Understanding Contracts And Negligence In Australia

Verbal and written contracts

The law of contract is a civil law and which aims at bringing an association amid two private parties by establishing a legal document amid them. A contract is such legal document which is formulated by an offeror and an offeree by complying with all the essentials requirements of a contract formation. Thus, to have a good understanding of contract law, it is first important to understand its key elements the presence of which ensures a legally binding contract. (Latimer, 2016)

An offer is intention of the offeror which is transferred by him in the form of statement (orally or in written form) with intent to abide by the terms without bringing any variations and is held in (Smith v Hughes, 1871). An offer should come in the notion of the offeree to make it binding. An offer can be made to an individual to class of persons or to the entire world and is held in (Carlill v Carbolic Smoke Ball Co , 1893).

An offer without any approval has no relevance in law. When the offeree to whom the offer is made, gives consent to the offer terms unambiguously and absolutely then such an acceptance is legal in law and is held in (Crown v Clarke, 1927). An acceptance when comes in the notion of offeror makes a binding agreement and is held in (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd , 1888). But, an acceptance by post is enforceable immediately on the post of the acceptance letter and is held in (Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH, 1983). (Furmston & Tolhurst, 2010)

But, to convert an agreement into an enforceable contract there is a need of consideration. A consideration is a benefit or detriment which is accrued to one party in exchange of the promises that are made by them and is held in (Coulls v Bagots Executor & Trustee Co Ltd, 1967). It is anything of value and need not be adequate but be sufficient to hold the promises enforceable in law and is held in (Cole v South Tweed Heads Rugby League Football Club Ltd, 2004).

However, it is also important that the parties who are entering into an agreement must not be barred in law and must be of sound mind and have attained an age of majority. Also, when making the promises, both the offeror and the offeree should have legal intent to bind by the promises so made. In (Balfour v Balfour , 1919) the presumption of legal intent is not present in family contract but in (Rose and Frank & Co v Crompton, 1923) the legal intent is present in commercial contracts. But, these presumptions are rebuttable.

The essential elements of a valid contract

There is yet another kind of contract that is normally found and is called Standard form of contract.

Generally, the parties to the contract enter into several discussions and negotiations before making any contract and the terms are binding on both the parties. But, when only one party to the contract frame the contract terms without the involvement of the other party and such other party has no choice either to accept the contract or abide by the pre decided term or just reject the contract. Thus, such contract which is framed by one party are called standard form of contracts and is analyzed in (Toll (FGCT) Pty Limited v Alphapharm Pty Limited, 2004). (Latimer, 2016)

When any party accepts the standard form of contract, then, the terms of the contract are binding upon the parties. But, many a times there are certain term which is considered to be unfair in nature. An unfair term is those term which are of such a nature that hampers the legitimate interest of the other party or inequality in the bargain power, etc. If the unfair term can be segregated from the contact then only such term is considered to be unfair and the rest of the contract is valid otherwise the whole of contract is treated as void.

Now, in contract law, the contracts can be wither written or oral.

A written contract is formed when the term are captured on a piece of paper in black and white form. Both the parties sign the contract and are bound by the terms of the contract. A written contract is simple to construe and thus results in having a best piece of evidence in situations of conflicts. But, verbal or oral contract are made amid the parties by exchange of words and are bound by the terms that the parties intend to be abide by. These contracts are very difficult to prove because of lack of any textual evidence. (Law, 2018)

Both the contract has legal sanctity in law and is enforceable.

Now, when the parties establish a contract, then, they are liable to comply with the terms of the contract. If any party breach any term then the consequences depends upon the kind of term that is breached. Thus, terms in the contract are of two major kinds.

Conditions are the terms that are the root of the contract and the compliance of the same is necessary to achieve the very objective of the contract. It is the soul of the contract and no contract can into existence without such terms and is held in (Poussard v Spiers and Pond , 1876). Any default in the compliance of the condition results in non performance of the contract and the aggrieved party has the right to terminate the contract and claim damages.

The terms and conditions of a contract

Warranties are the terms that are not the essential terms and are only needed for the compliance of the conditions. Thus, even if these terms are not fulfilled then the only remedy that can be availed is damages and there can be no termination of the contract and is held in (Bettini v Gye , 1876).

Further, when contract is made amid the parties then there are several manners in which the contract can comes to an end. The methods include:

1. When the parties comply their contractual obligations, then the contract comes to an end by performance;
2. When the parties does not want to comply their contractual obligations and intend to relive themselves from the contract, then, by entering into the agreement the contract can be terminated by the parties mutually;

• When a breach to the contractual term is incurred by one party, then, the non defaulting party has the right to bring the contract to an end;

1. At times, the contract is valid when the same is formulated and the parties are also willing to comply with the contract terms, but, because of some supervening event, the performance of the contract becomes impossible, then, the contract comes to an end on account of frustration.

So, a contract is a private document which brings an association amid the parties. The parties must comply with the terms to achieve with the objective by taking into consideration the various aspects of the contract law.

