1. (a) Explain how the contracts Avinash made with the café were formed.
You will need to address all the essential elements of a contract, as well as analyse the legal status of each step or event that led to the café supplying Avinash with its products. Refer to relevant case law. In this part, do not discuss the impact, if any, of consumer protection laws.
You may, but are not obliged to use the IRAC format for this part, given that each step or event must be analysed separately.

2. Explain whether the café is legally entitled to rely on the clause printed on the ticket to avoid liability in relation to Avinash’s injury. For the purposes of this part you should consider both common law as well as legislation ( also confirming whether Avinash is a ‘consumer’).
Please use IRAC format for this part.
 

 

Answer:

Issue:

• Had a Contract been formed between the Café and Avinash?

Rule

It is to be mentioned that there exists four most important essentials of a valid contract. The aforementioned essentials elements of the valid contract are:

• Offer
• Acceptance
• Intention to create legal relations
• Consideration

Offer:

An offer is a statement of expression intending to create legal relation between the two parties.An offeror makes an offer to the offeree. Offer cannot be incomplete if is to be treated as a valid offer. Offer cannot be made on ambiguous terms and incomplete terms. In the case AGC (Advances) Ltd v McWhirter an offer would be considered to be an invitation to treat if the terms of such offer are missing 

Acceptance:

Acceptance of an offer is required in order to form a contract. The principles of valid acceptance have been demonstrated in the case Hyde v Wrench. The person to whom the offer is made can only accept such offer. Any other person accepting the offer would not constitute valid acceptance. Offer has to be accepted on the terms as proposed in the offer. If the terms of offer are changed it would be considered to be a counter offer. Acceptance should be equivocal and person making such offer has to be informed about its acceptance. 

Intention to Create Legal Relation:

In the case Carlill v Carbolic Smoke Ball Company it was held by the court that the intention of the parties of creating legal relationship has to be assessed from a reasonable man’s perspective who placed in the same position as the plaintiff. The parties to a contract must intend to be legally bound. It was held by the court in the case Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd an objective test needs to e applied in order to assess whether the parties to intended to be legally bound.

Consideration:

Consideration is an important element of a contract. Consideration is considered to be  the price which the promisor fixes for fulfilling the promise as mentioned in the Carbolic smoke ball case. The nature of consideration has been elaborately discussed in the case Chappell & Co Ltd v Nestle Co Ltd. It is the duty of the promisor to stipulate such consideration in the contract. 

Application

In this picked contextual analysis one might say that self-service facility of the cafe which gives a menu to the clients is a solicitation to an offer however not simply the offer as held in the case AGC (Advances) Ltd v McWhirter. It is simply an invitation to treat. The demonstration of Avinash’s putting in a request in the café in the form of an order from the virtual menu constitutes valid offer. 

The demonstration of the cafe accepting the request of Avinash constitutes legitimate acceptance. In this situation, the Café acknowledges Avinash’s order on the terms he proposed. The news of acceptannce of offer was imparted to Avinash by the printed ticket given by the Café to Avinash. The printed ticket by the cafe is the confirmation of acknowledgment of the offer. 

In the case Air Great Lakes Pty Ltd. it was held that an objective test is to be connected to assess whether the parties to the contract planned to make legitimate legal relations. One might say that any sensible individual, set in the circumstance of the offerer would have acted similarly and would have proposed to make lawful relation while entering into the agreement. The correspondence of the news of acknowledgment by issuance of the ticket likewise reflects the purpose of the cafe to make legitimate relations with the aggrieved party.

As held in the Carbolic Smoke ball case consideration is the value which is fixed by the promisor for fulfilling the promise. In this situation the consideration is the cost paid by Avinash in return of the food and drink.

Conclusion

Thus to conclude it is to be stated that a valid contract was formed between the café and Avinash and all the important elements of a valid contract had been present in the contract formed between the aforementioned parties.

Part B

Issue

• Can the exclusion clause limit the liability of the café?
• Is Avinash eligible in claiming damages?

Rule

The issue in this scenario is the existence of an exclusion clause in a contract. Exclusion clause is a term whose purpose is to limit or restrict the liability of one of the parties in a contract as held in the case L’Estrange v Graucob.

