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The Formation of the Contract
Invitation to Treat
In the agreement between Eva and Winnie, the display of the hotel premises and services was in itself an invitation to treat; it was not an offer. Basically, an invitation to treat is a disclosure of parties willingness to enter into a contract. In the case between Pharmaceutical Society of Great Britain v Boots, Court of Appeal (1953), it was held that an offer is made once the seller accepts the consideration offered by the buyer. Otherwise, the mere display of products is not an offer. In this case, a pharmaceutical company allowed shoppers to pick medicines at the counter, such as in a supermarket. Later on, a pharmacist would approve the medicines and the cashier would charge the customer. In essence, an offer to sell medicine was made only when the pharmacists accepted that the medicines were appropriate for the customer and payments were made. Similarly, a mere display of services offered by ERF in itself was not an offer; it was simply an invitation to treat.
An Offer
When Eva accepted Winnie’s payment for the wedding event and the meals, she made an offer. An offer is made when a seller accepts payments for a particular good or service. In Carlill vs Carbollic Smoke Ball Company, the judge said that an offer was made when Carlill purchased the anti-influenza medication from Carbollic Smoke Ball Company.
Time
The contract between ERF and Winnie was from 5pm to midnight on the wedding day. The use of specific time when the contract was running made it valid. The formation of a contract is always limited by time. In this case, a contract is usually expected to be in existence within the reasonable time, or as per the contract’s agreed timelines. In the Carlill v Carbollic Smoke Ball Co. case, the court ruled that where there is no set deadline, a contract is said to be in operational for a reasonable time. Therefore, although the event did not start as early as expected, the 7 pm time when it started was within the contract’s requirements.
Acceptance
When Winnie signed the contract letter sent to her by Eva, she accepted the terms of the contact and legitimized its existence. Acceptance of an offer is made when the offeree agrees to the offer by making an unequivocal statement orally, by writing, or through conduct. Further, an offer is only accepted by the person to whom it is directed. In addition, the payment and enjoyment of the services offered by an offeror constitute to accepting an offer. Further, if the offeror does not expressly reject an offer, it is assumed that he/she has accepted it. In a case between Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988), the former engaged the latter to develop its premises. However, Empirical Holding Pty Ltd never signed the engagement contract, nonetheless, it still knowingly enjoyed these services. The court held that by its actions, Empirall Holding Pty Ltd. had accepted Machon Paul Partners Pty offer.
Certainty
Even if the contract between ERF and Winnie had elements of uncertainty, such is in clause 3 of the contract, this did not invalidate the entire contract. The law requires that a contract must be certain and understandable. However, the presence of uncertainty cannot invalidate the whole contract. In the case between Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968), judge Barwick observed that the presence of uncertainty cannot invalidate the whole contract. In a similar ruling on a case between The Life Insurance Co of Australia v Phillips (1925), a single issue of uncertainty did not invalidate the whole contract. In contracts that have uncertainty, only the vague part is unenforceable.
The Validity of the Contract Terms
Limitation of Liability: Clause 6
In the contract between Eva and Winnie, Eva acted as the supplier. As a result, she had the obligation to provide a full guarantee on the provision of high-quality service on the wedding day. The Australian consumer law requires a business to provide a guarantee for all the services and products that it offers. In a case settled in July 2013, Hewlett-Packard, a computer hardware company, was ordered by the Federal Court to pay $3 million as a civil pecuniary penalty since it had made false and misleading representations to its consumers and retailers concerning consumer guarantee rights (ACCC v Hewlett-Packard, 2013). Its representations said that consumers’ remedies were only limited to those available at the business discretion. In addition, consumers were required to have their products repaired multiple times before they were entitled to a replacement. Further, the warranty was limited to an expressly stated period. With regards to this example, the limitation on guarantee, even to damages caused by Emerald Reef Hotel (ERF), is illegal and unenforceable.
Acceptable Quality: Clause 2
In the contract between Eva and Winnie, ERF displayed a delicious-looking meal of tray fingers on its website. Further, the menu had descriptions that included sushi, prawns, salmons, teriyaki skewers, a tropical fruit, and prawns. However, the meal served at the wedding did not fit this description. In fact, it was sourced from a discount supermarket. Under the Australian Consumer Law, a supplier should provide services that match the quality of the goods that he/she has promised to deliver. In this case, the products should match the description or samples that were shown to the customer. In a case that was settled in 2015, the Australian Competition and Consumer Commission (ACCC) filed a case against Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser) in relations to a case of false misrepresentation. Reckitt Benckiser (Australia) sourced various types of painkillers on the allegation that each type was uniquely made to heal specific types of pain. In particular, the medications aimed at treating back pain, period pain, migraine, and tension headache. However, a scientific analysis of these medications showed that they were made of the same chemicals and in the same quantities. Therefore, they were all similar drugs, which had been packaged in misleading formats. Moreover, the allegation that each medicine could heal a specific type of pain was a misrepresentation. Similarly, the type of food that ERF promised was of different quality from the one they had shown on their website. Therefore, it should pay for this misrepresentation.
