Contracts!Notes! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 1!

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1 ContractsNotes 1. INTRODUCTION AGREEMENT.3 3. CONSIDERATION ESTOPPEL INTENTIONTOCREATELEGALRELATIONS CONTRACTSREQUIRINGWRITTENEVIDENCE TERMSANDPARTIES BREACHANDFRUSTRATION DISCHARGEFORREPUDIATION DISCHARGEFORDELAYANDTIMESTIPULATIONS TERMINATION DISCHARGEBYFRUSTRATION 107 1

2 Introduction Contractlaw: Theenforcementofpromisesthatpeoplevoluntarilyassume.Assoonaspromisesare exchangedthenyouhaveacontract Acontractisalegallybindingpromiseoragreement.Theperson(orpersons)whomakea promiseistermedthe promisor.theperson(orpersons)towhomthepromiseismadeisthe promisee Theessentialgoalofcontractlawistoprovideaninstitutionalbasisforarrangementsmade forthetransferoflandgoodsandservices Exceptincaseswherewritingisrequiredanoralcontractisasvalidasawrittencontractor oneevidencedbywriting Acontractisaconsensualrelationshipconcernedwiththeallocationofrisk Freedomofcontractlaw Thecourtsrecogniseabsolutelyanyfreedomofcontract Youcanenteranycontractandagreetoanylegaltermsyoulike UnilateralContract Ifthereisatthetimeofformationonlyonepromisorthecontractisunilateral BilateralContract Ifthereismorethanonepromisoratthetimeofformationthecontractisbilateral ObjectiveTheoryofContractLaw Howwouldareasonable)personinthepositionoftheotherpartyinterpretthestatementyou havemade? 2

3 AGREEMENT dtherecanbenocontractintheabsenceofagreement (i)offer Anoffer:anindicationbyonepersonoftheirwillingnesstocontractoncertaintermswithoutfurther negotiation Needstobeanintentiontocontract Thetermsneedtobecertain Thepersonwhomakestheofferistheofferor Thepersontowhomanofferismadeistheofferee Whetherthereisanofferdependsonwhetherareasonablepersoninthepositionofthe offereewouldconsiderthatanofferwasmade Acontractcanbemadewithoutanidentifiableofferandacceptanceprovidedthepartieshave manifestedtheirmutualassent Aninvitationtotreat Aninvitationtoapersontomakeanoffer Anexpressionofawillingnesstonegotiate Aninvitationforsomeoneelsetomakeanoffertoyou Includesthecirculatingofmerchantprices.E.g.AldiadvertisingacheapTV.Thesearenot offers.youcannotbuy1000ofthem.theyaremerelyaninvitationtotreat Amerestatementofpriceinreplytoanenquiryisnotanoffer o Don tconcludethereisacontractjustbecausethereisanagreementonprice Anadvertisementtoauctionwithoutreserveisaninvitationtotreat Thecallfortendersareaninvitationtotreat o Atenderisanoffermadeinresponsetoaninvitationtomakeit Anadvertisementofpriceisaninvitationtotreat o Theofferismadewhenyoupresentthegoodtothecompanyselling Withinaninvitationtotreatcanbeoffers PharmaceuticalSocietyofGreatBritainvBootsCashChemistsLtd[1953] 1QB401EnglishCourtofAppeal Facts: Defendants(Boots)ownedapharmacyorganisedonaselfdservicebasis Customerswishingtomakeapurchaseselectedgoodsandpresentedthemtothecash registers.apharmacistsupervisedthetransactionsatthecashregisters s18ofthepharmacy)and)poisons)act1933(uk)providedthatitwasunlawfulforapersonto sellcertaindrugunless thesaleiseffectedbyorunderthesupervisionofaregistered pharmacist Principleoflaw:whetherthedisplayofitemsonaselfdservicebasisamountedtoanoffer? EnglishCourtofAppealruledinfavourofthedefendants(Boots)byarguingtheyhadnot contraveneds18ofthepharmacy)and)poisons)act1933 o Ratio:Thecourtruledthatselfdservicedidnotamounttoanoffer Thecourtdistinguishedoffersfrominvitationstotreat 3

