General Principles Definition 
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A contract is a transaction in which people voluntarily assume legal obligations toward each other, usually with respect to the transfer of property or the provision of goods and services. It contains a promise or set of promises that are enforceable at law. The law of contract governs the processes involved with making, performing and terminating contracts. Sources of contract law 
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Legislation Common/case law 
Where applicable, legislation takes precedence over common law. Classification of contracts 
By their validity 
A valid contract: 
A valid contract is one that contains all elements essential to the formation of a contract (see below). It results in legal rights and obligations that are enforceable at law. 
An invalid, imperfect or impaired contract: 
An imperfect, impaired or invalid contract is one in which one or more vitiating (spoiling) factors are present. The type of vitiating factor determines the degree to which the contract is impaired (see below). There are three types of imperfect, impaired or invalid contracts: 
Void contracts – a contract that is void ab initio or invalid is one that has no legal effect. This means that no party can sue the other on the contract. 
Examples of void contracts include: 
contracts to oust the jurisdiction of the courts; 
contracts based on common mistake; and 
contracts to do something forbidden by law. 
Voidable contracts – a voidable contract is one in which one of the parties to the contract can elect to avoid the legal relations created by the contract. This right must be exercised promptly, as a voidable contract remains valid (and thus can give rise to legal rights and obligations) until rescinded. 
Contracts generally become voidable as a result of: 
one party’s actions prior to or during the formation of the contract, e.g. misrepresentation, duress, undue influence; or 
one party’s state during the formation of the contract, e.g. drunkenness, unsoundness of mind, minority. 
Unenforceable contracts – these are valid in all respects except that one or both parties cannot be sued on the contract because of some substantive technical or procedural defect in the contract itself. In some cases, the defect that leads to unenforceability may be cured by the courts. 
Examples of unenforceable contracts (and their possible cures) include: 
contracts not evidenced in writing where statute requires that they be written, which may be rectified by transcribing the oral contract; 
contracts under which the right of action is barred by the Limitation of Actions Act 1974 (Qld), which may be rectified by the defendant providing written acknowledgement of indebtedness or a part payment to extend the limitation period; and D Fuller (2007) 1 
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certain contracts with a foreign sovereign, which may be rectified if the foreign sovereign waives his or her immunity. By their form 
Simple contracts: 
Other than the provision of sufficient consideration, simple contracts generally require little formality to be valid. Thus they may be: 
written; 
partly written and party oral; 
wholly oral; or 
implied from the actions of the parties. 
Exceptions include: 
certain classes of simple contracts required by statute to be in writing, e.g. relevant contracts under the Hire Purchase Act 1959 (Qld), Copyright Act 1968 (Cth), and Corporations Law (Cth), contracts for the sale of goods worth $20 or more in Tas and WA and contracts for the sale of goods worth $50 or more in the NT; and 
certain contracts under the Statute of Frauds 1677 such as those involving sale or disposition of land and contracts of guarantee (only in Qld, Vic, Tas, WA and NT), which must be written for evidentiary purposes. 
Contracts under seal (deeds): 
Deeds generally require that a promise be sealed (usually in the form of a witnessed signature) and delivered to be valid. The reasoning is that passing a contract under seal requires deliberation and “determination of the mind” (Sharington v Stotton [1566]). As such, the parties are considered bound by a deed, even in the absence of consideration (i.e. a gratuitous promise made under seal is enforceable). 
While the validity of a deed has in the past rested on the deed being constructed in a highly specific manner (on a specific type of paper, written, delivered and sealed in a certain way), these procedures have largely fallen into disuse. 
Exceptions include: 
contracts falling under the Property Law Act 1974 (Qld) – which, in s.45(1), requires a witnessed signature and delivery to the other party in lieu of a formal sealing procedure; and 
contracts falling under the Powers of Attorney Act 1998 (Qld) – which, in ss.11 and 12, requires a witnessed signature to be valid. 
Examples of deeds include: 
wills; 
legally transferred gifts; 
Powers of Attorney; 
certain contracts for land and property. Types of contract 
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Bilateral 
A bilateral contract involves a promise made by one party in exchange for a reciprocal promise made by the other party. Unilateral 
A unilateral contract involves a promise made by one party in exchange for an act performed by the other party e.g. reward cases. D Fuller (2007) 2 Formation of Contracts 
All of the following elements must be present for a contract to arise. The onus of showing these elements to be present is on the party seeking to enforce the contract. Intention to create legal relations Fundamental principle 
For a contract to be valid, it must be objectively determined that both parties intended for legal consequences to attach to their agreement. Thus, where an objective analysis shows that one party or both parties did not intend for legal relations to exist and the other party should reasonably have known this, the agreement will not be binding: Air Great Lakes v K S Easter (1985). Tests 
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Where the parties have made an express statement as to their intention, the courts will most often give effect to that statement: Pirt Biotechnologies v Pirtferm [2001]. Where the parties have not made an express statement as to their intention, the court tends to adopt a presumption depending on the circumstances, for the purpose of assigning onus: 
Where dealings are of a business or commercial nature, it is presumed that an intention to create legal relations does exist. The onus of disproving intention is on the party seeking to deny the enforceability of the contract. This is a very strong presumption: Edwards v Skyways [1964]. 
Where dealings are of a social or domestic nature, it is presumed that an intention to create legal relations does not exist: Balfour v Balfour (1919). The onus of proving intention is on the party seeking to enforce the contract. This is a weak presumption. 
Where an agreement is preliminary (e.g. a ‘heads of agreement’): 
Where parties have reached finality regarding the terms of the agreement and intend to immediately be bound, but want terms to be restated in a fuller and more precise form that is not different in effect from the preliminary agreement: 
A contract exists to perform the terms regardless of whether or not a formal contract comes into existence (though there is a further obligation to settle and execute a formal document). This is because the final terms are agreed not to be alterable, so the contract was formed when the ‘preliminary’ agreement was made: Rossiter v Miller (1878). 
