Adam wishes to throw a surprise 40th birthday party for his mother.

He has saved
some money from several small jobs but needs to borrow about $3,000 from his
kind Uncle Bert. Adam is talking to Uncle Bert at a family barbeque, who is happy
to help out and so lends Adam the needed money on the understanding that Adam
can pay off the loan when he starts his new after school job at the supermarket.
Adam contacts caterers, decides on the menu, and pays a deposit. He then spends
all of Uncle Berts money on the party. He cant repay Uncle Bert as he decides
not to take the supermarket job but to finish school and study hard to get the
traineeship he wants.
Advise Uncle Bert.

Adam wishes to throw a surprise 40th birthday party for his mother.
Note that Adams mother is turning 40, a guide to the possible age of Adam.
He has saved some money from several small jobs but needs to borrow about
$3,000 from his kind Uncle Bert.
Adam is borrowing the money- possible loan contract.
Bert is Adams uncle family relationship. He has worked several small jobs
another guide to his age.
Adam is talking to Uncle Bert at a family barbeque,
Consider whether offer and acceptance has been communicated. What does the
fact that they are at a family barbeque tell you about the family relationship
between Adam and Uncle Bert?
who is happy to help out and so lends Adam the needed money on the
understanding
What does this mean?
that Adam can pay off the loan when he starts his new after school job at the
supermarket.
It is intended that the loan be repaid
Adam is still at school how old is Adam?
Adam contacts caterers, decides on the menu, and pays a deposit. He then spends
all of Uncle Berts money on the party. He cant repay Uncle Bert as he decides
not to take the supermarket job but to finish school and study hard to get the
traineeship he wants.
Is finishing school in Adams interest, for his benefit?
Advise Uncle Bert.

WHAT IS THE ISSUE BEING RAISED BY THIS QUESTION: Does Uncle

Bert have an enforceable contract with Adam? (i.e. CONTRACT
FORMATION)
WHAT IS THE LAW YOU NEED TO DISCUSS FOR CONTRACT
FORMATION?
(Note: All the following elements are necessary for contract formation, but they
should not all be discussed in the same depth. Those elements in issue should be
discussed in detail others may simply need a one line mention.)

1 Legal Capacity
Minor

Is Adam a minor?

What facts, drawn from the question, will you use to determine the factual
question of whether or not Adam is a minor?
after school job
youthful mother
several small jobs
hope for traineeship in future
If a minor, is Adam bound by this contract?
What law will you rely on to address this legal issue?
Common law/Statute (Minors (Property and Contracts) Act
1970 (NSW)) is Adam so young as to lack understanding of the
significance of the contract? (s18)
What facts will help you answer this? Or, how does this broad legal issue apply
to the particular facts of the question before you?
Consider Adams school and work experience and understanding of
his obligation.
Has Adam participated in a civil act (s19)? If yes, (he has entered into
a contract) will it be presumptively binding on Adam?
Consider the ss19 -25 tests.
Is the contract to borrow and repay money to Uncle Bert, to fund his
mothers party, for Adams benefit?
If yes, it will be presumptively binding. If not, any contract will be
unenforceable by Uncle Bert unless ratified by Adam when he turns
18. (Or not repudiated by 19). What effect will this have for Uncle
Bert?
After looking at all the above, does Adam have capacity? MAKE A DECISION.

If no, do not stop here, but consider the rest of the issues raised.
2 Offer
Was the offer sufficiently definite, so as to be capable of acceptance - Bert
undertakes to pay the money to Adam (Australian Woollen Mills v.
Commonwealth)
Was the offer made to a specific person (Carlill v Carbolic Smoke Ball)
Offer made to Adam
Was the offer communicated? (R v Clarke)
How did Adam know that he could spend Uncle Berts money?
Is there an offer? MAKE A DECISION. If no, do not stop here, but consider
the rest of the issues raised.
3 Acceptance
Acceptance express or implied?
Express - discussion at barbeque.
Is it unequivocal?
Yes, there is nothing left to be negotiated.
Has acceptance been communicated? (Felthouse v Bindley)
Discussion at barbeque
Was acceptance in reliance on offer? (R v Clarke)
Discussion at barbeque
Was acceptance complete? (Did it contain all the essential terms of the offer?)
(George v Roach)
Discussion at barbeque
Was acceptance certain? (Whitlock v Brew)
Discussion at barbeque

Is there acceptance, If no, do not stop here, but consider the rest of the issues
raised.

4 Consideration
Was consideration sufficient? (Stilk v Myrick; Hartley v Ponsonby)
Simple loan contract; money lent on promise to repay
Does consideration move from the promisee? (Dunlop Pneumatic Tyre Company
Ltd v Selfridge & Company Ltd)
Simple loan contract
Is there consideration, if no, do not stop here, but consider the rest of the
issues raised.
5 Intention to create legal relations
Is the contract between family members? (Balfour v Balfour)
Uncle/nephew
How close a family relation exists between them - look at the question to
find information.
If yes, can the presumption be rebutted? (Merritt v Merritt)
Is it intended to be a commercial relationship?
Contract of loan (Woodward v Woodward (1863) 3 De GJ&J 672)
Make a decision and tie everything together in a concluding paragraph.
Question 2
FIRST, READ THROUGH THE QUESTION AND CONSIDER THE
RELEVANT INFORMATION.
WHAT ARE THE ISSUES THE
QUESTION IS RAISING?
a) Derek always buys his fruit for his juice stand in the shopping centre from Gary
the market gardener.
b) On Monday morning he rang Gary and left a message on Garys answering
machine, offering to buy carrots and asking this weeks case price for carrots
and explaining that he wanted them as soon as possible.

