Cntract Law Ntes - Table f Cntents Offer 2 Acceptance 8 Cnsideratin 11 Intentin 15 Certainty 18 Frmalities 21 Privity 24 Express Terms 27 Parl Evidence Rule 35 Implied Terms 37 Classificatin f Terms 40 Perfrmance, Breach and Right f Terminatin 43 Terminatin: By Agreement 46 Terminatin: Repudiatin 47 Terminatin: Frustratin 49 Terminatin: Time Stipulatins and Delay 52 Terminatin: Cnsequences and Restrictins 53 Estppel 63 Vitiating Factr: Duress 65 Vitiating Factr: Undue Influence 67 Vitiating Factr: Mistake 69 Vitiating Factr: Misrepresentatin 73 Vitiating Factr: Misleading and deceptive 77 cnduct Vitiating Factr: Uncnscinable Cnduct 80 Vitiating Factr: Illegality 84 Remedies 89 Page 1
Offer An ffer is an expressin f willingness t enter int a binding agreement with the fferee n specific terms A prpsal nly amunts t an ffer if the persn making it indicates that an acceptance is invited and will cnclude the agreement between parties Must take frm f a prpsal fr cnsideratin which gives the fferee an pprtunity t chse between acceptance and rejectin: Brambles Hldings v Bathurst City Cuncil: Cmmunicatin which uses the language f cmmand and peremptrily requests may nt be regarded as an ffer Appear t a reasnable persn in psitin f the fferee that an ffer was intended Objective des nt matter if fferr didn t intend t make an ffer! Whether it wuld appear t a reasnable persn in the psitin f the fferee that an ffer was intended and that a binding agreement wuld be made upn acceptance. (Carlill v Carblic Smke Ball C) Carlill v Carblic Smke Ball C! Newspaper advertisement ffering bank depsit reward fr persn wh cntracted cld r influenza after using device " Bank depsit made it clear it was intended Gibsn v Manchester City Cuncil! Lcal cuncil sent letter inviting frmal applicatin by cuncil tenants t buy their huse. P cmpleted and returned applicatin. Change f gvernment and the scheme was drpped " Cuncil s letter was nt an ffer: may be prepared t sell the huse t yu, A letter setting ut the financial terms n which it may be the Cuncil will be prepared t cnsider a sale and purchase in due curse Page 2
Puffery Nt an ffer Puffery refers t prmtinal statements and claims that express subjective rather than bjective views, which n reasnable persn" wuld take literally. Carblic Smke Ball Supply f infrmatin Nt an ffer (Stevensn) Invitatins t treat An invitatin fr thers t make ffers r enter negtiatins is nt in itself an ffer waiting fr acceptance Gds fr sale! Pharmaceutical Sciety f Great Britain v Bts Cash Chemists (Suthern) Ltd " The cntract is nt cmpleted until, the custmer having indicated the articles which he needs, the shpkeeper, r smene n his behalf, accepts that ffer " It is an ffer by the custmer t buy and there is n sale effected until the buyer s ffer t buy is accepted by the acceptance f the price Tenders! Invlves each interested party submitting a single bid withut knwing what ther bids have been made! A call fr written tenders usually cnstitutes an invitatin t treat, with each tender cnstituting an ffer! A persn calling fr tenders can stipulate the basis n which the tender prcess will be cnducted and will be bund by any cnditins he/she says will gvern the tender prcess (that is give cnditins that smene can either accept r reject) Harvela Investments Ltd v Ryal Trust C f Canada (CI) Ltd A call fr tenders was held t amunt t an ffer because the vendr prmised t accept the highest bid Page 3
Prmise t accept the highest bid, when the highest bid received cmpleted a cntract! Obligatins impsed n tenderers, such as bligatin nt t withdraw their tenders " Blackpl and Fylde Aer Club Ltd v Blackpl Brugh Cuncil Cuncil under implied cntractual bligatin t give cnsideratin t cmplying tenders The call fr tenders amunted t an ffer which was accepted by the submissin f a cmplying tender Mistakenly failed t cnsider the P s cmplying tender " Hughes Aircraft Systems Internatinal v Airservices Australia Letter cmmitting themselves t participate in the tender prcess Terms f secnd cntract set ut in a request fr tenders which amunted t ffer accepted by each tenderer s ldgment f a tender Auctins! Invitatin t treat! Auctineer invites ffers each bid cnstitutes an ffer then cmmunicates acceptance f bid by the hammer! Bidder entitled t withdraw bid befre it is accepted! Auctineer nt bliged t sell t highest bidder! Advertised t be held withut reserve " AGC (Advances) Ltd v Mcwhirter! Hlding an auctin withut reserve England: " Auctineer makes an ffer t sell t the highest bidder " If highest bid nt accepted, n cntract arises but can be sued under separate, cllateral cntract Ticket cases Page 4
