Contract Law Elements and Case Examples

Question: Discuss about the Contract Law for Elements and Case Examples. Answer: Consideration and Enforceable Agreement Before implementing any sort of a contract or an agreement, it is important to focus on the consideration aspect. Consideration is something with a monetary value gives to one of the parties who is providing some of the benefits to the other part in the form of a favor, act, forbeance, promise, right, or any sort of good and services. Without consideration, no contract or an agreement would be enforced by law, as according to the laws mentioned in the contract act, all the contract should be having the aspect of consideration as in the absence of the same, it will not be termed under the contract law. This consideration has been an effective part for most of the contract parties to determine whether how they would be accepting the offer and proposal offered by the offerree. All the contracts have four basic elements, which are to be followed by the parties. If either of the aspect were not being taken in to account, then it would never be considered as a contract. These four elements are classified as, Offer, Consideration, Acceptance, and Legal enforceability. (australiancontractlaw, 2010) In this case as well, consideration has been one of the most important factors as the car, which is being sold by Jane. The total amount, which will be a consideration in this aspect, for the car is $25,000. Therefore, in this case, $25,000 is basically the total amount of consideration for the car, which is to be sold. Following are the cases, which are to be analyzed in the respect of the mentioned scenario. (Government, 2012) In the given scenario, Jane is moving oversees and therefore, she is planning to sell the car, Lotus Super 7. For this reason, as per the market value, the car could have been offered to Jack at the price of $25,000, as per the market valuation of the car. She had just decided for a fact that she will give the car and there was no consideration as accepted by either of the parties. The offer was accepted by jack at the given price and therefore, it can be said that the agreement was made between both the parties. As per the laws mentioned in the contract act, if both the parties are agreeing to the given conditions and considerations, the agreement can be enforceable by law. For this reason, it can be said that both the parties will have to make sure that all these aspects are being presented in the best possible manner in a contract with the legal enforcement. Hence, the contract law states most of the principles and laws, which would be aiding both the parties to make sure that the process is executed in the best possible manner without having any sort of an issue. Apart from this, these principles are most important factor, which are to be considered with the help of which the legal matters would be an easier task for both the parties. Section 2 of the contract act does play an important role in the determination of the fact that the enforceability would play an important role in the whole scenario. Not only this, the principles as laid down in the act would be benefitting both the parties in the long run as all these mentioned aspects would aid them in referring to contract in the future. Therefore, it can be said that as Jack has accepted the offer to buy the car at the given rate, it should be considered that law, and all the norms of the contract should be applied and followed in the whole scenario, by both the parties, should enforce upon the agreement. (LawHandbook, 2006) In the second part, it has been observed that Jack has accepted the offer to pay the amount of $25,000 for the car. Jack as per the market valuation accepts this total amount. For this purpose, it can be said that the contract act would be having principles, which would lead Jane to make the offer for the given amount. Jack had readily accepted the offer because of which the law regarding this aspect in the contract law would be applied in the best possible manner. All these aspects are to be considered as per he contract act in the long run. The major aspect, which is to be considered in this scenario, is because of the fact that the agreement between both the parties, once accepting the whole scenario, can be actually laid under the norms of contract act. In this scenario, Jack has accepted the offer in the best possible rate, as that was the market valuation of the car. Jane readily accepted the total amount, which was to be paid by Jack, without having any sort of negotiations regarding the car, which was to be sold. The contract act plays the most important role in the determination of the fact that whether both the parties would readily accept the whole scenario without making any sort of negotiations. In this regard, it can be said that the principles as laid down in the contract act will be strictly followed to make sure that all the steps are taken with respect of the contract act. (Monash University, 2012) In the third scenario, the car was being offered to Jack at the price, which was way lesser than the actual valuation of the car. The market value of the car was $25,000, whereas Jane was offering the car at the price $2,500. This price was actually really lower than the market value of the same. This leads to the fact that most of the times, when a person is actually selling a commodity at a price, which is not as per the valuation of the car in the market. As per the market valuation of the car, $25,000 was the real amount and hence, the amount as offered by Jane was relatively very cheap and therefore, Jack had readily accepted the offer, as it was a fruitful offer. Hence, it should be said that as the market value of the car was more than the rate at what it was being offered, the car was being sold at a very cheap rate. This car could have bee sold to any other person, or even to Jack at the market valuation. It greatly depends upon the offer or to determine the price of the com modity. Jack would readily accept the offer, as the price of the car as per the market has been quite low. For this reason, it is effectively important to make sure that the contract has been signed between both the parties as in the absence of the same, either of the party can change its statements because of which there can be a legal suit against either of the parties. Therefore, it can be said that the most important factor has been the fact that when a consideration has been determined at an unexpected rate or price, a contract should be formed between the parties, as it would be used as proof whenever it is being required by either of the parties. Issue The ship building company was contracted to build a ship for the North Ocean tankers, with proper terms and conditions. It was stated in the contract that no extra amount would be paid by north ocean tankers for the services as provided by the ship building company. There were no terms and conditions, regarding all the fluctuations in the currency of the country. It