Contract Law JB Low-Fi And Local Fitness Centre

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Contract Law JB Low-Fi And Local Fitness Centre

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Contract Law JB Low-Fi And Local Fitness Centre

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Discuss about the Contract Law JB Low-Fi Pty Ltd Local Fitness Centre.

Whether a contract was formed between Jo and JB Low-Fi Pty Ltd (the store), or not?
A contract denotes that two or a higher number of parties have undertaken a promise where one party discharges promise by doing something and the other by paying an amount of consideration (Andrews, 2015). It can be made in an oral manner, where the parties discuss the terms orally; or the same can be made in a written manner, where the parties summarize the terms on a document and finally sign the same. In order to create a contract, which could have a legal backing it needs to have certain elements. These elements are in form of an offer, acceptance, consideration, capacity, intent and clarity (Ayres and Klass, 2012).
The first requirement is to have an offer made by one party to the other. It is crucial that an offer is differentiated from an invitation to treat, which merely depicts the parties intention to start negotiations, whereas an offer depicts the intention to enter into a contract. The advertisements given in the magazines or newspapers are taken to be an invitation to treat. And in such cases, the individuals do not have a compulsion over them to finish the sale of the product which has been advertised (Clarke and Clarke, 2016). This was established in the case of Partridge v Crittenden [1968] 1 WLR 1204. It is crucial that the advertisement does not contain a unilateral offer or the same would be deemed as a valid offer instead of an invitation to treat. This was held by the judges in Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1, where due to the presence of a valid offer, a contract was held to be formed (Latimer, 2012).
The next requirement is attaining an acceptance on the particular offer. The acceptance has to be made for the exact offer that was made. If any term is changed to the slightest, a counter offer is garnered instead of an acceptance, as was seen in Hyde v. Wrench (1840) 3 Beav 334. A counter offer results in the original offer being expired (Marson and Ferris, 2015). The acceptance has to be properly communicated to the party which made the offer and the date on which the acceptance reaches the offering party, is considered as the date of acceptance. However, when the postal rules of acceptance are applicable, the date of posting the acceptance letter is taken to be the date of acceptance. The postal office is the implied agent of the parties. Also, it is does not matter when the post reaches the other party, the date of dispatch is used to form the contract (Mulcahy, 2008). In Adams v. Lindsell (1818) 106 ER 250, the validity of the postal rules was upheld and the contract was held as enforceable (Swarb, 2016).
The Electronic Transactions Act, 1999 (Cth) is an act applicable over the digital communications in Australia. As per section 14 of this act, the time when the communication leaves the information system of the creator is the time of dispatch of such communication, instead of the time when the communication reaches the other party. This is based on the postal rules of acceptance. So, even in electronic communicates, the date of sending the offer and acceptance, is the date on which the communication has been sent, instead of the date on which the same is received by the other party (Legislation, 2011).
A contract needs to have a consideration which is mutually settled between the parties, and is acceptable till the time it has an economic value. Chappell and Co Ltd v Nestle Co Ltd [1960] AC 87 was a case where due to the condition precedent; the consideration of three wrappers had legal validity (E-Law Resources, 2017a).  The parties need to have the contractual capacity to enter into a contract and the terms of the contract have to be clear. Hence, the parties need to be of legal age and of sound mind. Lastly, there should be an intention in the parties to create lawful association (Lambiris and Griffin, 2016).
In the given case study, the advertisement given in the newspaper does not contain a unilateral offer and so, on the basis of Partridge v Crittenden, the store is not bound to go through with the same of the electronics. Moreover, even if as per Carlill v Carbolic Smoke Ball Company, a unilateral offer is taken, the same would lapse with the end of stock, which happened. Though, as this advertisement could not be accepted till the store actually wanted to go through with the sale, it cannot be deemed as a unilateral offer.
Once Jo entered the store and went to the store owner to ask the prices of Macbook Lite, an offer was made by Jo to purchase the product at a price of $1000. Though, due to the absence of stock, another product was offered by the store for $1300. On the basis of Hyde v. Wrench, this would be deemed as a counter offer and the original offer of $1000 would be taken as lapsed.
Jo showed his interests in purchasing the laptop when she restocked it and gave the details for further communication. However, she did not submit any money for the same. And due to this absence of deposit, his offer to purchase the product is not binding upon the store and the product, when restocked could be easily sold to anyone else. Had she submitted the deposit, a contract would have been formed and in such case, the store would have been obliged to go through with the sale.
The Electronic Transactions Act applies on the email sent by Jo. This email would be deemed as an offer on part of Jo and the date of the email would be considered as the date of the offer. An offer does not have to be accepted compulsorily, so the store had the authority to sell the product to another.
Hence, on the basis of lack of acceptance, which is a crucial element of contract, along with the absence of consideration, a contract was not formed in this case.
Whether the exclusion clause successfully limits the liability of the local fitness centre against the loss of Jane, or not?
Often, a term is found in the contracts which has the ability of limiting or restricting the liability of an individual in case of certain occurrences, and this clause is known as an exclusion clause. To have a legal validity, the exclusion clause needs to be incorporated in a proper manner into the contract (Turner, 2014). Further, it is crucial that the exclusion clause is brought to the attention of the parties, against which it has been inserted. The exclusion clause is prohibited from restricting or extinguishes the validity of common law or of statute and cannot oppose any statutory framework (Abbott, Pendlebury and Wardman, 2007).