! Curts usually regarded the issue f the ticket as an ffer which can be accepted r rejected by the passenger after the passenger has had a reasnable pprtunity t cnsider the cnditins n the ticket (MacRbertsn Miller Airline Services v Cmmissiner f State Taxatin WA) Online transactins! Prpsal t make cntract thrugh electrnic cmmunicatin which is nt addressed t a particular persn, but is made generally accessible t peple using infrmatin systems, is t be treated as an invitatin t make ffers unless it clearly indicates an intentin t be bund in the case f acceptance (Electrnic Transactins Act 1999 Cth s 15B NSW) Terminating an ffer An ffer will cease t be available fr acceptance when it is withdrawn by the fferr, lapses r is rejected by the fferee. The withdrawal must be cmmunicated t the fferee - can be made by any reliable third party (Dickinsn v Ddds) Withdrawal! General rule " An ffer may be revked at any time befre it is accepted " At cmmn law, a prmise t hld an ffer pen fr a specified perid is nt binding unless the fferee has given cnsideratin fr that prmise " (Dickinsn v Ddds) " The fferr can therefre revke the ffer befre the specified perid fr acceptance has expired, prvided the ffer has nt been accepted in the meantime " The withdrawal f an ffer is effective nly when it has been actually cmmunicated t the fferee. N exceptin is made fr withdrawal sent by pst " (Byrne & C v Len Van Tienhven & C)! Optins Page 5
" An ptin is an agreement between an ptin hlder and a grantr under which the ptin hlder is entitled t enter int a cntract with the grantr n specified terms, either at a specified time r within a specified perid. Optin hlder is then free t chse whether t exercise that ptin at a time within that perid " Prmise t hld an ffer pen is binding at cmmn law if cnsideratin has been given in return fr that prmise " Gldsbrugh Mrt & C Ltd v Quinn (1910) Optin t purchase prperty as a cntract fr the sale f that prperty, cnditinal upn the ptin being exercised within the specified perid. Rejectin/cunter-ffer! Once ffer has been rejected it is n lnger available fr acceptance (Tinn v Hffman)! A rejected ffer may later be revived r may frm the basis f an agreement which is inferred in the absence f a valid ffer and acceptance (Brambles Hldings v Bathurst City Cuncil)! The making f a cunter-ffer is treated as a rejectin f the riginal ffer and will, therefre, als extinguish it (Harris v Jenkins)! Distinctin between cunter ffer and inquiry relating t alteratin f terms in determining whether an agreement was made the curts cncerned t ascertain the intentins f the parties frm language and cnduct f their cmmunicatins (Greig and Davis Law f Cntract)! Buyer might make an inquiry if asks whether there is rm fr mvement n the price nt manifested an intentin t reject and s seller s riginal ffer shuld be treated as remaining pen Lapse f time Page 6
! An ffer which is expressed t be available fr acceptance fr a particular perid f time will lapse at the end f that perid. If n perid is stipulated, the ffer will lapse after a reasnable time as passed " Either n the basis that a term can be implied that the ffer lapses after a reasnable time has passed r n the basis that the curt can infer rejectin frm the fferee s failure t accept the ffer within a reasnable time What perid f time is reasnable will depend n the circumstances, including the nature f the subject matter and the frm in which the ffer was made (Bartl v Hancck) Death terminates the ffer generally (Reynlds v Athertn), but in ptin there is presumptin that death f the ptin hlder des nt prevent the ptin frm being exercised by the ptin hlder s persnal representatives (Carter v Hyde). Hwever if ffer is persnal t the ptin hlder, then the ptin lapses Failure f cnditin and changed circumstances! An ffer may be made subject t express r implied cnditin that must be fulfilled befre ffer can be accepted r it may be made subject t an express r implied cnditin that it shuld lapse upn the happening f a certain event! Financings Ltd v Stimsn D s ffer subject t implied cnditin that the car shuld nt cntinue in the cnditin it was in when the ffer was made and that, n the failure f that cnditin, the D s ffer lapsed If the ffer is made t the whle wrld, then the fferr must use apprpriate means t cmmunicate the revcatin f the ffer t all ptential fferees - Mbil Oil Australia Ltd v Wellcme Internatinal If there is n time perid stipulated in the ffer then an ffer will end at the expiratin f a reasnable perid f time. Page 7