4 Arguments SomervellLJ: isacontracttoberegardedasbeingcompletedwhenthearticleisputintothe receptacleoristhistoberegardedasamoreorganisedwayofdoingwhatisdonealreadyin manytypesofshops [?] o inthecaseofanordinaryshopalthoughgoodsaredisplayedanditisintendedthat customersshouldgoandchoosewhattheywantthecontractisnotcompleteuntilthe customerhavingindicatedthearticleswhichheneedstheshopkeeperorsomeoneon hisbehalfacceptsthatoffer.thenthecontractiscompleted. o Hearguesthatselfdserviceismerelyaconvenientmethodofshoppingandshouldnot beconstruedasanacceptedoffer BirkettLJ: themerefactthatacustomerpicksupabottleofmedicinefromtheshelvesdoes notamounttoanacceptanceofanoffertosell.itisanofferbythecustomertobuyandthereis nosaleeffecteduntilthebuyer soffertobuyisacceptedbytheacceptanceoftheprice o theoffertheacceptanceofthepriceandthereforethesaletakeplaceunderthe supervisionofthepharmacist. Rule o Theadvertisementofpriceisaninvitationtotreat.Notanoffer.Theadvertisementofa priceismerelytheinvitationtoapersontomakeanoffer AustralianWoollenMillsPtyLtdvCommonwealth(1954) 92CLR424HighCourtofAustralia Facts: InJune1946Commonwealthannouncesitwouldpayasubsidyonwoolpurchasedandusedit forlocalmanufactureafter30june1946 Theplaintiff(AWM)purchasedlargesquantitiesofwoolforlocalmanufacturebetween1946d 48andreceivedsomepayments ThegovernmentsubsequentlystoppeditssubsidyschemeandthePlaintiffsuedthe Governmentforsubsidiesitclaimeditwasdue Plaintiff(AWM)Argument: TherewasacontractbetweenitandtheGovernmentunderwhichCommonwealthpromised topaysubsidiesifwoolwasboughtfordomesticconsumption/manufacture Theplaintiffmadepurchasesofwoolinpursuanceoftheagreement Thatthereexistedaunilateralcontract Held: HCAheldtherewasnocontract Principles: TheObjectiveTest:whetherareasonablepersoninthepositionoftheoffereewouldconsider thatanofferwasmade (ii)offerscanbemadetothewholeworldortoamorelimitedgroup CarlillvCarbolicSmokeBallCompany[1893] 1QB256EnglishCourtofAppeal d theimportanceofcarlillliesinthewayitexplainstheapplicationoftheobjectivetest d unilateralcontractd>unusual.generallyofferscontemplateacceptancebythemakingof promises.incarlilltheoffercontemplatedthedoingofanact 4

5 Facts: thedefendants/appellantsbeforetheenglishcourtofappeal(carbolicsmokeballcompany) claimedtheywouldpaya100poundrewardtoanyonewhocontractsthefluhavingusedtheir CarbolicSmokeBallthreetimesdailyfortwoweeks theyclaimedthat1000poundswasdepositedinalliancebank showingtheirsincerityinthe matter theplaintiffcarlillusedasdirectedandcontractedtheflu.shesuedtorecoverthe100pounds thedefendantswererefusingtopay Issues: whethertheadvertisementwasanoffer o whatwasthesignificanceofthestatementthat1000poundshadbeendepositedwith thealliancebank? o Wastheoffermadetotheworldatlarge? o Didacceptanceoftheofferneedtobecommunicated? Defendant(CarbolicSmokeBallCompany)Argument: arguedthattherewasnobindingcontract o whilstthewordsintheadvertisementexpressedanintentiontheydidnotamounttoa promise o theadvertisementwastoovaguetoconstituteacontract.inparticularitisnottime limitedanditwouldnotbepossibletocheckwhethertheballhadbeenusedcorrectly orevenusedatall o tomakeacontractbyperformingaconditionthereneedstobaeithercommunicationof intentiontoaccepttheofferorperformanceofsomeovertact.merelyperformingthe actinprivateisnotsufficient Plaintiff(Carlill)Argument: theadvertisementwasclearlyanoffer.itwasdesignedtobereadandactedupon.itwasnot anemptypuff o thefactthatsheperformedtheactconstitutedacceptance o assuchtherewasacontractbetweenthepartiesthatthedefendantshadbreached o