LAWS11-212 Study Guide - Final Guide: Meeting Of The Minds, Contract, Puffery
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CONTRACT FORMATION
Contract: an agreement or set of
promises that the law will enforce or for
breach of which the law will provide a
remedy
Four elements
1. agreement: offer and
acceptance
2. sufficiently complete and certain
3. intention to enter legal relations
4. consideration
if missing… contract void “void ab initio”
Agreement: “two or more parties
coming together to form consensus ad
idem”
OFFER
GENERAL RULE: an expression by
one party (offeror) to the other party
(offeree) of a willingness to be bound
by certain terms if the other party is
prepared to accepted those terms
(Carlill v Carbolic Smoke Ball Co)
• HELD: offer as there was a clear
promise, backed up by statement of
sincerity ($1000)
• “first come, first serve” – clear
willingness to be bound
(Leftkowitz)
OBJECTIVE TEST: there must be a
promise or undertaking & an
intended assumption of a legal
contractual obligation. Is there a
serious commitment to be bound
upon acceptance? How would the
reasonable addressee interpret the
statement? (Gibson v Manchester)
DISTINGUISING OFFERS FROM:
1. Puffery: praise of a product
“Red Bull gives you wings”
2. Supplying information: no
intended assumption of a legal
contractual obligation
a. (Harvey v Facey): “lowest
price $900” – not offer in
context of property. “we agree
to buy for $900”
b. HELD:
3. Invitations to treat (or
negotiate): “beach towels $20”,
shop display, newspaper
advertisements.
a. (Partridge v Crittenden):
“hens 25 s each” (illegal
selling) –
b. HELD: no serious
commitment to sell to ALL who
might accept
c. (Pharmaceutical Society v
Boots) – offer was people
picking up the item from shelf,
sale takes place at counter.
Unilateral contract: offer to the world
(Carlill)
INVITATIONS TO TREAT
GENERAL RULE: An attempt to induce
an offer or engage in negotiations, they
lack legal commitment
1. Catalogues, periodicals,
newspaper advertisements,
brochures: (Partridge v
Crittenden)
2. Priced goods on display
(Pharmaceutical Society v Boots)
AUCTION:
Calls for bid is invitation to treat, buyers
bid is an offer (Payne v Cave)
a) Buyers bid is offer
b) Auctioneer accepts or rejects bid
c) When you put a bid, you accept
the offer as a bidder
if auctioneer states “without reserve” or
“sold to highest bidder” it is still invitation
to treat
d) promise to sell to highest bidder
is a binding unilateral contract
but separate from contract of
sale (Warlow v Harrison)
TENDER
Invitation to tender or request for tender
is an invitation to treat:
e) “here is what I want”, “submit
your tend”
f) the submission of the tender is
the offer
g) receiver of tenders can accept
any, or none
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If invitation says award to
highest/lowest:
h) separate unilateral contract, use
contract analysis (Harvela)
i) whilst call for bid was ITT, the person
signing the shares had made an offer to
process to highest bidder
j) it was confidential process which
eroded the referential element
Referential bids therefore are not
valid as they would deadlock the
process if bid was made by numerous
parties and they would not know how to
outbid (Harvela Investments).
If tender process specified:
k) separate unilateral contract re-
tender process (process contract)
l) two contract analysis: contract for
the process + contract for subject
matter
Ticket cases:
They give you the ticket, the T&C’s are
on the back. The offer is made when
you pay, the acceptance is made when
you do not object to the terms
(MacRobertson Miller Airline
Services)
Duration of an offer
An offer cannot be accepted if he knows
it has been withdrawn Dickinson v
Dodds
1. Lapse of time
The nature and character of the
transaction Barrick v Clark. Consider:
m) usual course of business
n) conduct of parties during
negotiations
o) “reasonable
contemplation/exceptions
2. A rejection or counter offer
An offer is terminated once the offeree
rejects it. (Hyde v Wrench)
p) A counter offer rejects an
offer
q) Whether or not
communication is a
question of objectively
and intention
A REQUEST FOR CLARIFICATION: A
request for clarification or information is
not a counter offer and does not
terminate. (Stevenson Jacques)
TEST: the effect on the reasonable
person standing in the shoes of the
offeror (Powierza v Daley)
3. By failure of condition
Offers may be subject to an express or
implied condition, “only while stocks
last”. Offer lapses automatically upon
failure of condition.
