Agreement Notes

Agreement Offer The offer must be communicated by the offeror or an authorised agent of offeror to offeree: Henthorn v Fraser However, it is not necessary for an offer to be made to a specific person or a class or group of people. An offer can be made to "all the world", in which case the offeree is regarded as a member of the general public: Carlill v Carbolic Smoke Ball When an offer is made, the term of the proposed contract must be communicated to the offeree: Thornton v Shoe Lane Parking However, an offer can be made in general terms, leaving the precise terms of the contract to be settled later: Master v Cameron The fact that the word 'offer' is used is not itself conclusive: B Seppelt & Sons Ltd v Commissioner for Main Roads An offer must be distinguished from "an invitation to treat", which can be described as any part of the negotiation process that invites further bargaining, rather than acceptance: Pharmaceutical Society v Boots Cash Chemist Acceptance Communication of acceptance is generally required: Felhouse v Bindley, EXCEPTIONS are: * Where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer: Empirnall Holdings v Machon Paull Partners * Offer may dispense with the need of communication or acceptance takes the form of performance. Carlill v Carbolic Smoke Ball Co. * Postal acceptance rule: Bressan v Squires * The rule only applies when the parties contemplated that acceptance would be communicated by the post: Henthorn v Fraser Acceptance must correspondent with the offer, any departure from the offer will amount to a 'counter-offer': Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (Eng) Ltd Acceptance must be in reliance on the offer. This means that all the time of acceptance, the offeree must know of the existence of the offer and the acceptance must be based on the offer made: R v Clarke Durance of an Offer Offer may be revoked before acceptance. The revocation does not necessarily by given by the offeror himself, and can be implied from words or conduct: Dickinson v Dodds * However, if the promisee paid a consideration to keep the offer open or if the promise to keep it open has made by deed, the offeror will not be able to withdraw the offer: Goldsbrough Mort & Co Ltd v Quinn In terms of unilateral offer, no universal rule can be stated about whether an offer can be withdrawn after the offerees commenced the performance. In some situations, if the performance of the offer itself benefits the offerees, the revocation may be effective though the offeror may be liable in damages: Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) A mere inquiry is not a rejection to the offer: Stevenson, Jaques & Co v McLean Counter-offer kills the offer: Butler Machines Tool Co. Ltd v Ex-Cell-O Corporation Uncertainty and Incompleteness Generally, courts will try to, as far as possible to give effect to contract between the parties: Council of the Upper Hunter County District v Australian Chilling & Freezing Co Ltd * Where the agreement has partly performed or has previous record, courts will be reluctant to hold it void for uncertainty: Hillas v Acros A contract is void if the term is uncertain and not severable: Whitlock v Brew An agreement to negotiate in the future on some fundamental matter is too vague to be enforced: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd * However, an agreement to negotiate, if made in good faith, maybe enforceable depending on its terms and construction: United Group Rail Services Ltd v Rail Corporation Whether a contract containing a "subject to contract" term is enforceable depends on the intention of the parties. This kind of contracts is usually classified into three categories and the test is an objective test: Masters v Cameron. "Subject to finance" term usually will not make a contract void: Meehan v Jones Consideration Consideration must be referable to the promise and must be part of the bargain: Australian Woolen Mills v Commonwealth Consideration must move from the promisee (but not necessarily to the promisor): Coulls v Bagot's Executor and Trustee Co Ltd Consideration must be of some value, i.e. sufficient, but not necessarily to be (commercially) adequate or something of great value: Chappell & Co Ltd v Nestle & Co Ltd; Thomas v Thomas Past consideration is not good consideration: Roscorla v Thomas; except for the remuneration rendered by the past service as requested by the defendant: Re Casey's Patents Consideration cannot be illusory: Placer Developments Ltd v Cth; Meehan v Jones Performance of existing duty is not good consideration: Stilk v Myrick; however, a promise to perform an existing obligation can constitute good constitute good consideration where there are practical benefits to the promisee: Williams v Roffey Bros & Nicholls (Contractors) Ltd; and promise to perform the existing duty to a third party may be good consideration if it is a benefit to the promisor: Ward v Byham Payment of a lesser sum on the day in satisfaction of a greater, is not good consideration: Foakes v Beer Forbearance to sue or to compromise is a good consideration: Wigan v Edwards Promissory Estoppel Estoppel now can be used as a 'sword' rather than merely a 'shield': W. v G. Silence may amounts to a representation which lead to the operation of promissory estoppel: Waltons Stores (Interstate) Ltd v Maher Elements of promissory estoppel: Waltons Stores (Interstate) Ltd v Maher However, promissory estoppel is not allowed when there is a clear contradiction to the intention