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Perwira Deandra Tutorial 3

1) The legal issue is whether a contract was formed between Tony and the hardware store for the purchase of an electric drill. 2) For a contract to be legally enforceable there must be an agreement between the parties, an intention to create legal relations, and consideration. 3) While there was an agreement between Tony and the store clerk Lisa, the requirement of intention was not met because Tony clearly did not intend to be legally bound by the agreement. Consideration was also lacking because Tony did not make a promise or payment. Therefore, no legally enforceable contract was formed.

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21 views3 pages

Perwira Deandra Tutorial 3

1) The legal issue is whether a contract was formed between Tony and the hardware store for the purchase of an electric drill. 2) For a contract to be legally enforceable there must be an agreement between the parties, an intention to create legal relations, and consideration. 3) While there was an agreement between Tony and the store clerk Lisa, the requirement of intention was not met because Tony clearly did not intend to be legally bound by the agreement. Consideration was also lacking because Tony did not make a promise or payment. Therefore, no legally enforceable contract was formed.

Uploaded by

dea.shafa29
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Deandra Shafa Perwira - 46561376

Tutorial 3

Step 1: Issue
From the facts stated in the case, the main legal issue is whether there are any
contracts formed between Tony and the hardware store.

Step 2: Law/Rule
According to the case, the most suitable law related to the problem is Contract Law.
According to the law, a contract is a legally enforceable agreement. There are three
requirements that need to be satisfied for an agreement to be legally enforceable.

1. There is an agreement between the parties (agreement):


An agreement will be formed if all of the following requirements are satisfied.
(a) One person (the offeror) has made an offer.
(i) An offer can be: made in writing, made verbally, or indicated
through conduct
Case: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
(b) Another person (the offeree) has accepted the offer.
Case: Goldsborough Mort & Co Ltd v Quinn [1910] 10 CLR 674.
(c) The offeree has communicated their acceptance of the offer to the
offeror.

2. The parties intended to create legal relations (intention):


If an agreement is made in a commercial or business context, it is likely that it
was intended to be legally enforceable. However, if the parties behave in such
a way that it is clear that they do not intend their commercial agreement to be
legally enforceable, it will not be a contract.

3. Each party has provided consideration, that is, paid a price or made a promise
(consideration):
A consideration is a contribution of each party to the agreement.
Consideration can take the form of: the payment of money, the provision of
goods, the provision of a service, the undertaking of an onerous obligation,
refraining from doing something (e.g. agreeing not to sue), or a promise to do
any of these things.
Case: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.

Consideration does not need to be adequate. It is only a price of some legal


value. The requirement is satisfied as long as both parties pay some
consideration. No matter if it is inadequate or small in value.
Case: Thomas v Thomas (1842) 2 QB 851; 114 ER 330.

LAWS 1100 - Business Law - Tutorial 3


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Deandra Shafa Perwira - 46561376

Consideration must be sufficient. It cannot be accepted if the promise is vague


or in other word uncertain or of no legal value.
Case: White v Bluett (1853) 23 LJ Ex 36.

Step 3: Application
1. There is an agreement between the parties involved in the case. All of the
agreement requirements have already been satisfied:
(a) Tony’s action placing the electric drill on the counter has indicated that
he conducts an offering to buy the product.
(b) According to Lisa’s statement, she has accepted the offer.
(c) Lisa, as the offeree, has communicated her acceptance by responding
to Tony.

2. This agreement is made in a business context. Regarding her response in the


case, Lisa has agreed and has an intention to make the agreement to be
legally enforceable. However, based on Tony’s statement, he has no intention
to make the agreement to be legally enforceable.

3. Based on the case, Tony has not made any contribution yet. He has not made
a payment or any promise to do so.

Step 4: Conclusion
There are three general requirements for a contract to be legally enforceable. The
first one is agreement. There is an agreement between both of the parties because
all of the agreement requirements have been fulfilled. The second requirement,
intention, can not be found since Tony clearly has no intention to be part of the
agreement and make it legally enforceable. Lastly, the third requirement, which is
consideration, can not be found as well. This happens because Tony has not made
any contribution in the form of a promise or payment. The only action Tony has done
is place the product on the cashier counter. His action might possibly count as a
‘promise’. However, this is too vague to be one. To sum up, there is no legal contract
formed between Tony and the store since only one of the requirements was fulfilled.

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