NAME: DELILAH AVEA VAOGA ESERA
ID#: S11234848
COURSE CODE & COURSE NAME: LW201 CONTRACT LAW 1
WORD LIMIT: 2000 WORDS
DUE DATE: 11/05/2025
Delilah Avea Vaoga Esera
S11234848
Issue: Can Julie enforce contract with her brother Jumbo?
Rule: (1) General Rule: There is a presumption in the case of social and domestic agreements
that there is no intention to create legal relations. (2) Exemptions: it can be rebutted expressly
or impliedly1
(3) Case law: Prasad v Hussein (1967) 13 FLR 98 – Negotiations do not amount to an
agreement and it renders the contract incomplete2.
Application: Julie and Jumbo are siblings, and their relationship falls under domestic.
Domestic relationships are generally not binding. However, if Julie can show that there was an
intention to be bound in their agreement, then she can rebut and enforce the contract with
Jumbo.
In this case, Julie cannot enforce the contract with Jumbo because the contract was incomplete
regarding its terms. Additionally, no consideration was exchanged between them because Julie
only suggested, and Jumbo was unserious, which highlights why family agreements can never
be binding. Therefore, it is a negotiation, not legally binding, because both parties went away
without further discussions.
Conclusion: Julie cannot enforce the contract with her brother because agreements between
families should not regarded to be enforced. As seen, Jumbo did not take his sister seriously,
and Julie was just suggesting, constituted a negotiation not an agreement to be legally binding.
Issue: Can Pepsi enforce contract with Jumbo?
Rule: (1) General Rule: Silence cannot be taken as acceptance (Felt house v Bindley (1862)),
where the court held that silence isn’t acceptance, clear agreement is required for a valid
contract 3.
1
University of the South Pacific, Intention to Create Legal Relations, Topic 5 Guide (Accessed 7th May 2025)
Prasad v Hussein (1967) 13 FLR 98
3
University of the South Pacific, Contract Formation – Acceptance, Topic 3 Guide (Accessed 8th May 2025)
2
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(2) General Rule: all terms agreements must be certain to be enforceable. (3) Presumptions of
Certainty – clearly define obligations4 (4) Fong Lee v Mital and Ram Kissum – Clear words
but do not settle an essential part of contractual terms, for example no reference to price5.
(5) The acceptance must mirror the terms of the offer. If an offeree's response to the offeror
does not match the offer, he or she may have made a counter-offer. A counter-offer is a
response to an offer that introduces new terms or conditions6.
Application: Pepsi offered to buy the car for $15,000, but Jumbo responded with a counteroffer
of $23,000, stating that this was the lowest price he could accept, rejecting Pepsi's original
offer; Additionally, Pepsi proposed a new offer of $16,000, which Jumbo found disrespectful
and chose to remain silent, indicating that he did not agree to this offer. She may contend that
Jumbo’s silence and failure to respond to the $16,000 offer may be interpreted as an acceptance.
However, under the principle confirmed in Felthouse v Bindley, silence cannot be taken as
acceptance. Jumbo was silent on his side concerning the negotiations with the prices because
the terms were unclear, as confirmed in Fong Lee v Mital and Ram Kissum.
Conclusion: No binding contract was formed between Pepsi and Jumbo because silence cannot
amount to acceptance; without an agreement, it cannot be considered a contract.
Issue: Can either Jumbo or Jessy enforce contract?
Rule: (1) General Rule: Acceptance must be communicated using the method stipulated by the
Offeror, if no method stipulated, acceptance is reasonable in Entores v Miles Far East (2)
Exemptions: The rule was established in Adams v Lindsell. Under this rule, if the post is
contemplated by the parties as the proper method to communicate acceptance, then the
acceptance is deemed complete as soon as the offeree posts the letter. 7.
(3) Case law – Brinkibon Ltd v Stahag Stahl - acceptance is effective when it is placed in a
pot box and handed to officer of the post8.
4
University of the South Pacific, Uncertainty and Incomplete Agreements, Topic 4 Guide (Accessed 8th May
2025)
5
Fong Lee v Mital and Ram Kissum (1966) 12 FLR 4
6
University of the South Pacific, Contract Formation – Offer, Topic 2 Guide (Accessed 8th 2025)
7
University of the South Pacific, Contract Formation – Acceptance, Topic 3 Guide (Accessed 8th May 2025)
8
University of the South Pacific, Contract Formation – Acceptance, Topic 3 Guide
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(4) The acceptance must mirror the terms of the offer. If an offeree's response to the offeror
does not match the offer, he or she may have made a counter-offer. A counter-offer is a
response to an offer that introduces new terms or conditions.
Application: Jessy made a clear offer on 6 March to buy the car for $23,000 and specifically
requested Jumbo to respond in writing if he wished to accept. According to the general rule,
where an offeror stipulates a method of acceptance, the offeree must follow that method for
acceptance to be valid, as supported by Entores Ltd v Miles Far East, that communication
must be effective. Since Jessy never received any written response from Jumbo, she could
argue that no acceptance letter concerning her request. When Jumbo later sent a letter offering
to sell the car for $24,000, this was a counter-offer, not an acceptance of Jessy’s original terms.
