MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Week 2 Law of Contract Revision.
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Transcript of MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE Week 2 Law of Contract Revision.
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Revision Sources of Law Separation of Powers Division of Powers Court Hierarchy
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Sources of Law
Parliament The Courts
Equity Common Law
Contract LawUnconscionable Conduct
Promissory estoppel
Trade Practices Act
Fair Trading Act
Federal State
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
High Court
Federal Court Family Court
Federal Magistrates Service
Court of Appeal
County Court
Magistrates Court
Supreme Court
FEDERAL COURTS VICTORIAN COURTS
Privy Council
Appeals Abolished
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Revision (cont.) Precedent
2 types Describe 2 parts of a decision
Rule of Law Citing decisions
Smith v Jones (2001) 145 CLR 203, 207 Smith v Jones [1945] 2 All ER 203, 207 Smith v Jones (2001) HCA 203, [20]
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Revision (cont.) Statutory Interpretation
3 approaches Current approach
Why Aids to interpretation Rules of interpretation
Proof Burden of proof Presumptions
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Development of Contract Law Developed in England pre 1900 Laissez faire economic environment Underlying common law principles
Freedom of Contract Equality of bargaining power
Courts reluctant to interfere unless Duress Illegal
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Recent Developments Equal bargaining power is a myth Courts developed equitable principles
Unconscionable conduct Unjust enrichment Economic Duress Promissory estoppel
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Recent Developments (Cont.) Consumer protection legislation
Trade Practices Act 1975 Fair Trading Acts Insurance Contracts Act 1987 Credit Codes Licensing Acts (e.g. Builders Licensing Act) Amendments to Sale of Goods Act
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Contract An agreement between two or more persons
that will be enforced by law May be
In writing Oral Partly in writing and partly oral
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Writing Contracts need not be in writing Exceptions
Sale of Land Guarantees Credit contracts Other statutory requirements
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Analysing a ContractIs there a contract?
What are the terms?
Is it valid & enforceable?
Has it been discharged?
Has there been a breach?
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Six Elements1. Contractual Capacity
2. Offer
3. Acceptance
4. Intention to create a contract
5. Consideration
6. Certainty
The elements are not always clear
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Intention to Contract Parties must intend their agreement to be legally
binding i.e. enforceable by a court An intention to be morally binding is not enough Objective test Distinction between
Social/domestic agreements Commercial agreements
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Intention Subjective intention
The person’s actual state of mind Objective intention
Concludes, on the basis of what a person said and did, what a reasonable person in the same circumstances would have intended
Contract law uses objective tests
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Domestic Agreements Court presumes that parties did not intend to
contract Presumption may be rebutted
Todd v Nicholls (S&O p94) Roufos v Brewster (S&O p94)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Domestic Agreements (cont.) Court will look at
Terms of agreement Circumstances surrounding the agreement Effect of the agreement on the parties Parties conduct subsequent to agreement
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Commercial Agreements Courts presume that the parties intended to
contract Clear words are needed to rebut the
presumption Onus is on party seeking to disprove the
contract Rose & Frank v J R Crompton (S&O p95) Edwards v Skyways (S&O p95)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Commercial Agreements (Cont.) Contrast with Clauses excluding courts
jurisdiction which are are invalid Letters of Comfort
Kleinworth Benson v Malaysia Mining (S&O p96)
Banque Brussels Lambert v Australian National Industries (S&O p97)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Commercial Agreements (Cont.) Heads of Agreement/Letters of Intent
Air Great Lakes v K S Easter (S&O p98) Coal Cliff Collieries v Sijehama (S&O p98)
“Without prejudice” documents
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Offer Specific legal meaning An offer exists only where a reasonable person
would conclude on the facts that the person was willing to be bound in a court of law
Distinguish Indication of future conduct Invitation to treat Negotiations
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Indication of Future Conduct A mere statement of a present intention to do
something in the future is not an offer Harvey v Facey (S&O p 70) Australian Woollen Mills v Commonwealth
(S&O p71) Harris v Nickerson (S&O p71) Kelly v Caledonian Coal Co (S&O p71)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Invitation to Treat An invitation to
Negotiate Make an offer
is not an offer but an “Invitation to Treat” The distinction lies in the objective intention of
the person making the offer or invitation to treat.
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Invitation to Treat Retail Displays Catalogues Advertisements Auctions Tenders
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Retail Displays Fisher v Bell (S&O p72) Pharmaceutical Society v Boots (S&O p73) In most circumstances the retailer does not
make an offer by displaying goods for sale, even where the goods are marked with a price
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Catalogues Grainger v Gough (S&O p73) If the catalogue publisher was making an offer
then it would be bound by every acceptance even if their stock was exhausted.
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Advertisements Depends on circumstances Carlill v Carbolic Smoke Ball Co (S&O p74) But note legislative restrictions e.g. Trade
Practices Act
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Auctions Bidder makes the offer Auctioneer accepts S64 Sale of Goods Act (Vic) Auctioneer announces terms at start Anyone who bids then accepts the auctioneers
offer as to terms
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Tenders Person submitting the tender makes the offer Body calling for tenders accepts any tender
Not bound to accept lowest BUT, the request for tenders may be an offer to
deal with tenders in a certain manner Hughes Aircraft v Aeroservices Australia
(S&O p76) Harvela Investments v Royal Trust Co of
Canada (S&O p76)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Negotiations An offer will not arise merely because parties
have reached agreement on one aspect of the deal
Implied (or express) understanding that parties not bound until formal contract executed
Heads of Agreement
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Fate of An Offer Withdrawn by offeror Accepted by offeree Rejected by offeree Lapse due to passing of time Lapse due to death of offeror or offeree Lapse due to failure of condition precedent
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Withdrawing an Offer Cannot be withdrawn after accepted A contract is made when the offer is accepted The withdrawal of the offer must be
communicated to the offeree Special cases:
Unilateral offers Options cannot be withdrawn
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Withdrawing an Offer Before Acceptance Generally, an offeror may withdraw an offer at
any time before acceptance Routledge v Grant (S&OR p78) But, options cannot be withdrawn
an option is a separate enforcable obligation and cannot be withdrawn
Exists where the offeree has given consideration to keep an offer open
Goldborough Mort v Quinn (S&OR p 80)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Withdrawal Must be Communicated Offeror must let the offeree know that the offer is
withdrawn Byrne & Co v Tienhoven & Co S&OR p79) Offeror does not have to communicate
withdrawal personally Would a reasonable person in the position of the
offeree conclude that the offer had been withdrawn?
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Withdrawing a Unilateral Offer Involves a unilateral promise e.g. Carllil v
Carbolic Smoke Ball Co (S&O p74) If offeree has acted on the promise then offeror
cannot withdraw until offeree has had a reasonable opportunity to complete
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Rejecting an Offer Once rejected, an offer cannot be accepted May be rejected expressly or by implication Implied
Offeree’s actions are inconsistent with an intention to accept
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Rejecting An Offer (Cont.) A counter offer is a rejection
Hyde v Wrench (S&O p81) Any material alteration is a counter offer
Restating the offer when accepting is not a counter offer
Turner Kempson v Camm (S&O p81)
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Rejecting An Offer (Cont.) A counter offer is a rejection (cont.)
Asking for clarification is not a counter offer Reasonable person test examine all circumstances
MANAGEMENT & LEGAL IMPLICATIONS OF eCOMMERCE
Lapse of Offer Due to death of either party unless
An option; and Does not involve personal skill or service by
the deceased Due to failure of condition precedent Due to time
Express time limit Otherwise, offer remains open for a
reasonable time