Rose and Frank Co v J R Crompton & Bros Ltd (1923) -­‐ Stated in the document that it is “not a legal contract” but instead a “gentleman’s agreement” (of honour), held not to be a legal contract. Australian European Finance Corp Ltd V Sheehan (1993) Looked at ‘letters of comfort’, a document which one will seek if they are unsure whether their loan will be able to be repaid -­‐ generally considered to not be a legal contract ECNZ v Fletcher Challenge Energy (2002) Found that there are no settled principles of Heads of Agreement, need to look at specific contract and determine whether there is a particular clause which helps Balfour v Balfour (1919) Arrangements between family members are not taken to have legal effect Roufos v Brewster (1971) Intention requirement will be satisfied where a transaction between family members is essentially commercial in nature. Agreement between son in law and parents in law, degree of hostility between the parties, “whole setting of the arrangement was commercial” as each party had their own separate goals they aimed to achieve. Cohen v Cohen [1929] -­‐ If the context of the agreement is social or domestic, legal relations are assumed to be absent Jones v Padavatton (1969) – Plaintiff told the defendant, her daughter, that if she left her job in USA and came to England to study law, the plaintiff would purchase a house in which she would live. Majority held that circumstances fell short of intention to create legal relations (note however that she compromised her case in her testimony) Ermogenous v Greek Orthodox Community of SA Inc (2002) Helped clarify commercial/domestic relations; held that an archbishop (minister of faith) was an employee, not part of a community. Plaintiff must prove intention to create legal relations. Held that he was treated as an employee (i.e. given long service leave), therefore there was a contract. 2) Agreement It cannot be said that a contract has been formed until the parties’ negotiations have reached a stage where no further negotiations are needed and the parties are ready to be bound. • Where no further negotiations are needed, there has been offer and acceptance • The offer is made when there is evidence that one party has stated their terms and indicated that they are ready to be bound as soon as the other party accepts them • Before and offer is made there may be many statements made in the course of negotiations, if they are not made with intention, that is, a readiness to be bound, •
they are an “invitation to treat” – not binding because offer is not ready to be immediately accepted The acceptance occurs when there is evidence that the offeree has said or done something which indicates to the offeror an intention to accept the terms proposed “subject to contract”-­‐ there is no contract until the formal contract is signed acceptance of a unilateral contract would usually be constituted by conduct (just doing the act requested) the intention to accept the terms must be indicated to the offeror •
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Need to show exact offer & acceptance not always important -­‐ Raguz v Sullivan (2000) There are limitations in interpreting who the offerer and offeree is, e.g. with ticket machines. Offer & Acceptance is not a prerequisite for determining a case as the rules are flexible. What constitutes a “Puff” -­‐ i.e. piece of advertising not meant to be taken literally/seriously Carill v Carbolic Smoke Ball Co (1893) Offered a sum of money if product didn’t work, paid into a bank account. Argued that it was a mere puff; money in account convinced court it was more than this. Demonstrates that offers can be made to the world Leonard v Pepsico, Inc (1999) [American Case] Advertisement suggested that if one collected 7m tokens they could win a harrier jump jet; not a contract as the reasonable person would not have taken it seriously (would have considered it mere puff instead) Invitations to treat Pharmaceutical Society of Great Britain v Boots [1953] -­‐ The distinction between an invitation to treat an offer is just a question of intention. Display of goods in a shop window or on shelves in a self-­‐service shop is an invitation to treat, the customer making an offer to buy which the shop owner can accept or reject. Payne v Cave (1789) – Calling for bids during an auction is an invitation to treat, submitting a bid is an offer and the fall of the hammer is the acceptance Three things to note are; •