FORMATION OF A CONTRACT (1)
1.
2.
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6.
Offer
Acceptance
Consideration
Capacity
Intention to create legal relations
No vitiating factors present
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OFFER
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Person who makes offer is offeror, person who
receives offer is offeree.
Promise to be bound on particular terms.
Must be capable of being accepted (i.e. not too
vague).
Sets out terms upon which offeror willing to
enter into contractual relations with offeree.
May be made to a particular person, group of
people, world at large.
Carlill v Carbolic Smoke Ball Co (1893).
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7.
Distinguish an offer from:
i.
Statement of Intention
i.
Cannot form basis of contract even though
party to whom made may have acted upon
it.
ii. Re Fickus [1900].
ii.
Supply of Information
i.
Cannot form basis of contract, i.e. supplying
information about price does not mean that
you contract at this price.
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Invitation to Treat
iii.
i.
An invitation to others to make offers.
Person making invitation not bound to
accept any offers made.
ii.
Fisher v Bell [1961]. Display of goods in
shop window.
iii. Pharmaceutical Society of GB v Boots Cash
Chemist [1953]. Display of goods on the
shelves of a self service shop.
iv. Partridge v Crittenden [1968]. Public
advertisement.
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8.
Rejection of Offers
i.
Express rejection of offer terminates offer.
Offeree cannot subsequently accept it.
ii. Counter offer (where offeree tries to
change terms of original offer) also
terminates offer.
iii. Distinguish from a request for
information.
iv. Hyde v Wrench [1840].
9.
Revocation of Offers
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ii. Offer may be revoked at any time before
acceptance.
iii. Routledge v Grant [1828].
iv. Revocation not effective until actually
received by offeree.
v. Byrne v Van Tienhoven [1880].
vi. Communication of revocation may be made
through a reliable third party (e.g a broker).
vii. Dickinson v Dodds [1876].
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viii.Promise to keep offer open only binding
where there is a separate contract to that
effect.
ix. In unilateral contracts revocation not
permissible once offeree started performing
task requested.
x. Errington v Errington and Woods [1952].
10.
Lapsing of Offers
i.
Offer no longer capable of being accepted:
i.
ii.
At the end of a stated period or after a
reasonable time if no time limit set.
Where the offeree/ offeror die.
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ACCEPTANCE
1.
Once offeree assents to terms offered contract
comes into effect. Both parties bound, offeror
cannot withdraw offer and offeree cannot
withdraw acceptance without consent.
2.
Forms of Acceptance
i.
Acceptance must correspond with terms of
offer. Offeree must not seek to introduce new
contractual terms into acceptance.
ii. Neale v Merrett [1930] & Hyde v Wrench
[1840].
iii. Acceptance may be in the form of express
words (oral or written) or may be implied
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3.
Communication of Acceptance
i.
General rule, acceptance must be
communicated to offeror.
ii. Silence cannot amount to acceptance.
iii. Felthouse v Bindley [1863].
iv. Exceptions to general rule:
v. Where offeror has waived right to receive
communication. E.g in unilateral contracts
or reward cases acceptance occurs when
offeree performs required act.
vi. Carlill v Carbolic Smoke Ball Co [1893].
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vii. Where acceptance is through the postal
service. Acceptance is complete as soon as
the letter, properly addressed and stamped is
posted. The contract comes into effect even if
the letter subsequently fails to reach the
offeror.
viii.Adams v Lindsell [1818].
ix. Postal rule does not apply when
instantaneous communications are used.
When acceptance made by telephone, fax or
telex etc… offeror must actually receive
acceptance.
x. Entores v Far East Corp [1955].
xi. Postal rule only applies where both parties10
contemplated that post would be used as
xii. Postal rule can be excluded if:
i.
Offeror insists that acceptance only to
be effective on receipt or in a particular
manner.
Holwell Securities v Hughes [1974].
Yates Building Co v J Pulleyn & Sons
[1975].
If offeror does not actually insist on
acceptance in a particular manner, then
acceptance effective if it is
communicated in a way that is no less
advantageous to offeror.
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4.
Tenders
i.
Where one party wishes particular work to
be done and issues a statement
requesting interested parties to submit
the terms on which they are willing to
carry out the work.
ii. Person who invites tender is making an
invitation to treat not an offer. Person
who submits tender is offeror.
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