was agreed upon by the all the parties concerned regarding the payment will be done in Dollars and no action would be taken, if there were situations where the currency is being fluctuated. No extra amount would be paid for the same. As per the case, the US dollar got adjusted and the government had made sure that the currency is adjusted by almost 10 per cent for the betterment of the society. There are situations where the economy of any country have to take up certain decisions, which would directly impact the society and the economy, be it for a fact, that it can be appreciation or depreciation of the currency. Regard ing this, after observing all the changes, the adjustment in the currency would be, the ship building company had determined to demand an extra amount of $3 million. In order to make sure that the delivery of the ship is being done on time and without any delay, North Ocean tankers had decided to make the payment to the ship building company. Therefore, in order to make sure that the work is done without any delay, the payment of the whole extra amount was done and hence the delivery was made. After several months have been crossed, the North Ocean Tankers had decided to file a suit against the ship building company and demanded back its extra amount as paid to them for the adjustments of the currency. Rule The concerned parties were formulating the contract after the contract was agreed upon. As per the law, the company should make sure that all the principles and regulations, of the contract act, as mentioned in the contract deed, between both the parries, should be followed. The Australian Contract Law does not allow the company to do any sort of an activity, which is beyond the clauses and norms as stated in the contract. All the activities, which are being performed by all the parties in the contract, beyond these clauses and rules in the contract, would be considered as illegal and hence strict action can be taken by the party to ensure that the issue regarding the same is resolved, in the most efficient way. The court of law would not allow doing such activities, which will terminate the clauses of the contract as mentioned in deed. Therefore, it can be said that any contract, which has been formulated, by two parties have to follow these certain laws and regulation as stated in the contract act to avoid any kind of an issue in the coming years or during the course of the company. (Sydney Government, 2012) Application In this case, as well, both the companies will have to follow the norms and principles as mentioned in the contract act of Australia. For this reason it should be said that there are certain actions, which had been taken place in this case. The activity as done by the North Ocean Tankers, was beyond the principles of the contract act. For this reason, it became an important aspect for both the companies to make sure that no activity beyond the whole contract is being conducted. The extra amount, which was being paid by the company, was not as per the contract signed between the parties, involved. For this reason, it stated that the contract was nit obligated as per the clauses mentioned in the same. The total extra amount, which was paid by the company, was not determined in the initial stages. Hence, nothing regarding the extra amount was discussed in the whole contract. Yet the company had paid 3 million extra in order to make sure that they get the delivery of the ship on time and their work is actually carried out as per the mentioned deadline. Not only this, the extra amount, which was being demanded by the shipbuilding company, was due to the fluctuations in the currency rate of the country. Hence, it should be noted for a fact that as it was mentioned in the contract that no extra payments would be made, under any circumstances, North ocean tankers were not at all under any obligation to make the payment. As they made the payment, the contract was broken intentionally. Therefore, all the rules and regulations of the contract act, the contract was breached by North Ocean Tankers and hence, it is not advisable for them to file a suit against the company as the total amount would not be reimbursed by the shipbuilding company. Hence, it should be said that under these circumstances, the company will not be refunded. The refund amount of 3 million from the shipbuilding company as, in the non-existing of the contract, there was no agreement or contract between either of the parties regarding the extra payment, which is to be made. (Government, 2012) Conclusion To conclude, both the parties should execute the principles of the contract act plays a major role in the whole case, as there has been a contract between both the parties for the betterment of the whole deal. If any of the activity is being done, which is beyond the rules and norms of the contract act, it can be said that the principles of the contract act, is being terminated and legal action can be taken or executed in order to make claims regarding the same. References Government. (2012). CONTRACTS REVIEW ACT 1980. Retrieved August 19, 2016, from www.austlii.edu.au: https://www.austlii.edu.au/au/legis/nsw/consol_act/cra1980201 Sydney Government. (2012). Contract law. Retrieved August 19, 2016, from www.sa.gov.au: https://www.sa.gov.au/topics/crime-justice-and-the-law/contract-law Law resource. (2013). Contract consideration. Retrieved August 19, 2016, from e-lawresources.co.uk: https://e-lawresources.co.uk/Consideration.php Government. (2011). consideration . Retrieved August 19, 2016, from dictionary.cambridge.org: https://dictionary.cambridge.org/dictionary/english/consideration Legal Information Institute. (2015). Consideration. Retrieved August 19, 2016, from www.law.cornell.edu: https://www.law.cornell.edu/wex/consideration Goon, S. (2012). Rules of Consideration in Contract Law: Elements Case Examples. Retrieved August 19, 2016, from study.com: https://study.com/academy/lesson/rules-of-consideration-in-contract-law-elements-case-examples.html Australiancontractlaw. (2010). Legislation. Retrieved August 18, 2016, from www.australiancontractlaw.com: https://www.australiancontractlaw.com/legislation.html LawHandbook. (2006). Elements of a contract. Retrieved August 18, 2016, from www.lawhandbook.org.au: https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/ Monash University. (2012). Commercial law: Contract law . Retrieved August 18, 2016, from guides.lib.monash.edu: https://guides.lib.monash.edu/commercial-law/contract-law Booker, N. (2012). Australian Government Review of Australian Contract Law. Retrieved August 18, 2016, from www.lawsociety.com.au: https://www.lawsociety.com.au/cs/groups/public/documents/internetyounglawyers/644777.pdf Business dictionary. (2011). consideration . Retrieved August 18, 2016, from www.businessdictionary.com: https://www.businessdictionary.com/definition/consideration.html Government. (2012). Contract law. Retrieved August 18, 2016, from www.sa.gov.au: https://www.sa.gov.au/topics/crime-justice-and-the-law/contract-law