Where parties have reached finality regarding the terms of the agreement and intend to immediately be bound, but want terms to be restated in a fuller and more precise form that is not different in effect from the preliminary agreement but nonetheless have made one or more terms conditional on the execution of a formal document or intend for additional terms to be included in a formal document that do not require the agreement of the parties (e.g. terms that solicitors may reasonably require) and that do not alter the substance or form of the original agreement (Godecke v Kirwan [1973]): 
A contract exists to settle and execute a formal document. This is because the creation and execution of the formal contract is not a condition of the agreement itself being made, but is required to fulfil the term/s in question. This means that the formal document is created in order to fulfil a term/terms of the agreement, not to give effect to the agreement itself. In other words, the preliminary agreement gives rise to a contract based on the terms agreed to, and it happens that fulfilling one of the terms requires the creation of a formal contract. D Fuller (2007) 3 
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Where parties have reached finality regarding the terms of the agreement and intend to immediately be bound, but expect to make a further contract in substitution for the first containing, by consent, additional terms: 
A contract exists to perform the terms in the initial agreement, until such time as a formal contract was entered into (containing new terms consented to or containing at least the terms agreed to at the time of the initial agreement), at which time it would come to operate in place of the original agreement: G R Securities v Baulkham Hills Private Hospital (1986); Helmos Enterprises v Jaylor (2005). 
Where parties don’t intend to make a concluded bargain unless and until a formal contract is drafted, either because: 
they have only considered some matters (generally major matters) and contemplate that others may or will be introduced into the formal document based on mutual agreement (Pirt Biotechnologies v Pirtferm [2001]); or 
they want to retain the right to withdraw from the agreement until the formal document is signed, there is no contract. Agreements of this type are recognised by: 
use of the phrase “subject to contract” or something similar, which means that the agreement has been recognised as an intended basis for a future contract; in other words, assent is given subject to the existence of a formal contract; or 
where it is agreed in the preliminary agreement that a new agreement with terms not yet known or expressed in detail, and that these terms or details must be agreed upon. Masters v Cameron (1954) 
Where parties don’t intend to make a concluded bargain at the time for any reason but do Determining which presumption to adopt 
Where one or more of the parties is a business or acting in pursuit of business interests, the dealings are of a business or commercial nature. 
This includes agreements between family members, where the family members are pursuing separate business interests. This may be established with reference to: 
The setting of the dealings – a business or social/domestic setting? 
The purpose of the dealings – for business gain or personal reasons? 
Related to the context of the relationship – close family members doing each other a favour, or distanced individuals acting in their own interests? Roufos v Brewster (1971) 
It also includes a government acting in a commercial capacity. In other words, the government essentially acting as a business. This is generally shown where: 
the government seeks Parliamentary approval (statutory authority) to appropriate funds with relation to the subject of the agreements; 
the government is acting in its own commercial interests, in terms of making a profit or otherwise providing some commercial benefit. Placer Development v Commonwealth (1969) 
Where neither party is a business or acting in pursuit of business interests, the dealings are of a social or domestic nature. 
It also includes a government acting in a political capacity. In other words, the government is simply pursuing government policy (i.e. providing a service or acting in an administrative capacity rather than a business capacity, such that there is no commercial benefit for the government in making the agreement in question). This only applies where the other party also treats the government’s actions as administrative or ‘service’ in nature, for example by appealing for the government to pursue a policy: Australian Woollen Mills v Commonwealth (1954); Administration of PNG v Leahy (1961). Rebutting the presumption 
Business or commercial arrangements: 
The presumption of intention to create legal relations in business and commercial dealings is agreed by the courts to be very difficult to rebut. General exceptions are: 
Some forms of letters of comfort. D Fuller (2007) 4 
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D Fuller (2007) A letter of comfort is a letter sent from a parent company to a bank that is unsure of whether to lend to a subsidiary of the company in question. The letter is designed to provide the bank with some assurance that the parent company will support its subsidiary, but not to provide what would legally be considered a guarantee to prevent creating any contingent liability. 
This is successful where the statements made in the letter of comfort cannot be treated as contractual promises i.e. are where the statements are not of a promissory nature. This generally occurs where: 
The statements are merely representations, statements of intention, statements of current policy or statements of fact. This is based on the particular language used (Kleinwort Benson Ltd v Malaysia Mining Corp Bhd [1989] (English Court of Appeal); Commonwealth Bank of Australia v TLI Management Pty Ltd [1990]). 
The language appears to deliberately be ambiguous and vague (Australian Finance Corp Ltd v Sheahan [1993]). 
There is a clear indication that the statements are not intended to be legally enforceable (Banque Brussels Lambert SA v Australian National Industries Ltd. [1989]). 
The argument fails where the court considers the language and statements made to be strong enough to constitute promises (Banque Brussels Lambert SA v Australian National Industries Ltd. [1989]). 
Contracts containing honour clauses, which explicitly or implicitly provide that an agreement will be binding in honour only i.e. promises will be performed in good faith: Rose & Frank Co v J R Crompton & Bros Ltd [1925] (English Court of Appeal). 
Problem: 
If the language and context of the agreement suggests that the agreement constitutes a contract, then the honour clause becomes void as its presence in an actual contract would be viewed as an attempt to illegally oust the jurisdiction of the courts (Rose). In such a situation, the clause would be removed and the remainder of the contract would be enforceable. 
Agreements or promises made by individuals or groups with no authority to do so, where the other party realises this (similar to statutory authority: Australian Woollen Mills). 
The parties expressly exclude legal liability, where both parties understand (or should understand) the exact meaning of the phrase such that they fully understand that no intention to create legal relations was present with relation to the exact subject matter of the agreement. 