In the case Darlington Futures Ltd v Delco Australia Pty Ltd  the court held that exclusion clauses in business contracts are required to be treated in the same way as any other contract term. Curtis v Chemical Cleaning Co. is an appropriate case regarding this matter. It has been observed that if a party signed on a receipt or ticket unaware about the fact and the authority does not inform him about the facts, authority will bear all the liabilities in case of subsequent event. In Chappelton v Barry UDCC, the court has held that signing party could not know what is written in the backside of the ticket, therefore, he will not be liable unless the authority informed him about it.  

As indicated by area 64A of the Competition and Consumer Act 2010 (Cth), changes to in contract terms are just allowed in specific conditions to give solutions for the providers against claims of the clients because of the exclusion clause. Be that as it may, such remedies are not accessible to providers, giving products and ventures which are utilized for individual, domestic and family purposes. As expressed in the Section 64 of the Australian Competition and Consumer Act 2010 (Cth) it is to be said remedies and warranties which are provided to consumers cannot be revoked. Any endeavor to do as such would be viewed as void.

There are certain tests regarding the incorporation of unsigned documents. In Parker v South Eastern Railway Co., it has been held that effective notice should be provided to the signee regarding the doable terms. Further in case of Thornton v Shoe Lane Parking Ltd.  it has been held that representation of the exclusion clause at the back of a ticket will not reduce the defendant’s liability.

Exclusion clause helps a party to avoid their liability in a contract. However, there are certain ways to challenge the clause. In Olley v Marlborough Court, it has been observed that the hotel owners are liable to narrate the information printed on the backside of the door. In the absence of such narration, the exclusion clause of the owner can be challenged.  

Section 18 of schedule 2 of the ACL states that a person involved in commerce and trade is prohibited from engaging in misleading and deceptive behavior. Section 51-59 of the ACL deal with the guarantees of consumers in relation to supply of goods.

Section 60-64 of the act deal with guarantees of consumers related supply of services.

Section 260 of the ACL states that a manufacturer or supplier has legal obligations to the consumers in case goods and services provided by them majorly fail to comply with the consumer guaranties.

Section 64(a) of the ACL states that any change in the contract terms is permissible in exceptional cases when such revised terms aim to provide remedies to the suppliers against claims of consumers. However, according to section 64 the warranties and guaranties of consumers cannot be taken away.   

Application:

In this scenario a contract had just been created between Avinash and the café when he submitted the order for the cappuccino and the Danish cake and the café acknowledged his request and issued a ticket which was a proof of the correspondence of acknowledgment. It is to be noticed that at the time of entering the agreement, he was not made mindful of any exclusion clause which could confine or restrict the obligation of the café in the event of any damage sustained by any buyer by utilization of any nourishment or refreshment sold by the café.

 Therefore as explained above in the Thornton v Shoe Lane Parking Ltd case the exclusion clause cannot be effective as a mere representation of an exclusion clause printed on the back of a ticket will not restrict of limit the liability of any party in a contract. As such clause is not expected to attract the attention of the consumer. In addition it can be said that the ticket produced by the café was a proof of valid acceptance of offer which makes the contract binding upon the parties. As held in the aforementioned Thorton case any exclusion clause if existing must be communicated to a party prior to contract formation. The representation of the exclusion clause in the ticket therefore becomes invalid.

Had the exclusion clause been specified preceding the development of the contract it would have regarded as the essential terms of a contract as held for the situation Darlington Futures Ltd v Delco Australia Pty Ltd. Furthermore, it is to be said that the beverages and food sold by the cafe are for individual consumption and are not therefore allowed constrained obligation because of the exclusion clause. For this situation the endeavor of the cafe to confine its risk takes away the assurance of the consumer which will make this exclusion clause void as expressed in section 64A of the Australian Competition and Consumer Act 2010 (Cth).

Conclusion

Thus to conclude it is to be stated that the café is not permitted to avoid its liability against the claim of Avinash due to the existence of the exclusion clause incorporated at the back side of the Ticket issued by them. Avinash is justified in making his claim.

Express and Implied Terms of a contract

Introduction

Every valid contract has a set of terms which are either express or implied that govern the relationship of the parties and are binding upon the parties. The rights and duties of the parties in a contract are called its terms.

