Agreement Offer and acceptance based can exist between 2 or more (Clarke v Dunraven) May be necessary to look at whole agreement rather than isolate offer and acceptance (Empirnall Holdings v Machon Paul Partners) Offer: Has a valid offer been made? Offeror! person who makes offer (promisor) Offeree! person who receives offer (promisee) Expression to be bound by legally stated terms (Australian Woollen Mills v The Commonwealth) Was it to a specific class of persons? Def - Expression of willingness of another to be bound by stated terms. (Australian Woollen Mills v The Commonwealth) Mere statement of a price of which someone would contract should they decide to sell is not an offer (Harvey v Facey) Courts will consider likely effect upon potential customer to determine if offer (Carlill v Carbolic Smoke Ball Co.) Court to interpret parties words objectively not subjectively (Taylor v Johnson) Not what parties meant, but what third party would view words as Standing Offers " Offer to supply goods for a period up to a certain amount as required o Every time order placed is an independent contract o Standing offer can be withdrawn at any time prior to acceptance o Once revoked no further acceptances valid unless offer is renewed (Great Northern Railway v Witham) Or Invitations to Treat: Or was the statement an invitation to treat? Advertisements in catalogues for goods are generally ITT s (Grainger v Gough) o In newspapers (Partridge v Crittenden) o However if certain and not open ended it is an offer (Carlill v Carbolic Smoke Ball Co) Goods displayed in shops (Fisher v Bell) Announcement inviting tenders unless indicated lower tender will be accepted (Cf. Blackpool & Flyde Aero Club v Blackpool Council) Auctioneers request for bids (Payne v Cave) o If without a reserve price then the highest bidder must be accepted and it is therefore an offer (Warlow v Harrison) Advertisement of an auction sale (Harris v Nickerson)
Call for tenders is an invitation to treat (Spencer v Harding) In instance of submitted tenders, each person is submitting an offer which selling party is free to accept or reject (Spencer v Harding) When call for tenders includes indication that best tender will be accepted, call is construed as an offer (Spencer v Harding) Time limits are not binding on invitations to treat Communication of the Offer: Was the offer communicated to the offeree? Can be made to world at large (Carlill v Carbolic Smoke Ball Co) Offer effective when communicated, and not until it is communicated to the offeree (Taylor v Laird) Within terms of offer the offeror may set the method of communication of acceptance (HBF Dalgety v Morton) Offeror can waive communication of acceptance, must be shown that: o Express or implied intimation from offeror that particular mode of acceptance will suffice- particular mode does not involve communication o Must be some over act or conduct on part of offeree which evidences intention to accept and conforms to mode of acceptance indicated (Carlill v Carbolic Smoke Ball Co) Termination of Offer: Can be terminated at any time prior to acceptance, Once offer is accepted it is irrevocable (Great Northern Railway Co v Witham) Where offer takes form of an option (consideration to keep offer open), it cannot be terminated before the time of the option has expired (Goldsborough Mort v Quinn) Option to renew lease at a rental to be agreed is unenforceable (Randazzo v Goulding) Withdrawal by Offeror: Can be freely revoked prior to acceptance unless offeror promised to keep it open for a fixed period is supported by consideration or under seal (Routledge v Grant) Revocation ineffective until communicated and received by offeree (Byrne & Co v Leon Van Tienhoven & Co) When person does not communicate revocation and one party accepts, after a further party has purchased the item, results in seller only being able to perform one contract and being liable for breach of other (Patterson v Dolman) In case of unilateral contract, offer cannot be withdrawn after promisee has begun to perform conditions to enable acceptance (Errington v Errington) Communication by a 3 rd party is sufficient if offeree as a reasonable person would know that offer is revoked (Dickenson v Dodds) o Must be communication by reliable 3 rd party o Either party may select trusted agent to communicate (Cole v Cottingham) Rejection by Offeree: (Stevenson Jaques & Co v McLean)
Lapse of Time: Must be accepted within time specified, if no time is prescribed then within reasonable time (Ramsgate Victoria Hotel Co v Montefiore) Reasonable time is question of fact depending on circumstances take into account nature of subject matter and means used to communicate offer (Buckley J in Manchester Diocesan Council for Education v Commercial and General Investments Ltd) Failure of condition subject to which offer was made (McCaul (Aust) Pty Ltd v Pitt Club Ltd) Death: Offeree cannot accept offer after being notified of death of offeror (Coulthart v Clementson) If offeree dies, a personal representative cannot accept the offer on behalf of offeree, offer lapses automatically (Reynolds v Atherton) Acceptance: Was the offer accepted? Expression by words or conduct, of willingness to be bound by terms of offer (HBF Dalgety v Morton) Requirements: Person cannot accept offer which has not