theofferwasmadetothepublicandassoonasapersondoesthespecifiedactthereisa contract o thetermsarenottoovagueanduncertain Held: therewasavalidoffer o significanceofthe1000poundsinthealliancebankindicatedthatitwasnotasales puff o anoffercanbemadetothewholeworld o thelanguagewasnottoovaguetobeenforced o althoughasageneralrulecommunicationofacceptanceisrequiredtheofferormay dispensewiththeneedfornotificationandhaddonesointhiscase.hereitwasimplicit thattheofferee(carlill)didnotneedtocommunicateanintentiontoaccept.rather acceptanceoccurredthroughperformanceoftherequestedacts(usingthesmokeball) LindelyLJ: o Duetothe1000pounddepositinAllianceBanktheclaimwasnota merepuff.itis proofofthedefendant ssincerityinthepromisetopay100pounds Assuch wearenotinferringapromise;thereisapromiseasplainaswordscan makeit 5

6 o Thefactthattheofferisnotmadetoanyoneinparticulardoesnotdetractfromitbeing binding. theadvertisementisanoffertopay100poundstoanybodywhowillperform theseconditions o Generallyinorderforacontracttobebindingthereneedstobenotificationof acceptance.howeverthereareexceptions.inthiscasethelanguageoftheofferandthe natureofthetransactionsuggeststhatthedefendantdoesnotexpectorrequirenotice ofacceptance o Doesnotthinkitistoovaguetobeapromise.Heinvokesthestandardof reasonableness: Idonotthinkthat reasonablepeoplewouldunderstandthewordsas meaningthatifyoutookasmokeballanduseditthreetimesdailyfortwoweeksyou weretobeguaranteedagainstinfluenzafortherestofyourlife Ifsomeonecontractsinfluenza withinareasonabletimeafterusingit thenthey oughttobepaidthe100pounds BowenLJ: o thedocumentitselfisnotacontractatallitisonlyanoffermadetothepublic o theofferisnottoovague.bowenevokesthefollowinginterpretation: ifanybodyafter theadvertisementwaspublishedusedthreetimesdailyfortwoweeksthecarbolic smokeballandthencaughtcoldhewouldbeentitledtothereward o hearguesthatthetimeinwhichitwouldbeappropriatetocatchthefluandgainthe rewardwouldbeforaslongasthecarbolicsmokeballisbeingused o duetothe1000poundstheadvertisementwasintendedtobeunderstoodbythepublic asanofferwhichwastobeactedupon o thefactthatitispracticallyveryhardtoprovetheveracityofpeopleandwhetherthey actuallyusethecarbolicsmokeballisnotoverlyimportant: theanswertothat argumentseemstometobethatifapersonchoosetomakeextravagantpromisesof thiskindheprobablydoessobecauseitpayshimtomakethemandifhehasmade themtheextravaganceofthepromisesisnoreasoninlawwhyheshouldnotbebound bythem o youcanmakeanoffertotheworld althoughtheofferismadetotheworldthecontractismadewiththatlimited portionofthepublicwhocomeforwardandperformtheconditiononthefaith oftheadvertisement o itisonlynecessaryfortheotherpersontowhomsuchofferismadetofollowthe indicatedmethodofacceptance.inthiscaseacceptancedidnotrequirenotificationbut rathertheperformingofanaction commonsenseisneededtodeterminewhichoffersneedanotificationof acceptanceandwhichdonot.inthiscaseitdidnotrequireit e.g.notificationsforlostanimals.itisnotrequiredtonotifythepersonof youracceptance: theessenceofthetransactionisthatthedogshouldbe foundanditisnotnecessaryundersuchcircumstances thatinorderto makethecontractbindingthereshouldbeanynotificationofacceptance thereisanimpliedindicationthathedoesnotrequirednotificationofthe acceptanceoftheoffer Notes d incarlillthecontractwasunilateral.theoffertooktheformofapromiseinreturnforthe doingofanactratherthaninreturnforacounterdpromise d ifacontractisunilateralitisnotrelevanttoaskwhetherthepromiseehasbreachedthe contract d thestatementthat1000poundshadbeendepositedwiththealliancebankwasregardedas importantbecauseitshowedtheoffertobeaseriousone 6

