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Hypothetical Question: Word count – 1498 Alfie and Charlie Issue Charlie made an offer on 2nd August and requires Alfie to respond in writing for the deal to proceed. Alfie posted a letter on 12pm 7th August accepting the offer, which he later attempted to withdraw. The issues would be; does the postal acceptance rule apply? Was Alfie’s acceptance withdrawn by speedier means before the arrival of the letter? Legal principle The postal acceptance rule was established by the Adams v Lindsell1 case and states that acceptance takes effect on the day the letter is posted. When examining retraction of the postal rule, there are two relevant cases. In Wenkhein v Arndt, 2 an attempt to retract an acceptance was held invalid through the strict application of the postal rule. On the other hand, in Dunmore v Alexander3 it was held that postal acceptance could be withdrawn if communicated via speedier means. Application The postal acceptance rule does apply to the situation as acceptance was sent through a letter. If the rulings of Wenkhein v Arndt are followed, Alfie’s attempt to withdraw his acceptance will not be accepted. However, as per Dunmore v Alexander Alfie’s retraction would be accepted as it was communicated through speedier means. Conclusion Alfie’s acceptance of the offer via letter put the postal rule in effect. If there is a strict application of the postal rule, Charlie can claim damages against Alfie. However, if the withdrawal is accepted as it was communicated via speedier means, Alfie will no longer be bound by his acceptance. Alfie and Daisy Issue Daisy makes an offer, which she promises to keep open till 5pm 7th Friday. When Alfie calls to accept the offer at 10am 7th Friday, Daisy declines and is no longer interested. There are two issues here, was Daisy’s promise to keep the offer open till a certain time binding? Secondly, was revocation communicated in time for the offer to be terminated? Legal principle For the issues mentioned above, the applicable case law includes three relevant cases. In Routledge v Grant,4 Best CJ stated that an offer could be retracted at anytime during the given period as long as there is no acceptance. This rule was also applied in Dickinson v Dodds,5 it was also established that – there must be consideration for a promise to keep an offer open to be binding. In Financings Ltd v Stimson6 it is stated that revocation must be communicated before acceptance of the offer, in order for it to be effective. Application 1 Adams v Lindsell (1818) 1 B & Ald 681. 2 Wenkhein v Arndt (1873) 1 JR 73. 3 Dunmore v Alexander (1830) 9 SH (Ct of Sess) 190. 4 Routledge v Grant (1828) 130 ER 920, 923. 5 Dickinson v Dodds (1876) 2 Ch D 463, 466. 6 Financings Ltd v Stimson [1962] 3 All ER 386, 389.

As per the rulings in Routledge v Grant and Dickinson v Dodds, Daisy’s promise to Alfie was not binding and she had the right to withdraw the offer anytime during the given period. There was no consideration, which meant no option contract was formed according to Dickinson v Dodds. Revocation must be communicated before acceptance as per Financings Ltd v Stimson; however, Alfie accepted the offer before Daisy’s withdrawal. Conclusion Daisy was well within her rights to withdraw the offer at anytime and was not bound by her promise, however revocation was not communicated before Alfie’s acceptance. Therefore, Alfie can claim damages against Daisy. Alfie and Ellie Issue Ellie asked Alfie for a written agreement, which she later changed her mind about, and no longer wanted to go ahead with the deal. Was the preliminary agreement legally binding? Legal principle Masters v Cameron7 puts forward three categories of preliminary agreements – categories 1 and 2 are binding agreements and category 3 is not binding. Under category 3, the intention of a party is not to make a ‘concluded bargain’ unless a formal contract is executed. Application Under category 3 of preliminary agreements in Masters v Cameron, Ellie did not intend to make a ‘concluded bargain’ and no formal contract was executed. Therefore, there is no legally binding contract Conclusion The prior agreement to settle the deal with a written agreement between Ellie and Alfie is not legally binding and therefore there is no cause of action for Alfie. Alfie and Freddie Issue Freddie was willing to purchase the wine collection off Alfie and Alfie agreed. Was the oral agreement between the two parties legally binding? Legal principle The formation of a contract requires intention, agreement and consideration. When an offer is made, the offeree understands that the offeror intends to be bound in the event off acceptance according to Crest Nicholson (Londinium) Ltd v Akaria Investments Ltd.8 In Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd, 9 the court used a general test to determine acceptance; ‘whether a reasonable bystander’ would regard the conduct of the offeree as the offer being accepted. Generally, the presence of consideration is sufficient to prove intention. 7 Masters v Cameron (1954) 91 CLR 353, 360. 8 Crest Nicholson (Londinium) Ltd v Akaria Investments Ltd [2010] EWCA Civ 1331. 9 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527, 529.

