Sam’s wife has recently passed away so he wishes to sell his house and her belongings. Sam has agreed to sell his house to Ben and both parties have signed a sale agreement which provides that the settlement date for the sale is 30th September 2011. On that date, the buyer is to have vacant possession of the house and the seller is to receive the balance of the purchase money owing.
Sam places an advertisement in the local newspaper stating that he is offering for sale a second-hand Janome sewing machine for $750.00. The advertisement gives details of Sam’s address and phone number. Patricia sees the advertisement and immediately telephones Sam, but is unable to speak to him. She leaves a message on his answering machine saying:
“I will buy the sewing machine for $700.00. I am posting you a cheque immediately.”
Later that day Amy telephones Sam and actually speaks to him, offering to buy the sewing machine for $700.00. Sam agrees.
One hour later Jillian passes Sam’s house and sees a “For Sale. Janome Sewing Machine” sign on the front letter box. She asks Sam the price, and he says she can have it for $800.00 cash. She agrees and immediately pays $100 as a deposit, promising to return with the balance as soon as she can get it from an automatic teller machine. On her way to the bank Jillian meets her husband, Fred, who has seen the advertisement and tells Jillian about it. She is annoyed at having agreed to pay above the advertised price, and now wants her money back.
Advise Sam, Patricia, Amy and Jillian of any rights or liabilities they may have at each stage in these transactions.
Solution
Advice for Sam – as per the facts, Sam wanted to sell his house, Ben gave him a lucrative offer, Sam accepted the offer and a valid contract under Australian contract law was made between both the parties. now Sam is liable to Ben in respect of their contract and he has to sell his house to Ben, so on the ascertained date he has to vacate and give a peaceful possession of the house to Ben. It is worth mentioning here that as per the contract made between both the parties Sam has every right to receive his rest amount that Ben owes to him. There is a valid contract between both of them and Sam is liable to abide by the contract provided that Ben gives the agreed amount in contract by the predetermined time. Since the contract of Sam with Ben was in respect of selling of the house only he has all the rights to sell rest of his belongings as per his wish without consent on any liability towards anybody else including Ben. .
Advice for Patricia – as per the facts, Sam made an advertisement in the newspaper to sell a second hand Janome sewing machine and seeing that advertisement Patricia called Sam, talks could not take place between both of them, left a massage “I will buy the sewing machine for $700.00. I am posting you a cheque immediately” on his phone answering machine and expressed her wish to purchase that machine. Now If Sam is not selling that Janome sewing machine to Patricia and sells the same to anybody else he has not done anything wrong. No one can sue him just on the basis of that newspaper advertisement considering the same as an offer and alleging Sam with the conduct of breaching of the contract. According to Australian contract law, Advertisement is not an offer but an invitation to do the business, since it does not invites direct acceptance but it invites a bargaining response between parties. Carhill vs. carbolic smoke ball company is an example of case settlement on the similar lines by court.
But this ruling was turned down later by the high court; it was held that the person who is making the offer should also mention all the terms and conditions if he wishes to bargain and not want to make an offer. If he is not mentioning all these terms and conditions then the advertisement would be considered and treated as the offer and if accepted by the person interested in the same, it would be considered as a binding on the person who made the offer. It was held by Justice Bowen that if the terms and conditions are make explicit by the person making the offer then the nature of the offer and contract would need review by the competent court as per the facts and circumstances of the case and would be decided accordingly, if the dispute is taking place between the parties.
Now it is suggested to Patricia that when she saw the advertisement that a second hand Janome sewing machine is being sold by Sam, she contacted him on phone but due to some reasons she could not talk to Sam, as per the facts of this case the acceptance part was not done by the Sam thus the valid contract was not made between both the parties. In absence of a valid contract Patricia can get her cheque back that she sent to Sam but she would hardly get any success if she sues Sam. If Patricia could have talked to Sam and Sam would have agreed and accepted her offer then the situation would have been different and she could have succeeded. Leonard vs. Pepsico and Lefkowitz v Great Minneapolis surplus store are two more leading and decided case by the courts.
Advice for Amy – as per the facts, Amy after seeing the advertisement of selling a second hand Janome sewing machine, given by Sam in newspaper, called him and expressed her wish to purchase the advertised sewing machine. Sam bargained the price of the machine on phone with Patricia and agreed to sell the machine to her. Here as per the provisions of Australian contract law a contract was made between Sam and Amy. Amy offered to purchase the second hand Janome sewing machine from Sam and Sam accepted the offer after bargaining and on getting the desired price thus a valid oral contract under Australian contract law was made between both the parties. Now in case, if Sam is not selling that machine to Amy, she has every legal right to sue Sam for breach of contract. Here Sam is guilty of breaching the contract and he could be directed and tried by the competent court for not abiding by the contract.