Revocation of offer
An offer may be revoked by the offeror
before it is accepted provided it
communicated.
• Uncommunicated revocation is not
revocation (Byrne v Van
Tienhoven) arrival of letter too late
EXCEPTION: OPTION
CONTRACT
• Option is a binding offer to keep
offer open for specified time
• Consideration by the offeree is the
price paid for keeping the offer open
for the period of option
(Goldsbrough Mort)
Does the offeror need to
communicate personally? NO
(Dickinson v Dodds)
• If the offeror is reliable, the seller is no
longer binded to sell, then at that point,
acceptance is no longer open
How do you withdrawn an offer to
the world? (Shuey v US)
• The offer can be revoked if done with
the same notoriety. i.e. same audience
and publication
Can you withdraw a unilateral offer
after some partial act of acceptance?
(Veivers v Cordingley), (Mobil v
Wellcome International).
• V v C: you cannot revoke once
partial performance has started
• M v W: you could, unless there was
an implicit promise that you couldn’t
revoke
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UNILATERAL V BILATERAL
One promisor AT TIME OF
ACCEPTANCE under contract is a
unilateral contract. In all other cases,
it is bilateral or multilateral
Unilateral – a promise in return for a
requested action. Once party assumes
an obligation is bound, NOT UNTIL the
action is performed (on the faith of the
offer).
i.e. $100 if you find a return my bicycle.
Bilateral – each party assumes
obligation and are immediately bound
upon exchange of promises
i.e. I offer to sell you my bicycle and I
will pay you on delivery. One promising
to pay, one promising to deliver.
ACCEPTANCE
Agreement requires consensus ad
idem.
OBJECTIVE TEST: The acceptance
must be on the faith of the offer (R v
Clark)
• This can be presumed if there is
knowledge and performance of
requested acts
• Cannot be accepted in ignorance of
the offer
• Cross-offers (Tinn v Hoffman)
1. Must be communicated
• This can be waived by the offeror
expressly or implied (Carlill) – there
was clear language in the ad
• Clear language generally required
(Latec Finance v Knight)
EXECPTION: POSTAL
ACCEPTANCE RULE
• Where circumstance are such that it
would be in the contemplation of the
parties that the post would be used
as communication as acceptance,
the acceptance is complete as
soon as it is posted (Henthorn v
Fraser)
PAR DOUBT?
• PAR not acceptance unless “it is
inferred that the offeror
contemplated and intended that
his offer might be accepted by post”
(Tallerman)
• “until there is a case whose
outcome depends on the present
status of the PAR, it is safer to
proceed on the basis that the law as
stated in English cases…continues
to be the law in Australia”(Wardle v
Agricultural)
PAR REQUIRED (ASSUMPTIONS):
r) letter correctly addressed
and stamped
s) postal services operating
normally
PAR LIMITATIONS
Can be displaced – if objective intention
to the contrary, express or implied.
• “exercisable by notice in writing to
the intending vendor” Holwell
Securties v Hughes
• “exercised by notice in writing
addressed to me” (Bressan v
Spires)
• “by notice” – means there must be
communication
PAR – ISSUES
• Offeror was bound even though
they did not know of acceptance
(Household Fire v Grant).
PAR INSTANTANEOUS METHODS
t) PAR also applies to telegrams
u) Does not apply where
communication is instantaneous
as these are assimilated to face-
to-face negotiations (Entores
Ltd v Miles Far East)
• Look at parties’ intentions, sounds
business practice and what are the
risks? What do the parties know
about each other i.e. Business
shuts at 5? (Brinkibon)
OTHER ACCEPTANCE METHODS
Offeror is free to prescribe method but
may be accepted if in the benefit of the
offeror i.e. walking to their house
instead of posting
SILENCE IS NOT ACCEPTED: the
offeror cannot compel the offeree to