of the parties: Austotel v Franklins Intention to create legal relations Intention to create legal relations is an essential element of a contract. Intention is ascertained by an objective test: Ermogenous v Greek Orthodox Community of SA The presumption of no intention applies in domestic contexts involving family members or friends: Cohen v Cohen; Balfour v Balfour; Jones v Padavatton * However, the presumption may be rebuttable, and the burden of proof lies on the party who alleges there was a contract: Ermogenous v Greek Orthodox Community of South Australia In commercial context, the general presumption is that commercial transaction attracts intention to create legal relations: Esso Petroleum Ltd v Commissioners of Customs & Excise; Chappell & Co Ltd v Nestle & Co Ltd * However, an honourable clause may make the agreement unenforceable in law: Rose & Frank Co. v JR Crompton & Bros Ltd * In terms of letter of comfort, it should be construed objectively to check the parties' intention: Banque Brussels Lambert SA v Australian National Industries Ltd In government scheme, where a government agreement involves the administrative or political activities, the courts are very reluctant to find intention: Australian Wollen Mills v Commonwealth Agreement General The law of contract will enforce obligations where there has been agreement between the parties. Absent of agreement, there is no contract The courts are looking for consensus ad idem --- a meeting of the minds between the two parties. The traditional analysis is to ask: has there been an offer made by one party to be bound by terms of a contract which is accepted by another? Besides offer and acceptance, the necessary elements of an enforceable contract are * an intention to create binding legal relations * consideration Correct analysis of the agreement is essential to determine: * when the contract was entered into * a breach of obligations will often depend on when the obligation needed to be performed where the contract is formed * * to determine the jurisdiction and relevant applicable law * what the terms of the contract are * both express and implied Offer Offer is the indication by one person to another of his or her willingness to enter into a contract with that person on certain terms. The offer must indicate a willingness by the offeror to be bound without further negotiation as to the terms of the proposed contract. An offer can be made by words and/or conducts. The existence of an offer is ascertained by asking whether a reasonable third party would conclude an offer has been made. This objective test takes into account: * The express conduct or words used by the parties rather than their subjective intentions. * Whether the terms are sufficiently complete so that acceptance is enough to constitute a contract. Offer vs invitation to treat * Advertisement 1. Goods displayed on the shelf of the self-serviced store. 2. Customer picked up goods, however, the purchase may be rejected by the authorised pharmacist. 1.Whether the offer comes into being? The display of the goods is an offer or merely an invitation to treat? * Displays of goods in shops * A reply to the invitation may possibly be an offer or merely an indication of willingness to negotiate. Pharmaceutical Society v Boots Cash Chemist [1953] The display of goods in a shop does not amount to an offer by the shopkeeper to sell, accordingly, the mere fact that a customer picks up a commodity from the displayed shelves does not amount to an acceptance of an offer to sell. It is an offer by the customer to buy and there is no sale effected until the buyer's offer to buy is accepted by the acceptance of the price. Although the display of goods for sale will not normally be regarded as constituting an offer for sale, the display of an automatic vending machine apparently constitute an offer which is accepted by those customers who insert their money into the machine. 1. The plaintiff parked his car in an automatic car park owned by the defendant. 2. A notice headed with the price listed and a sentence "All cars parked at owner's risk". 3. The tickets were sold by the self-service machine. 4. The plaintiff was severely injured when he returned to collect his car by an accident. Defendant failed to prove sufficient notice had been given to the plaintiff. (the sentence was not incorporated) 1. Commonwealth announced a "subsidy" plan to reimburse manufacturer on local wool purchasing before 30 June 1948. 2. AWM purchased large quantities of wool and before the subsidiary plan ended, its stock pile exceeded the government's prescribed limitation. 3. The company was required to repay the subsidy paid on that excess. 4. Held, no contract, the subsidiary plan was not an offer. 1. The vendor made an advertisement saying $100 reward would be paid to any person who contacted influenza after taking the ball three times daily for two weeks. 2. A further representation that "$1000 is deposited with the Alliance Bank". 3. The plaintiff took the medicine according to the prescription and caught influenza. 