This is not the case where a simple ex gratia clause is added to the agreement, since ex gratia is generally used to prevent the party in question from having to admit pre-­‐‑existing liability (for example, that payment was due or required under an employee’s current contract), not to discharge liability for the agreement to come – unless that was the meaning clearly present in the minds of both parties: Edwards v Skyways (1964). Domestic or social arrangements: 
The basis of this presumption is that arrangements made in domestic or social contexts tend to be based on trust and mutual love, trust or friendship due to the relationship between the parties to the agreement, and thus do not intend for legal consequences to arise from their action or inaction: Balfour v Balfour (1919). There are two sets of cases where this is clearly not the case and intention to create legal relations can be found to exist: 
In non-­‐‑commercial arrangements in which it is clear that the arrangement is not based on mutual trust, love or friendship. There are two broad types of situations where this is the case: 
Arrangements between estranged spouses, estranged family members, or estranged friends: Merritt v Merritt (1970); McGregor v McGregor (1888) 5 
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Non-­‐‑commercial arrangements where parties act independently and don’t have the capacity to personally influence one another (‘arm’s-­‐‑length transactions’), e.g. private sales, private employment of an individual in a domestic capacity, ‘employment’ in a non-­‐‑commercial capacity: Ermogenous v Greek Orthodox Community (2002). In situations where one party heavily relies upon the assumption that the other party’s promise will be legally enforceable. This is generally visible where: 
The parties were clearly acting in their own interests when making the agreement. This is generally indicated by the language used in correspondence. 
One party suffers considerable detriment as a result of fulfilling their obligations under the agreement, generally to the extent that there is little in it for them other than the other party’s promise (indicating permanence). 
It is clear that the party in question performed its obligations contingent upon the other party’s promise being fulfilled, and the other party realised or should have realised this. This is generally indicated in the language used in correspondence. 
The party in question would suffer serious consequences if the other party’s promise was not fulfilled, and the other party realised or should have realised this. 
The conduct of the parties does not indicate that they didn’t intend to be legally bound. Todd v Nichol (1957); Jones v Padavatton () Agreement: offer Fundamental principles 
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For an agreement to be made, it must be objectively determined that one party made an offer – that is, a promise to do or refrain from doing something, generally made upon the condition that the offeree agrees to do or refrain from doing something else. An offer must take the form of a proposal that invites acceptance and upon which intends for the agreement to be concluded. This depends on the intention of the alleged offeror: Reardon (1980). Offers may be unilateral. A unilateral offer is one where it is explicated or implied that performance of an act at the request of the offeror is sufficient to accept (and provide consideration for) the offer, where the offer was made for the purpose of inducing the offeree to undertake a certain activity and as consideration for the doing of the act: AWM (1954). Acceptance of a unilateral offer results in a unilateral contract, which is a contract where the offeree’s obligation is executed at the time of formation (since the contract forms as a result of the offeree executing their obligation): Carlill (1893); Mildura Office Equipment and Supplies v Canon Finance Australia (2006). Reward situations are almost exclusively unilateral offers. General rule in monetary transactions 
Generally the offer is considered to be made by the person paying for a product or service, and acceptance is provided by the person supplying the product or service by accepting the other party’s money. 
This has been held not to be the case with tickets purchased for passage – the ticket issued following the payment of the fare is an offer which is accepted or rejected by the passenger depending on whether they accept the conditions of passage. The offer is held to automatically be accepted after such time as is reasonable to read and understand the conditions, during which time the passenger did not make evident that those conditions were unacceptable. Where an individual other than the passenger buys the ticket, an executory contract is formed between the buyer and seller, while the ticket still constitutes an offer to the passenger: MacRobertson Miller Airline Services (1975). Absence of an offer D Fuller (2007) 6 
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No invitation of acceptance 
Supply of information: 
Where a statement merely provides information as to, for example, the nature of an offer that may be made in a future dealing, the statement does not invite acceptance and thus does not constitute an offer: Harvey v Facey [1893]. No intention for the agreement to be concluded 
Puffery: 
Where the statements made are clearly (and would objectively be interpreted as) vague exaggerations that are meaningless and not serious, there is no intention for an agreement to be concluded. This is determined according to how the ordinary person would interpret the specific statements made (Carlill v Carbolic Smoke Ball Co [1893], where the reference to a bank deposit being made indicated that the promise to make the payment was held as being made for the purpose of dispelling the assumption that the promise was puff). 
Invitation to treat: 
An invitation to treat is a statement of willingness to contract on certain terms if the other party offers to deal on those terms. As such, when an invitation to treat is made, there is no intention for a binding agreement to be made if the invitation were accepted. Common forms of invitation to treat are: 
Advertisements, particularly those appearing in catalogues, newspapers, on websites etc., even if they say “offer for sale”: Partridge v Crittenden (1968). 
Display of goods in shops, since customers make an offer when they go to pay for a product (otherwise a contract would form as soon as they removed the product from the shelf and the buyer would be committed to keeping the product – which they obviously aren’t since they can return it to the shelf): Boots Cash Chemists (1953); Fisher v Bell [1961]. 
There are exceptions to this rule in certain circumstances. For example, a car on display in a dealership could constitute an offer if it was the intention of the dealership that a customer could simply say “I want that car” and thus form a contract for its sale: Reardon v Morley Ford (1980). 
A specific exception is with vending machines – the display of goods in a vending machine constitutes an offer which is accepted by placing money in the machine since the buyer is committed as soon as the money is placed in the machine. 
Auctions, as an auctioneer merely invites offers from those present at the auction. This means that: 
no contractual claim can arise if the auction is cancelled; 
a bidder can withdraw their bid before it is accepted; and 
the auctioneer is not obliged to sell to the highest bidder. Payne v Cave (1789) While an auction held ‘without reserve’ does not constitute an offer to sell to the highest bidder, it has been held that such a statement of the conditions of the auction does constitute an offer to hold an auction in that particular manner which, in this case, the highest bidder accepts by making the highest bid. Thus, they can sue the auctioneer under that collateral contract, but not the seller: Warlow v Harrison (1859); Ulbrick v Laidlaw (1924). 
