Contract Law Matters affecting Formation Privity Formalities Elements of Formation Offer Acceptance Intention Consideration Content: Terms Express Implied

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Contract Law Matters affecting Formation Privity Formalities Elements of Formation Offer Acceptance Intention Consideration Content: Terms Express Implied Slide 2 Offer Expression to another of a willingness to be legally bound by the stated terms Australian Woollen Mills v Commonwealth Requirements 1.Statement to offeror containing stated terms 2.Statement is made to another person 3.Offeror indicates a preparedness to be bound If requirements are met If requirements not met Mere Puff Test: RM How would RM interpret Ad. In position of offeree? Manufacturers Material Insurance v John Boardman Insurance Brokers Supply of Info Test: Categorisation Supplying information is not an offer. Harvey v Facey Invitation to treat Advertisement Test: (TOF) Language & circumstance Anything that states an intention to be legally bound is an offer RE Mt Tomah Blue Metals Display of Goods No test. Does not constitute an offer Taking goods to counter is Fisher v Bell Advertisement for Auction Not an offer Harris v Nickerson Auctions w/reserve Invitation to treat Payne v Cave Unilateral A uni. Contract involves an offer made by offeror to act/ref. Act if someone performs as requested. Offeree not bound to do so. Acceptance is also consideration Carlill v Carbolic Smoke Ball Company Bilateral Under [bilateral contracts] each party undertakes to do/ref. From doing something and in the event that either fails to perform, the law provides other party a remedy Lord Diplock, United Dominions Trust v Eagle Aircraft Services Standing offers Indication of willingness of one party to provide goods/services over a specified period May be revoked at any time before acceptance Great Northern Railway v Whitham Options Revokable at any time unless consideration is provided to keep open Machine Offer is machine ready to accept $ Acceptance is placing in $ Terms cannot be introduced after this point except where reasonable time to view terms before carriage. Thornton v Shoe Lane Parking Prior to carriage Prominent notices can be incorporated See incorporation of terms Tickets for transport Exemption/exclusion clauses only incorporated before formation Special issues Ambiguous Auctions without reserve Early English offer Warlow v Harrison OR each bid represents an offer that can be accepted or rejected by auctioneer AGC Advances v McWhirter Tender Usually invitation to treat EXCEPT: Offer when highest bid accepted Harvela Investments v Royal Trust Company of Canada Must consider all tenders Hughes Aircraft Systems International v Air Services Australia Slide 3 Termination Withdrawal by Offeror Can be withdrawn at any time before acceptance Goldsbrough Mort & Co v Quinn There needs to be actual communication to offeree Bryne & Co v Leon Van Tien Hoven & Co Communication by reliable source other than offeror or agent acceptable Dickinson v Dodds Unilateral Contracts Cannot withdraw offer once acceptance commenced Abbott v Lance Offers to World at Large Less than actual communication acceptable Use same medium to withdraw offer Shuey v United States Rejection by Offeree Rejection = termination Stevenson Jacques & Co v McLean Must be communicated to offeror If offeree responds with new terms = counter offer Hyde v Wrench Lapse of Time Once time limit expires, offer unable to be accepted When not stated, time is set to reasonable Manchester Diocesan Council for Education v Commercial & General Investments Failure of condition If offeree fails to comply with condition of conditional offer, it is terminated Financings v Stimson Death Death of offeror Offer cannot be accepted after death Exception: Property which can be completed by deceased estate Dickinson v Dodds Death of Offeree If offeree dies, no offer. Exception: Sale of property Reynolds v Atherton Options If offer involved personal services, option will not enforce offer Property may apply: If conditional contract enforceable If irrevocable offer - unenforceable Slide 4 Acceptance Agreements is formed once an offer is accepted Requirements Offeree must intend to accept terms of offer Intention must be communicated to the offeror (Consensus Ad Idem) Acceptance must correspond to offer Offeree must have knowledge and act in reliance on offer Crown v Clarke Counter offer is not acceptance Hyde v Wrench Acceptance couched in different language may be acceptable (IE different forms) Exceptions Agreement not prevented if offeree seeks concession for performance before formation If offerees conduct more favourable than terms of offer, agreement exists Ex Parte Fealey Request for alternate mode of acceptance not prevent contract formation Clive v Beaumont Acceptance must be unqualified If subject to exists, TOI to determine whether acceptance is unqualfied Masters v Cameron Mere inquiry