Q1

It is impossible to overstate the significance of contract law to the workings of the economy,
of interpersonal relationships, and of business transactions. A contract is a legally binding
agreement between two parties that outlines particular rights and obligations. This type of
agreement can be legally enforced. A fundamental tenet of contract law is the concept of
privity of contract, which states that only the parties to a contract have the legal authority to
enforce the terms of the agreement. However, when circumstances are such as these, a
third party may have an interest in seeing that a contract is upheld. When one of these
agreements is violated, there is almost always a subsequent dispute, a breach of contract,
and monetary losses that follow. The power to enforce contractual rights has been delegated
to third parties so that problems of this nature can be resolved. On the other hand, this has
resulted in a greater number of problems than it has solved.

One of the fundamental principles that underpins the area of contract law is known as
"privity of contract." It states that the only people who have the authority to enforce the
terms of a contract are the parties to the contract themselves. This principle holds that a
contract is only legally binding for the parties to it. It is founded on the premise that a
contract is a private agreement between two parties and that a third party does not have
the authority to intervene with a deal of this nature. The purpose of the privity of contract
principle is to ensure that the parties to an agreement are able to freely communicate with
one another regarding the terms of that agreement without interference from third parties.

The fact that third parties do not have any kind of obligation under the law to abide by the
conditions of the contract is the most common problem that arises. When determining
whether or not to include other parties as beneficiaries or grant them access to contractual
rights, the benefits that will accrue to the parties involved are taken into consideration.
However, there is a possibility that the third party will violate the agreements, which will
result in disagreements and losses. The case of Beswick v. Beswick (1967) is a good example
of this kind of scenario. In this particular case, the husband gave his wife's nephew the
authority to enforce any agreements that her husband had made with his nephew. However,
after the death of the husband, the nephew went back on his promise to the surviving
spouse. The court listened to the complaint that she filed against the nephew she was
responsible for raising. The courts came to the conclusion that the wife was not permitted to
file a lawsuit against the nephew because she was not a party to the agreement between
the two parties and did not owe the nephew any contractual obligations.

The body of case law offers a multitude of illustrative examples of the problems that may
manifest themselves when third parties are granted the ability to enforce contractual rights.
In the case of Dunlop Pneumatic Tyre Co. Ltd. v Selfridge & Co Ltd [1915] UKHL 1, a
manufacturer and a dealer agreed that their wares would not be sold to anyone who
planned to resell them for a lower price than they were originally purchased for. The dealer
ultimately parted ways with the products and sold them to a buyer who intended to resell
them for a price that was lower than what had been agreed upon in the beginning. The
manufacturer brought a breach of contract claim against the third party, but the court ruled
that they were not liable because they were not a party to the agreement and therefore
could not be held responsible.

It is problematic to permit third parties to enforce contractual rights because doing so

increases ambiguity and bolsters the likelihood of legal conflicts. In some jurisdictions' legal
systems, it is generally assumed that the contract will be enforced according to common law
if it is silent on the subject. As a result, relying on a third party to carry out the enforcement
of the contract might prove difficult due to the ambiguity and openness to interpretation
that characterises common law. Case law, such as that found in Tweddle v. Atkinson [1861],
provides an explanation for the challenges that arise when a third party is given the ability to
enforce a contract. Due to the fact that Tweddle's father and his father-in-law had previously
entered into a binding agreement, the latter was obligated to pay Tweddle a predetermined
amount of money. In spite of this, the executor was able to carry out the terms of the
agreement because they were the only party with the legal standing to do so following the
death of the father-in-law. As this particular case demonstrates, allowing third parties to
enforce a contract can lead to a great deal of confusion as well as a great number of legal
disputes.

Another case that illustrates the disagreement over third-party rights is Trident General
Insurance Co. Ltd. v. McNicee Bros. Pty. Ltd. [1988] HCA 40. In this particular scenario, the
insurance policy held by the claimant included a provision for a no-claims bonus. A driver
from a third party who had never driven the claimant's car before was involved in an
accident with it. The assertion made by the claimant that their no-claims bonus had not
been impacted was met with disagreement from the insurers. This circumstance
demonstrates how involving third parties in a contract can make it more complicated than if
it had simply involved the parties to the contract.

