BACKGROUND Contracts: voluntary civil obligations (mainly common law) à taken from old English Cases and Australian cases An agreement that gives rise to legally enforceable obligations CONSIDER 1. Is there a valid K?? à Offer, Acceptance, Certainty, Intention to enter legal relations, Consideration, Estoppel, Capacity 2. What are the term and their meanings?? à Pre-contractual statements, Express/Implied terms, Term incorporation/construction 3. Is K still effective? à Termination/Discharge à Agreement, Breach, Performance, Frustration OTHER ENFORCEMENTS OF A PROMISE Equity (other) eg. trust Restitution / Quasi-contract (will look at this at the end of the semester) Tort eg. fraud or negligence (receive damages for loss suffered for an untrue promise) Statutes eg. ACL (Australian Consumer Law) REQUIREMENTS OF K 2 or more parties with legal capacity cannot have K with yourself unless acting in two different capacities (ie. as individual and as representative of a company) Promises agreed between them (normally identified by an offer & acceptance) Sufficient Certainty to be enforced à à terms of K defined Intend to enter legal relations Consideration given à or avoid requirement by entering deed or estoppel FREEDOM OF K: So long as all terms are legal, any K can be entered into *Other Factors to consider >> Bargaining power (large corporations v individuals) >> Interest (family/domestic relationships vs commercial ventures) >> K assumed binding = strict laibility (actionable per se) TENSIONS: - Individualism vs welfarism (traditional = individuals VS modern = state interests) - Certainty vs flexibility (certain = enforceable VS rigid = difficult to achieve justice) - Subjective intent vs objective intent (what is actually in your mind VS what you appear to a reasonable observer to have in mind) - National vs international OFFER
THE NATURE OF AN OFFER A manifestation (through conduct) or expression (verbal or written) by one party (the offeror) to the other party (the offeree) of a willingness to be bound by certain terms if the other party is prepared to accept those terms *only accepted by offeree (party to which it is addressed) BUT can be a universal offer Offeror à specifies terms Offeree à accepts rejects asks for clarification gives counter-offer does nothing (offer terminates after reasonable/specified time) Brambles v Bathurst per Heydon JA: offer must take form of a proposal for consideration Solid waste disposal depot for council, charging fee to depositors à Council informed B of increased fees to be given to C à B said not viable (wanted compensation) à not an offer for consideration (C enforcing policy) to which B assented by conduct Stevenson Jacques v McLean Clarification = K still valid S ask for clarification before accepting original offer M sold to someone else but clarification did not terminate K Hyde v Wrench - Counter offer terminates orig. K Counter offer for farm terminated original offer. H decided to pay initial price, but this was a new offer to be accepted or not by W Butler v Ex-Cell-O Corp - Counter Offer terminates orig. K = new K, new terms B s offer = price decided upon delivery E placed order with fixed price (= counter offer = terminates first offer) ACTUAL VS APPARENT AGREEMENT Parties may appear to agree but deep down = misunderstanding à CONSENSUS requirement = objective Smith v Hughes per Blackburn J: despite subjective intentions, if offeree objectively appears to assent terms of offeror (by conduct or expression), then he is bound Carlill v Carbolic objectively bound by conduct CSB advertised: 100 reward if you get flu or cold after using our product as per instructions for 2 weeks à said 1,000 deposited with bank to show sincerity C sued for reward à CSB = subjectively no intention to be bound = objectively intended to be bound *advertisements not generally legal offer = invitation to treat à BUT had terms, conditions, obligations, rewards = certainty & consideration Bilateral K: one party promises something for another party promising another else (no notification of acceptance required) à Universal offer to whole world possible Toll v Alphapharm signed K = assenting K + performance indicated agreement to terms by conduct DISTINGUISHING OFFERS FROM OTHER PRE-CONTRACTUAL STATEMENTS Invitation to treat = advertising, shop displays, brochures, websites Mere Puff = praise of product to induce K (not strictly true or to be relied upon) Boots Cash Chemist: Harvey v Facey Supplying information = not offer Item on shelf with price = offer to treat (1) Will you sell BHP? Telegraph lowest price Customer approaching sales staff/clerk is the offer (2) Owner replied Lowest price 900 Payment and exchange of item = acceptance = performance (3) Buyer replied We agree to buy for 900 Held no K Partidge v Crittendon magazine ad = invitation to treat
