Lisa in a Binding Contract with Vicky - Assignment Example

Question One: Is Lisa in a binding contract with Vicky for the purchase of the Wave 500G jet skis? A key issue between Lisa and Vicky in determining whether there was a contract is to follow contract law which stipulates that there was a legally binding agreement. As such, we assess the issue on whether there was an offer, acceptance, consideration and an intention to create legal relation between the two regarding Wave 500G jet skis. Beginning with the offer, there was a relationship of quid quo between Lisa and Vicky. It seems facile in this case that there must be an offer and that the offer must be accepted. This is a case where the offer was clear and Wave did this on clear term especially in noting that, ‘I can do $13,450 each for the 500G jet ski. I can only hold them at this price until 5pm today.’ It is therefore acceptable, that the prima facie presumption is that the phone chat and or communication provided detailed analysis of an offer. The case at hand was succinctly enumerated in Inglis v. John Buttery.1 Regarding acceptance and consideration the two parties agreed to embody and conclude to what actually embodies the sell and buying of the Wave 500G jet skis thus making their contract formal by a fact that Lisa accepted the contract noting that ‘…that price is great…I don’t think I’ll need to dwell on this too long. I’d be silly to say no.’ This is not only an expression of acceptance but the law considers this as existence of formal deed as parties are agreeing to be bound by the deed as at when the agreement was reached.2 The law observes that acceptance is admissible when: Offeree is having knowledge of and act in reliance to an offer Acceptance not unqualified On the intention to create legal binding, the statement of general rule is that Lisa and Vicky are having a common intention allowing them to enter into legal obligation that was mutually communicated both expressly and impliedly.3 Question Two: Is Lisa contractually obligated to pay Patrice the additional money he has requested? In order to constitute a valid contract that there would be additional pay should Patrice divorce then Patrice and Lisa ought to have expressed themselves that their meaning could be determined with a reasonable degree of certainty and in particular, that there would be additional charges. It is plain that unless this could be done it would be impossible to hold that the contracting parties had the same intentions and particularly, Lisa foresaw that Patrice would ask for additional pay. In other words the consensus ad idem can be considered to be a matter of mere conjecture.4 Unfair Contract Terms Act of 2016 defines unfair contracts as agreements that are not reasonably necessary when it comes to the protection of legitimate rights and interests of parties that have agreed or consented to the contract. In such cases, one party will be advantaged by the term. A contract is regarded unfair when it causes financial or otherwise, effects to one party if it were to be relied on or applied. The general rule is that when Lisa agrees to pay Patrice the additional fees then it will: Enable Lisa but not Patrice to avoid and to some extent, limit her obligation under the new contract that Patrice is suggesting It may likely, enable Lisa but not Patrice to terminate the contract as she is already financially strained to establish the business It will penalise Lisa but not Patrice for change of terms of payment or if the contract is terminated since their agreement with Vicky did not materialise It only allows Patrice to vary the contract terms at his benefit but not Lisa’s. General understanding of unfair contract terms that restrains Lisa from contractually paying Patrice was presented in the court in a case involving Director of Consumer Affairs Victoria v AAPT Ltd5 The fairness or unfairness of the contractual term between Patrice and Lisa should not however, be considered in isolation but in terms of the contract as a whole. In considering the contract as a whole, there is need to balance between the legitimate commercial interests Lisa has against the detriment the term is likely to cause to Patrice if it is going to be enforced as per their first agreement. The law provides that offeree must have knowledge of an act in reliance to an offer. That is, Lisa only had knowledge of the terms of offer at the time of the purported acceptance and was not privy to the divorce case between Patrice and the wife. Therefore, courts (Tinn v Hoffman6) have found that acceptance may not be valid in cases where there are more than one offer or in cases where one party is performing the act of acceptance without the knowledge of the offer.7 In accordance with section 24 of the Australian Consumer Law (ACL) Patrice is proposing a term that is effectively permitting Lisa to limit or avoid performance of the contract they had already set. This term is more likely to be considered unfair and therefore Lisa is not bound to pay as she did not understand when and how it was likely to be changed and to what extent the amendment of the term would be effected. Pursuant to s 24 and section 25 (1) (a) of ACL the exclusion clause is unfair to Lisa as she did not understand the effect on the term and to some extent, given reasonable notice as of its possible effect on the contractual agreement. In accordance with section 25(1) (b) of ACL, the act by Patrice is likely to cause Lisa to terminate the contract and paying Patrice the additional money will unfairly necessitate the termination since the agreement will no longer be within her expected expenditure. This is a situation where a modification of contract agreement is allowing another party to cancel the contract just to protect the interest of the business.8 This is indeed in response to inconsequential breach of contract by Patrice. Therefore, making the additional payment has often been considered an act of bailing out unfair contract. 