7 d inasituationwherethetermsoftheofferarecomplexbothpartiesneedtobefamiliarwith thesubjectmatter.forexampleconsidertheshippingcontractinhoward)smith)&)co)v)varawa) (1907). Seppelt&SonsLtdvCommissionerforMainRoads(1975) 1BPR9147 Facts: theplaintiffnegotiatedwiththedefendantforthesaleoflandwhichthedefendantneededin connectionwiththeconstructionofaproposedfreeway PrinciplesofLaw generallyforcomplexoffersitwouldnormallybeexpectedthatpartieswouldnotenterintoa bindingcontractforthesaleoflandunlesstheyhadaformallydrawncontract o NB:thereisnothingtostopthemdoingitinformallyandonunfavourabletermsbut importanttorememberthatitisimprobablytheywouldhavedoneit Theuseoftheword offer isnotconclusive.itmustbereadincontext Thefactthatthepartiescontemplatedthetransactionbeingdealtwithbylawyersisnota conclusivebasistolabelitacontract.howeverfromthatitispossibletoinferthattheparties intendedthetransactiontobedealtwithbyaformallyddrawncontractofsale Subsequentconductoftheparties o Whatthepartieshavesubsequentlydoneisnotmaterialtobereferredtoinconstruing thetermsofthecontract:l)schuler)ag)v)wickman)machine)tool)sales)ltd)[1974])ac)235 o Howeverindeterminingwhetheracontracthasinfactbeenmadebycertain correspondenceithasbeenheldthatsubsequentactsofthepartiescanbereferredto o Evidenceofsubsequentconductisnotadmissibleasanaidtointerpretation ACCEPTANCE Fourkeyprinciplesofacceptance: 1. Theofferormaystipulatewhatisnecessaryforanoffertobeaccepted.(Carlill).Inother wordstheofferorcandictatehowtheoffereehastoaccept.howeveranofferorcannot imposeacontractontheofferee a. Subjecttothesilenceruletheofferormaystipulatewhetherornotacceptancemustbe communicated(carlill) 2. Offerandacceptancemustexactlycorrespond.Anattempttointroducenewtermsisa counterdoffer.althoughitselfincapableofacceptanceacounterdoffernullifiestheoffer (Trollope&CollsLtdvAtomicPowerConstructionLtd[1962]) 3. Acceptanceneednotbeexpress:itmaybeinferredaparty sconduct 4. Onlypersonstowhomanofferismademayacceptit (A)Communicationofacceptanceisgenerallyrequired FelthousevBindley(1862) 11CBNC869;142ER1037 CourtofCommonPleas 7

8 Facts: Felthouse(Plaintiff)offeredtobuyahorsefromhisnephew.Hestatedinawrittenofferthat: ifihearnomoreabouthimiconsiderthehorsemineat30pounds15s. Felthouse snephewdidnotreplybutinstructedtheauctioneer(bindley)nottosellthehorse Bindleyaccidentlysoldthehorse FelthousesuedBindleyforthetortofconversion Held: ThecourtruledthatFelthousedidnothaveownershipofthehorseastherewasnoacceptance ofthecontract.acceptancemustbecommunicatedclearlyandcannotbeimposeddueto silenceofoneoftheparties Arguments: WillesJ: o itisclearthattherewasnobargain [betweenfelthouseandhisnephew] o theunclehadnorighttoimposeuponthenephewasaleofhishorse unlesshechose tocomplywiththeconditionofwritingtorepudiatetheoffer o [thenephew] hadnotcommunicated hisintentiontohisuncle o theletterfromfelthousetohisnephew stoodanopenoffer KeatingJ: o itseemstomethatnothinghadbeendoneatthattimetopassthepropertyoutofthe nephewandvestitintheplaintiff PrinciplesofLaw: Communicationofacceptanceisgenerallyrequired Theabilitytostipulatewhatconstitutesacceptancedoesnotmeanthattheofferormayimpose acontractontheofferee Anofferorcannotdeemanoffertobeacceptedbymeresilence (B)Correspondencewithoffer d youcannotpartiallyacceptanoffer.youhavetoacceptthewholeoffer o mirrorimagerule d