Uncertainty: Clause 3a
The terms used in the contract that ERF would sell its drinks to Winnie’s guest at a discount were uncertain. In particular, they did not state the discount rates, such as at 70% of their current prices. As a result, this clause is unenforceable. In a case between The Life Insurance Co of Australia v Phillips (1925), the former made a contract with Philip that provided for a facility to access a loan besides granting him the right to enjoy the insurance services. However, the facility of the house loan was uncertain since it did not state the amount of loan that Philip could access. The court ruled that this statement was uncertain, however, the remaining section of the law could be enforced. As a result, the contract was binding. Similarly, the use of the terms “reasonable price” is uncertain. Nonetheless, this statement does nullify the entire contract.
Fit of Purpose: Clause 3b
In the event, Eva misled Winnie by recommending her son’s band The Trolls to perform in her wedding show while she was fully aware that it was incapable of singing romantic wedding songs. Consequently, the event turned out to be terrible. The Australian law requires suppliers to offer services or products that fit the required purpose. In this case, a supplier has the fiducial duty of providing commodities that meet the needs of the customer. Evidently, the Troll band was not suitable for this event. In a case of Campbell v Lane (No 2) (2013), the court found the defendant guilty when he sold the plaintiff a horse that could not perform in shows while he knew the intention of the buyer was to use the horse in these shows.
Time: Clause 1
Contracts are binding within their specified timelines. In this case, ERF had an obligation of ensuring that all the events in regards to the wedding were perfect from 5 pm until midnight on the wedding day. Specifically, this case was emphasized in the Carlill v Carbolic Smoke Ball Co. case. Generally, the presence of time was important in showing the period within which the contract was enforceable.
Part Payment: Clause 4
The indication of payment of 50% of $20,000 as part payment showed that ERF had not accepted this amount as full settlement of the contract. The Australian law provides for part payment in contracts. However, an individual must fully complete each payment when it falls due. In the case of H B F Dalgety Ltd v Morton (1987), it was found that part payment is not acceptable as completion of the contract. Dalgety received a part payment from Morton and sent a letter to the latter indicating that the partial payment would not be considered as a full settlement of the contract. The judge ruled that the enclosed letter indicating that the amounts were part payment exonerated Dalgety.
Termination of Contract: Clause 5
            The clause on termination of contract was important in indicating how the losses would be shared incase Winnie decided to frustrate it. According to the Australian law, parties that have entered into a contract should not breach its terms. In the event of a breach, such as frustration, which may occur if the groom decides he will not wed Winnie, the losses lie where they fall. In the Taylor v Caldwell (1863), a fire broke out and burnt down a cinema hall that the plaintiff had hired. In this case, the judges ruled that since no party had foreseen of such an eventuality, the losses would lie where they fell. In the contract between ERF and Winnie, the losses would fall on Winnie if she decided to revoke the contract once it was operational. In this case, she would lose her deposit. In general, a breach of contract gives the non-breaching party the right to terminate the contract without any cost.
Vitiating Factors of the Contract
A valid contract, such as the one between Eva and Winnie may be avoided due to the presence of possible vitiating factors in the contract. Most of these factors involve some unfair and unjust means.
Misleading or Deceptive Conduct
The contract between Eva and Winnie had various issues of misrepresentation from both parties. There was misrepresentation through silence when Winnie failed to disclose that besides holding a wedding, the wedding would also be showcasing her wedding dresses. On Eva’s side, she failed to disclose that the Troll was her son’s band, which played rock and metal music and not romantic wedding songs. Noteworthy, in misrepresentation, the party that misrepresents always stands to gain from this act. For instance, it is likely that Winnie would have been charged more fees if she had disclosed that her wedding would also be displaying her dresses. Therefore, by misrepresentation through silence, she stood to benefit. On Eva’s side, if she had disclosed that her son’s band does not play romantic wedding songs, it would have been denied the opportunity to perform in the wedding.
In a case of Caffey v Leatt-Hayter (No.3) (2013), the defendant misrepresented facts in the pre-contractual negotiations. In this case, Mrs. Leatt-Hayter (Vendor) entered into a contract with the Caffey’s (Purchasers) for $1.9 million. In the advertisement of the business, the vendor had said that the Australian government would be issuing more funds to libraries due to the increase in population. Moreover, the business was in good condition and its main competitor Adelaide Library Service (ALS) was having operational difficulties. However, court findings disclosed that the Vendor was aware of the government’s plan to reduce funding to libraries, which would have resulted in a reduction in the price of the library business. In addition, ALS was performing much better than Mrs. Leatt-Hayter library. Specifically, the failure to disclose all relevant information such as the reduction in funding made the vendors lose the case. Similarly, Eva and Winnie had issues with misrepresentation through non-disclosure of important information.
Unfair Terms of Contract
There were various clauses in the contract between Eva and Winnie that resulted in unfair terms of the contract. In particular, ERF used statements such as:

  • In small writing at the end of the contract: “Substitutes may be used at the hotel’s discretion.” (For the “Asian Finger Feast.”){ hotel’s discretion}
  • In small writing at the end of the contract: “Tropical Punch is a secret recipe and its contents cannot be disclosed.” {secrete receipt}
  • ERH is not liable for any damage or harm caused, even by its own negligence. {not liable}

In the Australian Consumer Law, section 23 provides that a contract is unfair if  the terms used in it are unfair, a contract is a standard form, the contract can continue to be binding without the use of the unfair terms, and the agreement is a consumer contract. Section 24 emboldens this law by giving an in-depth interpretation of the meaning of the words unfair. In this case, an unfair consumer contract refers to an agreement that results in a significant imbalance between the parties, it is detrimental to one party if it is applied, and it is not necessary for the agreement.
The terms used by ERF are unfair since they give the hotel the right to adjust the customer’s menu, and contract without consulting him/her. Further, they also limit their liability, notwithstanding their unlawful acts. In a case of ACCC v ByteCard Pty Limited (2013), the court ruled that ByteCard Pty Limited had used unfair terms of contract with its customers. In this case, ByteCard Pty Limited said that it had authority to unilaterally vary its prices without giving customers the chance to terminate their contracts. Additionally, customers were to indemnify ByteCard in any circumstances even where they had not violated the original contract but the liability was due to ByteCard’s breach of the contract. ByteCard also had the authority to unilaterally terminate the contract with or without cause. Similarly, the right to alter the menu that the client had ordered and lack of any liability on the part of ERF for any wrong doing was the use of unfair terms in the contract. Further, the statement that the contents of the “Tropical Punch” could not be disclosed was unfair since the customer was left unaware of what they were buying.
Illegal Contract
The contract between Eva and Winnie had parts that made it illegal. Specifically, the clause that stated ERF could not be held liable for any liabilities, even those are due to its own negligence. According to the Australian consumer law, all suppliers must guarantee the quality of their services and goods. In addition, this statement by itself was an unfair term in the contract. Specifically, this is a case of statutory illegality; therefore, the contract is void. Nonetheless, Winnie can still file a claim to the contract due to ignorance on her part. Basically, if a contract is ex facie lawful and legal as performed, where one party is ignorant of the illegality, that party can be able to claim a remedy for his/her loss. In the case of ACCC v ByteCard Pty Limited (2013), the use of unfair terms made the contract illegal. However, since the other sections were okay, the company had to remove this portion. In addition, it paid a fine for using the unfair terms.
Mistake
The contract between Winnie and Eva did not have an element of mistake. In general, mistakes occur when one or both parties are unable to clearly understand the terms of the contract. Mistakes are usually classified as common mistakes, mutual mistakes, unilateral mistakes, and non est factum. In general, parties to a contract are bound by what they agree, however, under non est factum rule, if an individual can prove that he/she  did not understand the contents of the document that he/she signed, he may not be bound by it. In this regard, an individual may prove that he/she was a minor or mentally incapacitated at the time he signed the document.
Remedies and Damages Available to Winnie
Misleading and Deceptive Conduct