been communicated (Taylor v Laird) Two requirements for acceptance to be valid: o Offeree must intend to accept terms of the offer " Acceptance must be unqualified and correspond to terms of offer. It appears that there is no contract if two offer, identical in terms, cross in post neither can be construed as acceptance of other, despite unanimity of mind (Tinn v Hoffman & Co) " Acceptance must be in reliance of the offer, rather than for some other reason (R v Clarke) o Intention to accept must be communicated to the offeror. Acceptance of Offer Terms: Counter-offer: Where a person purports to accept an offer but introduces new terms, no contract is made. Offeree refuses the offer and makes own counter-offer. (Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation (Eng) Ltd) Counter-offer is not acceptance, but causes original offer to terminate. Original offer may not be accepted unless it is renewed (Hyde v Wrench) Purported acceptance that departs from terms of offer but only in minor, non-material way may be effective and not amount to a counter-offer (Turner Kempson v Camm) Mere enquiry will not amount to acceptance and will not cause offer to terminate (Stevenson Jaques v McLean) Acceptance may be effective even when new term is added where it is clear offeree intends to be bound irrespective of whether new term is agreed upon by other party (JB Rogers Ltd v Lesnie)
Conditional Acceptance: Conditional assent is not acceptance. Where offer is accepted subject to preparation of formal contract or is subject to contract, there is no binding contract until formal contract is executed (Masters v Cameron) Communication of Acceptance: Acceptance has no effect until communicated to the offeror (Byrne & CO v Leon Van Tienhoven & Co) In case of instantaneous communication, acceptance not complete until communicated and received by offeror (Entores v Miles Far East Corp) Telephone is instantaneous form of communication (Reese Bros Plastics v Hamon-Solbeco Australia) Acceptance may be communicated only by offeree or their agent (Powell v Lee) Silence is not acceptance (Empirnall Holdings v Machon Paull) Offeror may waive need for acceptance to be communicated (Carlill v Carbolic Smoke Ball Co) Where no method of communication is prescribed, the method to be adopted will depend upon nature of offer and method of communication used to make offer. Court will look at surrounding circumstances to determine what is a reasonable method. Rule that acceptance must be communicated and is incomplete until it is received by offeror applies to contracts made when parties are in presence of each other or are using instantaneous forms of communication (Hampstead Meats v Emerson & Yates) Postal Acceptance Rule: As the postal acceptance rule was Within contemplation of parties, post would be used as method of communication, or post was prescribed by offeror as method of acceptance, the postal acceptance rule shall apply (Adam v Lindsell) Acceptance is complete once letter is properly posted, immaterial that it is later delayed or lost in post (Henthorn v Fraser)
Certainty: Was the offer certain? Ambiguity of individual terms: Parties must express themselves so that their meaning can be determined with a reasonable degree of certainty (Scammel v Ouston) Capable of more than one meaning does not make it void (Hillas v Arcos) Onus on P to demonstrate validity of clause (Falck v Williams) Contract has been partly executed, court will seek to imply necessary terms (Hall v Busst) Agreements to negotiate: Terms sufficiently certain, agreement to negotiate may be enforceable (Coal Cliff Collieries v Sijehama) If clear parties have gone beyond stage of negotiation and intended to be contractually bound, court will more likely imply term and enforce contract (Hillas v Arcos) Saving ambiguous or meaningless contracts: No contract unless what parties agreed can be determined objectively with reasonable degree of certainty (Hall v Bust) No agreement if parties leave major part to be determined by future agreement (May & Butcher v R) Whether agreement to negotiate is regarded only as agreement to agree, and unenforceable will depend on terms. If terms are sufficiently certain, agreement to negotiate may be enforceable (Caledonian Cliff Collieries Pty Ltd v Sijehama Pty Ltd) Contract which is uncertain or contains uncertain terms may be upheld if court can use some mechanism to give meaning Agreement to agree in future is incomplete (Biotechnology Aust v Pace) Agreement whereby terms are to be determined by third party is complete (Godecke v Kirwan) It is not certain whether an agreement whereby one of the parties to the contract is empowered to insert further terms in the contract is complete (Godecke v Kirwan) An agreement subject to finance is complete (Meehan v Jones) Intent to create Legal Relations: Was there intent to create legal relations? To create contract must be common intention of parties to enter into legal obligations, mutually communicated expressly or impliedly (Rose and Frank Co v JR Crompton & Bros Ltd) Objective test for whether parties intended legal relations. Whether a reasonable person would regard agreement as intended to be binding (Merritt v Merritt) Assumption that in a commercial situation there is intent (Skyways v Edwards) Cannot be easily rebutted.