The decision in Jackson v. Horizon Holidays Ltd. (1975) 1 ALL ER 36 is another potential
violation of the rights of third parties which is illustrated by this case. A vacation package
was purchased by the plaintiff in this case, and it included the plaintiff's son. The son
required hospitalisation after becoming ill from a reaction to some food he had eaten. The
fact that the plaintiff had made the reservations on both of their behalf meant that the son
was not bound by a separate contract with the travel agency. As a result, the plaintiff's
attempt to bring a claim for damages on behalf of his son as a third-party beneficiary was
unsuccessful.

In addition, considering that contracts are private agreements between two parties, allowing
third parties to enforce their rights can be difficult. A private agreement is one in which the
conditions were negotiated between the parties, and no third party is entitled to the
benefits of the agreement. A public agreement is one in which the conditions were not
negotiated between the parties. The intentions of the parties determine whether or not a
third party may be able to enforce a contract. In the case of Linden Gardens Trust Ltd. v.
Lenesta Sludge Disposals Ltd. (1993), the Privy Council came to the conclusion that a third
party was permitted to file a lawsuit if it could be demonstrated from the contract that the
parties intended to allow third-party claims. However, if the agreement is silent on the
subject, there is no legal doctrine that would permit a third party to enforce the contract.
This is because the agreement is considered to be invalid. In order for the court to prevent a
third party from carrying out their obligations under the contract, it must first determine the
intentions of the parties.

In the event that contractual rights are allowed to be enforced by third parties, the parties to
the contract may find themselves in a position of competing interests. When parties to
commercial agreements try to delegate the responsibility for performance to a third party,
they are doing so in the hope that this will lighten the load of the contract. On the other
hand, if the intervention of the third party leads to pointless disputes, the parties to the
contract might end up in a bad position. In the case of Linden Gardens Trust Ltd. v. Lenesta
Sludge Disposals Ltd. (1993), the court reached the conclusion that a third party was not
permitted to file a claim because doing so would violate the rights of the original parties to
the contract.

Given that contracts are enforceable by law, they play an important part in the functioning
of the economy. When parties enter into a contract, they are committing to a certain set of
terms and obligations. If those terms and obligations fail to be fulfilled, the parties may face
legal complications as well as financial losses. On the other hand, permitting third parties to
enforce contractual rights could result in greater issues than it solves, depending on the
specifics of the situation. Due to the fact that third parties are not bound by contractual
obligations, this frequently results in misunderstandings and arguments. When a third party
is allowed to sue one of the parties to a contract, it creates a situation in which those
parties' interests compete with one another. In conclusion, allowing third parties to enforce
contractual rights has a few positive aspects, but it also creates a significant number of
difficulties. This is the case despite the fact that it has some positive aspects. As a
consequence of this, the court ought to give careful consideration to all of these aspects
before permitting third parties to file lawsuits.

To summarise, the fundamental principle of contract law known as privity of contract

protects the right of the parties to discuss the specifics of their agreement without any
limitations being placed on the conversation. It may appear to be an acceptable approach to
allow third parties to enforce contractual rights; however, doing so actually creates more
problems than it fixes. In light of these considerations, the concept of privity in contracts
ought to be respected, and the assertion of contractual rights by third parties ought to be
restricted to certain circumstances only.

Word Count: 1600

Q2

The provisions of a contract sale are divided into conditions, warranties, and innominate
terms in accordance with the effect of Sale of Goods Act 1979. Examples of contractual
terms include conditions, warranties, and indeterminate (or intermediate) terms. All of the
parties involved in the contract negotiations need to reach a consensus on how to initially
categorise each term. In the event that a contract is broken, this is useful because it allows
the parties to examine their choices in a timely manner. It is possible to reach contractual
agreements either verbally or in writing. In addition, terms can be inferred from the law, the
actions of either party, or previous transactions.

