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o Standing offer can be withdrawn at any time prior to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?
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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)
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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 3rd party is sufficient if offeree as a reasonable
person would know that offer is revoked (Dickenson v Dodds)
o Must be communication by reliable 3rd party
o Either party may select trusted agent to communicate (Cole
v Cottingham)
Rejection by Offeree: (Stevenson Jaques & Co v McLean)
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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)
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Conditional Acceptance:
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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:
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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?
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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.