Express Terms

An expressed term in a contract is a term which is clearly expressed in the contract either in writing or verbally and which has been agreed upon by the parties while entering into such contract as held in the remarkable case Wilson v Best Travel.There are several types of express terms in a contract which are not very clear. They are:

• Pre-Contractual Statement
• The terms that were displayed
• Incorporation of terms while dealing

Pre-Contractual statements- It is mostly difficult to assess or examine the statements that were made prior to entering into the contract. To assume the pre-contractual statements it is necessary to categorize them and assess them individually. The following are the categories of the pre-contractual statements:

Term of a contract- For a contract term to be valid, the parties to the contract must have intended it to be promissory. It must aim to create legal relations. The intention to create legal relation by the parties is generally determined by the court objectively as held in the case Ellul and Ellul v Oakes

Collateral Contract- It can be said that pre-contractual statements may initiate a collateral contract. In such a case a main contract and an oral contract are formed together. The principles required for establishing a collateral contract has been described in the case Shepperd v The Council of the Municipality of Ryde(1952)

Representations- It is to be mentioned that pre-contractual statements which are terms will also be treated as representations. However if such representations are found to be false, the parties will have remedies as held in the case Ellul and Ellul v Oakes

Terms that are displayed-Express terms need not necessarily be pre-discussed by the parties prior to entering into the contract. For instance the terms of a contract can be included by exchange of written terms which are displayed on notice boards and tickets. However such terms must be displayed prior to execution of the contract as held in the case Thornton v Shoe Lane Parking Ltd.

Conditions:

Conditions play an important role in case of every contract as non-fulfillment of the terms may affect the validity of the contract. It is a form of stipulation and any breach of it gives right to either party to repudiate the contract. 

Warranty:

Warranty is less important compare to the conditions. Non-fulfillment of the same does not affect the party and it is subsidiary to the goal of the contract. If any breach made regarding the warranties, the affected party can claim compensation, but they could not repudiate the contract. In Wallis Sons and Wells v Pratt, it has been held by the court that a party can change the condition into warranty only to make a claim for compensation from the other party.   

Implied Terms-

Implied term is an arrangement in an agreement which despite the fact that isn’t communicated or settled upon by the gatherings yet is accepted to be added to the agreement by the courts and by statutory provisions. In the noteworthy case The Moorcock(1889) 14 PD 64 court held that an implied term is imposed if the court assesses that usage of such term is essential for fulfilling alternate terms of the agreement and keeping it legitimate. The implied term of the agreement is to be evaluated from the perspective of a reasonable individual to see whether a sensible individual would have thought about the nearness of such an implied term. For the situation Shirlaw v Southern Foundries the court found that implied term can’t be imposed on an agreement since it is reasonable for do as such.

Contract term existing in question one

 A contract was initiated between Avinash and the café when Avinash ordered for food and beverage from the virtual menu presented to him by the café. The contract was formed when the café accepted his order and communicated the acceptance of the order by the printed ticket. The terms of the contract were clearly express as the menu from which the order was placed was an invitation to treat and the act of ordering from the same menu constitutes an offer made on the same terms as stated in the menu.

Conclusion

Thus to conclude it can be said that both express and implied terms are significant in a contract. The express terms are those terms which are clearly mentioned in the contract and agreed upon by the parties while entering into such contract. The implied terms on the other hand are those which are not express but believed to be present by the court for the purpose of carrying out the contract. Thus, after analyzing both the types of terms, it can be said that in the aforementioned question presented the terms of a contract were clearly express.  

Bibliography

AGC (Advances) Ltd v McWhirter(1977) 1 BLR 9454

Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2 NSWLR 309

Carlill v Carbolic Smoke Ball[1893] 1 QB 256

Chappell & Co Ltd v Nestle Co Ltd[1960] AC 87

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500

Ellul and Ellul v Oakes (1972) 3 SASR 377

Hyde v Wrench[1840] EWHC Ch J90

L’Estrange v Graucob [1934] 2 KB 394

McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.

Shepperd v The Council of the Municipality of Ryde (1952) 85 CLR 1

Shirlaw v Southern Foundries [1939] 2 KB 206

Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686

Willmott, Lindy, et al. “Contract law.” (2013)

Wilson v Best Travel [1993] 1 All ER 353