Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia This is the prescribed textbook for your course. Available NOW at your campus bookstore!

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Contract Law Part 1 Chapter 7

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-2 Valid contract An agreement made between two or more parties, giving rise to legal rights and obligations which the law will enforce.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-3 Valid contract Intention to createLegality legal relationsof object Terms:- Express/implied OfferForm Acceptance Conditions Warranties Consideration Exclusionary clauses Reality ofCapacity of consent parties

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-4 Classifications ValidityPerformanceFormatFormation

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-5 Validity

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-6 Performance PERFORMANCE EXECUTED EXECUTORY One party to contract Both parties have has completed their part obligations to of the contract perform

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-7 Formation FORMATION EXPRESS IMPLIED QUASI Dependant on By operation of associated conduct law w WRITTEN SPOKEN

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-8 Intention to create a legal relationship Social/domestic agreementBusiness agreement Assumption No intention to create legal relationship (Balfour v Balfour) Intention to create legal relationship Prove Intention to create legal relationship (Todd v Nicol) (Wakeling v Ripley) No intention to create legal relationship Financial disadvantage leaving job Expenses incurred in moving Selling belongings Presumption rebutted in contract

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-9 Format SIMPLE FORMAL Verbal, written, implied Written Consideration must pass Does not require in both directions.consideration passing in both directions Statute of limitations – 3 yrs Statute of limitations - 12 yrs Contract of Record Contracts under Seal (Deeds)

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-10 Essential elements of a contract Intention to create a legal relationship Offer and acceptance Form and/or consideration Capacity of parties Reality of consent Legality of object

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-11 Offer Invitation to treat: An invitation to invite people to make offers. Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) 2 QB 795 Offer: A proposal by the offeror that if accepted by the offeree will create a legally binding contract.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-12 Rules with respect to offer An offer is not required to be in any particular form. The person who makes the offer is called the offeror; the person to whom the offer is made is the offeree. An offer can be made to one or more persons, even the whole world. All terms of an offer must be communicated to the offeree.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-13 Rules with respect to offer - termination An offer can be revoked at any time before acceptance. Revocation must be communicated to offeree. An offer will lapse if: 1.not accepted within the time stated, or 2.within a reasonable time, or 3.if a counter offer is made, or 4.if a party loses its contractual capacity. An offer can be revoked at any time: 1.before acceptance, and 2.if communicated to the offeree. An offer will be terminated if rejected. Death of the offeree or offeror may terminate an offer. An offer will be terminated if a condition precedent is not met.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-14 Rules with respect to offer - termination Termination of offer RejectionLapse Revocation Conditional Death of offer offeree/offeror

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-15 Rules of acceptance 1.Acceptance must be communicated to offeror by an authorised person. Exception: Offeror waives the right to receive notification of acceptance. Communication by post: (postal rule): If it is agreed that post is the method of acceptance and the letter is stamped and addressed correctly, acceptance occurs when posted. 2.Acceptance relies on the knowledge of an offer. 3.Acceptance must be unqualified. Acceptance can only be made by the offeree. Acceptance must take place within a prescribed time or within a reasonable time.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-16 Consideration Consideration can be regarded as something done or promised by one party (the promisor) in exchange for something done or promised by the other party (mutual promises).

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-17 Promisor and promisee Promisor Person undertaking to perform the consideration Promisee Recipient of the consideration

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-18 Rules of consideration 1.Past consideration not valid for simple contract. 2.Amount of consideration is irrelevant. 3.Nature of consideration must be definite. 4.Consideration must be able to be performed. 5.Consideration must not be illegal or unlawful. 6.Consideration must extend beyond what person is already obliged to do in terms of: a) requirement by law b) compliance with contract already existing. 7 Consideration must move from the promisee.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-19 Rules of consideration (continued) 8.Part payment of a debt will not be adequate consideration. 9.Consideration is essential in all simple contracts.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-20 Promissory estoppel If one party to a contract, by its behaviour, leads the other party to the contract to believe a certain state of affairs exists between them, the courts will support that state of affairs rather than the terms of the contract. Elements The promisee has altered their position in reliance on a new promise. It would be impossible for the promisee to return to their original position without detriment. It would be unfair for the promisor to renege.

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-21 Contracts required to be in writing Transfer of ownership of a British ship or share in a ship Appointment of an agent where the agent will be contracting by deed (Power of Attorney) Bills of exchange and promissory notes Cheques Assignments and mortgages of life insurance policies Assignment of copyright Contracts for marine insurance

Copyright 2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 7-22 Contracts required to be evidenced in writing Via Letters passing between parties Receipt for a deposit Cheque signed by the purchaser.