Contracts Part 3 Flashcards
What happens when Irun sees a soccer ball on sale for $10 in a store and gives $10 to the cashier who refuses to sell him the ball?
There is no contract, because Irun is making the offer to the cashier, who does not have to accept the offer
What happens when Lewis offers Darren $20 to wash his car, but Darren asks for $25, then accepts Lewis’ initial offer?
There is no contact, because the original offer was cancelled out by the counteroffer
What happens when Stephen offers to swap his grand final tickets for Sharon’s grand proxy tickets, but withdraws the offer before Sharon accepts?
There is no contract because an offer can be withdrawn before it is accepted, and Sharon can no longer accept the initial offer
What happens when Everett agrees to sell Zac ecstasy for $20 a tablet, but the tablets are actually sugar pills?
This is an illegal contract so Zac cannot enforce this contract because it is of an illegal nature
What happens when Joe sells Sam a legal DVD, telling him it is brand new, however Sam discovers the disc is scratched and not new?
It is a valid contract, because there is an offer, acceptance and consideration, however there is misrepresentation because Sam thought the DVD would be brand new
Anita needs her house painted and decides to ring a painter advertising in the local paper. She contacts Perfect Painters who come out and give her a quote for $6000 to paint all the rooms in the house. Anita accepts the quote and Perfect Painters agree to do the work. Perfect Painters ask for an upfront fee of $2000 so that they can cover the costs of paints and material. Anita gives them the upfront payment. Perfect Painters commence the job, but after one week, they have only completed four of the eight rooms and three weeks later, still haven’t returned. Advise Anita about her contractual rights.
The necessary elements of contract exist because Anita accepted the quote and the contract is valid. The contract has been breached because they agreed to paint all the rooms in the house and have not completed the job. The most likely outcome would be rescission
Robert and Sandy are fifteen years old, and they decide to join the gym to get fit and tone their muscles. After looking at a few gyms they join a local gym called Mr Muscles and sign a contract for membership, whereby they can pay in three monthly instalments. The manager has agreed to allow them to pay at the end of every month given that they are students. Sandy and Robert continue using the gym, and for two months keep up the payments of $40. At the end of the fourth month they receive a letter stating that they are behind in their payments and that they must pay within a week. Sandy and Robert find it difficult to scrape up the payment of $80 each and decide not to pay the fee.
The elements of a contract do exist because they signed a contract for membership, however they are minors and only 15 years old, therefore it is not a valid contract. The most likely outcome would be rescission.
Samantha, Belinda, Skye and Natasha make an appointment to have singing and dancing lessons with Suzie’s singing and dancing school. The school is offering a three-hour dancing and singing session for $490. The girls decide to accept the offer and make a booking, and send off their payment. On the day of the session the teacher says she is not feeling very well and will only provide a two-hour lesson. The girls are disappointed that they didn’t get the three hours they paid for and demand a refund for the one hour. Suzie argues that they got their money’s worth in the two hours rather than three, and refuses to refund the girls for the one hour. Advise the girls of their contractual rights and what action they could take.
Most of the necessary elements of a contract exist, however there is no consideration as they paid for 3 hours but only received 2 hours. Suzie should give them an extra hour for free at some point, and the most Lilley outcome is specific performance of the contract.
Jane has always admired a painting owned by Ben and so she decided to make an offer to buy it. Having no idea of the painting’s value, Jane says to Ben “I offer to buy the painting for whatever it is worth”. Ben accepts and then states that as the painting is worth $10,000, that is what he expects Jane to pay for it. Jane is horrified and wishes to withdraw from the agreement. Ben sues for breach of contract.
In this case, uncertainty of terms exists because there is no clarity. Ben would be unsuccessful in suing Jane for withdrawing from the agreement and the most likely outcome would be rescission
Phillipa, aged 22 years is complaining to her parents that she needs a car to drive to work. Her mother Wendy says, “Alright, stop nagging you can have a car for $3000”. Phillipa immediately agrees but four days later she changes her mind. Wendy believes that her daughter should learn to honour her commitments and so she sues Phillipa for breach of contract.
