Contract(
Is(there(a(valid(contract?(
1. Was(there(an(agreement?(
2. Was(there(enough(certainty?(
3. Was(there(intention(to(enter(legal(relations?(
4. Was(consideration(given(for(the(promises(made?(
!
Offer(
• Intention!not!to!be!bound!–!Carvill'v'Carbolic'Smoke'Ball'Co!!
• Unilateral!Offer!2!Carvill'v'Carbolic'Smoke'Ball'Co!!
• Invitation!to!treat!–!Pharmaceutical'Society'of'GB'v'Boots'Cash'Chemist!!
• Supplying!information!not!making!an!offer!–!Harvey'v'Facey!
• Charged!with!offering!birds!for!sale!not!selling!them!as!could!reject!the!offer'–'Partridge'v'Crittendon!
!
Auction:!
• If!no!reserve!then!do!not!have!to!sell!the!item!to!highest!bidder!if!not!happy!but!may!have!to!pay!damages!for!
not!selling!–!AGC'v'McWhirter!
• Internet!auction!with!time!expiring!and!reserve!price!must!sell'–'Smythe'v'Thomas!
• If!person!bids!at!a!auction!it!is!a!offer!and!acceptance!is!the!fall!of!the!hammer,!therefore!the!person!cn!
withdraw!their!offer!before!the!fall!of!the!hammer'–'Payne'v'Cave!
!
Withdrawal!of!offer:!
If!withdrawal!of!offer!is!not!communicated!before!acceptance!there!is!still!a!valid!contract'B'Byrne'v'Tienhoven'
• 1!oct!V!wrote!to!b!offereing!to!sell!tin!&!suggested!a!cable!reply!
• 8!oct!V!posted!letter!to!b!withdrawing!offer!
• 11!oct!B!cabled!v!accepted!offer!
• 20!oct!B!received!letter!withdrawing!offer!
• Yes!there!was!a!contract!since!the!withdrawal!had!not!been!communicated!to!B!yet.!Therefore!cannot!
withdraw!offer!
If!a!unilateral!contract!withdrawal!must!be!communicated!before!task!is!started!(before!consideration!is!give)!–!
Veivers'v'Cordingley!
!
Keeping!option!open!(not!to!sell!to!another!for!period!of!time)!
• Must!be!supported!by!valid!consideration!or!can!sell!to!anyone!in!that!time!lapse!period!(eg.!Withdraw!offer)!
–!Goldsborough'Mort'Ltd'v'Quinn!
!
A!counter!offer!kills!the!original!offer:!
• If!you!respond!to!an!offer!by!putting!forward!an!alternative!proposal,!it!will!likely!be!regarded!as!a!counter!
offer,!the!effect!of!which!will!be!to!terminate!the!original!offer!–!Hyde'v'Wrench!
• A!mere!inquiry!is!not!a!counter!offer!and!therefore!original!offer!stands!2!Stevenson'v'Jaques!
!
Acceptance(
4!rules!to!accept!offer:!
1. By!a!person!to!whom!offer!was!made!
2. Offeree!must!be!aware!of!the!offer!and!intend!to!accept!it!
3. Acceptance!must!be!unqualified!and!correspond!with!offer!
4. Acceptance!must!usually!be!communicated!
!
• May!be!difficulty!with!identifying!offer!and!acceptance!–!MacRobertson'Miller'Airlines'v'CoT!(1975)!133!CLR!125!
!
*Offer!and!acceptance!are!not!requirements;!courts!only!need!to!find!agreement!
!
Can!be!accepted!in!any!way!unless!it!is!stated!that!the!acceptance!must!be!in!a!specific!form!which!then!becomes!a!
term.!Objective!test!as!to!whether!it!was!the!only!method!of!acceptance.!No!acceptance!if!don’t!hear!it.!
!
UK!Postal!Acceptance!Rule!–!only!applies!to!acceptances!
• Must!have!intended!that!the!postal!rule!was!to!apply!to!acceptance!of!the!offer!–'Wardle'v'Agricultural'&'Rural'
Finance!PTY!LTD![2012]!NSWCA!107!(in!this!case!it!was!not)!
• If!postal!rule!applies:!
• Acceptance!is!upon!posting!of!the!letter!not!receiving!–!Henthorn'v'Fraser![1892]!2!Ch!27!
• Even!if!letter!is!not!received,!still!bound!–!Household'Fire'&Carriage'Accident'Insurance'v'Grant!(1879)!4!Ex!D!
216!
!
• Must!have!intended!something!other!than!postal!acceptance!rule!for!it!to!not!apply!(objective)!–!Holwell'
Securities'v'Hughes'[1974]!1!All!ER!161!–!good!for!counterargument!
