Sample Contract Law Essay Questions And Answers

Tutorial Problem Brad and Jen want to buy a pearl pendant. They look at a number of pearls at a licensed pearl farm but decide that they are too expensive. They then find a shop in Broome –Pearl Jewellery and Repair Barn – and see that the pearls are much more reasonably priced. The shop owner shows them a number of pendants and suitable gold chains. After looking at a few, they see a pendant and chain they like and agree to purchase them for a bargain price. Jen prefers a much shorter silver chain to the gold long one that is attached to the pendant, and so they arrange to pay for the pendant and replacement silver chain immediately, and to pick up both the pendant and chain the next day, after the shop has swapped and adjusted the chain. The assistant gives them a receipt for the purchase and a repair docket for the chain alteration. The repair docket states: “One pearl pendant with silver chain.” The next day, Brad and Jen go to the shop to pick up their pendant and chain, but are blithely told by the shop owner that she cannot remember them ever making their purchase. The owner is an ex-law student and so, when they become angry and threaten legal action, she also smugly suggests that they perhaps should be careful dealing with an unregistered pearl trader. Brad and Jen knew about the law when they bought the pendant, and that the seller was not registered, but were just so keen to get a pearl they could afford. The applicable statute, The Pearl Purchasing Act 1997 (WA) states in s.20: It is an offence to purchase pearls or any product containing pearls, from an unregistered seller. Penalty: $10,000 for every purchase. Brad and Jen have come to you for advice. Specifically they would like to know: 1) Is the contract illegal under the Pearl Purchasing Act 1997 (WA)? Is there anything else you would need to know about that statute to decide? 2) If the contract is illegal under the Act, should the court nonetheless enforce it? i.e. allow Brad and Jen to claim their property or get their money back. FORMATION: Offer, acceptance, consideration, intention to be bound, mutuality, legality, capacity. Are only the people purchasing the pearls breaking the Act? Contract void ab initio Two types of illegality: express and implied Express illegality: Cases like Mamood and Ispahani  linseed oil case Implied illegality: Yango  bank guarantee Look at language, object of statute and penalty of that statute to determine illegality. 2.) Will be enforced and there will be no remedy as long as they can be found to be aware of the illegality If you are mistaken to the legality of the contract, mistake on the facts not on the law  maybe relief Oppression, duress  contract killing saying theres a bargain is not duress Fitzgerald  repentance bfore performance Absolute liability provision. Sanction for refusing relief not disproportionate to illegal conduct. $10000 penalty? Harsh under the circumstances? COURT CAN MAYBE GRANT RELIEF. Likely to get restitution, unlikely to be fined under the section.



* * * * *An offer may be defined as a clear, unambiguous statement of the terms upon whichthe offeror is prepared to contract should the offeree decide to accept. It is importantthat the offer itself manifest an intention to be bound. If the offeror is merely feeling hisway towards an agreement, or initiating negotiations from which an agreement mightor might not result, there is no offer. Instead, it constitutes an invitation to treat, an"offer to receive offers".Over the years the courts have held that certain situations constitute invitations to treatrather than offers; for example, goods in a shop window (

Fisher v. Bell 


Pim v.Minister for Industry & Commerce

), goods in a self-service shop (

Pharmaceutical Society of Great Britain v. Boots Cash Chemists

), auctions (

Payne v. Cave


Harris v. Nickerson

) and applications for tenders (

Harvela v. Royal Trust Company of Canada

).Advertisements will generally constitute invitations to treat. In

Partridge v. Crittenden

,the plaintiff placed an ad in

Cage and Aviary Birds

which stated "Bramblefinch cocksand hens, 25s each". He was convicted of the offence of offering for sale a live wildbird. His conviction was quashed on appeal, where the court held that advertisementswere merely invitations to treat so that he could not have committed the offence of "offering for sale".Though as a general rule advertisements merely constitute invitations to treat, it ispossible for an advertisement to be construed as an offer, if the court feels that itdisplays a definite intention to be bound (

Carlill v. Carbolic Smoke Ball Co


Lefkowitz v. Great Minneapolis Surplus Store


R v. Warwickshire County Council 

).When an offer is accepted, it is essential that the offeree accept the


terms of theoffer. If, instead of doing so, the offeree introduces a new term, he is making acounter-offer, the effect of which is to destroy the original offer. In

Hyde v. Wrench

thedefendant offered to sell his farm for £1,000. The plaintiff agreed to buy, but at £900. Afew weeks later the plaintiff accepted the offer of £1,000. The court held that there wasno contract. By stating he would buy the farm for £900 the plaintiff had made acounter-offer, which destroyed the original offer so that it could no longer be accepted.Another example of a counter-offer is the case of 

Wheeler v. Jeffrey 

.If the offeree intends to accept the offer as it stands, and looks for some further information about the offer, he does not make a counter-offer but a request for information which does not destroy the offer. A good example of this is found in

Stevenson v. McLean

.In general, the offeree's acceptance of the offer must be communicated to the offeror.The postal rule however is an exception to this. If the acceptance is posted,acceptance is complete the moment the letter is placed in the post box. The postal rulewas first set out in

 Adams v. Lindsell 

. It applies even if the letter never arrives(

Household Fire Insurance v. Grant 

) though it will not apply if the letter was notproperly stamped or addressed, if it was unreasonable at the time to use the post or if the offeror expressly or impliedly stated that the rule would not operate (




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