It is possible for the parties to a contract to impose a condition that they regard as being of
such vital importance that it must be adhered to. A condition is the component of the
contract that is considered to be the most important and central. A condition that might be
included in a sales agreement for commodities is a clause that requires the products to be
delivered by a certain date and time. If one of the parties to the agreement does not comply
with a condition, the other party is free to treat the agreement as if it has terminated. One
example of a clause that could be included in a contract for phone repair would be one that
states the company performing the repair must only use brand-new components to replace
the ones that have been damaged. If the client discovers that the repairer did not use only
brand-new components in their work, they may consider this to be a breach of contract and
bring legal action against the repairer. In addition, the customer has the option of
terminating the contract and searching for a new service provider if they so desire. In the
event that a condition is breached, the innocent party has two choices: either they can
terminate the contract and pursue damages, or they can continue to perform the obligations
of the contract, pursue damages, and pursue additional remedies such as injunctions.
Whether or not a repudiatory breach has occurred is the most important question, and this
is true regardless of the magnitude or nature of the damage that was brought about by a
condition being violated.
An example of a condition that failed to be satisfied is presented in Poussard v. Spiers and
Pond [1876] 1 QBD 410. In this particular scenario, an actress had a contract to sing in the
opera; however, she was unable to perform until a few weeks after the production had
already begun due to illness. The court came to the conclusion that this breach of the
contract was fundamental to the agreement, which allowed the opera to get out of their
commitment to the contract and hire a new actress. The House of Lords decided in the case
of Schuler AG v. Wickman Machine Tool Sales Ltd. [1974] AC 235 that a contract may be
terminated if a condition is breached. However, the case demonstrates that the term
"condition" is not always conclusive, even when the parties themselves define a particular
obligation as a condition. This is the case even though the parties themselves define the
obligation as a condition. It is possible, given the terms of their agreement, that the parties
did not intend to use the term in the technical sense that is typically associated with it. In
addition to this, the law itself might provide some indication regarding the standing of a
particular term. It's possible that an earlier judicial decision or a law like the Sale of Goods
Act 1979 gave rise to the idea.

Contract provisions known as innominate terms or intermediate terms are positioned

between conditions and warranties in the contractual hierarchy. When it is unable to be
established that a term is a condition or warranty, that term is said to have become
innominate. In the event that one of the essential indefinite terms is violated, which would
prevent one party from receiving the full benefit of the agreement, the innocent party has
the right to terminate the agreement and look for other options. If the innominate term of
the contract is not so essential that its breach would render the entire contract null and void,
then the blameless party does not have the right to terminate the contract. In this scenario,
the innocent party's only recourse is to pursue financial compensation.

This provision is considered a condition and gives the party the right to terminate the
contract if a breach of it denies the other party access to all of the benefits that are
associated with the agreement. If this is not the case, the term will be treated as a warranty,
and the party that was injured will be eligible for compensation. However, if the other party
was not truly deprived of one of the benefits of the contract as a result of the breach, then
the breaching party could be held liable for unlawful termination of the contract. An
innocent party may be held liable for damages if it is determined by a third party that the
breach did not totally deprive the parties of the value of the contract.

The "Baltime 1939" form indicates that the Hong Kong Fir was chartered for approximately
twenty-four months. Her engines were in a satisfactory state when she was delivered to her
owner; however, because of their age, they required careful upkeep. When the order was
delivered, the engineers working for the owners had insufficient training and a lack of staff.
As a direct result of this, the first charter flight experienced a variety of significant engine
issues. Prior to the trip from Liverpool to Osaka, which was followed by another 15 weeks of
repairs, the ship was chartered for a total of 20 weeks. Five of those weeks were designated
for maintenance and repairs. The proprietors of the ship filed a claim for damages on the
basis that the alleged termination of the agreement by the charterers was unlawful. It is
alleged that the charterers terminated the agreement before the ship was once again
prepared for open water. It was determined that the owners were in violation of the
undertaking of seaworthiness because of the incompetence of the engine room staff; the
owners were not protected by the "Baltime 1939" exceptions clause (Clause 13) because
the owners' lack of due diligence in their selection of the engine room staff was the cause of
the staff's incompetence; seaworthiness was not a condition; therefore, it did not by itself
give the charterers the right to repudiate. This example demonstrates how challenging it can
be to correctly categorise all of the contractual responsibilities as either conditions or
warranties. Despite the fact that it would be easier and more practical to do without them,
this example demonstrates the significance of intermediate phrases.

In the case of Cehave v. Bremer Handelsgessellschaft mbH (The Hansa Nord), [1976] QB 44,
Lord Denning expressed his reluctance to permit rejection under the Sale of Goods Act for
what he considered to be a relatively minor breach in regards to damaged goods. Instead, he
came to the conclusion that the goods were commercially viable according to section 14,
despite the fact that they were not in good condition. This was a violation of the express
term that required the goods to be in good condition, and he decided that breach damages
were the appropriate remedy.