Application As per the ruling in Crest Nicholson (Londinium) Ltd v Akaria Investments Ltd, an offer was made by Freddie. Alfie accepted this offer according to Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd. Freddie’s promise to pay $5000 was consideration for Alfie’s promise. Conclusion Alfie is legally bound by his promise; in the case Alfie does not comply with the promise Freddie will able to claim damages. Alfie and Bessie Issue On 12th August, Bessie contacted Alfie informing him she will no longer be able to give him the wine collection. The issues of concern would be; was the agreement between Alfie and Bessie simply a domestic agreement or was it a legally binding contract? Can Alfie’s help in renovating Bessie’s house be considered as good consideration? Can Alfie rely on equitable estopple remefies? Legal principle A common law presumption states ‘social and domestic arrangements are outside the realms of contract law simply because the parties to them must be regarded as intending that the mutual promises whether kept or broken are not to land them in court.’10 In Wakeling v Ripley,11 ‘intention’ to create legally binding agreements between family members was examined and with the facts provided it was held that there was a legally binding contract. This case also stipulated how the presumption of no legal intention between domestic parties can be rebutted. Roscorla v Thomas12 demonstrated the past consideration rule, where it was held that past consideration cannot be regarded as good consideration in order to make a current contract enforceable by court. The Walton Stores v Maher 13 was a leading case in establishing the elements required to establish equitable estopple: t oe s t a bl i s he qui t a bl ee s t op pe li ti sne c e s s a r yt opr ov e : ( 1)Thepl a i nt i ffa s s ume d[ ore xpe c t e d]t h a tapa r t i c ul a rl e g a lr e l a t i o ns hi pt he ne x i s t e d be t we e nt hepl a i nt i ffa ndt h ede f e nd a nt ; ( 2)Thede f e nda nth a si nduc e dt hepl a i nt i fft oa doptt ha ta s s ump t i onore xp e c t a t i on; ( 3)Thepl a i n t i ffa c t sora bs t a i nsf r om a c t i n gi nr e l i a nc eon t ha ta s s ump t i on or e xpe c t a t i on ; ( 4)Thede f e nda ntk ne wori nt e nde dhi mt odos o; ( 5)Thepl a i nt i ff’ sa c t i onori n a c t i o nwi l loc c a s i oni nde t r i me nti ft hea s s ump t i onor e xpe c t a t i oni snotf ul fil l e da nd; 1 4 ( 6)Thede f e nda nth a sf a i l e dt oa c tt oa v oi dt ha tde t r i me nt .

Application If the assumption in Placer Development Ltd v Commonwealth is applied, there will be no legally binding agreement between Alfie and Bessie. However as per Wakeling v Ripley, 10 Placer Development Ltd v Commonwealth (1969) 121 CLR 353, 367. 11 Wakeling v Ripley (1951) 51 SR (NSW) 183. 12 Roscorla v Thomas (1842) 3 QB 234, 235. 13 Walton Stores v Maher (1988) 164 CLR 387. 14 Ibid 428-429.

the assumption of no intention can be rebutted and if the facts indicate that Bessie intended to take part in a legally binding agreement, Bessie will be bound by a contract. As per Roscorla v Thomas, Alfie’s help in renovating Bessie’s house would be considered past consideration as it occurred before the current agreement and therefore would not make the contract enforceable. Alfie was under the assumption; Bessie would give him the wine collection as promised. Under the assumption, Alfie notified Bessie of his intention to sell the collection. It will be of detriment to Alfie if Bessie does not fulfill her promise, as he will face legal complications with the buyers involved. There is no act by Bessie in order to avoid the determinant. As per the Walton Stores v Maher case, elements 2 – 6 will be satisfied. Conclusion If it is found that Bessie intended to form a legal agreement, Alfie will be able to claim damages. Otherwise, he will have no cause of action. His help will not be considered as good consideration and hence the contract will not be enforceable. He is however eligible for equitable estopple remedies....