The law of negligence is a civil law and aims at compensating the victim who has suffered injuries because of the wrongful actions of the defaulter. In Australia, the fundamental theme while carrying out any act or omission is that no harm should be caused to any person or property which is reasonably foreseeable by the action doer. The fundamental approach towards the application of the law of negligence was found in (Donoghue v Stevenson , 1932) wherein the duty of care is enshrined upon the manufacturer towards the consumers.

This rule of law that relating to the law of negligence that was established in (Donoghue v Stevenson , 1932) was later extended and now no defendant is permitted to take acts or inactions which might cause harm to the reasonably anticipated plaintiff. It was held in (Caparo Industries PLC v Dickman , 1990) that to make any defendant liable for the acts of negligence the prime elements that are needed are: (Latimer, 2016)

1. Duty of care – When the defendant indulges himself in any act/inaction, then, it is his paramount responsibility to make sure that because of his acts there should not be any negative impact that is suffered to the plaintiff and is analyzed in (Grant v Australian Knitting Mills , 1936). But, the duty under negligence is only enshrined on the defendant when:
2. That the relationship that is shared by the plaintiff and the defendant must be proximate. The proximity principle submits that the plaintiff is the neighbor of the defendant and the acts that are undertaken by the defendant will bring an impact on the plaintiff directly and thus it is the deity if the defendant to provide care towards such plaintiff and is held in the leading case of (Palsgraf v Long Island Railroad Co, 1928).
3. Also, even if the plaintiff is directly impacted by the acts of the defendant, but, the duty of care is only imposed towards those plaintiff who are reasonably foreseeable and not which in no manner can be predicted by the defendant and is held in the leading case of (Wyong Shire Council v Shirt:, 1980).  
4. Breach of duty of care – So, when a duty of care is imposed on the defendant, then, it is his responsibly that the care should be met in most appropriate manner. Now, the most appropriate manner depends upon the situation in which care is to be carried on. The level of care differentiates depending upon the situation, that is, higher the risk brings higher level of care, vulnerability of the plaintiff requires higher level of care, etc. Thus, when the level of care that is expected from the defendant is not met by him then the duty is considered to be beached and is held in ( Bolton v. Stone, 1951).

• Damages – It is a settled law that every defendant should provide care to the plaintiffs who are his neighbors and are reasonably foreseeable, the duty when not met as expected by him, that is, what a normal prudent man will do in the similar situation, then the duty is said to be violated. But, once the duty is violated, then, it is necessary that because of the violation there should be some harm that is caused to the plaintiff. But, the defendant is not liable for every harm that is suffered by the plaintiff. The defendant is answerable to such harm which is:

1. It is necessary that the damage that is caused to the plaintiff is not remote in nature and can be predicted by the defendant like a normal prudent person in the similar situation. Thus, the defendant is not answerable for losses that are remote in nature and is held in ( Overseas Tankship (UK) Ltd v The Miller Steamship Co (Wagon Mound No. 2), 1966).
2. Also, the defendant is liable for such losses which are suffered by the plaintiff because of the breach of duty of care. If the loss is not associated with the breach then there is no causation and the defendant cannot be held liable for the same.

So, when the duty of care that the defendant is obligated to be met is not comply with as the level of care fall short of the expected level of care and because of such breach there is loss that is caused to the plaintiff which is not remote and establishes causation, then, the defendant is held liable to be negligent in his actions.

But, every defendant has few defenses that he can avail to his own benefit, these includes:

1. When the loss that is caused to the plaintiff is because of his own negligence knowing the risk that is associated with the acts he is indulging into, the defendant has let the plaintiff aware of the risk and the risk is assumed voluntary. So, the defense of voleti non fit injuria can be attained;
2. When the loss is caused to the plaintiff because of the negligence of both the plaintiff and defendant, then, the liability of the defendant is reduced proportionately.

So, all the elements of negligence should be proved to hold the defendant negligent, but, he can protect himself by availing the defenses.

Bolton v. Stone (1951).

Overseas Tankship (UK) Ltd v The Miller Steamship Co (Wagon Mound No. 2) (1966).

Balfour v Balfour (1919).

Bettini v Gye (1876).

Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH (1983).

Caparo Industries PLC v Dickman (1990).

Carlill v Carbolic Smoke Ball Co (1893).

Cole v South Tweed Heads Rugby League Football Club Ltd (2004).

Coulls v Bagots Executor & Trustee Co Ltd (1967).

Crown v Clarke (1927).

Donoghue v Stevenson (1932).

Donoghue v Stevenson (1982).

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1888).

Furmston, M., & Tolhurst, G. (2010). Contract Formation: Law and Practice. OUP Oxford.

Grant v Australian Knitting Mills (1936).

Latimer, P. (2016). Australian Business Law 2016. Oxford University Press.

Law, F. (2018). Is a verbal agreement legally binding? Retrieved September 29, 2018, from Find Law: https://www.findlaw.com.au/articles/5626/is-a-verbal-agreement-legally-binding.aspx

Palsgraf v Long Island Railroad Co (1928).

Poussard v Spiers and Pond (1876).

Rose and Frank & Co v Crompton (1923).

Smith v Hughes (1871).

Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004).

Wyong Shire Council v Shirt: (1980).