9 Finally, Lisa is not obligated to pay since the contract did not make any provision for mechanism to complete. A contract which has a mechanism for setting a term at a later time would have been valid since Patrice would have indicated that there would be a likelihood of price change. As such, the heavy onus of demonstrating that to be the case lies with Patrice. Lisa is not contractually obligated to pay Patrice the additional money since Patrice’s terms amount to unfair contract term. Question Three: Is Lisa required to pay the participation fee in the kayaking event? To begin with there is need to assess whether there was establishment of a contract terms between Lisa and Kayaking event organisers. In determination of whether a mere reading part of the booklet and ignoring the part that obligated her to pay $500 form a contract, there are two ways of looking at the issue. First, there is need to assess whether the two parties assented to the written terms. Secondly, there is need to ascertain whether Lisa was mistaken regarding some aspect of the contract as contained in the booklet and if that is the case, she will have the right to escape the contractual obligation to pay $500. Lisa is obligated by contractual term of the document under the provision ‘incorporation by notice or unsigned document.’10 Courts have found that a person will be likely to be bound by terms of a given contract in a written document (in such cases, the document not signed by both parties) in case reasonable notice of existence of the terms of contract has been given and such notice was before or upon contract information. In this case, by giving Lisa the booklet, she is obligated to read the terms since it is assumed that contract formation took place before she joined the race and she must have read and agreed to terms of contract as contained in the booklet. However, it is a question of fact that reasonable steps would have to be taken to give the class of individual to which the recipient belonged, in this case, notices of the existence of the payment of $50011. As it stands therefore, this is a case of mistake or negligence from Lisa. However, mistake remains to be a complex area of contract law. As far as general rule is concerned, being negligent or mistaken by some aspect of the contract is unlikely to provide Lisa with a right to escape this contractual obligation---even though it looks fundamental. In recent court cases (Petelin v Cullen12), it has been observed that when speaking about negligent as it is the case of Lisa and within the context of non est factum, the reference is not made to the ‘tort of negligence’ but to mere failure where one party fails to take reasonable care and precautions in ascertaining the nature, content and character of a document before agreeing to take part in the contractual obligations. As a general rule and subject to some consumer protection laws within Australia (for instance where there is making of void unfair terms in consumer contracts nonetheless the agreement of the parties), Lisa is bound by the document she was given, regardless of whether she read or not. There is one exception to this rule which applies when the other contracting party (Lisa) is able to demonstrate that she did not understand the very nature of the document she was given. While this will be treated as ‘it is not my deed’ (a pleas of non est factum), that would not be applicable here because the case explains in part that, ‘…race track is quite clearly laid out with bouys and flag markers, and she has kayaked for many years and knows very well how to use them, so doesn’t see the need to read through the booklet.’ There is existence of heavy onus of individuals seeking to rely on the plea of non est factum as a result of strict requirements which have to be met.13 Further to the points above, the principle of incorporation by notice applies in this case. Lisa is bound by the terms of the activity because the notice to pay the registration was communicated to her in writing before commencing the activity. Courts have argued that for the other party to be bound by the contract terms, the issuer of the notice need to be reasonable and take the needed steps to give the class of person the existence of term.14 Since reasonable steps were taken by giving Lisa the document before commencing the activity, it does not matter if she did not read the term or that she was not able to read the terms. By virtue of these provisions, Lisa is obligated to pay $500 as registration fee for participating in the activity. Read More