!
Certainty(
a) General!Principles!
• Contract!too!vague!which!means!never!was!a!valid!contract!(void)!–!Scammell'Ltd'v'Ousten![1941]!AC!251!
•
Mistake!eg)!two!boats!with!same!name!–!Raffles'v'Wichelhaus!(1864)!159!ER!375!
b) Illusory!Promises!
• Promises!that!are!not!real!
• No!agreement!because!one!party!still!has!a!discretion!or!choice!!
Eg)!I!will!pay!as!much!as!I!believe!is!appropriate!or!I’ll!mow!your!lawn!if!I!have!time!
• An!‘agreement!to!agree’!–!no!contract!eg)!We’ll!agree!on!the!price!when!we!know!how!much!the!import!
duty!will!be.!
• MacRobertson'Miller'Airlines'v'CoT'–!exclusion!clause!so!wide!consideration!is!illusory!!
Agreement!to!negotiate!
• Agreement!to!negotiate!like!agreement!to!agree!but!not!to!sell!(no!contract)!–!Walford'v'Miles![1992]!2!
WLR!174!
c) Finding!certainty!
• Custom!or!trade!usage!
• Previous!course!of!dealings!(if!dealt!with!each!other!before!more!certain)!
i) External!formula!or!method!
• Can!leave!terms!to!be!decided!later!if!there!is!an!objective!way!of!determining!them!(anyone!
that!is!not!them!eg.!third!party!or!website!valuer)!–!Hawthorn'FC'v'Harding!
• All!essential!terms!have!to!be!decided!eg!product,!price,!delivery!date,!goods.!Other!terms!can!
be!decided!later!on!and!does!not!make!contract!void!–!Godecke'v'Kirwan'(1973)!129!CLR!629!
ii) Impliedly!what!is!reasonable!
• Reasonable!price!is!too!vague!but!if!also!says!arbitrator!can!determine!it!if!parties!cannot!agree!
valid!contract!–!Booker'Ind'v'Wilson'Parking!(1982)!149!CLR!600!
• Courts!can!also!determine!it!as!they!determine!reasonableness!on!a!everyday!basis!
iii) Severance!of!vague!part!2!possible!if:!
• Agreement!on!all!substantial!terms!
• Severance!leaves!basis!of!contract!intact!and!parties!(objectively)!intended!to!be!bound!whether!
clause!operated!or!not!
• Therefore!binding!and!clause!just!removed!–!Fitzgerald'v'Masters!(1956)!95!CLR!420!
d) Conditional!contracts!
• Verbal!contract!now!with!formal!contract!to!be!signed!in!future:!
> Contract!now,!new!doc!is!part!of!performance,!and!doesn’t!change!terms,!ie)!obliged!to!sign!new!
doc!–!Godecke'v'Kirwan!!
> Contract!now,!obligation(s)!suspended,!ie!new!contract!triggers!time!for!performance!–!unclear!
and!not!used!much!
> No!contract!unless!and!until!new!doc!is!signed!(most!common)!–!Masters'v'Cameron!!
> If!there!is!a!valid!contract!the!deposit!does!not!have!to!be!returned,!if!there!is!not!a!valid!contract!
yet!the!deposit!must!be!returned!–!Masters'v'Cameron!
> Contract!now!on!these!terms,!but!expected!to!make!substitute!contract!with!additional!terms!by!
consent!(contract!now!but!can!agree!to!vary!it!later)!
• Subject!to!Contract!2!Masters'v'Cameron,!Godecke'v'Kirwan!!
• Subject!to!Finance!–!Meehan'v'Jones!!
> Purchaser!must!be!satisfied!not!seller!(subjective!&!objective!test)!
> Must!act!honestly!when!deciding!finance!but!hard!for!court!to!prove!if!not!and!therefore!
purchaser!can!reject!terms.!
> Purchaser!can!waiver!clause!if!doesn’t!need!finance!(eg!wins!lotto),!still!valid!
•
•
•
Intention(to(enter(legal(relations(
Reasonable!person!test!–!objective!
If!you!say!something!is!not!to!be!binding!then!it!is!not!–!Rose'&'Frank'v'Crompton![1925]!AC!445!
No!firm!rules!or!presumption!as!may!lead!to!wrong!decision!!2!Ermogenous'v'Greek'Orthodox'Community!!
!
Commercial!dealings!
• If!coins!produced!for!sale!they!would!be!charged!for!tax,!held!it!was!a!contract!but!not!a!sale.!It!was!a!promise!
to!give!coins!if!bought!petrol,!enforceable!2!Esso'Petroleum'v'Comm'of'Customs'&'Excise![1976]!1!AER!117!
