKendrick and Liu,2015. ). The decision was made in case of Mercantile Bank of Sydney v Taylor specifically outlined the parol evidence rule that in case contract is provided in written form than it will be presumed that all the terms are required to be provided in same. In present case as the previous communication between Events management Ltd and Rigby Corporate Function Planner has been done by emails (written communication form), thus it is necessary that whole agreement must be in written form. Moreover, mere discussion relating to terms relating to acquisition of business of Rigby Corporate Function Planner could not lead to enforceability of contract.
It can be concluded that no contract exist in present case of Rigby Corporate Function Planner and Events Management as essential element of contract i.e. clear final consent by another party is not available which is necessary to form a contract. Availability of all the essential elements is necessary in order to make an agreement enforceable. Moreover, agreement cannot be made enforceable on the basis of incomplete negotiations and agreed consideration.
The issue in this part of Business law assignment is if contract does not exist than negotiations conducted provide sufficient certainty for court to conclude that contract did exist.
As per the provision of fourth sub rule of acceptance, in case the communication is instantaneous, it will be deemed that it is not communicated by the offeree (Roberts, 2017). The decision was made in case of Entores Ltd v Miles Far East Corporation acceptance occurs only when the offeror actually becomes aware of it. It is necessary to provide clear, unambiguous and unequivocal acceptance by both the parties (Black, 2015). The decision has been made in case of Masters v Cameron (1954) 91 CLR 353 that unless a formal contract has been prepared and signed in case preliminary agreement was not conclusive in accordance with specification of parties, parties cannot enforce the contract (Fitzpatrick., F. Symes F, Velijanovski and Parker., 2017).
In order to enforce the contract it is necessary that complete acceptance should be received by both the parties (Governatori and etal., 2018). In case, any of terms relating to agreement are not communicated to another party than those specified terms cannot be enforced. As in case of Entores Ltd v Miles Far East Corporation the agreement was sent through telex machine but not received by another party, the agreement was not enforce. In present case as draft of agreement was prepared but not communicated to Rigby Corporate Function Planners, thus the agreement cannot be enforced.
The facts of case of Masters v Cameron (1954)91 CLR 353, can be related to present situation. In this case parties signed sale not with a statement that agreement is subject to preparation of formal contract and eventually the before signing of formal contract Masters was not able to proceed with transaction due to financial issues, thus he refused to purchase the property. The decision was made as parties have not agreed on all the terms and formal contract which is copy of preliminary contract is not signed, thus agreement cannot be enforce (Fitzpatrick., F. Symes F, Velijanovski and Parker., 2017).. In same manner in present case of acquisition of Rigby Corporate Function Planners, discussion relating to sale of their business was going on and all the terns relating to sale were not finalized. They agreed the consideration and even rough draft relating to transaction was to be prepared and not forwarded. Thus, as no formal contract has been signed by both the parties and mere acceptance of purchase price cannot lead to enforceability of contract.
In accordance with decision made in case of Masters v Cameron (1954)91 CLR 353, it can be concluded that as the terms of contract were incomplete. Further the performance of contract will occur only when formal contract is signed (Tayar, 2019). In present case formal contract is not even drafted completely, thus even if negotiations are conducted there is no certainty for a court to conclude that contract did exist.
It can be concluded after analysing the above discussions within the Business law assignment that an agreement can be referred as contract only in case the essential elements of contract i.e. offer and acceptance, consideration, intend to be legally bound and capacity to contract exist. In present case as the terms of agreement were not finalized between Rigby Corporate Function Planner and Events Management Ltd and complete acceptance was not received by Rigby Corporate Function Planner relating to all the term of agreement, thus agreement cannot be enforceable. In other words it can be stated that no contract exists. Business Law assignment assignments are being prepared by our law assignment help experts from top universities which let us to provide you a reliable assignment help online service.
Black, A.J., 2015. Exclusion Clauses in Contracts and Their Enforceability Following the Decline of Fundamental Breach. Advoc. Q., 44, p.139.
Fitzpatrick., F. J., Symes F C., Velijanovski., A. and Parker., D. Business and Corporation Law.2017. 3rd Edition. LexisNexis Butterworths. Australia.
Giancaspro, M., 2017. Is a ‘smart contract’really a smart idea? Insights from a legal perspective. Computer law & security review, 33(6), pp.825-835.
Governatori, G., Idelberger, F., Milosevic, Z., Riveret, R., Sartor, G. and Xu, X., 2018. On legal contracts, imperative and declarative smart contracts, and blockchain systems. Artificial Intelligence and Law, 26(4), pp.377-409.
Graziano, T.K., 2019. Comparative contract law: cases, materials and exercises. Edward Elgar Publishing. Australia.
Hiscock, M., 2018. The Enforceability of Promises to Negotiate in Good Faith: Rethinking Traditional Common Law Attitudes. In Transnational Commercial and Consumer Law(pp. 175-186). Springer, Singapore.
Keyes, M., 2016. The Internationalization of Contract Law. In Codifying Contract Law (pp. 15-36). Routledge.
McDermott, P.A., 2017. Contract law. Bloomsbury Publishing. Australia.
McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International Higher Education. New York.
Raffles v Wichelhaus. (1864) 2 H & C 906;  EWHC Exch J19; 159 ER 375. 2015. [Online]. Available through < https://www.australiancontractlaw.com/cases/raffles.html >. [Accessed on 2nd September 2019]
Roberts, M., 2017. Variation contracts in Australia and New Zealand: whither consideration?. Oxford University Commonwealth Law Journal, 17(2), pp.238-264.
Tayar, J., 2019. Concerning the Enforceability of No Oral Modification Clauses: Rock Advertising Ltd v MWB Business Exchange Centres Ltd. Business Law International, 20(1).
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