As this is a domestic contract it is not legally binding, and Wendy cannot force Phillipa to pay. There is also no consideration involved in this case. The most likely outcome is specific performance and Phillipa paying her mum $3000, as she initially agreed on doing.
Charlotte and Adele are haggling over the price of some clothes that Charlotte is attempting to sell to Adele. Eventually Charlotte says “$120 and that’s my final offer”. Adele is thinking about the price when Jenny, who overheard the conversation said, “I accept that offer, I’ll pay the $120. Adele on hearing this immediately shouts out, “Alright I’ll pay you the $120, it’s a fair price”. Meanwhile Charlotte had reconsidered her final offer and feeling that it may have been too low she decides not to sell to either Adele or Jenny. Both women sue Charlotte for breach of contract.
The offer was made exclusively to Adele, therefore Adele should have been given sufficient time to accept before offering the clothes to a third party. Jenny has no right to accept the offer of $120 unless Adele rejects the offer. Adele has the right to buy the clothes from Charlotte for $120 and specific performance for Charlotte to sell the clothes to Adele is the most likely outcome.
Chris staggers out of a hotel after having been drinking steadily for six hours. Walking past a jewellery shop Chris decides to buy his wife a diamond necklace to apologise for his constant bouts of drunkenness. Chris signs a sale note agreeing to pay $12,000 for the necklace over the next 2 years. The proprietor of the store, realizing that Chris is affected by alcohol, phones for a taxi to take him home. The next day the proprietor phones Chris to ask if he wishes to continue with the purchase. Feeling hung-over Chris snaps back, “Of course I want to stick to the deal”. He is then informed that the necklace will be ready in 4 days time. Two days after being phoned, Chris informs the jeweller that he has changed his mind and that he wishes to cancel the order. As the store refuses to accept the cancellation Chris is sued for breach of contract.
It can be argued that Chris did not have the capacity when signing the contract due to intoxication. However, he agreed the next day when sober, enforcing his willingness to go ahead with the contract, and 4 days later he changed his mind. As the jeweller has lost out from this, he would seek either specific performance requiring Chris to pay, or damages for any costs incurred should Chris not be required to buy the necklace.
Georgio is walking along the street when he finds the famous Picasso painting “Weeping Woman” lying on the road. Georgio knows that the painting has been stolen from the National Gallery and assumes that a reward has been offered for its return. Georgio instantly returns the painting to the gallery’s curator and asks if he can have any reward that has been offered. The curator informs Georgio that the details of the reward are not due to be announced until later that afternoon. Georgio discovers that the gallery had intended to announce a reward of $100,000 for the painting’s safe return. He claims the $100,000 but the gallery refuses to pay as the painting had been returned before the details of the reward had been announced. Georgio sues the gallery for breach of contract.
As no reward was arranged prior to Georgio returning the painting, he is unable to sue and claim the $100,000 reward. There is no potential remedy outcome for Georgio.
Allison, aged 16, shows outstanding potential as a runner but she realizes that she needs professional coaching to reach the top. Consequently she signs a 3 year contract with an athletics coach who agrees to train her and prepare her for races in return for 25% of the income that she earns from her running. Allison, assisted by the coaching she is receiving, reaches the top very quickly, winning the women’s section of the Boston and New York marathons in the one year. Her income zooms as a result of prize money and from endorsing products and she earns over one million dollars by the time she is 17. Allison now feels that her contract is unfair and so she refuses to pay the 25% of her income to her coach. The coach sues for breach of contract.
This is a valid contact, because although Alison is a minor, it is for employment purposes. Allison should stick to the terms of the contract and pay her coach 25% of her income. The coach can seek specific performance to receive the income he deserves.
