Australian contract law assignment give an overview of the terms and conditions so involved under standard contracts. It determines the extent of involvement of the parties to the contract. Contracts are formulated with the purpose of constructing an exchange mechanism of the promises and values. Every contract has to have two or more parties and be inclusive of something of value that would restore the parties to the contract to their original status before they entered into contract. Thereby, contracts shall have the basic elements included under a standard contract law such as offer and acceptance. The importance of the contracts is also to be studied in terms of being written or oral contract. Furthermore, the extent of its enforceable is to be analyzed and applied on the given statement.
A contract is an agreement requiring the presence of certain elements. Such elements are namely, offer, acceptance, intention, capacity, consideration and privity. Such an agreement shall be entered into without any undue influence or false statements making the contract void or illegal ab initiation. An offer is the fist step towards entering into a contract. It has to be made sure that the contract entered into arises from the offer and not invitation to offer. This is because invitation to offer is an expression of intent whereas an offer is considered to be presented for the very purpose of entering into a contract. Such offer shall move from the offer-or and be accepted by the offered.
For example, Party A puts up a book in the shop window with a quoted price. Party B then enters the shop wanting to buy the book. It is to be noted that the display is merely an invitation to offer wherein various offers may be invited from prospective buyers. When Party B expresses the want to buy the book, that is regarded as an offer being made. Thereby, the offer may further be negotiated between the parties. Such as Party A may further express that he does not want to sell at the quoted price but higher. This is considered to be a counter offer wherein the terms and conditions of the original offer are altered. It is to be noted that under a counter offer, the original offer loses its importance and becomes irrelevant to the final offer. Thereby, Party B may either reject the counter offer or accept the same. When B rejects the counter offer he may either initiate a new offer or not buy the product. Once a counter offer is rejected, both the counter offer and the original offer become irrelevant. Thereby, the offers so made may be terminate five different ways, such as, through communication of intent to reject, lapse of time, withdrawal of offer, death of the party or acceptance.
An acceptance is referred to as the commitment to the contract on the offered terms and conditions. Such an acceptance shall be clear and understandable. It is important to know that not all offer require an acceptance such as the offers that are made to the world sometimes waive off the intimation of acceptance by replacing the same by performing a certain act to be considered as an acceptance. For example wherein an commercial advertisement is presented in the newspaper for the reward of finding a lost wallet such a contract would be considered to be a unilateral contract wherein the acceptance for the contract would be on finding the lost wallet in question. When the same is presented the person posting the advertisement would have to acknowledge the contract and pay the reward so promised under the advertisement.
Furthermore it shall be understood that merely the contract has been entered into does not mean it is valid. Such a contract shall be clear regarding the terms and conditions bearing an equal understanding and intent of the parties to the contract. The intent to enter into a contract explains the nature of the contract. It implies that whether the intent for the contract to be legally enforceable exists or not. Such as under social contracts if the legal implication exists the same has to be expressed preferably in writing. Wherein under commercial advertisement contracts it is presumed that the same is already present thereby even if not mentioned it is legally enforceable. Every contract for it to make valid require an exchange of value between he parties. A contract is based upon an exchange of promise undertaken by the parties to their advantage. Thereby, the consideration that exists between the parties shall not be of past, arising from official duty, shall be sufficient, shall not be in association of the existing contractual duty and just. The consideration of love and affection is not found to be valid under the law.
Contracts, either it written or oral, are to be entered into by the parties that are eligible to contract. Such parties are determined as capacitance to contract. Parties that don’t have the legal capacity to contract are namely, prisoners, people with unsound mind, minors, and bankrupts. This is so because at the time of entering into a contract the parties shall be aware of the terms and conditions and implications of the affects of such contracts. The people who cannot understand the meaning of the contract shall not be considered of capacity to do the same. Exception to the rule of capacity is the contract entered into by a minor for the necessities of life.
In Australia, the types of contract that exist are either oral or written or partial contracts. Oral agreements are generally discussed verbally and the terms and conditions are agreed to by word. Such contracts are sometimes difficult to be established. While written contracts are wherein the terms and conditions are presented in writing as well. The acceptance thereby is given in writing and easier to be presented in the court of law for enforcement. Certain contracts are mandatory required to be present in the written form such as the sale of land or purchase of car for the amount of consideration involved. Certain contracts that are partially discussed orally and partially present in writing are known to be partial contracts.