In light of all of these judicial decisions and definitions of contract terms, the classification of
a contract's terms in accordance with the Sale of Goods Act of 1979 might be incorrect. In
addition, it demonstrates how challenging it can be in practise, despite the fact that it is
straightforward in theory, to categorise various phrases contained in a contract as either
conditions or guarantees. The particulars of each instance make it possible for intermediate
terms to "provide a more flexible and equitable remedy," which, in my view, is an
improvement that should be encouraged. However, this could also increase the level of legal
uncertainty, which could lead to an increase in the number of problems that actually occur
in the real world and make it more challenging for the court to determine what kind of
remedy is appropriate. In a manner comparable to that of the Hong Kong Fir, which was
discussed earlier, it has the potential to create difficulties for all parties involved. When the
party that had suffered the breach made the decision to treat it as a conditional breach and,
as a result, treated the contract as repudiated, the court ruled that the contract was not
repudiated because it was not a conditional breach. This serves as evidence that these
concepts are ambiguous in their application. In light of the problem at hand, the candidate
arrives at the conclusion that the judges' classification of terms as conditions or innominate
terms is nothing more than an exercise in semantics.

Word Count: 1500

Q3

In Walton Stores (interstate) Ltd v. Maher and other cases where promissory estoppel
applies, Wright notes that the common law has long upheld the requirement of something
external to the agreement in itself for a contract to be legally enforceable; this requirement
is something both unprejudiced and practical, outside motive, desire, and incentive —
elements all contradictory to mutuality. The solution is "consideration," which, in its most
basic form, is the promise of something of value in exchange for a promise, according to
common law. Any pricey object will suffice; the price need not be monetary. This might
entail damaging the promisee, assisting the promisor or a third party at their request,
proposing to do anything (such as mow A's lawn in exchange for $10 paid to C) or not doing
something (such as in Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256). Since Rann v.
Hughes (1778) 101 ER 1014, all simple contracts have required the support of consideration.
The decision in Eastwood v. Kenyon (1840) 11 Ad & E1 438 that "moral obligation alone is
not sufficient consideration" backed this. The focus of this essay is on the value of reflection
in modern law, not where it came from. Consideration, in the words of Llewllyn, is "a vast,
sprawling field, the roots of which are hopelessly entangled with other roots from other
phases of our law." In this post, we'll examine if this convoluted idea is actually a remnant
from the past of contract law that has no current use. Wright asserts that laws "must be
prepared to defend themselves against attacks, and cannot shelter behind antiquity or
prescription," so it is only fair to test whether the doctrine of consideration—which has been
heavily criticised for quite some time—remains applicable in the contemporary legal system.
This section initially discusses the advantages before moving on to an examination of the
main criticisms, drawing on pertinent case authorities and other sources. When we compare
them, we find that the theory of consideration is indeed nearing the end, and we suggest
some potential improvements. However, the importance of mindfulness is emphasised as
being crucial in the context of such a change.

Following this essay's discussion of significant objections to consideration, it is crucial to

note the arguments, which, according to Gamage, typically fall into two categories: The first
is the idea that this notion offers a technique of determining the parties' intentions. This
creates a symbolic hurdle that must be overcome, making it quite apparent which
agreements are intended to be treated as legal duties. But this begs the question: Why can't
this intention just be stated in writing without requiring consideration to determine which
promises are meant to be legally binding? Posner explains that there is no benefit to
requiring the parties to state a rationale in addition to their desire for their vow to be
enforced. Attempts to rationalise the custom as a way of assisting courts in differentiating
between enforceable and unenforceable commitments fall short since the 'form' of the
formality is not defined.

It's important to keep in mind that judges in Australia have some discretion when
determining the merits of a case. This deviates from the usual rule of strictly following the
letter of the law. This idea is illustrated by the law of promissory estoppel, which permits
free promises to be enforced if the promisee has relied on the promise and it would be
unfair to hold the promisee unbound.

The theory of consideration, according to substantive theorists, the second school of

thought that addresses the justification of consideration, serves as a means of separating
pledges made in good faith from commitments made in return for something of value. It is
asserted that in this instance, a promise that is only enforceable against one party is less
socially relevant than a commitment that is instantly enforceable against both parties. This is
such that a bilateral contract immediately binds both parties, but a unilateral contract is only
binding if one party starts to carry out the act. The parties' real desire to create a legally
binding obligation and whether or not the proper steps were taken to convey that intent are
not taken into account.