amereenquirydoesnotkillanoffer ButlerMachineToolCoLtdvExUCellUOCorp(England)Ltd[1979] 1AllER965 EnglishCourtofAppeal Facts: Plaintiffsellers/respondentsintheappeal(Butler)suedthedefendantbuyers(ExdCell)to recoveranadditionalsumof2892pounds Theplaintiff/sellers(Butler)argueitwasincludedinapricedvariationclauseintheagreed contractthataccountedforcostincreases Thedefendants/buyers(ExdCell)arguedthatthecontractincludedtheirstandardtermswhich madenoprovisionforpricevariation Anumberofcontractualformsweressentbackandforthandsignedwiththetermsdiffering slightlyeachtime.cruciallythetermsoftheplaintiff/sellers(butler)didincludeaprice variationclause.thetermsofthedefendantsdidnot o Itwasthusa battleoftheforms Held: 8

9 TheEnglishCourtofAppealheldthatthecontractwasonthedefendant/buyers'(ExdCell) terms.thebuyers termsdidnotincludeapricevariation.thustheysuccessfullyappealed Arguments: LordDenningMR: o theorderof27may1969purportedtobeanacceptanceofthatofferinthatitwasfor thesamemachineatthesamepricebutitcontainedsuchadditionsastocostof installationdateofdeliveryandsoforththatitwasinlawarejectionoftheofferand constitutedacounterdoffer o thecounterdofferkillstheoriginaloffer o inmostcaseswhenthereisabattleoftheformsthereisacontractassoonasthelastof theformsissentandreceivedwithoutobjectionbeingtakentoit o insomecasesthebattleiswonbythemanwhofiresthelastshot.heisthemanwho putsforwardthelatesttermsandconditions:andiftheyarenotobjectedtobythe otherpartyhemaybetakentohaveagreedtothem insomecaseshoweverthebattleiswonbythemanwhogetstheblowinfirst o thedocumentshavetobeconsideredasawhole o theacknowledgementof5june1969isthedecisivedocument.itmakesitclearthatthe contractwasonthebuyers termsandnotonthesellers terms:andthebuyers terms didnotincludeapricevariationclause. LawtonLJ: o thebuyerswereonlypreparedtohaveoneoftheseveryexpensivemachinesontheir ownterms.theirtermshadverymaterialdifferencesinthemfromthetermsput forwardbythesellers.theycouldnotbereconciledinanyway PrinciplesofLaw: thiscaseillustratestwoaspectsofacceptance: 1. therequirementthatanacceptanceconformtotheoffer 2. thecontentofthatrequirement inrelationtothebattleoftheformsthecaseillustratesthatvictorywilloftenbutnot necessarilygotothepersonwhofiresthelastshot Note: ViennaConvention: o Crossbordersalesofgoods o Article19dealswiththeBattleoftheForms Youcannothaveanofferifyoudonothaveterms Standingoffer:possibletomakeanofferthatisacceptedfromtimetotime (c)postalacceptancerule Onlyappliestoacceptances BressanvSquires[1974] Theacceptancetakeseffectthemomentyoupostit.Thisiseventhoughtheletterof acceptancemaybedelayedintransmissionornotdeliveredatall o Thusthereisaperiodoftimethattheofferorgetsboundwithoutknowingaboutit BrinkibonLtdvStahagStahlMbH[1983]2AC34HouseofLords Theapplicationofthepostalacceptancerulewhenappliedtotelexaformofcommunication thatis virtuallyinstantaneous 9

10 Animportantquestioniswhatruleisapplicabletocontractsformedbyelectronic communicationssuchaselectronicmailinstantmessagingandsoon.atpresentthelawdoes notprovideananswer o ApplyingtheprinciplesofBrinkinononeapproachwouldbetoaskwhether communicationis virtuallyinstantaneous Ifsotheordinaryrulethatacceptancemustbecommunicatedisapplicable Whenthepostalacceptanceruledoesnotapply: Whentheofferexpresslystates Whentheofferimpliesit Toinstantaneousmodesofcommunication( phoneetc.) Ifitisnotcorrectlyaddressedandstampedbecauseofyourmistakenottheirs Ifitgivesrisetoanabsurdsituation (d) KNOWLEDGEOFOFFERREQUIREDFORACCEPTANCE