Advert in classified section of magazine to sell bramble finches (protected bird species) was an invitation to treat Electronic Transactions Act (Cth) 1999 s 15B website/digital order form = invitation to treat (1) proposal to form K = invitation to treat (unless clearly indicated otherwise) à if it is, (a) NOT addressed to one or more specific parties (b) generally accessible to parties making use of information systems (2) Subsect. (1) extends to interactive applications to place orders 15C automated message system acceptance valid K formed by: (a) interaction of automated message system and natural person; or (b) interaction of automated message systems; = NOT INVALID, void or unenforceable (given that no natural person reviewed [altered] or intervened in actions carried out by automated message systems or the resulting K) **ALSO Consider availability of products à indeterminacy (cannot accept every order if not enough stock), acceptance has to be within supplier discretion/control indeterminate liability avoided by while stocks last AUCTIONS *Auctioneer acting on behalf of seller (agent of seller) à invitation to treat (make offer) à auctioneer not making offer because price (major term) is unknown Payne v Cave - call for bids = invitation to treat buyer s bid = offer à auctioneer = accept/reject bid (eg by fall of hammer ) *makes sense if there is a reserve price = if reverse price not exceeded auctioneer reserves right to withhold sale **still applicable with no reserve (low price not considered) (Internet Auction) Smythe v Thomas - Automated fall of hammer at certain time Expiry of a moment of time, considered to be the fall of the hammer in the auction = assumed that the offer is accepted (cannot revoke offer) AGC v McWhirter - Auctions without reserves (in UK, Vic & Qld NOT NSW) auctioneer makes offer by saying property will sell to highest bidder UNKNOWN PRICE NOT ISSUE à Offer has condition, price must = higher price than any other offer made *Obiter possible personal action against auctioneer TENDERS Invitation to tender = usually invitation to treat à Offer = Submitting tender à Receiver can accept any or none Great Northern Railway v Witham acceptance of tenders not legally Blackpool & Fylde Aero Club v Blackpool Borough K obligation to binding consider tenders GNR gave standing offer in tender à W given order to deliver à unilateral K à Tender submitted not considered after stamped with wrong date (= after tender accepted as winning tender not K acceptance but placing order = accept by conduct closed) à Council have K obligation to consider all tenders submitted correctly Hughes Aircraft v Airservices (HC) Breach of Tender not binding (tender offer = not K) Breaching tender process = Separate claim for tenderer refusing to sell when highest bid not accepted despite statement that it would be à Not binding K = unenforceable Harvela v Royal Trust (UK) EXCEPTION: if specified award to highest (or lowest) Invitations to tender = Offer, conditional on price (tender must be fixed bid) Submission of tender = acceptance (with condition that it is the highest bid) DURATION OF THE OFFER Expressly/impliedly stated lapse of reasonable time à determined considering circumstances death of offeror/offeree (depends on intention) rejection or counter-offer withdrawn by offeror (any time before acceptance) WITHDRAWAL K not binding until accepted still considered to be in negotiation stage à withdrawal must be notified to offeree
* generally not effective until communicated to offeree **if accepted before withdrawal, K binding Byrne v van Tienhoven Acceptance before withdrawal 1 Oct V offers to sell goods to B - suggested a cable reply 8 Oct - V posted letter to B withdrawing offer 11 Oct - B cabled V accepting offer 20 Oct - B received letter withdrawing offer Offer still open à K binding Dickinson v Dodds Ignore info from source other than offeror Offer withdrawn whenever desired à if reasonably reliable source conveys withdrawn, it cannot be ignored à offer withdrawn = cannot be accepted = no K Veivers v Cordingley Unilateral offer not withdrawn after performance commences Once actions to execute the K have commenced then the offer cannot be withdrawn à once process has started, one party have begun enacting the unilateral offer and it cannot be taken back Mobil v Wellcome acceptance of unilateral offer not complete before withdrawal M promised any dealer performing at set level for 6 yrs = own franchise at no cost for 9 yrs à M discontinued scheme and dealers alleged breach of K à dealers had not fully accepted benefit of K (=performance = consideration) à no K WITHDRAWAL OF UNIVERSAL OFFER *Take all reasonable steps to notify the people who may have heard of the offer à same method offer first advertised ie. advertise offer in Courier Mail, therefore advertise withdrawal in Courier Mail Shuey v United States (US Case) Revoke universal offer by same method in which it was made Advert in newspaper made an offer à