This is an extract of our Introduction To Offer And Acceptance document, which we sell as part of our Contract Law Notes collection written by the top tier of University Of New South Wales students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Contract Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Week 1- Introduction to Offer and acceptance Chapter 1 and 2 and pages 45-53. What is a contract?
* An agreement or set of promises that the law will enforce.
* They are designed to facilitate the freedom of the parties to create their own private bargains.
* In the 19th century, the will theory said that a contract represents an expression of the will of the contracting parties and should be respected and enforced by the courts.
* Charles Fried invented the promise theory. A contract is based on moral principles and people keep the promise because they have created a convention for the other person to rely on. Something must be given in exchange for the promise.
* Randy Barnett invented consent theory. Contracts are based on an underlying system of legal entitlements. This specifies the boundaries people may operate in and minimises conflicting claims because the contract can be legally enforced. What are the functions of contract law?
* To create freedom of contract and to discourage state intervention.
* To contain opportunistic behaviour so the party who is regretting the deal cannot get out of it.
* Reducing transaction costs. Default rules save the parties the expense of drafting provisions to deal with contingencies.
* Filling in gaps in incomplete contracts.
* Discouraging inefficient exchanges.
* Having consequences in a dispute. Problems?
* Judges are forced to make value judgments.
* It does not distribute resources fairly between the parties. It only looks at whether the exchange is efficient.
* It encourages self interest.
* It allows parties to decide what is in their best interests but some parties are unable to do this effectively. When is a contract made?
* When there is an offer and acceptance the individuals become ad idem (of one mind) and this creates binding obligations.
* There must be an intention to create legal obligations. What is an offer?
* An expression of willingness to enter into a contract on certain terms.
* Would a reasonable person (objective test) in the position of the offeree believe that an offer has been made? The intention is decided objectively and not subjectively. What is a unilateral contract?
* The offeree accepts the offer by performing his or her side of the bargain. What is an invitation to treat?
* Different from an offer. It is an invitation to others to make offers or enter into negotiations. For example shop sales. When is a contract created in an auction?
* Usually is an invitation to treat. The auctioneer invites offers from the crowd. A bidder can withdraw their bid before it is accepted. The auctioneer doesn't have to sell to the highest bidder.
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