d inordertoacceptanofferyouhavetohaveknowledgeoftheoffer d o youmustalsoactinpursuanceoftheoffer ifyouknowofanofferandyoudotheactthatisrequiredforacceptancethenyouhavea primafaciecaseforthereward(williamsvcarwardine) RvClarke(1927)40CLR227HCA d Inthecontextofanallegedunilateralcontractitdealswithwhetheranoffereemustintendto acceptanoffer Facts: ThegovernmentofWesternAustralia(defendant/appellant)offeredarewardof1000pounds forinformationleadingtothearrestandconvictionofpeopleinvolvedinmurderingtwopolice officers TheWAgovernmentalsoofferedafreepardontoanyaccomplicewhodidnotactuallycommit themurderswhocomeforward Clarkewasarrestedinrelationtothemurders Hesubsequentlygaveinformationrelatingtotwoothermenwhoactuallycommittedthecrime Clarkewasbothreleasedfromcustodyandthenclaimedthereward TheissueathandwaswhetherClarkecouldestablishaunilateralcontractbetweenhimself andthewagovernment Held: TheappealwasallowedandthecourtfoundthatClarkewasnotentitledtothereward Arguments: IsaacsACJ: o [Clarke]wasnotacingonorinpursuanceoforinrelianceuponorinreturnforthe considerationcontainedintheproclamationbutexclusivelyinordertoclearhimself fromthefalsechargeofmurder inotherwordshewasactingwithreferencetoaspecificcriminalcharge againsthimselfandnotwithreferencetoageneralrequestbythecommunity forinformationagainstotherpersons o itis abundantlyclearthathewasnotactingforthesakeofjusticeorfromanyimpulse ofconscienceorbecausehewasaskedtodosobutsimplyandsolelyonhisown 10

11 initiativetosecurehisownsafetyfromthehandofthelawandaltogetherirrespective oftheproclamation hehas neitheralegalnoramoralclaimtothereward o Importanceofactingontheoffer JudgearguesthatwhenClarkewasgivingtheinformationitisclearthathewas notdoingsowiththeofferofrewardinmind Assuchitcannotbesaidtobeacceptanceofanoffer Thusnocontract Thisisdistinctfrommotive theremaybeanothermotiveforacceptingthe offerandstillbeacontract HigginsJ: o NocontractbetweenClarkeandtheCrown o HedidnotmentallyassenttotheCrown soffer therewasnomomentoftimeatwhichtherewastillaftertheinformationwas givenasbetweenclarkeandthecrownaconsensusofmind o Therecanbenocommunicationofassentuntiltherebeassent o Therecannotbeassentwithoutknowledgeoftheoffer;andignoranceoftheofferisthe samethingwhetheritisduetoneverhearingofitortoforgettingitafterhearing o DistinguishesbetweenCarlill theplaintiffhadboughtthesmokeballsonthefaithoftheadvertisement and itisjustafactwhichisnotandcouldnotbefoundunderthecircumstancesof thiscase o Higginsarguesthatattherelevantmomenthehadforgottenabouttheoffer Assuchhewasnotactinginpursuanceofthereward.Hewasmerelywantingto savehisskin StarkeJ: o MutualassentoraconsensusofwillsisessentialinEnglishlawtotheformationofa contract o unlessapersonperformstheconditionsoftheofferactinguponitsfaithorinreliance uponithedoesnotaccepttheofferandtheofferorisnotboundtohim PrinciplesofLaw: Thecaseheldthatwhereapersondoestheactsrequiredbyanofferofaunilateralcontract withknowledgeoftheofferthereisapresumptionthattheactsweredoneinresponsetothe offer o InRvClarkethecourtarguedthatClarkedidnotactwithknowledgeoftheoffer.Thus therewasnoacceptancenorcontract Thecaseestablishestheprinciplethatapersongivingtherequiredinformationinignoranceof therewardhasnolegalclaimtoit (iv)durationofoffers Threekeyprinciples: 1. Anoffermaybewithdrawnatanytimebeforeacceptanceeveniftheofferisstatedtoremain openforadefiniteperiodoftime 2. Revocationofanoffermustbecommunicatedtotheofferee 3. Rejectionofanofferorthemakingofacounterdofferrevokesanoffer (a) REVOCATIONOFOFFERS 11