Tenders – which are similar to auctions except that each party submits its bid independently and without knowledge of other bids – since each tender will generally constitute an offer to deal on certain terms: Spencer v Harding (1870). However, if the party calling for tenders expressly states that it will conduct the tender under certain conditions – accepting the highest bid, excluding referential bids (Harvela Investments [1986]) or specifying certain procedures or criteria for conducting the tender (Blackpool [1990]; Hughes Aircraft Systems [1997]) – it is bound by contract to do so. D Fuller (2007) 7 Invalid offer 
An offer is invalid where it is not communicated. Responses to an offer 
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Acceptance of the offer on its terms (see below). Outright rejection of the offer. A counter-­‐‑offer or a ‘conditional acceptance’, neither of which constitutes acceptance and both of which prevent the original offer from being accepted: Hyde v Wrench (1840). Request for further information/clarification, which is not construed as rejection of the offer: Stevenson v McLean (1880). Termination of an offer 
When an offer is terminated, it is destroyed and cannot later be accepted. There are a number of ways in which an offer may be terminated: 
Withdrawal 
In general, an offer may be revoked at any time before it is accepted. 
For offers leading to bilateral contracts, revocation must be communicated to be effective, meaning that the offeree must become aware of the revocation through writing, conduct or word of mouth from a reliable source: Dickinson v Dodds (1876). 
For unilateral offers the obligations of the offeree under which have not been performed, withdrawal must be notified in the same way that the offer was notified, or in such a way as to give the same degree of circulation or ‘notoriety’ as was established by the original offer: Shuey v United States (1875). 
For unilateral offers the obligations of the offeree under which have begun but not finished being performed, the offer will be irrevocable where there is an implied contract not to withdraw the offer. This is generally found where: 
the offeror knows that the offeree has commenced performance, in that commencement has been specifically defined; 
the offeree would not reasonably be expected to have understood that he/she bore the risk for incomplete performance; 
the actions of the offeree in reliance on the offer caused he/she to incur detriment; 
the implication of such a contract would not mean that the offeree could choose whether or not to perform and to cease performing at any time yet the offeror would be obliged to keep their offer open for a long period without knowing whether the offeree will choose to complete or not complete the act/s in question; and/or 
in the particular circumstances of the case, the parties did not expressly or impliedly suggest an intention that the offeror would be at liberty to revoke the offer (or did expressly or impliedly suggest an intention that the offeror would not be at liberty to revoke the offer). Mobil Oil v Wellcome (1998) 
Withdrawal will be ineffective where the offeror has promised that the offeree will be entitled to contract with the offeror under specified terms if acceptance is provided within a certain period or at a certain time in return for some consideration, and the offeror seeks to withdraw his/her offer prior to the specified time or the end of the specified period. This is because the agreement to hold the offer open constitutes a separate ‘option contract’: Goldsbrough Mort v Quinn (1910). 
Rejection by the offeree 
A rejection by the offeree will terminate the offer once that rejection is communicated to the offeror. D Fuller (2007) 8 
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The making of a counter-­‐‑offer amounts to rejection of the previous offer. Hyde v Wrench (1840) Lapse 
Where an offer explicitly states that it will expire at a certain time, the offer is terminated at that time. 
Where an offer does not stipulate a time of expiry, the offer will be held to have lapsed after the passing of a ‘reasonable time’. ‘Reasonable time’ is determined with reference to: 
the nature of the subject matter of the potential contract, particularly whether its subject matter was of a ‘wasting’ nature; 
the form of the offer, particularly relating to the speed of the means employed to make the offer, since the use of faster means generally suggests a desire for a faster reply; 
the circumstances that are known or foreseeable at the date of the offer being made; 
the conduct and situation of both parties following the making of the offer, particularly in regard of their association with any events that may cause a delay in respect of the subject matter; and 
the particular state of affairs in regard of the subject matter in question at the time of the purported withdrawal of the offer: Ramsgate Victorial Hotel v Montefiore (1866); Telina Developments v Stay Enterprises (1984). Note that, per Telina, the above also applies to the calculation of reasonable time with regard to the fulfilment of conditions precedent to a contract. 
Where an offer is objectively found to be a ‘standing offer’ – an open offer intended to be able to be accepted at any time unless expressly revoked by the offeror – no such terms will be implied: G. N. Railway v Witham (1873). Death or supervening incapacity of a party 
Where the offeror dies, the offer will be terminated unless: 
the offeree is unaware of the offeror’s death at the time of signalling acceptance; and 
the offer does not require the offeror’s personal involvement. In such a case, the offer will still be capable of acceptance and the deceased’s estate will be bound: Bradbury v Morgan (1862). 
Where the offeree dies, his/her executor may accept the offer unless its subject matter requires the offeree’s personal involvement: Carter v Hyde (1923). 
Where either party loses sufficient contractual capacity to render performance of any resulting obligation possible, the offer will generally be terminated. Failure of a condition precedent 
If an offer is made subject to an express or implied condition that must be fulfilled before the offer can be accepted, and that condition fails or is otherwise unsatisfied, the offer will lapse unless the offeror chooses to waive the conditions: Financings v Stimson (1962); Neill v Hewens (1953). Agreement: acceptance Fundamental principles 
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Acceptance occurs where it is objectively apparent that the offeree, acting with full knowledge of the offer and with the offer present in their mind at the time of acceptance (Fitch v Snedaker [1868], R v Clarke [1927]), regardless of motive (Williams v Carwardine [1833]), is signalling an unqualified assent to the terms of the offer in the manner specified or indicated by the offeror. The objective test is based on whether a reasonable person in the offeror’s or offeree’s position would believe that acceptance was provided: Smith v Hughes (1871). Acceptance may take the form of: 
a counter-­‐‑promise, resulting in a bilateral contract; or 
performance of an act specified by the offeror, resulting in a unilateral contract. Invalid acceptance D Fuller (2007) 9 
Per the definition of acceptance:  In general, where acceptance is not directly communicated to and received by the offeror either by the offeree or an agent authorised to do so, it will not be effective unless the offeror has expressly or impliedly dispensed with the need to communicate acceptance or unless the postal rule applies: ICTA Investments v GE Commercial (2006). 
