Invitation to treat
• Initial approach to others inviting them to deal or to instigate dealings on certain specified terms • Inviting others to make an offer (i.e. auction sale) • Fisher -v- Bell [1961] 1QB 394
• Auction Sales • Tenders, shares and debentures • Price lists
Acceptance
Acceptance: a final and unqualified assent to all the terms of the offer.
Who may accept the offer?
The postal acceptance rule
• Special acceptance rule:
– The acceptance is complete as soon as the letter is posted. – Adams -v- Lindsell (1818) 106 ER 250
– Felthouse -v- Bindley (1862) 142 ER 1037
Manner of acceptance
• The acceptance must be communicated to be effective. However, the offeror may prescribe a particular mode of acceptance. • In the absence of such stipulation, acceptance may be made in any way (words, in writing or implied). • Exceptions: postal acceptance and unilateral contracts.
To whom can an offer be made?
What can happen to a valid offer?
Termination of an offer
• • • • • • Revocation Rejection Counter-offer Lapse of time Non-occurrence of an event Death
• Only the person to whom the offer was addressed can accept it unless the offer was made to the world at large. • Carlill -v- Carbolic Smoke Ball [1893] 1 QB 256
– Husband and wife agreements • NOT intended to be legally enforceable unless the presumption is rebutted by evidence to the contrary. • Balfour -v- Balfour [1919] 2 KB 571 • Merritt -v- Merritt [1970] 2 All ER 760
The essential elements of a valid contract
1. Intention to enter into a legal relationship 2. Agreement: offer and acceptance 3. Consideration 4. Certainty of terms – There must be sufficient agreement on the terms (contents) of then contract
– The acceptance is complete when the offeror receives the communication. – E.g. Acceptance is complete once the email is received or once the fax is received
No acceptance
Forms of acceptance
Importantly, acceptance cannot occur in the following ways: •silence; or •ignorance of the offer
Example of how silence does not constitute acceptance
How can acceptance be made (cont.)
Acceptance can occur in a number of ways, including: •express words or in writing (bilateral contracts involving an exchange of a promise for a promise); •conduct (express or implied); •performance of an act (unilateral contracts).
What may be accepted?
• Exactly what has been offered without any conditions, additions or deletions. • Conditional acceptance is no acceptance.
How can acceptance be made?
What are the limits of the rule?
• The postal acceptance rule applies to acceptances made by mail or by telegram. • The rule does not apply to acceptances sent by fax, telephone, telex, teleprinter, e-mail and other forms of communication. For these kinds of acceptances, the general rule applies that is:
Essential elements of a contract
Offer
•An offer is a proposal made by one party to another to enter into a legally binding contract.
Offer (cont.)
• Offer may be ‘express’, using written or spoken words. • Offer may be ‘implied’ from the offeror’s conduct. • Can only be accepted after it has been communicated to the other party. • An offer must be communicated to the offered
Test to determine whether a statement is an offer
• Whether a valid offer has been made by one party to the other will depend on the words used or the conduct engaged by the offeror. • Courts use the objective test to determine whether an offer has been made. • The objective test requires the court to ask whether a reasonable person standing in the shoes of the recipient would believe the statement to be a promise in the form of an offer (the reasonable man test).
PART 2: CONTRACT AND TORT LAW
Lecture 4 Contract Formation: The Essential Elements of a Valid Contract
What is a contract?
A contract is an agreement between two or more people which is legally enforceable.
Social, family and domestic agreements
• There is no intention to enter into legal relations. • This presumption may be rebutted by presenting facts to the contrary.
Agreements ‘subject to contract’
• ‘subject to finance approval’; ‘preliminary agreement’; ‘non-binding agreement’; ‘informal agreement’; ‘agreement to agree’. Masters –v- Cameron (1954) 91 CLR 353 ‘This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors…’ • The High Court held that in this case, the parties did not intend to be bound by that agreement as the bargain was not concluded until they executed a formal contract.