12 d Anoffermaybewithdrawnatanytimepriortoacceptanceifitiscommunicatedtotheofferee o Thisisevenifitisexpresslystatedtobeopenforacertainperiod o Howeveroptionsmustbekeptopenfortheagreedtimebecauseconsiderationhas beenpaid d Revocationdoesnothavetocomefromanauthorisedsource o Aslongasyouhearaboutitthatwilldo o DickinsonvDodds(1876) d Ifthecontractisa unilateralcontract (promisemadeinreturnfortheperformanceofanact) andtheacthasbeenpartperformedcantheofferberevoked? o Yestheoffercanberevoked.Anytimepriortoacceptancetheoffercanberevoked o MobilOilAustraliaLtdvLyndelNominees(1998) d Postalacceptanceruledoesnotapply DickinsonvDodds(1876) 2ChD463EnglishCourtofAppeal d Leadingcaseonwithdrawalorrevocationofanoffer o Itanalysesthecommunicationofrevocation Facts: Dodds(defendant/appellant)agreedtosellDickinson(Plaintiff/respondent)aproperty.The offertosellwastostayopenfortwodays ThenextdayDickinsonheardthatDoddswasplanningonsellingthepropertytoamancalled Allan AsaresultthateveningDickinsonleftanotewithDodds motherdindlawacceptingtheoffer. Doddsdidnotreceivethisassheforgottogiveittohim ThefollowingmorningDickinsonfoundDoddsandhandedhimanotherwrittenacceptancein person.doddssaiditwastoolateandthathehadalreadysoldittoallan TheissueinappealwaswhetherDickinsonhadagreedtopurchasetheproperty.That dependedonwhetherhisacceptanceofdodds offerwasgivenintime o ThatdependedonwhetherDoddshadeffectivelyrevokedtheoffer o TheappealwouldbeallowedifDoddshadcommunicatedrevocation Held: CourtofAppealruledinfavourofDodds Theyheldthatnotificationbyathirdpartyofanoffer swithdrawaliseffectivejustlike withdrawalbythepersonwhomadeanoffer o Revocationdoesnothavetocomefromanauthorisedsource.Aslongasyouhearabout itthatwilldo Arguments: JamesLJ: o Dodds originaldocumentagreeingtosellthepropertytodickinsonwasnothingbutan offerandwasonlyintendedtobeanoffer Unlessbothpartieshadthenagreedtherewasnoconcludedagreementthen madeitwasineffectandsubstanceonlyanoffertosell o Therewasnoconsiderationgivenfortheundertakingorpromise tokeepthe propertyunsolduntil9o clockonfridaymorning;butapparentlydickinsonwasofthe opinion that[dodds]wasboundbythatpromiseandcouldnotinanywaywithdraw fromitorretractituntil9o clockonfridaymorning o thereisneitherprinciplenorauthorityforthepropositionthattheremustbean expressandactualwithdrawaloftheoffer 12

13 o Itistomymindquiteclearthatbeforetherewasanyattemptatacceptancebythe plaintiffhewasperfectlywellawarethatdoddshadchangedhismindandthathehad infactagreedtosellthepropertytoallan MellishLJ: o Ifanofferhasbeenmadeforthesaleofpropertyandbeforethatofferisacceptedthe personwhohasmadetheofferentersintoabindingagreementtosellthepropertyto somebodyelseandthepersontowhomtheofferwasfirstmadereceivesnoticein somewaythatthepropertyhasbeensoldtoanotherpersoncanheafterthatmakea bindingcontractbyacceptanceoftheoffer?iamofopinionthathecannot Ratio: Revocationdoesnothavetocomefromanauthorisedsource o Aslongasyouhearaboutitthatwilldo Apromisetokeepanofferopen(anoption)isitselfacontractwhichmusthavesome consideration Noformallanguageofrevocationisrequired Revocationmaybeinferredfromconduct Thedecisiontorevokedoesnothavetobecommunicatedbytheofferorpersonally GoldsbroughMortandCoLtdvQuinn(1910) 10CLR674HighCourtofAustralia Facts: Defendant/respondent(Quinn)gavetheplaintiffs/appellants(GoldsbroughMort)anoption(a promisetokeepanofferopen)topurchaseapropertyforfiveshillingsconsideration