Acceptance Acceptance ccurs where the fferee (acceptr): Cmmunicates t the fferr, whether expressly r by their cnduct that he r she is willing t enter int a legally binding agreement with the fferr n the exact same terms put frward by the fferr. (Crwn v Clarke) Test: Subjective: N cntract is frmed unless there was real cnsensus between parties. Objective: Cnsiders external manifestatins f acceptance, disregarding the fferee s state f mind. Smith v Hughes - there is n cntract if the parties are nt ad idem (f ne mind) unless estppel prevents ne f the parties frm denying that he r she had agreed t the ther s terms. Cnsciusness f the ffer In the case f bilateral cntract frmed verbally r in writing, it will usually be clear that the fferee has deliberately accepted the ffer. The situatin is different with unilateral cntracts. If an fferee perfrms an act requested by an fferr withut intending t accept the ffer, has a cntract been frmed? The answer depends n the type f apprach taken. (Crwn v Clarke) Elements Acceptance must be cmmunicated t the fferr! Silence cannt amunt t acceptance (Felthuse v Bindley)! Silence in cnjunctin with ther circumstances may be acceptable (Empirnall Hldings) Whether a reasnably bystander wuld regard the cnduct f the fferee, including his silence, as signalling t the fferr that his ffer has been accepted. Acceptance must be uncnditinal r unqualified Page 8
! If there is an agreement n all terms f the ffer, and the parties intend t be bund immediately, this wuld be cnsidered unqualified acceptance f the ffer. (Masters v Camern)! Exact same terms as the ffer (Butler Machine Tl C) Methd f acceptance can be stipulated! (Carblic Smke Ball) Acceptance f a Unilateral Cntract! Offerr can waive the need t cmmunicate acceptance (Carblic) Acceptance can be implied frm the fferee s cnduct! Acceptance is determined bjectively (Empirnall Hldings)! (Brgden v The Directr f the Metrplitan Railway Cmpany) Only an fferee can accept the ffer! (Crwn v Clarke) Acceptance may be cmmunicated nly by his r her agent! (Pwell v Lee) A cunter-ffer is nt acceptance! (Hyde v Wrench) Mere inquiry des nt cnstitute acceptance! (Stevensn) The Pstal Acceptance Rule Where the parties cntemplate acceptance by mail, acceptance will be cmplete as sn as the letter is prperly psted (Henthrn v Fraser) Acceptance takes place when the letter is psted, nt when it is received, even if the acceptance is lst in the pst. Exceptins t the pstal rule:! Intentin: Fr the rule t apply, acceptance by pst MUST have been cntemplated by the parties (Henthrn)! It may be excluded by the fferr either expressly r impliedly. Page 9
Revcatin: rule nly applies t acceptance i.e. cannt use fr revcatin f OFFER (Byrne and C) Pstal rule can be negated by requiring actual cmmunicatin instead f cnstructive (pstal) cmmunicatin (Elizabeth City Centre v Crralyn) Instantaneus cmmunicatin The Pstal Acceptance Rule des nt apply! General Rule: The cntract will be frmed when acceptance f the ffer is cmmunicated t the fferr and that cmmunicatin is received.! (Brinkibn) Telegrams have been treated as rdinary mail Electrnic Transactins Act 2000 (NSW) 13Timefdispatch (1)Frthepurpsesfalawfthisjurisdictin,unlesstherwiseagreedbetweentheriginatr andtheaddresseefanelectrniccmmunicatin,thetimefdispatchftheelectrnic cmmunicatinis: (a)thetimewhentheelectrniccmmunicatinleavesaninfrmatinsystemunderthecntrl ftheriginatrrfthepartywhsentitnbehalfftheriginatr,r (b)iftheelectrniccmmunicatinhasntleftaninfrmatinsystemunderthecntrlfthe riginatrrfthepartywhsentitnbehalfftheriginatrjthetimewhentheelectrnic cmmunicatinisreceivedbytheaddressee. 13ATimefreceipt (1)Frthepurpsesfalawfthisjurisdictin,unlesstherwiseagreedbetweentheriginatr andtheaddresseefanelectrniccmmunicatin: (a)thetimefreceiptftheelectrniccmmunicatinisthetimewhentheelectrnic cmmunicatinbecmescapablefbeingretrievedbytheaddresseeatanelectrnicaddress designatedbytheaddressee,r (b)thetimefreceiptftheelectrniccmmunicatinatantherelectrnicaddressfthe addresseeisthetimewhenbth: (i)theelectrniccmmunicatinhasbecmecapablefbeingretrievedbytheaddresseeatthat address,and (ii)theaddresseehasbecmeawarethattheelectrniccmmunicatinhasbeensenttthat address. 13BPlacefdispatchandplacefreceipt (1)Frthepurpsesfalawfthisjurisdictin,unlesstherwiseagreedbetweentheriginatr andtheaddresseefanelectrniccmmunicatin: (a)theelectrniccmmunicatinistakenthavebeendispatchedattheplacewherethe riginatrhasitsplacefbusiness,and (b)theelectrniccmmunicatinistakenthavebeenreceivedattheplacewherethe addresseehasitsplacefbusiness. Page 10