The Principles of Contract
This section discusses the factors that are vital to the formation of a valid contract: in legal terminology, offer, acceptance, consideration, and the intention to create a legal relationship. It then looks at the contents of the contract, the terms included by the parties and those implied by statute or the courts. The law of contract is of enormous complexity and the following material may be likened to a landscape painted with a ten-inch brush. Every day, many times a day, most people in modern society enter contracts or are affected by contracts entered into by others. It is easy to enter a contract; it is such an everyday experience that most of us do not realise when we have entered yet another contractual relationship. For example, if a man rings the doctor for an appointment, catches a bus to the surgery, stops on the way to drop off the laundry and buy a pie and sauce, it is little wonder if he complains of feeling exhausted. Already that day he has used his telephone rental contract, entered into a contract of carriage with the bus company (through its agent, the driver), travelled pursuant to that contract, entered a contract of service with the cleaners, left the clothes on the strength of a bailment agreement, and created and performed a contract for the sale and purchase of a pie and sauce. When that person eventually gets to the surgery it is probably a good thing that he does not realise that the receptionist is only returning his smile pursuant to a clause in her contract of employment. Similarly, contract pervades the professional life of the artist. Leasing a work space, buying turps at the local hardware shop, insuring works, getting the tradesman around the corner to do some frames, selling a piece to a studio visitor, having an exhibition of works, all involve the creation of a contractual relationship, the formulation of contractual rights and responsibilities and the possibility of legal recourse if those mutual expectations are not fulfilled. Thus it is important to
© Simpsons Solicitors Suite 1202 135 Macquarie Street
Sydney NSW 2000 Australia
Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442 email@example.com
Page 2 of 13
know what contracts are, how to enter them, how to enforce them, how to enjoy them.
1. Offer It seems facile to say that there must be an offer and that the offer must be accepted -- but it is the very root of any bargain. Because it is the basis of the transaction, an offer must be in reasonable detail: it must be clear just what is being offered and on what terms. Thus if a collector says, ``I'll buy that one for $500'', the offer is quite clear. On the other hand, if the collector said, ``I'd go to $500 for something that reminded me of the trip to West Wyong'', that would not constitute an offer because its terms are too vague. It is really only an indication of intention or desire. A difference of phrasing may seem slight but its effect may be considerable. For example, what if the collector had said: ``If you paint me a picture, I'll pay you $500 if I like it''; or ``If you paint me a picture, I'll pay you $500 if it's any good''; or even ``If you paint me a picture, we'll talk about the price when it's finished.'' The first example would amount to an offer, but the bargain would be conditional upon the collector liking the finished work. Whether or not the sale will proceed is totally dependent upon subjective criteria. The second example provides the artist with slightly more protection because it might be an objectively good painting, even though the collector does not like it. On the other hand, the third example would not constitute an offer of any kind. It is altogether too vague. It is really only an offer to make an offer. So that these sorts of disputes do not arise it is often advisable to jot the exact terms of an agreement onto a piece of paper, for then the parties have a record of their...