Eva should compensate Winnie for the losses that she suffered by providing her with an incompetent music band. Although Winnie had misrepresented her presentation to Eva, Eva did not get any loss. Her inability to provide an attractive wedding venue for Winnie resulted in the latter getting huge losses. As a result, she cannot claim any damages due to Winnie’s misrepresentation. On the contrary, the provision of an incompetent band made Winnie’s wedding not to be attractive. Primarily, it damaged the most important element of the contract, which was organizing a colorful wedding. In as much as good songs would have enabled Winnie to showcase her clothes, this would have been an overriding event of the wedding. Therefore, ERF is bound to compensate for the provision of a poor quality band while it was fully aware that Winnie wanted a band that could sing in a wedding. Nonetheless, ERF would not compensate Winnie for the losses that her clothes business suffered due to the event. On her part, Winnie had failed to disclose this information. Therefore, it was not part of the contract. In a case of Campbell v Lane (No 2) (2013), the court found the defendant guilty when he sold the plaintiff a horse that could not perform in shows while he knew the intention of the buyer was to use the horse in these events. In its ruling, the judges made the defendant pay the plaintiff for the losses he had suffered.
Unfair Terms and Illegality of the Contract
Despite the presence of unfair terms of the contract that exonerate ERF from liability, the hotel would still be bound to pay Winnie for the damages. According to the Australian law, all suppliers have a duty of providing a warranty of the condition of goods and services that they offer. Therefore, the clause that the hotel is not liable for any loss is illegal. In a case settled in July 2013, Hewlett-Packard, a computer hardware company, was ordered by the Federal Court to pay $3 million as a civil pecuniary penalty since it had made false and misleading representations to its consumers and retailers concerning consumer guarantee rights (ACCC v Hewlett-Packard, 2013). Further, the Australian Consumer Law required suppliers to provide high quality goods o their customer. As ruled in the case between Australian Competition and Consumer Commission (ACCC) v Reckitt Benckiser (Australia) Pty Ltd (Reckitt Benckiser), the court said that all suppliers have a duty of selling goods that are of acceptable quality.
Further, the Australian law protects consumers against unfair terms used in contracts. In particular, the use of unfair terms makes a contract void. However, since Winnie was unaware of the illegality caused by the use of these terms, she is not bound by them. In this case, the court will expunge the unfair terms of the contract. In a case of ACCC v Bytecard Pty Limited (2013), the court fined Bytecard Pty Limited for using unfair terms of trade. By this act, it is clear that ERF would have to compensate Winnie for the poor quality of food, drinks, and overall service that they offered on her wedding day.
 
 
 
 
 
 
 
 
 
Works Cited
ACCC v Bytecard Pty Limited (Federal Court, 24 July 2013, VID301/2013).
ACCC v Hewlett-Packard [2013] FCA 653.
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No 4) [2015] FCA 1408.
Caffey v Leatt-Hayter [No.3] [2013] WASC 348.
Campbell v Lane (No 2) [2013] QCATA 307
Carlill v Carbolic Smoke Ball Co. Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1.
Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429.
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527.
H B F Dalgety Ltd v Morton [1987] 1 NZLR 411 Jurisdiction: New Zealand Court: High Court 26th June 1987
Pharmaceutical Society of Great Britain v Boots, Court of Appeal [1953] 1 QB 401; [1953] EWCA Civ 6; [1953] 1 All ER 482, [1953] 2 WLR 427.
Taylor v Caldwell [1863] EWHC J1 (QB), 122 ER 309, 3 B & S 826 (6 May 1863), King’s Bench
The Life Insurance Co of Australia v Phillips (1925) 36 CLR 60.