Express or implied dispensation 
This occurs in one of four ways:  The offeror expressly or impliedly agrees to treat the performance of an act as effective acceptance. This is always the case with unilateral contracts (Carlill), and may be the case with some bilateral contracts (R v Clarke).  The offeror expressly or impliedly agrees to treat the despatch of an acceptance by a particular method (e.g. signing a document) as acceptance, regardless of whether that acceptance is actually received. This would require a clear statement to that effect: Latec v Knight (1969). 
It is clear that both parties considered themselves bound by a contract based on the offer: Brogden v Metropolitan Railway [1877], Empirnall v Machon Paull [1988]; Farmer’s Mercantile Union v Coade (1921). 
The rule expounded in Empirnall is that this situation will arise where, knowing the terms of the offer and the offeror’s intention to enter into a contract, the offeree “with a reasonable opportunity to reject the offer...[took] the benefit of [it] under circumstances which indicate[d] that [the subject of the offer was] to be paid for in accordance with the offer...”. 
The rule in Brogden is wider, essentially stating that where, in the course of dealing, conduct has occurred such that the offeror may legitimately infer that their offer was accepted by the offeree, a contract will exist. Brogden gives some circumstances where this will be the case. 
The purported agreement is in a business context where it can reasonably be presumed that assent was given even in the absence of explicit communication to that effect: Lucy v Mouflet (1860).  While an offeror may stipulate that he/she does not require communication of acceptance, he/she cannot stipulate that acceptance will be presumed unless communication to the contrary is received, since doing so would detriment the offeree rather than the offeror (Felthouse v Bindley [1862]).  The postal rule  When notification of acceptance is by post or telegram, the postal rule states that acceptance will be effective and complete upon posting the notification, regardless of whether it is received by the offeror in the expected timeframe or at all, iff:  acceptance by post was contemplated as an appropriate means of response, either: 
expressly: Adams v Lindsell (1818),  through receipt of the offer through the post – though see Tallerman (1957) – and through prior course of dealing by the parties through the post: Dunlop v Higgins (1848); or  where it would otherwise be contemplated by a reasonable person that the post might be used as a means of acceptance according to “the ordinary usages of mankind”: Henthorn (1892);  the notification of acceptance was addressed and sent in the correct manner: Household Accident Insurance v Grant (1879); and 
the offeror did not stipulate in any way that actual communication of acceptance was required for the agreement to be effective: Holwell Securities v Hughes (1974). D Fuller (2007) 10 
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The postal rule will not apply where acceptance is communicated using any form of ‘instantaneous’ communication, defined by Squire as having the following features: 
received almost as soon as it has been sent; 
any third parties involved do not have direct access to the message being communicated – they are merely agents by which the message is transferred; and 
the sender generally is or should be more aware of a failure to contact the purported receiver than the receiver would be. Generally accepted forms of ‘instantaneous’ communication are: 
telephone, unless: 
the message is sent/received through an independent third party that has direct contact with the message (e.g. an operator); 
the message is sent after office hours, where it probably becomes effective when the office reopens: Hampstead Meats v Emerson & Yates (1967), Dewhurst v Cawrse (1960); 
telex: Brinkibon v Stahag Stahl (1983), Entores v Miles Far East (1955); 
teleprinter; 
email or other internet communication facilities; 
facsimile, unless 
the message is not intended to be immediately, where it probably becomes effective a reasonable time after it has been received; or 
either of the exclusions in respect of telephone communication apply: Reese Bros Plastics v Hamon-­‐‑Sobelco (1988). 
The above rules do not apply to the revocation of an offer (which will be effective when notification of the revocation is received: Henthorn v Fraser) or to the repudiation of a contract (which will be effective when the act constituting repudiation occurs, which is generally the posting of notification of repudiation: Brinkibon). Where a potential acceptor was not aware of an offer’s existence and terms or if that offer was not present to their mind when they purport to have accepted the offer, they cannot be construed as having provided acceptance: Fitch v Snedaker (1868); R v Clarke (1927). Where purported acceptance is conditional in that it departs from the terms of the offer in any material way, it will be ineffective. Instead, it will act as (a) the rejection of the original offer, such that that offer cannot be revived (Hyde v Wrench); and (b) the proposal of a counter-­‐‑offer capable of acceptance by the original offeror (Evans Deakin [1984]). Conditional acceptance is to be distinguished from: 
statements that are objectively apparent to be requests for information; and 
statements that add meaningless terms to the original offer or merely expand upon or restate terms of the original offer. Neither of these situations will result in the termination of the original offer: Nicolene v Simmonds (1953), Fitzgerald v Masters (1956). Other rules 
Where an agreement is purported to have resulted from offer and acceptance via forms containing standard terms and conditions of agreements involving the parties in question, and the terms and conditions displayed on the form that purports to contain the offer conflict with those displayed on the form that purports to accept the offer: 
In general, the last set of terms and conditions corresponded constitute the terms and conditions of the final offer, which are accepted by the receiver of that correspondence either explicitly (without using another form: Butler Machine Tool [1979]) or through conduct (supplying or accepting the goods or services the supply of which is to be governed by the terms and conditions in question). Consequently, where a dispute arises as to the relevant terms and conditions in respect of the supply of a good before that good is supplied or accepted, a contract may be held not to exist since no explicit D Fuller (2007) 11 
statement was provided nor conduct performed to indicate acceptance of the final offer: Turner Kempson v Camm [1922]. However, where the terms of a purported acceptance do not materially alter the terms of the offer to which the offeree is responding, the courts will treat the situation as follows: 
A contract for the supply of the goods will be formed based on the material terms and conditions on which the parties agree. 
