Question

Sarah is the owner of a pre-school called “We Care for Kids” located in Sydney. Between January 2018 and December 2019, Sarah's business has boomed. Many parents were forced to place their names on a waiting list in the hopes of a future vacancy. Sarah’s business was chronically short staffed and consequently she was working very long hours. When Sarah heard that her sister, Jenny, who lived in Western Australia, had recently completed childcare qualifications at University, she sent her an email on the 17th of January 2020, which stated: “Dear Jenny, I am absolutely swamped at my pre-school and I desperately need help. Mum tells me that you have completed your childcare diploma at University. Would you be interested in coming to Sydney and working for me as a childcare worker? For $80 per week, I will rent you the granny flat at the rear of my house. The tenant who is living there now has given me notice – he is moving out by January 25. I would love to see you. Love, Sarah” Unfortunately, two days after Sarah sent Jenny the email, several children at the childcare centre were diagnosed with COVID 19. As a consequence, many parents withdrew their children from the pre-school and consequently business was drastically reduced. Sarah then had no need for any further staff, including Jenny. Meanwhile, Jenny was thrilled to receive Sarah’s email because many of her friends had gone to live and work in Sydney after finishing their University studies. By January 20, 2020 news of the COVID 19 outbreak at Sarah's childcare centre was being covered widely by the media. Jenny saw those media reports. Wanting to tie Sarah to the deal quickly, Jenny replied by posting a letter on January 21, as follows: “Dear Sarah, Thank you very much for this opportunity. I have resigned my job here and have bought a plane ticket. I leave on January 23 to go to Queensland for a beach holiday and I will arrive in Sydney on Wednesday, February 5, 2020. I will be ready to start work for you straight away. Also thank you for your offer of the rental of the granny flat – I accept with pleasure. Thanks again, love, Jenny” Sarah received this letter on February 1, 2020. However, on January 28, Sarah sent an email to Jenny describing what had happened to her business and telling her that there was no job for her at this time. Unfortunately, Jenny did not read this email because she had already left for Queensland. Whilst she was travelling, she did not access her email. Advise Jenny whether a binding contract exists.

please provide answers with issue, law, application and conclusion in regards to the contract law.

Answer 1

Firstly, A contract is a legally binding agreement between at least two parties.

For a legally binding contract, 5 elements must be satisfied:

Offer: One party makes an offer

Acceptance: The other party accepts the offer

Consideration: Each party provides consideration to the other.

Consideration can be:

• a promise to pay money
• a promise to do something
• a promise not to do something, or
• promise to provide something else of value. And it doesn't have to be money.
• Intention to be legally bound: Both parties have an intention to be legally bound by the agreement
• The parties have contractual capacity: The parties are legal entities recognised by law, such as companies, limited liability partnerships and individuals of at least 18 years of age. Hence, Once all the above elements are fulfilled, there is a legally binding contract

To form a contract, a party must have the legal capacity to do so. The categories of legal person (which includes natural persons) which don’t have legal capacity are

• bankrupts
• minors (subject to the Minors' Contracts Act 1987)
• individuals operating under a mental disability (at common law)
• companies which have not yet been formed, and
• companies which have been dissolved.
• In this present scenario there is a clear Economic duress which is seen that is When unfair - and extreme - commercial pressure is applied to a party to enter a contract or vary an existing contract in a business context, it may be declared void.

Since it is clear that Sarah's business suffered drastically and that she sent in the mail regarding the same before she received the letter of acceptance from Jenny the binding contract law will be considered void