According to the Parole Evidence Rule, extrinsic evidence refers to the terms that are not present in writing for the contracts. Such terms are discussed during the negotiations, oral conversations or letter of communication. Thereby, such extrinsic evidence is forbidden to be admitted under the court of law while determining the enforceable of the contract. It is so because such extrinsic evidence may contradict the written terms on some occasions. It is to be noted that the parole evidence rule only applies to the contracts that are present in writing and not in oral. This would mean that parole evidence rule is no considered under contracts that are only partially present in writing. The court while determining the status of the contract to be wholly in writing it may consider the entire agreement clause. Thereby, where such a clause is absent then the extrinsic evidence so present is judged. According to the strict approach of applicability of the extrinsic evidence it is determined that when the contract was being delivered in writing the parties intended to put the clauses so concerned in writing. Thereby, extrinsic evidence cannot be used. Whereby the lenient approach holds that the extrinsic evidence is elemental in determining the nature of the contract whereby the terms of the contract are analyzed based on the presence in writing or oral form.
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Under the case of State Rail Authority of New South Wales v Health care Outdoor Pvt Ltd.it was discussed that the mere presence of the agreement that seems to be whole is not sufficient evidence that no oral terms were agreed to. It is only present as a support or evidence of the existence of the contract. It acts as a mere foundation to the fact that the contract exists in writing. To determine whether the same is wholly in writing cannot be judged by the parole evidence rule. If the claim for the contract being in oral is made the extrinsic value may be observed to determine the nature of the contract not matter how complete it may come across.
The general exceptions to such rules are such as the evidence to the validity of the contract, nature of the contract, such other terms and determination of the document applies as decided under the case of Gordon V Macgregor. However, the certain exceptions to the given parole evidence rule explains that the same does not apply to collateral contracts. Collateral contract are referred to the contracts whereby the party offers to make a promise that is independent of the main contract whereby the other party would enter to the contract and the same is considered to be a consideration. Such a contract is whereby A promises to sell a car of certain make, whereby B is sceptical of the fact that it does indeed have engine installed by the manufacturing company. Whereby A makes the promise of the same and B enters the contract; the promise would act as a collateral to the contract.
In the case of Hoyt’s Pvt Ltd v Spencer, the rationale to establish the nature of collateral contracts was established. It was discussed that the contracts of such nature shall be promissory in nature and be entered into motivated by a promise so made at the time of entering into the contract. The consideration of promise so involved shall be taken wholly to bear the determined benefits. Thereby, the rights of the parties so involved would be status quo. Thereby, the parole evidence rule does not necessarily apply to the collateral contracts because the collateral may not be the part of the main contract but be as important.
Another exception to the rule of parole evidence is the Doctrine of Estoppel. The doctrine establishes the right of the party denied a right made under the contract to stop the non-allowance. Such right emerges from the privity rule under the contracts whereby only the party may reap the benefits of the contract. Thereby, a party may stop the benefits being driven to a third party when not a party to the existing contract. According to the case of Waltons Stores (Interstate) Ltd v Maher the doctrine of estoppel brings the contract to affect raises equity. Therefore, the parole evidence rule does not apply to such contracts whereby estoppel claims are made. Under the case of Saleh v Romanous and Franklins Pvt Ltd v Metcash Trading Ltd whereby the equity would not be allowed to restrict the application of the doctrines. Such rights would continue to be enforced and protected under the parole evidence rule and the contract rules.
Parole evidence rule thereby is not applied towards the written contracts. Whereby, the written and oral contract exists the parole evidence rule would not be applicable. It was further decided in the case of Royal Botanic Gardens and Domain Trust v South Sydney Council that the extrinsic evidence is only used to solve the possible ambiguity present in the terms. Thereby, the statement presented such as where a written contract exists, Australian courts do not and should not provide remedies for failure to fulfill verbal promises made during contract negotiations, and unless these promises are included in, the written contract is true.
In conclusion it may be said that the impact of written and oral agreements is different. Wherein the written agreement is a solid evidence of existence to be presented in court, oral agreements lack the enforceability under the law. However, to study the enforceability of the written or oral contracts the parole evidence rule is taken into account to define the extent of enforceability. Thereby, the effect of parole evidence rule under the partially written and oral contracts determined while analysing the statement so presented under the given assignment.
- State Rail Authority of New South Wales v Health Outdoor Pty Ltd (1986) 7 NSLWR (1986)
- Gordon V Macgregor (1909) HCA (1909)
- Hoyt’s Pty Ltd v Spencer (1919) 27 CLR (1919)
- Waltons Stores (Interstate) Ltd v Maher (1988) HCA (1988)
- Saleh v Romanous (2010) NSWCA (2010)
- Franklins Pty Ltd v Metcash Trading Ltd (2009) NSWCA (2009)
- Royal Botanic Gardens and Domain Trust v South Sydney Council (2002) HCA (2002)