The exclusion clause needs to be incorporated into the contract before the same is made, and if the same is inserted afterwards, it has no legal validity. In case there is an ambiguity in the terms of the exclusion clause, it is construed against such party which would have been benefited due to the insertion of such a clause and this is done on the basis of Contra proferentem rules, as was held in the case of White v John Warwick & Co Ltd [1953] 2 All ER 1021 (Poole, 2016).
The validity of exclusion clause has been contested time and again. In Thornton v Shoe Lane Parking Ltd (1971) 2 WLR 585, the exclusion clause was held as invalid, as it was present on the back of ticket, which was not brought to the notice of the plaintiff (Roach, 2016). In Olley v Marlborough Court Ltd (1949) 1 KB 532 also, the exclusion clause was held as invalid as being located at the backside of the ticket, the plaintiff was not aware of its presence. Hence, if the exclusion clause is referred at a different place, instead of the contract, to be valid it needs to be brought to the attention of the parties (Mulcahy, 2008).
However, if an exclusion clause is contained in a contract, which has been signed by the parties, the same would be valid even when the same has not been read by the parties, as was established in L’Estrange v Graucob [1934] 2 KB 394. This is because it is deemed that a prudent person would properly read the clauses of the contract before signing (Swarb, 2017). Though, in cases where a representation is made and which turns out to be misleading on part of the inserting party, the rule given in L’Estrange v Graucob, is not upheld, as was held in Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805. And the exclusion clause remains invalid in such cases (E-Law Resources, 2017b).
In Curtis v Chemical Cleaning and Dyeing Co, the wedding dress of the plaintiff was given to the defendant for cleaning purposes and she was asked to sign a form. When she enquired about the sign from the assistant, the assistant informed her that the form only excluded the liability for damages to the beads. In reality, the form excluded the liability from all damages. When the dress was returned to the plaintiff, it was stained badly. The court held that due to the misrepresentation undertaken by the assistant, the clause could not be relied upon, even when the same had been signed (E-Law Resources, 2017b).
The exclusion clause in this case was present on the receipt which Jane received. In the given case, Jane had been given the receipt for her yoga session and in this very receipt, in fine letters, the exclusion clause was printed. It was contained on the very front of Jane and so the same was already in notice of Jane. So, the exclusion clause cannot be held as invalid on the basis of Thornton v Shoe Lane Parking Ltd and Olley v Marlborough Court Ltd. The case of L’Estrange v Graucob also does not apply in this case as the receipt was not required to be signed by Jane.
Jane had questioned the representative about this very disclaimer and he had replied that the same was only for the belongings, in case they were kept at a place other than the assigned lockers. However, her Blackberry and files were lost. The facts are quite similar to that of Curtis v Chemical Cleaning and Dyeing Co. The yoga centre in the given case study cannot rely upon the disclaimer which they had given to its members. This is because the representative had misled Jane into believing that the clause was not applied on her. And so, the yoga centre is responsible for the loss of Jane and would have to compensate her adequately. Even if Jane had to sign the receipt, the exclusion clause would not have been valid due to this misrepresentation.
Moreover, when Jane went inside the session, the exclusion clause was stated there. This exclusion clause would be deemed to have been inserted after the formation of a contract and hence, the same could not be held as valid. The contract was orally formed in this case when the receipt for the session was given to Jane. This receipt was the contract in this case and hence, the blackboard information would be deemed as outside the scope of contract and would e seen as a subsequent addition, hence invalid.
The terms in covered in exclusion clause were clear in this case; hence Contra proferentem rules do not apply here. So, the store is required to compensate Jane for her losses.
Hence, due to the misrepresentation, the exclusion clause contained on the receipt could not discharge the liability of the yoga centre. And the exclusion clause contained on the blackboard would also be invalid, due to the clause being inserted subsequently in the contract.
Abbott, K., Pendlebury, N., and Wardman, K. (2007) Business Law. 8th ed. London: Thomson.
Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press
Ayres, I., and Klass, G. (2012) Studies in Contract Law. 8th ed. New York: Foundation Press
Clarke, P., and Clarke, J (2016) Contract Law: Commentaries, Cases and Perspectives. 3rd ed. South Melbourne: Oxford University Press.
E-Law Resources. (2017a) Chappel v Nestle [1960] AC 87 House of Lords. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Chappel-v-Nestle.php [Accessed on: 20/05/17]
E-Law Resources. (2017b) Chapelton v Barry UDC [1940] 1 KB 532. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/cases/Chapelton-v-Barry.php [Accessed on: 02/05/17]
Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH
Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.
Legislation. (2011) Electronic Transactions Act 1999. [Online] Legislation. Available from: https://www.legislation.gov.au/Details/C2011C00445 [Accessed on: 20/05/17]
Marson, J., and Ferris, K. (2015) Business Law. 4th ed. Oxford: Oxford University Press.
Mulcahy, L. (2008) Contract Law in Perspective. 5th ed. Oxon: Routledge.
Poole, J. (2016) Textbook on Contract Law. 13th ed. Oxford: Oxford University Press.
Roach, L. (2016) Card and James’ Business Law. 4th ed. Oxford: Oxford University Press.
Swarb. (2016) Adams v Lindsell: KBD 5 Jun 1818. [Online] Swarb. Available from: https://swarb.co.uk/adams-v-lindsell-kbd-5-jun-1818/ [Accessed on: 20/05/17]
Swarb. (2017) L’Estrange v F Graucob Limited: CA 1934. [Online] Swarb. Available from: https://swarb.co.uk/lestrange-v-f-graucob-limited-ca-1934/ [Accessed on: 02/05/17]
Turner, C. (2014) Unlocking Contract Law. 4th ed. Oxon: Routledge.

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