Advice for Jillian – as per the facts, Jillian has made an offer to purchase a second hand Janome sewing machine after seeing the advertisement made by Sam; Sam accepted it as he got a lucrative offer. Now both the parties entered into an agreement, there was an offer which was accepted, it constitutes a valid contract under Australian contract law. Now if Jillian, after knowing the actual price from her husband wants to get her money back which she gave to Sam as advance, it is not according to the contract and she would probably not be succeeding in getting that money back from Sam. She herself is not abiding by the contract which she deliberately consented and in this case Sam is not liable to Jillian.
In the meantime, shortly before the settlement date of the sale of the house, Ben tells Sam that he is having difficulty in reaching a settlement for the sale of his old house and requests Sam to alter the settlement date to 30th December 2011.
Sam knows of persons to whom he can let his house temporarily for a period of 3 months and arranges a tenancy for that period. After doing so, he agreed with Ben to extend the settlement date for the sale of the house as Ben requested.
Shortly afterwards, however, Ben completes the sale of his old house and now wishes to settle on the date provided in the sale agreement .
Advise Sam with respect to the sale of the house.
Advice for Sam - as per the present facts, Sam was ready to sell his house to Ben on the ascertained date and was ready to abide by the contract which had taken place between both of them. Now due to some compulsions it was Ben who requested Sam to postpone the ascertained date. Now Sam decides to let his house for three months and arrange a tenancy for that period. Situation changes and Ben again comes to Sam and requests to settle as per the date provided in the sale agreement. Since Sam has let his house for the three months and that too because Ben had requested him to do so, Sam should tell the Ben to settle on the new date given by Ben. If Ben sues Sam, the circumstantial evidences are in favour of Sam and Ben could hardly be getting any remedy . Such cases are looked into on the basis of facts and circumstance by the courts and they have a wide discretionary powers to decide such cases. A court takes cognizance of all the issues while dealing such cases, offer, acceptance, terms and conditions and decides the case, since these issues are very complicated in nature and even minor mistakes could make a severe impact on the case.
Question 2:
Fiona is 60 years old and interested in selling her holiday apartment in Coffs Harbour. She discussed the possible sale with her doctor, Ian, and with a local real estate agent, Bruce. Advise her of any rights IN CONTRACT LAW she may have in each of the following situations:
Ian suggests that he is happy to buy from her for $370,000 and that they will save money by not putting the sale through an estate agent. Several weeks after she has signed and exchanged contracts with Ian she discovers that her property is probably worth at least $500,000. She does not want to complete the sale.
(4 marks)
Solution
Advice for Fiona on the basis of above facts: - according to the facts of the case Fiona and Ian entered into a contract. Every component of a valid contract was there; offer, acceptance, intention, consideration, capacity and other required formalities. Since Fiona has deliberately entered into a contract to sell her house with Doctor Ian there was no illegality, now as per law Fiona is bound to fulfil the contract. In this case as a legal expert, suggestion to Fiona is to take the plea of undue influence and unconscionable conduct by the doctor Ian in the court. Since a number of cases have been decided by Australian courts on these bases, Fiona being a senior citizen might get the Benefit of her age. . It is not beyond presumption that her doctor Ian might have taken the Benefit of her age and did not disclose the actual market rate of that property to Fiona and Fiona in good faith relied upon the rates quoted by doctor and agreed to sell her costly property at cheaper rates. Being an old lady she herself could not go anywhere to probe the rates of the said property and relied upon her family doctor whom she used to know for several years. This is the most suitable pleading she can make in the competent court of law though this is absolutely the discretion of court to consider such cases as per their own understanding and as per facts and circumstances of the case. Several cases are decided on this ground by courts in Australia in favour of the needy people, senior citizens. . Commonwealth v Verwayen (1990) 170 CLR 394 is a famous case decided by the court in the similar context.
Bruce advises her that an auction will bring the best price for the property. He asks her to pay for all the advertising as well as a short article in the Sydney Morning Herald "Domain" supplement; all of which will cost $12,000. He also asks her to sign an exclusive Agency Agreement for 2 months which will entitle him to commission of 10% of the sale price if he manages to sell the property during the two months.
Fiona has now been advised that a commission is usually 2.5%-3% of the sale price and that most agents include advertising costs as part of their normal service during the standard 2 month agency.
Solution
Advice to Fiona on the basis of above facts: - Bruce suggested many things and made several offers to Fiona but as the facts disclose none of them was accepted by her. Acceptance being an important and compulsory component of the contract under the contract law was not done by Fiona in lieu of Bruce’s offer; here any valid contract was not completed. In absence of any valid contract between Fiona and Bruce, Fiona is not bound by any liability towards Bruce and she has all the legal rights in respect of her own property. She can herself give fresh advertisements in the newspapers and strike any good deal when any lucrative offer comes. She can consult a good agent and after completing an agreement with the agent, mentioning each and every condition explicitly, she can sell her property through the agent and give him appropriate commission.
Bibliography
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