Business Law Assignment
2013

Simon Close
Student ID: 16521244

Tut time: Tuesday 10am
Andy Chang

Monday the 19th of April

Word count = 1435

Question 1: 9 marks The issue is whether there is a legally binding contract between Michael and Matt. For there to be a valid and enforceable contract, all the following elements must be satisfied: offer, acceptance, consideration, intention to create legal relations, certainty of terms and the capacity to contract, Toyota Motor corporation v Ken Morgan.
The issue here is that, did Matt accept Michael’s offer of the 2008 BMW even though Matt showed interest and asked Michael whether he would be prepared to change the upholstery in the car before the sale? Does this mean that Matt is bound in this contract?
The element that raises questions is acceptance. Acceptance occurs when both parties have given their mutual consent in which the offer must be clear, absolute and identical to the terms of the offer. Hence, if the offeree remains silent, their silence cannot be constitute and acceptance.
In this case, Michael has advised Matt that he would sell his car for the initial cost of $19,500. Matt then goes on to ask Michael whether he would be prepared to change the upholstery before sale with Michael changing the cost to $20,500. ‘Matt says nothing’. Silence is not acceptance in which the Felthouse v Bindley case is an example that acceptance must be clear and cannot be imposed due to one of the parties being silent.
It is important to distinguish between terms and mere representations. Terms have a contractual force and form part of the contract, while representations is a statement which relates to some existing factor or past event and includes the other party to enter into the contract but doesn’t form part of a binding contract. Oscar Chess Ltd v Williams and Ellul and Ellul v Oakes are cases that illustrates the importance of the factors that distinguish between a term and a representation including the language, context, time, maker and the importance of the statement. Matt has simply shown interest in the car, in which Michael has predicted that he would purchase it off him, consequently the contract is classed as non-promissory. These facts conclude that the statements made by Michael are sheer representations.
There is no legally binding agreement between Michael and Matt. For there to be a valid contract all 6 elements must be satisfied. As acceptance isn’t fulfilled because Matt has made a mere representation towards the sale of the car, therefor Matt is not bound to the purchase of Michael’s vehicle.

Question 2: 5 marks

A promise is a commitment to do or not to do something for someone, while an expectation is a belief that someone will do something in the future. Is it a promise or an expectation that Michael has with Matt about the upholstery of Michael’s vehicle?
To make a conclusion in this example we have to answer that question. The way the question can be answered is that, is there Promissory Estoppel?
Promissory estoppel allows a party to recover on a promise. It prevents, or estops, a person from arguing that his or her promise should not be upheld as proven in this case Commonwealth v Verwayen.
To establish a promissory estoppel, these factors have to be fulfilled. It is necessary for the plaintiff (Michael) to prove that (1) Michael assumed that a particular legal relationship existed between himself and Matt or expected that a particular legal relationship would exist between them; (2) Matt has induced Michael to adopt the assumption or expectation of the sale; (3) Michael acts or abstains from acting in reliance on the assumption or expectation; (4) Matt knew or intended Michael to change to upholstery of the vehicle; (5) Michaels actions will occasion detriment if the assumption or expectation is not fulfilled; and (6) Matt has failed to act to avoid the detriment by fulfilling the assumption. The case Waltons Stores v Maher