!
!
Family!arrangements!
•
Generally!not!binding!2!Jones'v'Padavatton!!
•
Can!be!binding!if!person!specifically!asked!for!reassurance!of!promise!–!Todd'v'Nichol!(sold!up!house!and!
moved!to!the!other!side!of!the!world,!would!not!have!done!this!if!did!not!intend!it!to!be!binding)!
!
Governments!
• Policy!reasons!means!cannot!assume!contract!as!often!using!public!money!for!best!interest!of!public!and!
therefore!not!a!binding!promise!–!Admin'of'PNG'v'Leahy!(1961)!105!CLR!6!
!
Factors!favoring!intention!to!be!legally!binding!
•
If!substantial!mutual!sacrifice!(selling!up!of!all!property)!
•
Symbolic!consideration!(evidence!of!intention)!eg.!For!$1!you!can!use!my!car!for!a!week!
•
Formal!contract,!lawyers!involved,!even!if!family!arrangement!
•
Made!in!atmosphere!of!distrust!
!
Factors!favoring!against!intention!to!be!legally!binding!
• Closeness!of!relationship!
• Virtually!gratuitous!benefits!–!not!worth!much!
• Informal!contract!eg!not!reduced!to!writing!
!
Consideration(
1. First!identify!which!promise!you!are!questioning!the!enforceability!of!
2. Second!ask!what!the!other!party!gave!in!return!for!that!promise!
!
• “An!act!or!forbearance!of!one!party,!or!the!promise!thereof,!is!the!price!for!which!the!promise!of!the!other!is!
bought,!and!the!promise!thus!given!for!values!is!enforceable”!2!Dunlop'v'Selfridge![1915]!AC!847!
• For!there!to!be!valid!consideration!there!must!be!a!promise!given!from!both!parties!and!one!of!the!parties!
must!either!benefit!or!suffer!detriment!from!performance!of!the!contract.!
!
i. First!Descriptor!
Consideration!must!move!from!the!promisee,!but!need!not!move!to!the!promisor!!
> The!person!to!whom!the!promise!is!made!must!give!consideration!in!return!(a!detriment),!or!the!promise!is!
not!enforceable!
> But!the!consideration!can!be!for!the!benefit!of!a!third!party!
> Overlapping!privity!doctrine!has!similar!effect!2!if!you!are!not!part!of!the!contract!you!can’t!enforce!it!
Exceptions!!!
• Joint(promises!–!Coulls'v'Bagots'Executor!(1967)!119!CLR!460!(consideration!can!be!given!on!behalf!of!
another!but!must!do!more!than!just!sign)!
• Third(party(insurance!–!Insurance'Contracts'Act!1984!(Cth)!s!48!third!parties!can!sue!insurer!without!
consideration!2!Trident'Insurance'v'McNiece!(1988)!165!CLR!107!!
• Property(law!–!Third!party!beneficiary!can!enforce!a!contract!without!consideration!but!may!have!to!fulfill!
any!duty!imposed!by!the!consideration!originally!promised!2!Property'Law'Act!1974!(Qld),!1969!(WA)!
!
ii. Second!Descriptor!–!describes!the!privity!document!
Consideration!must!be!bargained!for!
> The!offer!must!involve!a!request!that!the!value!be!given!
> The!value!must!be!given!in!return!for!the!request!(you!give!something!in!return)!
> Not!consideration!if!you!are!not!doing!it!in!return!for!the!offer!being!made!2!R'v'Clarke!(1927)!40!CLR!227!&!
Aust'Woollen'Mills'v'Cth!(1954)!92!CLR!424!
!
iii. Third!Descriptor!
Consideration!must!be!executor!or!executed,!but(not(past!
> Executory!–!promise!for!promise;!which!at!the!time!of!dispute!is!still!to!be!performed!(haven’t!delivered!car!
and!they!haven’t!fully!paid!for!it!yet)!
> Executed!–!promise!for!an!act!or!forbearance;!at!time!of!dispute,!act!or!forbearance!already!performed!
(typically!a!unilateral)(mowed!laws!but!not!yet!paid)!
> Past!–!promise!on!account!of!something!that!happened!in!the!past.!Consideration!cant!be!past!(someone!
saves!you!and!afterwards!you!offer!to!pay!them!a!reward.!No!consideration!as!event!already!happened)!
> Exception!–!Consideration!can!be!past!if!both!intended!it!to!be!enforceable!2!Lampleigh'v'Braithwait!(1615)!
80!ER!255!
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