On the other hand, Jumbo responded to Jessy's offer in writing, although slightly late and with
modified terms of $24,000 instead of $23,000 also, even if Alto received it by mistake, which
is not a party to the contract, under the principle indicated in the case of Brinkibon Ltd v Stahag
Stahl. Accordingly, acceptance must be effective once posted by an offeree, as shown by the
postal rule from Adams v Lindsell. Additionally, Jumbo wrote back to Jessy indicating a
counter-offer of $24,000; in other words, Jessy must accept Jumbo’s counter-offer, because
Jessy’s original offer is no longer enforceable.
Conclusion: There was a binding contract between Jessy and Jumbo because Jessy’s original
offer required written acceptance, which Jumbo accepted and wrote back with new terms.
Therefore, Jessy needs to accept Jumbo's offer.
Issue: Can Alice enforce contract with Jumbo?
Rule: (1) Prasad v Hussein (1967) 13 FLR 98 – Negotiations do not amount to an agreement
and it renders the contract incomplete. (2) Generally, an advertisement will constitutes an offer
(Carlill v Carbolic Smoke Ball Co. [1893])9. (3) Acceptance must be communicated using the
method stipulated by the Offeror, if no method stipulated, acceptance is reasonable in Entores
v Miles Far East 10. (4) Felthouse v Bindley (1862) 142 ER 1037 confirms that silence cannot
amount to acceptance11. (5) The offeror is generally free to withdraw an offer at any point
9
University of the South Pacific, Contract Formation – Offer, Topic 2 Guide (Accessed 10th 2025)
University of the South Pacific, Contract Formation – Acceptance, Topic 3 Guide
11
Felthouse v Bindley (1862) 142 ER 1037
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before it has been accepted. This general rule will apply even if the offeror has promised to
keep the offer open for a certain period of time, unless some consideration for the time
allowance has been provided by the offeree Great Northern Railway v Witham (1873) LR 9
CP 16 12. (6) The acceptance must mirror the terms of the offer. If an offeree's response to the
offeror does not match the offer, he or she may have made a counter-offer. A counter-offer is
a response to an offer that introduces new terms or conditions.
Application: Given the circumstances, Alice might believe that a contract was formed through
her conversation with Jumbo. However, the advertisement that was posted by Jumbo on 5
March was an invitation to treat, not an actual offer, if an ad implies commitment, it might be
seen as an offer, so Jumbo was not forced to sell to the first person who replied, confirmed in
Carlill v Carbolic Smoke Ball Co. Most importantly, the advertisement did not include any
price, the absence of a clear price means there was no complete offer, as certainty of price may
considered an essential term of a binding agreement in Fong Lee v Mital Ram Kissum.
In addition, when Jumbo suggested $28,000 based on her background, it was part of
negotiations not an offer as explained in Prasad v Hussein, discussions that don’t settle key
terms like price can’t form a binding contract. Even if Alice thought her silence or delay meant
she had secured the car, silence cannot be taken as acceptance, as confirmed in Felthouse v
Bindley (1862).
However, on 11 March, when Alice offered to purchase the car for $25,000, which constituted
a counter-offer and which was rejected by Jumbo, meaning no contract was formed. For a
contract to exist, there must be acceptance of an existing offer, which did not happen here
(Entores v Miles Far East). Later, Alice asked Jumbo to keep the offer open until Sunday, and
he agreed. However, Alice didn’t offer anything in return for that promise. A promise t hold an
offer open is not valid unless there is consideration given, confirmed in Great Northern
Railway v Witham. Because there was no consideration, Jumbo was free to revoke his promise
and able to sell the car to someone else before Sunday, which he did.
Conclusion: There was no contract between Jumbo and Alice. Her offer was rejected, there
was no acceptance, and the promise to keep the offer open wasn’t binding, because he could
still revoke his promise and sell the car to someone else.
12
University of the South Pacific, Contract Formation – Offer, Topic 2
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Issue: Can ABC Motors enforce contract with Jumbo?
Rule: When someone makes an offer that is subject to a condition, like getting finance
approved, the agreement is not binding until that condition is met. In Masters v Cameron, the
court explained that in these kinds of cases, the parties do not plan to be legally bound until the
condition is fulfilled. This principle was also discussed in Prasad v Hussein, where ongoing
negotiations and conditional offers didn’t amount to a final contract13.
Application: Jumbo agreed to buy the Hilux from ABC Motors, but only if his loan got
approved. That condition of finance approval was never met. Since getting the loan was outside
Jumbo’s control and there is no sign he failed to try or acted dishonestly, the contract did not
become binding. Based on the reasoning in Masters v Cameron, this was a conditional
agreement that did not lock Jumbo in until the finance came through and it did not.
Conclusion: There was no binding contract between Jumbo and ABC Motors because the
deal depended on his loan being approved, and that did not happen.
13
University of the South Pacific, Contract Formation – Offer, Topic 2 Guide.
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BIBLIOGRAPHY
University of the South Pacific, Intention to Create Legal Relations, Topic 5 Guide (Accessed 7th May
2025)
Prasad v Hussein (1967) 13 FLR 98
University of the South Pacific, Contract Formation – Acceptance, Topic 3 Guide (Accessed 8th May
2025)
University of the South Pacific, Uncertainty and Incomplete Agreements, Topic 4 Guide (Accessed 8th
May 2025)
Fong Lee v Mital and Ram Kissum (1966) 12 FLR 4
Brinkibon Ltd v Stahag Stahl [1983] 2 AC 34
University of the South Pacific, Contract Formation – Offer, Topic 2 Guide (Accessed 10th 2025)
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