What is the nature of this communication? Simply because the question uses the
word offer does not mean that that is its legal status. Note a message is left. Is
this communication?
c) Gary faxed a price list to Derek stating that carrots were $20 per for that
Monday only, and he only had two cases left but he expected more to be
available during the week.
What is the nature of this communication?
d) Derek faxed back as soon as he received Garys fax and said that he wanted 2
cases to be delivered on Wednesday and another two on Friday at the same
price?
What is the nature of this fax?
communicated to Gary? When?

Has the information in the fax been

e) Gary was out of the office and did not receive the fax until Tuesday morning.
What is the effect of the fax?
f) On Monday afternoon Gary was approached by another trader who offered $25
per case for all his carrots for the next three weeks. Gary agreed to this
immediately.
What is happening here? Has a contract been concluded between Gary and the
other trader?
Advise Derek.
ISOLATE THE ISSUE(S), CITE THE RELEVANT LEGAL PRINCIPLES
AND APPLY THEM TO THE FACTS OF THE CASE.
ISSUE:
IS THERE A BINDING CONTRACT BETWEEN GARY AND DEREK
WHICH DEREK CAN ENFORCE?
That is:
Has the course of communication between the parties resulted in a contract?

Is there an offer?
Has there been acceptance?
Go through each paragraph in the question to determine the legal status of the
communication.
(a) Background speaks to history of relationship between Gary and Derek.
(b) ISSUE: Is this message a request for information, an invitation to treat or an
offer?
LAW: Only an offer is capable of acceptance. Is there an intention that the
offeror will be bound by the terms of the message?
APPLICATION: Is there an intention for Derek to be legally bound to buy the
carrots regardless of price and any other conditions? What facts from the
question will you apply to reach your conclusion?
If no? Invitation to treat/request for information?
If yes? Are the necessary elements of an offer made out?
Is it - definite?
- made to a person?
- communicated?
MAKE A DECISION AND GIVE YOUR REASONS. HOWEVER, IF
THE DECISION IS CONTENTIOUS, BE PREPARED TO ARGUE IN
THE ALTERNATIVE.
Note: Use of the word offer does not by itself convert an invitation to treat
into an offer.
(c) ISSUE: Is this an invitation to treat or offer?
LAW: Is there an intention for the offeror to be bound by the offer? (What is
your authority for this legal proposition? Which case(s) will you cite?)
APPLICATION: Is there an intention for Gary to be legally bound to sell the
carrots to Derek? What facts from the question will you apply to reach your
conclusion?

If no? Invitation to treat

If yes? Offer, subject to definite
- person
- communication
Is an offer by fax necessarily communicated at the time at which the fax is sent?
MAKE A DECISION AND GIVE YOUR REASONS. HOWEVER, IF THE
DECISION IS CONTENTIOUS, BE PREPARED TO ARGUE IN THE
ALTERNATIVE. REMEMBER TO BE CONSISTENT THROUGHOUT
YOUR ANSWER. IF YOU DECIDED THAT (B) WAS AN OFFER THEN
DOES IT MAKE SENSE FOR (C) TO ALSO BE AN OFFER? IF (B) WAS
AN OFFER, THEN COULD THIS BE AN ACCEPTANCE?
(d) and (e) ISSUE: WILL DEPEND ON WHAT YOUR CONCLUSION WAS
FOR PARAGRAPH ( C) ABOVE, BE PREPARED TO ARGUE IN THE
ALTERNATIVE AND CONSIDER BOTH POSSIBILITIES.
IF (C) WAS AN INVITATION TO TREAT, IS THIS FAX AN OFFER?
You need to go through each possibility as you go through the question.
LAW: What constitutes an offer?

It must be definite,
made to a person,
and communicated.
(HOW DO YOU KNOW THIS? - WHICH LEGAL PRINCIPLES
-DERIVED FROM WHICH CASES WILL YOU CITE?)
APPLICATION:
Was there:
a definite undertaking the price and delivery are clear.
to a specific person to Gary
which has been communicated by fax, but it has not yet been read?
Consider all elements.

IF (C) WAS AN OFFER, IS THIS FAX A COUNTER OFFER OR AN

ACCEPTANCE?
If (c) was an offer,
ISSUE: is this a counter-offer or an acceptance?
LAW: Counter-offer see discussion of offer above, and consider all the
elements.
APPLICATION: Does Derek reject the offer made by Gary and substitute
his own offer?
ISSUE: Has Derek accepted the offer?
LAW: Was there:
Communication
In reliance on the offer
Acceptance express or implied?
Completeness
Certainty
APPLICATION:
Is Gary aware of the fax from Derek in (d) above?
Is the fax sent in reliance on the offer made by Gary?
Is it accepting all the terms of the offer?
Is it certain and complete?
If acceptance is by fax, when was the contract made?
Finally for completeness you may look at:
If Acceptance, was there consideration?
Sufficient?
Does it move from the promise?
If Consideration, was there intention to create legal relations?

THE PURPOSE OF CONSIDERING ALL THESE ELEMENTS IS TO

DETERMINE IF AT ANY STAGE DURING THE EXCHANGE OF
FAXES/MESSAGES AN ENFORCEABLE CONTRACT WAS
CONCLUDED BETWEEN GARY AND DEREK. REMEMBER OUR
ISSUE FOR DECISION IS: IS THERE A BINDING CONTRACT
BETWEEN GARY AND DEREK, WHICH DEREK CAN ENFORCE
TO GET HIS CARROTS?
IF YES, WHAT WILL BE THE EFFECT OF (E)?
IF NO, WHAT CAN DEREK DO?
IF NONE OF THE
COMMUNICATIONS HAVE SUCCESSFULLY FORMED A
CONTRACT, THEN HE NEEDS TO BUY HIS CARROTS
SOMEWHERE ELSE.