not acceptance Stevenson Jacques & Co v McLean Exceptions Notification of Acceptance Method of acceptance Method of acceptance stipulated by offeror Offeror can stipulate how communication is affected If accepted in manner more advantageous to offeror offer valid Tinn v Hoffman & Co Method for benefit of offeree If method is for offerees benefit, they may chose to accept in another method Manchester Diocesan Council for Education v Commercial & General Investments Multiple methods Prescribed method may not be only effective method on construction of terms Conduct may constitute acceptance Empirnall Holdings v Mark Machon Paull Partners Instantaneous Communication Contract will be formed when acceptance of the offer is communicated to the offeror. The contract is formed when and where the offeror receives that communication. Entores L D v Miles Far East Corporation Postal Acceptance Rule Where circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary uses of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted. Lord Hershell, Henthorn v Fraser Contract formed when letter is posted Adams v Linsell Some argument about precisely when this takes place Powel v Lee If takes longer than usual to reach, risk is upon offeror Household Fire and Carriage Insurance v Grant Displacement of Rule Can be displaced by offeror stipulating in contract that acceptance is not affected until actual receipt Revocation prior to acceptance Contract is formed even if offer is notified of rejection before receipt of acceptance Nunin Holdings v Tullamarine Estates Multiple technologies A offeree can use multiple technologies to accept an offer Express Airways v Port Augusta Air Services Acceptance in Unilateral Contract See notes pp. 09 Slide 5 Ambiguity and Uncertainty Individual TermsAgreements to Negotiate Saving Ambiguous, Uncertain or Meaningless Contracts Saving Incomplete Agreements Vague, ambiguous and uncertain terms are void Meaningless clauses = uncertain clauses Fitzgerald v Masters Court will try to uphold an agreement where parties show intention to be bound Lend Lease Financial Planning v Southcap If parties to agree on terms at later time, not enforceable Agreement to agree. Booker Industries v Wilson Parking If terms are sufficiently certain and consideration is provided, may be enforceable Coal Cliff Collieries v Sijehama Method of increasing certainty ref. 3 rd party Link to external standard Uncertain clause may be enforceable if referenced to an external standard Hawthorn Football Club v Harding Link to reasonableness standard Courts will apply principle of reasonable ness (RM) to make terms certain Severance Invalid term may be severed from contract and the remainder is enforceable Fitzgerald v Masters Divisible Obligations If uncertainty arises in one area due to multiple types of obligations, it can be severed and save the contract Life Insurance Company of Australia v Phillips Waiver of Removal of Uncertainty If clause is entered into for sole benefit of one party, it may be waived and contract saved If uncertainty removed before commencement, specific performance may be granted MacAulay v Greater Paramount Theatres Incomplete Agreement Agreement contains mechanism to complete If the parties do not finalise all the terms of the agreement but provide a mechanism for doing so, the agreement may be enforceable. Reference to 3 rd party even essential terms may be decided by 3 rd party Godecke v Kinwan Breakdown of mechanism to complete Court will not substitute its own view if mechanism to complete fails Milnes v Gery Breakdown RE Sales of Goods If price is determined by third parties, governed under sales of goods act (1896) s.12(1) If prevented from making decision by party, the other may sue for damages s.12(2) If goods have been delivered and appropriated, they must pay for them ss.12(1a) Implication of Terms Courts have shown a willingness to imply terms Hillas & Co v Arcos More likely when willing to be bound Hillas & Co v Arcos More likely when contract partially executed Hall v Busst No agreement on price, parties and subject matter no implication Hall v Busst Sale of Goods More likely to imply Will imply reasonable price if contract is silent Foley v Classique Coaches Likely to uphold agreement in future Likely to infer price if contract makes reference to payment at reasonable price Sale of Land Will not imply price Likely to uphold future agreement Not likely to imply price when contract refers to reasonable price. (except rent, which they may determine via their own mechanism). Also applies to unique goods. Ambiguous, Uncertain or Meaningless Contracts Slide 6 Subject to Agreements Subject to Finance Subject to Contract Intention of parties can fall into three categories Test: Test of intentions. Language & conduct taken into account Masters v Cameron 1.Parties have finalised all terms and intend to be immediately bound to perform those terms but propose to have the same terms restated