Assignment Overview Issue 1: Was a contract for the refund of the tickets formed between Alex and the Comedy Festival (EBCT)? Issue: The issue here is whether a legally binding contract was formed between Alex and EBCT, based on the advertisement promising a refund for attending five Comedy Festival shows. Did the advertisement constitute a binding offer, and if so, did Alex’s actions and the terms of the advertisement satisfy the requirements for a valid contract under Australian contract law?
Rule: For a contract to be valid under Australian contract law, the following elements must be established:
Offer: A clear expression of willingness to be bound by specific terms, capable of acceptance by another party (Carlill v Carbolic Smoke Ball Co [1893]).[1]
Acceptance: The acceptance must be unequivocal and must correspond to the terms of the offer (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988)).[2]
Consideration: Consideration involves the exchange of something of value between the parties (Australian Woollen Mills Pty Ltd v The Commonwealth (1954)).[3]
Intention to Create Legal Relations: Both parties must intend to enter a legally binding agreement (Taylor v Johnson (1983)).[4]
Revocation: An offer can be revoked before acceptance unless the offeree has already commenced performance in a unilateral contract (Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998)). [5]
Application: Offer: EBCT’s advertisement can be interpreted as a unilateral offer, as it set out clear terms that were capable of being fulfilled by the public, much like the advertisement in Carlill v Carbolic Smoke Ball Co.[6] The offer was clear, promising a refund if attendees went to five shows, which demonstrates EBCT's willingness to be bound by those terms.
Acceptance: Alex’s attendance at five shows constitutes valid acceptance by conduct, which aligns with the principle in Errington v Errington [1952].[7] In unilateral contracts, acceptance occurs when the act required by the offer is performed. Here, Alex completed the act by attending the shows, meaning the contract was formed at that point. A potential issue arises regarding Alex’s awareness of the offer when performing the act, as seen in R v Clarke (1927), where the High Court held that a person must be aware of an offer to accept it.[8] Assuming Alex knew about the refund offer before attending the shows, this condition of acceptance was satisfied.
Consideration: Alex’s purchase of tickets and attendance at the shows provided valid consideration. In Australian Woollen Mills Pty Ltd v The Commonwealth, consideration was defined as a benefit or detriment exchanged between the parties. The expense and effort involved in attending the shows meet the requirement for consideration.[9] Even if attending the shows is something Alex may have done regardless, by fulfilling the condition set by EBCT, his actions count as valid consideration. This aligns with Carlill, where the court held that the completion of the act requested by the offer was sufficient consideration.[10]
Intention to Create Legal Relations: The commercial nature of EBCT’s advertisement strongly implies an intention to create legal relations. In Carlill, the court found that a reasonable person would view the advertisement’s promise as serious. EBCT’s refund offer in a commercial context would be seen as creating a legally binding obligation.[11] While it could be argued that the advertisement was a marketing tactic, the clear promise and explicit conditions suggest an intention to be legally bound. The reasonable person test supports the conclusion that EBCT intended the offer to be taken seriously.
Revocation: The issue of revocation arises because EBCT attempted to withdraw the offer after Alex had performed the required acts. In Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd, the court held that a unilateral offer cannot be revoked once the offeree has commenced performance.[12] Since Alex had completed the required performance by attending the shows, EBCT was no longer able to revoke the offer. Additionally, the timing of the revocation is critical. Under Byrne v Van Tienhoven (1880), revocation must be communicated to the offeree before acceptance.[13] In this case, Alex had already performed the necessary actions before EBCT attempted to revoke the offer, making the revocation ineffective.
Alcohol Clause: EBCT’s website included a clause barring claims if attendees consumed alcohol from "Drinks," but Alex only consumed non-alcoholic beverages from “Drunks.” As such, the alcohol clause is irrelevant to his situation. Furthermore, according to Byrne v Van Tienhoven, terms introduced after acceptance cannot retroactively affect the contract unless explicitly agreed upon.[14] Since the alcohol clause was not part of the original offer and Alex did not agree to it, it does not impact his right to a refund.
Conclusion: A valid contract was formed between Alex and EBCT under Australian contract law. EBCT’s advertisement constituted a unilateral offer, setting out clear terms (attendance at five shows) in exchange for a refund, similar to Carlill v Carbolic Smoke Ball Co.[15] Alex’s attendance at the five shows constitutes valid acceptance by conduct, as established in Errington v Errington.[16] Consideration was provided through Alex’s purchase of tickets and attendance at the shows, satisfying the requirement for something of value to be exchanged between the parties (Australian Woollen Mills Pty Ltd v The Commonwealth).[17] EBCT’s attempt to revoke the offer after Alex’s performance was completed is ineffective, as established in Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd.[18] The alcohol clause introduced by EBCT has no effect since it was not part of the original offer. Therefore, Alex is entitled to the refund as a valid contract was formed, satisfying all necessary elements under Australian contract law.