Thedefendantattemptedtorevoketheofferwithinthestipulatedtimedframe Akeyissuewaswhetherthedefendantwasentitledtorevoketheofferintheoption Held: Thedefendant(Quinn)couldnotrevoketheofferandthatthedefendant sattemptwasa breachofcontract Arguments: O ConnorJ: o itisanagreementtosellonaconditionsubsequenttheconditionbeingtheacceptance oftheotherpartywithinthetimenamed.theappellants rightunderthecontractisto acceptwithintheweekandhavingfulfilledtheconditiontheywereentitledtoallthe benefitsofthecontract o Therespondentonthefaceofitundertakesforvaluableconsiderationtokeepitopen tothe[appellants]foraweek.duringthatweekhecouldnotlawfullywithdrawit o Therespondentthereforehavingwithdrawntheofferduringtheweekisliableatlaw toanactionfordeprivingtheappellantsoftheirrightofacceptance IsaacsJ: o Thecontracttheyhadtogetherwasanoption:itconsistsofapromisefoundedon valuableconsiderationtoselllandonstatedtermswithinagiventime o Ifacceptedinaccordancewiththestipulatedconditionsnoattemptedwithdrawal havingmeanwhiletakenplacetherelationofvendorandpurchaseriscreatedbythe contractthusformedandsuchacontractmaybeorderedtobespecificallycarriedout o Thefeaturewhichdistinguishesanoptionfromamereofferistheconsideration.That howeverdoesnotalterthenatureoftheofferitmerelyensuresitscontinuanceby creatingarelationinwhichlawforbidstheofferorretractingit.hemayattemptto [retractit] buthisattemptisintheofthelawineffectual.hehaspartedwiththeright 13

14 toalterhismindfortheperiodlimitedandhecannotinbreachofhiscontractbeheard tosaythecontrary.hisoffermustthereforebedeemedtostand o Toholdotherwisewouldbeequivalenttosayinghehadnotsoldtothepromiseean optionbutonlythepromisetogiveanoptionwhichwouldbeabsurd RevocationofUnilateralContracts d d Unilateralcontracts(promisemadeinreturnfortheperformanceofanact)modifytherulesof revocation o Generallyoffersareinterpretedasinvolvinganimpliedpromisenottorevoketheoffer oncetheoffereehasstartedperformanceuntiltherehasbeenareasonabletimefor completion.thisimpliedpromiseisenforceableasitissupportedbyconsideration throughthecommencementofperformance Inaunilateralcontracttheperformanceoftherequestedactisboththeacceptanceandthe consideration Considertwoscenarios: 1. Iwillgiveyou$1000toswimacrosstheHarbourtoreachtheOperaHouse o Apersonwhostartsindicatesahopetoqualifybutisnotpromisingtocompleteit o Apersonwhodoesn tmakeitisnotentitledtoanything o Theoffereeisnotboundwithanyexecutoryobligation 2. Ifapaintersays: I mbusywithworkbutmightbeabletopaintyourhouse andthenthe Houseownersays: Iwillpayyou$ifyoupaintmyhouse o Thecontractisunilateral o Butitbecomesbilateralwhenthepainterbeginswork.Thereisanimpliedpromiseto finishthework Giventhisdifficultyatwhatpointcanyourevokeaunilateralcontract? d OR d Anytimebeforecompletiongiventhatacceptanceisonlyachievedoncompletionandan offerorcanwithdrawtheofferanytimebeforecompletion(mobil)oil)australia)ltd)v)lyndel) Nominees)Pty)Ltd) Anytimebeforetheoffereedeliverssufficientconsiderationtopreventtherevocationofthe unilateralofferasitwouldthenbeunjusttodeprivetheoffereeoftheopportunitytocomplete performanceandearnthebenefit(abbott)v)lance) AbbotvLance(1860)2Legge1283 Facts: LanceofferedoncertaintermstosellhissheepstationstoAbbot.Theywere500milesaway andabbotwasallowedtwomonthstoinspectthem TherewasasubsidiarytermthatifwithinthosetwomonthsLancesoldtosomeoneelse Abbotshouldbeentitledtobepaid100poundsintheeventofhisofferingwithinthatperiod topurchaseonthestatedterms 14