Any different (but non-­‐‑material) terms of the acceptance constitute counter-­‐‑offers, which are accepted by the original offeror’s conduct. Article 19(3) of the UN Convention on Contracts for… Agreement without offer and acceptance 
An agreement may occasionally be held to have been in place even where there was no true offer and acceptance. This only occurs where a clear manifestation of mutual assent to a sufficiently clear regime and a clear intention to be legally bound by that regime could be identified at a single point in time such that a reasonable person in the position of each of the parties would believe that a concluded bargain was in place: Brambles Holdings v Bathurst City Council (2001); Branir v Owston Nominees (2001). Consideration Fundamental principles 


Consideration is an act or forebearance by one party, or a promise thereof, constituting the price paid in return for the other party’s promise. It follows that there are two fundamental requirements for consideration to be valid: 
Consideration must involve the promisee either conferring a benefit on the promisor or incurring a legal detriment at the promisor’s request, in terms of giving something up (such as a legal right: Dunton v Dunton [1892], or the right to undertake a legal proceeding, provided that the plaintiff holds a reasonable and bona fide belief in its success: Callisher v Bischoffsheim [1870]) or undertaking an obligation. A promise to do any of these things also constitutes consideration. 
That consideration must be given in return for a promise means that consideration must be an agreed-­‐‑
upon price. In practice, this requires that consideration be given at the express or implied request of the promisor. This generally requires that the promisor make the promise to induce the promisee to take a particular action, make a particular promise etc.: Australian Woollen Mills (1955). 
This is to be distinguished from acts etc. performed in reliance on a promise which, if not performed at the request of the promisor, will not constitute good consideration: Beaton v McDivitt (1987). A promise made under seal (a deed, which is essentially an agreement recorded in a particular form) will be enforceable without consideration: Ballantyne v Phillott (1961). Rules 
Regarding the first requirement 
Since consideration can be anything legal value to the promisor, consideration must be sufficient in that it must have some value to the promisor, but consideration need not be adequate in that it may have any value, no matter how incommensurate to the promisor’s promise: Chappell v Nestle (1960); Thomas v Thomas (1842). It follows that: 
Acts etc. in performance of an existing public duty or legal duty to the promisor, including part payment of an existing debt (Foakes v Beer [1884]) is not good consideration, since the promisor receives no value above what he/she would already have received (Collins v Godefroy [1831]; Stilk v Myrick [1809]), unless: D Fuller (2007) 12 

the duty was part of a contract that has been terminated and/or replaced by the parties, though this does not apply where the original contract was merely modified; 
the promisee performs over and above their existing duty, to the extent of conferring benefit on the promisor or incurring detriment on themselves over and above what would have been conferred by performing the duty to the extent that it was originally required: Glasbrook v Glamorgan CC (1925); Hartley v Ponsonby (1857); Popiw v Popiw (1959); 
the promisee performs their existing duty in a manner different from the manner originally contracted such that performing the duty in the new way confers an additional benefit on the promisor: Williams v Roffey (1991); 
the promisee performs their existing duty as consideration for a bona fide compromise of a disputed claim, where the promisee honestly believed and asserted that they were not bound to perform their obligation under the existing contract or that they had a cause of action under that contract, and that belief or assertion is not clearly invalid or “frivolous or vexatious”: Wigan v Edwards (1973); or 
the promisee performs or partly performs their existing duty where it became doubtful as to whether the duty would have been performed properly or at all, to the extent of conferring a practical benefit on the promisor when compared with the detriment resulting from the existing duty not being performed fully or at all and the worth of any benefit (e.g. damages) arising as a result of a failure to fulfil that duty: Williams v Roffey; Musumeci v Winadell (1994). This does not apply where the promise was made as a result of unfair pressure from the promisee. 
The same act etc. can constitute consideration for multiple promises by multiple parties if performing that act etc. confers a benefit on each of those parties and if each party can legally enforce the obligation: New Zealand Shipping Co v Satterthwaite (1975); Port Jackson Stevedoring v Salmond & Spraggon (1980). 
When the act etc. alleged to constitute consideration predates the promise for which it was intended to provide consideration, it will not be valid unless: 
the act etc. was performed: 
was performed at the promisor’s request; 
was performed partly or fully on the basis of the promise in question being fulfilled in the future, where the promisor knew or reasonably should have known this in terms of the purported consideration making express or implied reference to the promisor performing the promise in question in the future; and 
would have been capable of being enforced had it been expressly made prior to the purported consideration being provided: Re Casey’s Patents; Stewart v Casey (1892); Pao On v Lau Yin Long (1980); c.f. Roscorla v Thomas (1842). 
Acts etc. involving the performance of a duty to or conferring a benefit on a party other than the promisor will be binding if they are performed at the promisor’s request to the promisee’s detriment, regardless of whether the promisor receives any direct benefit (it is presumed that they receive an indirect benefit from such a situation): Bolton v Madden (1873). 
A conditional gift (a promise to do something if the promisee fulfils a condition, where that thing does not benefit the promisor nor does it cause the promisee to suffer detriment) will not be binding. Regarding the second requirement 
Consideration must flow from the promisee or his/her agent to be valid. If there is more than one promisee as a party to the contract and the promisees are regarded as joint promisees one promisee can provide consideration on behalf of the others: Coulls v Bagot’s Executor and Trustee Co (1967). Note, however, that a third party who was not a party to a promisee’s consideration may still sue under a contract if: 
the third party is to a contract intended by the promisor to be for that party’s benefit; 
it was reasonable for the third party to order their affairs with reference to that contract; and D Fuller (2007) 13 

a failure to allow the third party to sue under the contract would result in unjust enrichment of the promisor, in terms of allowing them not to fulfil a promise by having no legal recourse: Trident General Insurance v McNiece Bros (1988). Both sides must provide consideration for an agreement to be valid. Estoppel 

Estoppel operates where party A is induced by party B to assume that party B will fulfil a non-­‐‑contractual promise, and party A relies on that assumption to their detriment. Estoppel prevents party B from acting inconsistently with that assumption. The representor is obliged not to act inconsistently with the induced assumption without taking steps to ensure that the departure does not harm the relying party. There are six elements of estoppel, laid out in Waltons Stores v Maher (1988) and Austotel v Franklin Selfserve (1989). The first three are vital, while the second three are generally necessary: 
Assumption 
Principle: 
The relying party must have adopted an assumption, either that a particular fact is true (Jorden v Money [1854]) or that the representor will act in a certain way in the future. 