Issue 2: Was a contract for accommodation formed between Alex and Olly? Issue: The issue in this case is whether a legally binding contract was formed between Alex and Olly regarding Alex’s stay at Olly’s residence. Was the arrangement between them, which involved Alex staying at Olly’s place, supported by an offer, acceptance, consideration, and an intention to create legal relations?
Rule: For a contract to exist, the following elements must be established:
Offer: An offer must be made and communicated to the other party (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988)).[19]
Acceptance: The acceptance must correspond to the terms of the offer and be unequivocal (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd).[20]
Consideration: There must be something of value exchanged between the parties, which can be monetary or otherwise (Beaton v McDivitt (1987)).[21]
Intention to Create Legal Relations: Social agreements, such as those between friends, may not be legally binding unless there is a clear intention to create legal relations (Balfour v Balfour [1919]).[22]
Application: Offer: Alex’s email request to stay at Olly’s place during April constitutes a clear offer. Under contract law, an offer is a proposal to enter into a contract, provided it is accepted by the other party. Alex’s request was specific, setting out the duration and terms of his stay. This satisfies the requirement for an offer as established in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd.[23] Olly’s response, “Sure darling, everything ok?” acknowledges the offer. However, her later imposition of conditions requiring Alex to stay out until 10 pm and clean up modifies the original offer. This response may be interpreted as a conditional acceptance or a counter-offer, following Hyde v Wrench (1840), where any change to the terms constitutes a counter-offer.[24]
Acceptance: Olly’s acceptance of Alex’s offer is evident from her response and the conditions she imposed. Under contract law, acceptance must be clear and unequivocal and can be communicated through words or conduct (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd).[25] By agreeing to let Alex stay and imposing conditions, Olly demonstrated both acceptance and modification of the original offer. Alex’s continued participation without objection demonstrates his implied acceptance of Olly’s terms. Under Australian contract law, acceptance can be inferred through conduct if the offeree proceeds with the arrangement without raising any objections (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd).[26]By complying with the imposed conditions, Alex effectively accepted the modified terms. This conduct results in a "meeting of minds" or consensus ad idem, meaning both parties are in agreement on the essential terms of the contract, creating a binding legal obligation.
Consideration: Consideration is a crucial element of a contract, involving the exchange of value between the parties. In this case, while no formal payment was discussed, Alex’s reference to making it “worth your while” and promising to discuss “quid pro quo” later suggests an understanding of some form of exchange or consideration. Consideration in Australian law, as outlined in Beaton v McDivitt does not need to be monetary.[27] It may involve any benefit or detriment agreed upon. Here, Alex’s promise of a future benefit and his compliance with Olly’s terms (such as staying out late and maintaining cleanliness) could both be seen as forms of consideration. Olly’s provision of accommodation is her side of the exchange, satisfying the requirement for consideration.
Intention to Create Legal Relations: A key issue is whether there was an intention to create legal relations, considering the social context of the agreement. In Balfour v Balfour, agreements between friends or family generally lack legal intent. [28] However, Todd v Nicol [1957] clarified that such agreements can be binding where obligations are serious.[29] Olly’s specific conditions, such as staying out until 10 pm and cleaning up, combined with her later demand for payment, suggest that the arrangement was not purely social, implying an intention to create legal obligations.
Breach of Terms: Alex’s failure to comply with Olly’s conditions regarding cleanliness likely constitutes a breach of the agreement. Under Australian contract law, once terms are agreed upon whether expressly or impliedly both parties are legally bound by them (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd).[30] Failure to meet those conditions may result in a breach of contract, entitling the other party to remedies. In this case, Alex’s non-compliance with cleanliness obligations could be considered a breach of the agreed terms. Similarly, Olly’s action of locking Alex out of the house may also constitute a breach, as it prevented Alex from accessing the accommodation to which he was entitled, thus violating the agreement.
Conclusion: A legally binding contract for accommodation was likely formed between Alex and Olly. Alex’s request to stay constitutes an offer, while Olly’s response, imposing conditions, reflects acceptance (Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd).[31]The consideration was present in Alex’s promise to make it “worth your while” and his compliance with house rules (Beaton v McDivitt).[32] The specific conditions and later demand for payment suggest an intention to create legal relations, making the arrangement enforceable under Australian contract law (Todd v Nicol).[33]
Brief Summary of Assessment Requirements The assessment required students to apply Australian contract law principles to a problem-based legal scenario involving two distinct contractual issues. The task focused on analysing factual situations, identifying legal issues, applying relevant legal rules and case law, and reaching reasoned conclusions using a structured legal method.
Key Pointers Covered in the Assessment: Identification of legal issues arising from the facts
Application of core elements of contract law, including:
Offer
Acceptance
Consideration
Intention to create legal relations
Revocation and breach
Distinction between unilateral contracts and social or domestic agreements
Use of relevant Australian and common law case authorities
Logical reasoning using an Issue–Rule–Application–Conclusion (IRAC) structure
Clear, concise, and legally supported conclusions for each issue
The assessment addressed two separate issues:
Whether a unilateral contract existed between Alex and the Comedy Festival (EBCT) for a ticket refund.
Whether a legally binding accommodation contract existed between Alex and Olly.