The idea of contemplation has come under increasing attack, with some contending that it
should be abandoned for the sake of the logic of contract law since it is unnecessary,
impractical, and anachronistic. Professor Burrows reached the following conclusion: The law
would become more understandable and clearer if the need for consideration were
eliminated and gratuitous promises that have been accepted or relied upon were held to be
legally binding (subject to the application of standard contractual rules relating to, for
example, the intention to create legal relations, duress, and illegality). There is unsettling
ambiguity around the concept of consideration and the scope to which it applies, which
leaves open the question of whether or not a promise is enforceable. Even further, Rodell
describes the idea as a "enormous and shapeless grab bag, so full of unrelated particulars
that it is just as meaningless and just as useless as it was before." Chen-Wishart makes the
observation that the condition that contemplation need not be adequate strengthens this
precariousness. To further explain, agreements can be enforced or avoided depending on
how strictly the rules of consideration are followed, regardless of how beneficial they are in
practise. For example, even though they are essentially the same, an agreement to trade a
car for something of minimal value can be enforced, but one to do so alone cannot. Jessel
contended that this standard was incorrect as early as 1881 in Couldery v. Bartrum because
under English common law, a creditor might take anything other than money to fulfil an
obligation. He was free to take a horse, a canary, or a tom-tit as much as he pleased, but the
nadum pactum forbade him to take 19 shillings and six pence in the pound. This concept, as
established by Sir Edward Coke, may have been questioned by certain people, whose
opinions deserve respect, as being debatable in principle; yet, it has never been overturned
by a court; rather, in my judgement, it has always been recognised as law since the sixteenth
century. The Lord Chancellor, the Earl of Selborne, handed down this decision in the case of
Foakes v. Beer three years later. Given this, I am unable to conceive how your Lordships
could suddenly declare as incorrect a Court of Appeal decision that was based on a rule of
law that has been in effect for the last 280 years. Contrary to this case, Williams v. Roffey
Bros. and Nicholls held that consideration is present when one party promises to carry out a
duty for which the other party is already owed money. Both the courts' inclination to imply
consideration into cases and the ambiguity surrounding the term "practical benefit" have
been brought up as objections to consideration. The William v. Roffey Bros. and Nicholls
case caused controversy since, historically speaking, past duties weren't fulfilled with "good"
regard. This case is frequently used, together with Williams v. Roffey Bros. and Nicholls
(1947) KB 130, to show a conclusion that seems to defy some of the most fundamental rules
of consideration.
The author contends that the goal of contract law should be "unification rather than
diversification" in view of the emergence of globalisation and international trade. The
abolition of the requirement for consideration would contribute to this goal. Due to the fact
that consideration, which is absent from certain legal systems, is now recognised, this
change will lower trade barriers and increase competitiveness. This is particularly valid in
countries with a civil law system. It's important to note that nations without a legislative
requirement requiring consideration of others' sentiments function just fine. "The idea that
consideration is essential to the very notion of a contract is a typical common law concept,
but it is quite untrue," claims Professor Coote. "If it were true, the only nations that
understood what a contract was would be common law nations." Wright believes there is
minimal need to take into account the various courts that enforce laws other than the
common law, such as the laws of France, Germany, Italy, Spain, and Japan, as well as the
laws of South Africa and Ceylon, which are based on Roman Dutch law. Another issue with
the idea is the necessity that parties must have established an agreement and intended it to
be legally binding.

The theory of consideration does not have a persuasive basis in modern law, as this article
has shown. There are many more arguments against it than for it, and the two main groups
that defend it are frequently at conflict with one another. The courts' lack of clarity is shown
in their uneven application of the rule of consideration, which increases ambiguity and
confusion. Consideration is not essential in order to demonstrate intent and create a legally
enforceable agreement. It is simple to see where the theory of consideration fails, but a
complete revision would need a lot of work, and doing away with it altogether would have
its own set of difficulties. Promissory estoppel's existing application might be enlarged, a test
of intentions could replace consideration, or consideration could be redefined as any
reasonable justification for enforcement.

Word Count: 1554