Rules: 
The assumption must relate to: 
an existing or future legal relationship between the two parties in question: Mobil v Wellcome; 
a promise expected to be performed in the future: W v G (1996); Lee Gleeson v Sterling Estates (1991); Chanrich Properties v Baulkham Hills Shire Council (2001); or 
an interest to be granted to the relying party: Austotel. 
Inducement 
Principle: 
The assumption adopted by the relying party must have been induced by the representor. 
Rules: 
Inducement is generally by an express promise or representation, but need not be. 
Silence or inaction may constitute inducement, but it will be necessary to show that the representor either intended or knew or should reasonably have known that the relying party would rely on that silence or inaction: Waltons Stores. 
A representation that is insufficiently precise to give rise to a contract may still be adequate inducement if it is reasonable for the relying party to interpret and rely on that representation in the manner that they do: Galaxidis v Galaxidis (2004). 
Detrimental reliance 
Principle: 
The relying party must have acted on the induced assumption in such a way that they would suffer detriment if the representor could depart from that assumption. 
Detrimental reliance deals with a loss suffered as a result of the party’s reliance on the assumption when the representor acts inconsistently with that assumption. This is not the same as a loss in terms of a benefit that the relying party expected to receive but did not receive when the representor acted inconsistently with the assumption. 
Rules: 
Detriment must be affirmatively demonstrated: Commonwealth v Verwayen (1990). 
Detriment need not have actually been suffered – the prospect of detriment is sufficient. This means that a threat to depart from an assumption may still be sufficient to bring about estoppel: Commonwealth v Clark (1994). 
Detriment must be material and significant, as distinct from ‘valuable’ when used with reference to consideration: Hawker Pacific v Helicopter Charter (1991). D Fuller (2007) 14 





Detriment must be assessed at the time at which the representor seeks to resile from the relevant assumption. Where the representor has not sought to resile, detriment must be assessed with reference to the detriment that would arise if the representor sought to resile: Je Maintiendrai v Quaglia (1980). Types of detrimental reliance include: 
wasted money on the representor’s land or in preparation for a contract with the representor: Hamilton v Geraghty (1901); Waltons Stores; 
entry into a contract with the representor where the representor does not perform in the manner that they represented; 
performance of services for the representor: Public Trustee v Wadley (1997); Jackson v Crosby (No 2) (1979); 
inactivity leading to a loss of an opportunity to gain a benefit or avoid a loss: S & E Promotions v Tobin (1994); Morris v FAI (1995); Giumelli v Giumelli (1999); 
consenting to the adjournment of litigation, or commencing litigation Collin v Holden (1989); Commonwealth v Verwayen; and 
giving up of legal rights: Gray v National Crime Authority (2003). Detrimental reliance does not require that the relying party change their position as a result of relying on the induced assumption – it merely requires that, at the time at which the representor seeks to resile from the assumption, detriment would be suffered: Je Maintiendrai. Reasonableness 
Principle: 
The relying party’s reliance on the assumption must be reasonable. 
Rules: 
Reasonableness is concerned with two questions: 
whether the relying party acted as a reasonable person in their position would have by relying on the assumption: Murphy v Overton Investments (2001); and 
whether the relying party acted as a reasonable person in their position would have by taking the relevant detrimental action in reliance on the assumption. Unconscionability 
Principle: 
The representor must have acted unconscionably when in the circumstances of the case: Forbes v Australian Yachting Federation (1996). 
Rules: 
Unconscionability is often assessed with regard to: 
the representor’s role in inducing the assumption, particularly intention to induce reliance; and 
knowledge of the relying party’s assumption. Departure or threatened departure 
Principle: 
The representor must seek to breach the promise or must deny the truth of the assumption for estoppel to be available. Certainty 
For a contract to be certain, three things are required: 
Completeness 
Where an ‘essential’ term has not been expressly or impliedly (based on the clear intention of the parties in terms) agreed upon at the purported time of contracting (meaning either that it was absent from the contract or the parties agreed to agree upon the term in the future), the contract will be incomplete. Whether a term is essential or not depends on whether it is a term: D Fuller (2007) 15 

D Fuller (2007) without which the contract would be meaningless and unworkable in law in terms of the court being able to define the parties’ rights and obligations with some degree of specificity and give a practical meaning to the contract: Trollope (1962); ANZ Banking Group v Frost Holdings (1989); or 
on which the parties clearly intended that they must agree upon. 
An incomplete contract or section of a contract will be unenforceable where the court is incapable of reasonably implying all of the missing essential terms into the agreement, because there is no concrete basis (generally an external standard, or a mutual interest or intention as to the terms as opposed to conflicting interests or no clear intention) upon which they can do so: Milne v Attorney-­‐‑General (1956); Hillias. 
General rules are: 
In lease or hire-­‐‑purchase contracts, the commencement date and specific rental price are essential: Harvey v Pratt (1965); Eudunda Farmers v Mattiske (1920) re. rent ‘to be agreed’. 
In contracts for the sale of land, the specific subject matter and a price or an effective method or mechanism for determining that price are essential: Hall v Busst (1960), also re. uncertainty; Stocks & Holdings v Arrowsmith (1964). This is opposed to contracts for the sale of goods, where the court may imply an obligation to pay a ‘reasonable price’ in the circumstances into the agreement where the parties are silent as to price, unless the parties have deliberately deferred agreement on price: May & Butcher v The King (1934); c.f. Hillias v Arcos (1937). 
