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Unit 5 Contract law: Revision


For the exam you should have studied these cases:

Wakeling v Ripley (1951) 51 SR (NSW) 183

Mr. Ripley was an elderly man who lived by himself in Sydney. He promised his sister and brother-in-law, who lived in England that if they came to live with him in his house in Australia, he would let them live rent free and leave them his house upon his death. Mr. and Mrs. Wakeling agreed to the proposition and moved in with Mr. Ripley. After a while the parties quarrelled, Mr Ripley sold his house and excluded the Wakelings from his will. They sued for breach of contract.

The Court found this was a case where there was evidence to rebut the presumption that there was no intention to be legally bound in a domestic agreement. The Wakelings had changed their position detrimentally in reliance on the agreement and Mr Ripley was aware of this. So there must have been an intention on behalf of the paries to be legally bound.

Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953) 1 QB 401

Boots Cash Chemists were self-serve chemists. They had their products on shelves. Customers would select the item they wished to purchase and take it to the cash register where a pharmacist checked the purchases. An English law required prescribed drugs to be sold under the supervision of a qualified pharmacist. The Pharmaceutical Society prosecuted Boots Cash for breaching this law arguing that the products were sold when they were selected by the customer from the shelf. At that point of time there had been no supervision by a pharmacist as required by the law.

The court held that the goods on display on the shelf was an invitation to treat. When the customer took the goods off the shelf and handed them to the pharmacist at the cash register this was an offer by the customer to buy. At this point the pharmacist could query the choice and not proceed with the sale. The sale only took place when the pharmacist accepted the customer’s offer by accepting the customer’s money. Therefore Boots Cash were not in breach of the law.

Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256

In that case Carbolic ran an advertisement stating that it would pay One Hundred Pounds to anyone who used its smoke balls in the prescribed manner and still contracted influenza. It deposited One Thousand Pounds in a special bank account to show its sincerity.

Mrs Carlill purchased the product, used it as prescribed, and still caught influenza. She sued the company for One Hundred Pounds. The company refused to pay. It argued that its advertisement was a “mere puff” and not an offer It argued even if it was an offer that for there to be a contract Mrs Carlill would have had to personally communicate with the company advising that its offer was accepted.

The Court held the advertisement was an offer which could be accepted by the public and that the offer could be accepted by a member of the public buying the product and following the instructions in the advertisement. The company was obliged to pay the advertised sum.

Commercial Bank of Australia v Amadio (1983) 151 CLR 447

The parents of a builder guaranteed his indebtedness to the bank. The evidence clearly showed that the parents misunderstood the extent of and the length of the guarantee. Further the evidence showed that the parents

The High Court set the guarantee aside. It held that the Bank had engaged in unconscionable conduct and that therefore the contract of guarantee was not enforceable.

Victoria Laundry (Windsor) Ltd v Newman [1949] 2 KB 528

The defendant company contracted to sell a large boiler to a laundry operated by the plaintiff company. Delivery was to be made on the 5th June but was not made until 8th November. The plaintiffs sued for damages because of the delay. Specifically, they wanted damages for:

The court held that the plaintiff company was entitled to claim the former amount of damages as the loss flowed directly from the breach of contract. However, the plaintiffs failed in their second claim, because the court decided that the loss was too remote and it could not have been foreseeable. The defendants were not to know of the dyeing contracts so they were unable to foresee any loss resulting from them.

Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344

Dillon was a passenger on a cruise ship that sank near New Zealand. Dillion sued the shipping line, claiming damages for disappointment and stress. The High Court found that Dillion was entitled to damages for the disappointment and distress that she had suffered. The Court stated that the purpose of such a travel contract was to provide pleasure and relaxation. Baltic Shipping had failed in this regard and the loss suffered by Dillion was directly linked to this breach of the contract.