4. The plaintiff was entitled to recovery. Puff cf a valid offer; offer to the world at large; dispense with the notice of acceptance. Thorn v Shoe Lane Parking Ltd (1971) * In a self-serving ticket case, the offer is made when the proprietor of the machine holds it out as being ready to receive the money.The acceptance takes place when the customer puts his money into the slot. * The terms of the offer are contained in the notice placed on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice beforehand, but no otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late. * Unless a course of dealing is proved between the parties, the notice must be given prior to or contemporaneously with entry into the contract. Government policy vs offer Australian Wollen Mills v Commonwealth (1954) Intention to be bound The presence of a request does not however in itself establish a contract. In order to establish a contract, it should made to appear that the statement or announcement which is relied on as a promise was really offered as consideration for the doing of the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement. Consideration to the offer: * A contract only exists if the unilateral statement is really offered as condition for doing the act, and that the act was really done in consideration of a potential promise inherent in the statement. In this case, no promise was made by the Commonwealth. * Commonwealth never induced Mills to buy the wool, only that if they bought domestic wool, a subsidy would be paid. This amounts to a gift subject to a conditional precedent. * Since there was no offer, Mills could not have accepted, and its acts could not count as consideration for the alleged promise to pay the money. Offer vs Puff Puff consists of all those statements which, while made to induce contracts, are so clearly far-fetched or exaggerated that no reasonable person would believe them to be binding statement of fact on which they should rely. Consequently, such statement, although they may induce a contract, are not binding on the party making them and do not give the other party any grounds on which to seek a remedy. Offer to the world at large Carlill v Carbolic Smoke Ball [1893] * The contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement. * The person who makes the offer may dispense with notice to himself if he thinks it desirable to do so, and if the person making the offer, expressly or impliedly intimates in his offer that it will be sufficient to act on the proposal without communicating acceptance of it to him, performance of the condition is a sufficient acceptance without notification. * Inconvenience sustained by one party at the request of the other is enough to create a consideration. Auctions AGC (Advances) Ltd v McWhirter In case of auction, it is considered that an auctioneer who puts something up for sale is not offering but inviting bids for the goods.Thus the bids constitute an offer, and a contract is formed when the auctioneer accepts the bid at the fall of the hammer. The difficult arises in relation to auctions without reserve prices. Current authority suggests they are the same as auctions with reserve prices (AGC (Advances) Ltd v McWhirter), however, the leading UK case suggests the opposite (Barry v Davies). Tenders A tender is a bid made in writing offering a price for the sale or purchase of goods and/or services. * Each tender has made an offer, which the offeree may then accept or reject, and the offeree is under no obligation to accept any tender. * Requests for tenders are generally regarded as an invitation to treat. However, requests for tenders which contains a promise that the highest bid will be accepted may be offers. Application for shares or debentures Generally, a person applying, in response to a prospectus, for the issue of shares or debentures in a company is regarded as making an offer, which the company must accept before any contract arises. Cross-offer Cross-offers occur when two parties forward offers to one another at the same time and in the same or substantially the same term. In such cases, there are two offers but no acceptance; hence, there is no contract. If one party subsequently decides not to deal, the other cannot do anything about it. Counter-offer A counter offer occurs when an offeree indicates a willingness to deal on terms slightly different from those of the original offer, although still in respect of the same or substantially the same subject matter. It is a rejection of the original offer and a substitution of a new offer for it. Offeree's response to an offer: accept the offer in its terms; reject the offer; make a counter-offer; ask for further information or clarification before making a final decision; * A mere inquiry is not an acceptance, but neither is it a rejection. It has an entirely neutral effect on the offer, and when the offeror replies, the offeree still has the option of accepting or rejecting. * do nothing at all * * * * Acceptance An acceptance is a final and unqualified assent to the terms of the offer, made in the manner specified or indicated by the offeror. It can occur orally, in writing, or, occasionally, it may be implied from the offeree's conduct. Acceptance is unconditional. An offer can only be accepted by person to whom the offer is made. Acceptance must be made within the stipulated time, or in the event of no stipulated time, within reasonable time. Acceptance cannot be withdrawn unilaterally without the offeror's consent. Unless there is a clear intention, acceptance does not have retrospective effect to a date before the date of acceptance. Acceptance can be inferred. Postal acceptance rule * The acceptance is effective immediately a properly pre-paid and addressed letter is posted. * The rule only applies when the parties contemplated that acceptance would be communicated by the post: Henthorn v Fraser

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