There rules will tend to be applied less the further the parties have moved along with performance of the ‘contract’, since the court wishes to give effect to clear contractual intent: Foley v Classique Coaches (1934). 
The rules will tend not to apply where a contract defers agreement on an essential term but provides an effective mechanism for supplying the term (e.g. a specified valuer or arbitrator) in the event that the later agreement fails or never occurs. Where that mechanism fails, however, the agreement will generally be held to be ineffective (George v Roach [1942]) unless: 
the specified mode of supplying the term is not regarded as essential – in other words, it may be implied that the value is simply required to be ‘fair and reasonable’, having regard for: 
whether possession has or was intended to be taken prior to the price being fixed, which can be ascertained from the wording of the clause as to payment and the context, particularly having regard for the type of agreement being made (e.g. a lease, as opposed to a sale), 
the person intended to perform the valuation, and 
express statements to this end; and 
the courts can reasonably imply a term in the specified supplier’s place: Booker Industries v Wilson Parking (1982); c.f. Whitlock v Brew (1968). Certainty of terms 
Where a particular term is so vague and imprecise that the court cannot attribute to the parties rights and obligations with some degree of precision (as with completeness, where they have no concrete basis upon which they can do so, as defined in the completeness section above), that term will be held to be ineffective and thus the agreement will be constructed as though that term is missing. Consequently, where the uncertain term is essential, the agreement will be ineffective. 
It follows that an agreement to agree will necessarily be unenforceable because, to be enforceable, such an agreement would have to detail what would be agreed upon at the future date, in which case it would constitute a binding agreement at the time that detail was agreed upon [to be agreed upon]. It is a contradiction: Ridgway v Wharton. 
The same general rules as to incompleteness apply here in terms of essential provisions. The generalisation that those rules will apply less the more the parties have performed also applies. 16 

D Fuller (2007) An extra rule is that agreements “on the usual terms” or statements of that kind will generally be held uncertain, and where they lead to the failure to define essential terms in the circumstances, the contract will be unenforceable: Scammell v Ouston (1941), Whitlock v Brew. 
Where parties agree to negotiate in good faith (meaning that the parties are committed to the process before it arises) toward an agreement in the future, that agreement to negotiate in good faith will be binding iff: 
the terms of the agreement are sufficiently certain as to the nature and procedure of those future negotiations, such that the obligations of the parties in regard of those future negotiations can be determined with some degree of certainty; and 
no part of the procedure purports to involve an agreement to agree: Aiton Australia v Transfield (1999). An agreement to negotiate in good faith will generally not be binding in respect of negotiations toward a future contract since contractual negotiations by nature generally give both parties discretion as to the nature and process of the negotiations, making the promise to negotiate ‘in good faith’ illusory. Consequently, to be enforceable, such an agreement would need to be: 
highly specific as to the procedure to be followed, such that the parties were negotiating in accordance with some specified rules and not at their complete discretion; and 
specific as to the conclusion of the negotiations, generally by involving an independent arbitrator in the event of disagreement: Coal Cliff Collieries v Sijehama (1991). Absence of illusory promises 
A promise will be illusory and thus unenforceable where: 
the promise is a contractual obligation as opposed to condition upon the fulfilment of which the obligation to complete the contract depended (so an option would not be illusory because it gives one party full discretion not to exercise the option): Meehan v Jones (1982); and either 
the promise is such that it gives the promisor unfettered discretion as to whether the promise is carried out by its nature: Placer Developments v Commonwealth (1969); or 
the promise is accompanied by an exemption clause so wide in its effect that it deprives the promise of any force: MacRobertson Miller Airline Services v Commissioner (1975). 
It follows that a promise will not be illusory where: 
it leaves important matters to be determined by a third party without requiring agreement of the two contracting parties and specifies that the terms implied as a result would not conflict with the agreed-­‐‑upon terms. This occurs where it is clear that the terms are to be fixed according to some objectively assessable criteria (see below), not purely at the discretion of the third party. This was the distinction between Godecke v Kirwan and Masters v Cameron; 
it gives either party discretion of any types that is to be exercised according to objectively assessable criteria, e.g. an implication as to honesty: Meehan v Jones; 
it gives one party a ‘latitude of choice’ as to how a stipulation will be effected but does not give them a choice as to whether or not to actually perform: Thorby v Goldberg (1964); or 
it gives one party discretion as to whether or not to fulfil a particular condition without whose fulfilment a binding contract would not be created, not discretion as to whether or not to perform an obligation of the contract itself: Meehan v Jones. 
Where a promise appears illusory, courts will often imply that the party who has the unfettered discretion perform the act in question ‘reasonably’ or ‘honestly’. This will generally not occur where: 
importing such a term would require the courts to take on a discretionary role specifically reserved for one party in a contractual obligation (not a precondition); or 
there is no basis upon which to import honesty, and there is no standard against which to assess reasonableness in regard of the particular subject matter: Placer. 17 Potential for maintaining a contract in the face of uncertainty 

Where it may be inferred that the parties did not intend for the validity of their agreement to hinge on the term that has been found uncertain, incomplete or illusory, the court will, where possible, tend to give effect to that intention by severing the provision in question: Fitzgerald v Masters (1956); c.f. Whitlock v Brew. The party for whose sole benefit an uncertain, incomplete or illusory provision was inserted may waive fulfilment of that condition and enforce the contract, iff: 
by waiving the clause the contract was not rendered unenforceable, nor was the contract unenforceable prior to waiving the clause: Bradford v Zahra (1977); c.f. Grime v Bartholomew (1972); and 
both parties intend for the waiver to be effective, and have full knowledge of the circumstances under which the waiver is to occur: George v Roach. D Fuller (2007) 18