reasonably sufficient to use same method of communication to revoke offer, despite possibility of not reaching all who saw orig. offer STANDING OFFERS (ie. company requires reliable supply) *Supplier offer = provide goods at agreed prices for specific period à Placing order = acceptance à Multiple acceptances possible during the period **Unless agreed otherwise, offeree may also order from others, or choose to order nothing ***Unless option, offeror can withdraw standing offer at any time Routledge v Grant revocation allowed for any offer (time specification irrelevant) Offer may be revoked, even if promised to remain open for a specific time Hughes Aircraft v Airservices Not bound to accept standing offer Tender = standing offer = not K = not required to accept and perform promise OPTIONS Early debate about nature of an option Goldsborough Mort v Quinn - offer with condition to remain open for specified time *option must be supported by consideration **consideration exists to keep the offer open (otherwise not bound to keep it open) ***viewed as having an immediate offer and acceptance, subject to the condition of Colonial Ammunition Co v Reid No specified Quantity No obligation to limit (min or max) quantity to be purchased during standing offer period à only agreement = for any transactions during period, terms are certain (ie. price) Alternative analysis K conditional on decision to enter into it Walker Corp v Pateman - Right of first refusal Parties are uncertain if the offeror will sell goods à if goods are to be sold, offeree (person interest when goods not on sale) has the first right to buy or refuse à Offer dies if the offeror or offeree dies
whether transaction goes through (K executed) within given time if not, K is terminated when time expires ACCEPTANCE NATURE OF AGREEMENT - meeting of the minds or consensus ad idem à unqualified indication of assent to open offer expressed in words (written or oral) implied (from words, conduct, or surrounding circumstances) imposed by law RULES ON ACCEPTANCE 1.By a person to whom offer was made - Boulton v Jones B could not accept offer to supply hose after taking over J s business because letter addressed to J 4.1 Acceptance must usually be communicated Tinn v Hoffman Parties both wrote to each other at the same time with same terms in mind (sale/purchase of 800T of iron) both received and agreed but neither accepted àno acceptance = no K *right to be notified may be waived (expressly or impliedly) Carlill v Carbolic Smoke Ball BUT need proof of acceptance 2. Offeree = aware of offer and intends to accept it - R v Clarke If fulfilling K through conduct but unaware of offer = no consideration = no K 4.2 Acceptance by conduct Brogden v Metropolitan Railway *B supplying coal to M à M asked B to enter into written K (had been verbal) à M drafted K and sent to B with blanks to be filled in à B filled in blanks and sent back to M s lawyers à lawyers didn t pass on to M to sign **Offer = B s complete K (not expressly accepted/signed) ***B and MR continue business as if K formed Court ruled K = oral K through conduct Felthouse v Bindley No Acceptance by silence *Offered to buy horse at certain price and if nothing more was heard from the other party, then the man will consider the horse to be his à owner sold horse to someone else à no response to man so assumed horse was his **man sued for selling horse he had bought BUT cannot impose on someone an acceptance by doing nothing (force action to be taken to reject) à unnecessary effort to reject but no intention to be bound EFFECT OF OFFER & ACCEPTANCE - Artificial model settles 4 things: 1) agreement (binding K?) 2) time - no later unilateral change (without agreement of other party) 3) content - terms discussed or implied up to that time (promises of K settled at time of acceptance) 4) place of agreement - where acceptance is notified to offeror (K governed under law of country in which it was formed) 3. Acceptance = unqualified and corresponds with offer, otherwise = counter-offer - Hyde v Wrench Counter-offer terminated first offer, so first offer could not be accepted 4.3 Valid K s by conduct - Empirnall v Machon Paull *Architect employed by a builder à K terms discussed then written draft and sent to builder à not signed/accepted à architect later asked whether the K was valid if no objections to its terms à builder said he didn t sign K s **K still validly accepted through conduct Inertia selling (eg unsolicited goods) not binding, unless goods used = objective indication of assent à only reasonable grounds if conduct shows consumer agrees to pay (consistent with statute and rule in Felthouse v Bindley) *Under s 40-42 ACL 2010, sender forfeits goods if not collected after 3 months *Difficulty: MacRobertson Miller Airlines v CoT - Remember: offer & acceptance are not requirements courts only need to find agreement (but offer & acceptance may help)