Consideration is based on a promise and where the only exchange of something valuable takes place. An agreement that is not in a deed is known as ‘informal agreement’.
Joanna, a small business entrepreneur is setting up a small lawn mowing business named ‘Spring Lawns and Gardens’ where she needs to invest in a lawnmower and other pieces of equipment which she plans to buy from her local hardware store called Lawnmower City. Joanna is assisted by hardware store assistant Jimmy. He is an excellent salesman and suggests Joanna, MowMaster 6000, a brand new lawnmower as per her requirements. He exaggerated the lawnmower features as to how sturdy it is and is made out of ‘best parts’ and is an ‘Amazing tool’. He even says it can get your job done quickly which could help her get more clients into the week. Puffery means when a seller often praises or over exaggerates the products to excite the customers to buy it. Puffery is not intended to be taken seriously and is not a part of a contract. Jimmy convinces Joanna to buy the lawnmower. In a different but similar scenario Handbury v Nolan case, the auctioneer who auctioned the cow on falsely based claims stated just before the auction about the cow being pregnant to raise higher bids was not mere opinion (puffery) it was a statement which binds the auctioneer into legal promise and became an express term of the contract under those circumstances. The fact that jimmy in those context used words like ‘was made in Germany’ and its blades ‘will never get blunt or bent out of shape’ is represented by statements and claims rather than mere representations.
To conclude Yes, Jimmy made certain statements such as ‘it was designed in Germany’ and its ‘blades will never get blunt or bent out of shape’ which are considered to be bounded by legal binding promises.
If terms are written in a document which is available to the party at the time of contracting then the document can be reasonably expected to have contractual terms. The party is liable to the terms and conditions even if they have not read or agreed too.
After 3 days Joanna found some fault in the new MowMaster 6000 which she bought from her local hardware store LawnMower City. The blades were worn down and were not cutting properly just after a few days of purchase and Joanna decides to call the LawnMower Company to complain. The company employee told Joanna ‘We’re not responsible for any problems like that. Didn’t you see the sign at the counter?’ There was a small sign stating that lawnmower company is not reliable for any of the breach of warranty and conditions of the products sold. In a similar case Sydney Corporation v West the court outlined the claims of Mr west because the statement on the given ticket was a part of the contract whether he read it or not it was already agreed upon when he bought the ticket, the ticket had become the term of the contract. In Joann’s situation when she was buying the lawnmower she should keep in mind that it is common knowledge that in certain types of places it is a given and expected to have those types of Signs or notice as these terms.
Promises made by both parties are sufficient to be considered as a legal binding contract and is known as ‘Bilateral’ contract. Fail to deliver on a promise can lead to a breach of a Bilateral contract. Promissory Estoppel is developed recently and it arises when one party causes another party to make the wrong assumption about the future based on past promises.
Joanna receives a phone call from a potential client Ronald. He seeks Joanna’s help to maintain his orchid collection on a weekly base. After their conversation on phone Joanna requested more details about this job, Ronald emails her and explains how his rare orchids need a specific type of fertilizer and special types of equipment to maintain them. As Joanna’s business is new and is at a small scale she was a little worried about the added expense and risks involved. She considered all the risks and expenses and prepared a custom agreement for Ronald so he sticks with the agreement for a longer time. She emailed him the contract and asked him to sign it and hand it over back to her. Over here we can see the formation of a ‘Bilateral Contract’. After waiting for a few days she hasn’t heard from Ronald about the agreement form so, she gives him a ring and Ronald says ‘Oh yes, I saw the email,’ and ‘I’m just waiting for my nephew to come around and help me with the printer and scanner here, to send it back to you.’ As per the last conversation they had Joanna asked Ronald if he was sure and if she could start her preparation.
Ronald agreed and said ‘Yes’. Joanna goes ahead and gets all the special equipment which is required to get this job done which sets back her 1000 dollars. Eager to start her new job on orchids she calls Ronald to check with the agreement deal because she still hasn’t received the signed copy of the agreement. The following day Ronald emails Joanna ‘So sorry Joanna. My nephew has offered to help me with my orchids on his weekly visits. So, I won’t be needing your services after all!’. Here Ronald breaks up his promise given to Joanna and it can be certified as a breach of contract. Joanna can appeal Promissory Estoppel against Ronald and as a proof, she has 4 Email conversations between them to offer. With everything in her favor, Joanna can appeal in court and the judge can rule against Ronald and find him guilty of breaking up a non-contractual promise and is liable to pay the damages to Joanna. In a very similar case Walton Stores (Interstate) Ltd v Maher 1988 we can see that Maher who owned a commercial property in Nowra which Waltons were interested in leasing.
Waltons wanted to lease the property on one condition that the existing property gets demolished and reconstructed according to their liking which Maher didn’t want to demolish until the agreement is done. Maher already began the work and was waiting for the Agreement papers to get signed and sent back to him. After not receiving any counter signature back Maher enquired and Waltons assured him the deal is still on and signing papers was just a formality. After about 40% demolition was done Waltons canceled the deal and were not willing to go further. Looking at the situation the judge pleads guilty to Waltons and were liable to pay damages to Maher for breach of the contract.
To conclude Yes, Joanna can argue promissory Estoppel against Ronald considering all the facts and the given situation. Joanna was encouraged by Ronald’s belief and expecting that the contract would be signed by Ronald so she acted accordingly.
If the terms and condition are available to the party while contracting then the document can reasonably contain contractual terms, the party receiving the document is held accountable for agreeing to the terms and condition even if the did not read it or agreed upon.
After her bad experience with Ronald, Joanna decides to print out stickers stating the terms and condition such as ‘Cancellation of any future appointment must be communicated in writing at least one week in advance, otherwise the fee for that appointment is payable in full’ to avoid her clients backing out of their promises on last minute and minimizing the risk and loss. In Sydney Corporation v West (1965) we can see that even though it was Sydney Corporation’s valet at fault the judge ruled against the favor of Mr. West whether he read the terms or not because the statement on the ticket contained the contractual terms and it clearly stated that they are not responsible for any loss or damage caused to any vehicle…however such loss or damage may occur.
To conclude Yes, the statement on the sticker binds future customers into legal contractual terms which are already agreed upon once you have made the transaction or exchanged something of value or promise. The receipt is a proof of transaction and contains the terms & condition and under long-established Law, terms referred on receipts and tickets are often incorporated into the contracts.
