Case Study : Better Brakes Manufacturing Ltd

The principle of law is that for a valid contract to be formed there must be an agreement reached by both parties.

NOW, THEREFORE, in consideration of the mutual promises herein set forth and subject to the terms and conditions hereof, the parties agree as follows:

The offer was made with the intention to create a legal contract that protects all sides of the bargain.

However, the following are the vital steps contained in each contract. Also, without them the contract would not be considered valid. First, an offer entails a statement by one party who is willing to make a contract under certain conditions keeping in mind that it shall be accepted. Second, acceptance gives a picture of the agreement to the terms offered. According to Rogers (2012), acceptance is considered valid when, (1) it is made by an individual to whom the offer was directed, (2) it is unequivocal, and (3) it is communicated to the offeror. Third, consideration encompasses the terms of the contracts between the parties. Therefore,

P2 EXPLAIN THE LAW IN RELATION TO THE FORMATION OF A CONTRACT IN A GIVEN SITUATION

As it is the agreement of the parties which binds them, so by their further agreement or consnt the contract may be terminated.

For there to be an agreement, the elements of offer and acceptance need to be properly satisfied. H offers to deliver the timber for $90,000, which then becomes binding when J accepts this offer by promising to pay the sum total of $90,000 for the timber, which is unqualified acceptance (Lawbook, 2006, 7.1.370). The offer is communicated and accepted by word of mouth (Felthouse v Bindley). Therefore it can be concluded that there is sufficient offer and acceptance between H and J for tha agreed additional $30,000.

Although the contract may have the essentials of a valid offer, acceptance, legal intentions and consideration, its validity or enforceability may be affected by a number of factors. The agreement may be wanting in genuine consent between the parties. That is, although the parties may appear to have reached an agreement, it may not have been genuinely achieved because of misconduct, pressure, unfairness, or fear by those involved.

In order for a contract to be legally binding, one of the essential elements is an intention of both parties to enter into a contract

Sam and Kelly have been business associations for quite sometime now. Sam and Kelly currently have a contract, but this contract is about to expire. The contract was a five year contract, in which Sam cleaned Kelly’s building in return for a fee of $30,000 per month. With this contract now coming to a close, Sam now wants to secure Kelly’s business. Sam decides to go out and show her appreciation to Kelly and buys Sam a brand new SUV. Sam tells Kelly about the SUV and to meet for dinner to discuss renewing the previous contract. The issue that arises; Is there consideration taking place by Kelly agreeing to meet Sam for dinner in exchange for the SUV.

An offer is an expression of willingness by one party to contract on certain terms with another party with the understanding that the contract will become binding when accepted by the person to whom it is offered. An offer may be made in different ways, such as in a letter, an email, or even your behavior, so long as it conveys the basis on which the offering party is willing to contract. An offer should consist of: (1) a statement of present intent by the offering party to enter into a contract; (2) a specific proposal that is certain in its terms; and (3) a communication that identifies the person to whom the offer is made. If any of these elements are not present, an offer has not been made. (Walker, C. B., 2012)

Whether or not Better Brakes Manufacturing (manufacturer) can enforce the RRP term in its contract upon Steve Auto Supplies Pty Ltd (dealer) and Mick’s Mechanics (retailer) depends on whether consideration has been given, determining the parties to an enforceable contract. Under the consideration rule, consideration must move from the promisee, emphasised in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd . The facts of the assigned case parallels that of Dunlop, and thus, is a direct precedent for the issue presented in the case. A contract exists between the manufacturer and retailer completed by consideration, its presence confirmed by the existence and entry to an exclusive contract . Subsequently, a contract exists between the dealer and the retailer given the obtainment of an undertaking agreeing to abide by the manufacturer’s price. On the other hand, no consideration was given by the manufacturer to the retailer for its promise, therefore, the promise cannot be enforced .

The Sales of Goods Act 1893 provides the definition of ‘condition’ and ‘warranty’. During the period between 1893 to 1962 both ‘condition’ and ‘warranty’ was generally accepted that they were the only two types of terms which assist in ‘identifying the breaches which entitled the injured party to terminate the contract. In the turning point of 1962, a new type of term-intermediate term brought about a whole new page into the Law of Contract. Hong Kong Fir Shipping Co. Ltd vs Kawasaki Kisen Kaisha Ltd is the key case which owns the credit for this discovery. In the case, the ship owner hired out the Hong Kong fir, ‘being in every way fitted for ordinary cargo service’. The ship was delivered on 13 February 1957, sailing

Whether “Heads of Agreement” written by Brett constituted documentation and if so, then does it amount to form the terms of the contract

The issue that need to be considered further is whether there is an intention to create a legal relationship between Gary and Baldcure Ltd.