Week 4 Law of Contract Offer and Acceptance

Week 4 Law of Contract Offer and Acceptance

Week 4 Law of Contract Offer and Acceptance Copyright Guy Harley 2008 1 Contract An agreement between two or more persons that will be enforced by law May be In writing Oral Partly in writing and partly oral Implied

Copyright Guy Harley 2008 2 Writing Contracts need not be in writing Exceptions Sale of Land Guarantees Credit contracts Other statutory requirements Copyright Guy Harley 2008 3

Analysing a Contract Is there a contract? What are the terms? Is it valid & enforceable? Has it been discharged? Has there been a breach? Copyright Guy Harley 2008 4 Six Elements 1. 2. 3.

4. 5. 6. Offer Acceptance Consideration Intention to create a contract Contractual Capacity Certainty Copyright Guy Harley 2008 5 Offer

An offer exists only where a reasonable person would conclude on the facts that the person was willing to be bound in a court of law Distinguish Statements of future intention Puffery Negotiations Invitation to treat Provision of Information in response to enquiry Copyright Guy Harley 2008 6

Statements of Future Intention A mere statement of a present intention to do something in the future is not an offer Harvey v Facey (Graw 3.2.2) Australian Woollen Mills v Commonwealth Harris v Nickerson Kelly v Caledonian Coal Co Often called a mere promise Copyright Guy Harley 2008 7 Puffery

Sales talk Exaggerated statements that no reasonable person would believe to be true Copyright Guy Harley 2008 8 Negotiations

An indication of a willingness to negotiate is not an offer An offer will not arise merely because parties have reached agreement on one aspect of the deal Implied (or express) understanding that parties not bound until formal contract executed Heads of Agreement Copyright Guy Harley 2008 9 Invitation to Treat An invitation to

Negotiate Make an offer is not an offer but an Invitation to Treat The distinction lies in the objective intention of the person making the offer or invitation to treat. Copyright Guy Harley 2008 10 Invitation to Treat

Retail Displays Advertisements Auctions Tenders Copyright Guy Harley 2008 11 Retail Displays Fisher v Bell (Graw 3.4.2) Pharmaceutical Society v Boots In most circumstances the retailer does not make an offer by displaying goods for sale,

even where the goods are marked with a price But Display of goods in an automatic vending machine is an offer Thornton v Shoe Lane Parking (Graw 3.2.2) Copyright Guy Harley 2008 12 Advertisements

If the advertiser was making an offer then it would be bound by every acceptance even if their stock was exhausted. Depends on circumstances Carlill v Carbolic Smoke Ball Co (Graw 3.5.1) But note legislative restrictions e.g. Trade Practices Act Copyright Guy Harley 2008 13

Auctions Bidder makes the offer Auctioneer accepts S64 Sale of Goods Act (Vic) Auctioneer announces terms at start Anyone who bids then offers on the auctioneers offer as to terms Copyright Guy Harley 2008

14 Tenders Person submitting the tender makes the offer Body calling for tenders accepts any tender Not bound to accept lowest BUT, the request for tenders may be an offer to deal with tenders in a certain manner Hughes Aircraft v Aeroservices Australia Copyright Guy Harley 2008 15

Provision of Information A statement supplying information may not be an offer Harvey v Facey (Graw 3.2.2) Copyright Guy Harley 2008 16 Termination of Offer

Revocation Rejection Lapse of time Failure of condition Identical cross offers Death Copyright Guy Harley 2008 17 Revocation

Can be withdrawn before accepted A contract is made when the offer is accepted The withdrawal of the offer must be communicated to the offeree Byrne v Van Tienhoven (Graw 3.10.3) Dickinson v Dodds (Graw 3.10.4) Would a reasonable person in the position of the offeree conclude that the offer had been withdrawn? Copyright Guy Harley 2008 18

Revoking a Unilateral Offer Involves a unilateral promise e.g. Carllil v Carbolic Smoke Ball Co If offeree has acted on the promise then offeror cannot withdraw until offeree has had a reasonable opportunity to complete Copyright Guy Harley 2008 19 Rejection

Restating the offer when accepting is not a counter offer Asking for clarification is not a counter offer Reasonable person test examine all circumstances Copyright Guy Harley 2008 20 Rejection

Once rejected, an offer cannot be accepted Hyde v Wench (Graw 3.8.2) A counter offer is a rejection Any material alteration is a counter offer A conditional acceptance is a rejection May be rejected expressly or by implication Implied Offerees actions are inconsistent with an intention to accept Copyright Guy Harley 2008 21

Lapse Due to Time Express time limit Otherwise, offer remains open for a reasonable time What is reasonable time depends on: Method by which offer made Nature of the transaction Terms of Proposed Contract Actions of parties between offer & purported acceptance

Intimations as to time by offeror Promise to keep offer open for certain time is unenforceable unless consideration given (e.g. option) Copyright Guy Harley 2008 22 Lapse Due to Death Due to death of either party if involves personal skill or service by the deceased Copyright Guy Harley 2008

23 Terms of Offer All terms of offer must be brought to attention of offeree before acceptance Causer v Browne (Graw 10.3.2) Olley v Marlborough Court (Graw 10.3.8) Copyright Guy Harley 2008 24 Accepting the Offer Acceptance must be final & unqualified Must be made with knowledge of and in reliance

on offer R v Clarke Fitch v Snedaker (Graw 3.7.1) Only person to whom the offer was made may accept Must be communicated to the person who made the offer Copyright Guy Harley 2008 25 Subject to Formal Contract 1. There is a contract & one of terms is that documentation be prepared 2. There is a contract but nothing can happen until contract prepared

3. There is no contract Copyright Guy Harley 2008 26 Acceptance Must be Communicated Express Communication of Acceptance is not necessary where Implied from past dealings between parties Industry custom Acceptance indicated by conduct Brogden v Metroploitan Railway (Graw 4.5.5) Unilateral contracts Postal rule applies

Copyright Guy Harley 2008 27 Accepting the Offer Silence is not acceptance Communications after acceptance are irrelevant Copyright Guy Harley 2008 28 Method of Acceptance If Offerror stipulates method of acceptance Must be in form stipulated by offeror, or Must use equally expeditious method

Presumption that acceptance in same form as offer Copyright Guy Harley 2008 29 The Postal Rule Applies where offeror has expressly or impliedly accepted post as the means of communication of acceptance Acceptance occurs at time of posting not receipt even if lost Household Fire & Carriage Accident Insurance Co v Grant (Graw 4.5.11) Applies to all situations where noninstantaneous communications are used

Often determines jurisdiction Copyright Guy Harley 2008 30 The Postal Rule Does not apply where Negotiations protracted - Tallerman v Nathans (Graw 4.5.9) If would lead to manifest inconvenience or absurdity Where offeror requires actual communication of acceptance Holwell Securities v Hughs (Graw 4.5.10) Acceptance not delivered due to fault of acceptor Getreide-Import Gmbh v Contimar SA Compania (Graw 4.5.12)

Instantaneous communications used Entores Ltd v Miles Far East Corp (Graw 4.5.13) Copyright Guy Harley 2008 31 Has an offer been made? No No Contract Yes Did the offeror intend to revoke

the offer? Yes Did the offeror communicate revocation? No Has the offer lapsed? No Yes Yes

No Has acceptance been received by the offeror? Yes No Contract Copyright Guy Harley 2008 Yes Was acceptance made under the

postal rule? No 32

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