Offer and Acceptance - Contract law: Notes with case law PDF

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Offer and Acceptance  Objective theory of Agreement: (Smith v Hughes 1971) It is not the subjective intention of the parties to determine the legal effect of their words or actions but the reasonable inference that they would support.  Exception: The courts are allowed to depart form the objective...

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Offer and Acceptance  Objective theory of Agreement: (Smith v Hughes 1971) It is not the subjective intention of the parties to determine the legal effect of their words or actions but the reasonable inference that they would support.  Exception: The courts are allowed to depart form the objective approach and take into account the subjective knowledge of the offeree(Snapping up Doctrine)Under this approach an offeree is NOT allowed to accept an offer which he knows is MISTAKEN AS TO ITS TERMS( Hartog V Collins and Shields 1939) *This exception will only apply where the offeree w3as aware that the offeror is mistaken as to the terms he intended to offer.

 Offer: An offer is an expression of willingness to contract on certain terms, it must be made with an intention that it will become binding upon acceptance.  Statement of intention: When one party states that they intend to do something, this doesn’t mean that they will do something and hence it does not amount to an offer. (Harris v Nickerson 1873) Courts have found the following as Offers : 1. Vending Machines Thornton v Shoe Lane Parking 1971 2. Advertisements (Unilateral only) Carlill v Carbolic Smokeball 1983 3. Tenders

 Invitation to Treat: An indication of a willingness to do business, for example, it is an invitation to make an offer or to start negotiations. Courts have found the following as invitations to treat: 1. Display of Goods Pharmaceutical Society v Boots 1953 Fisher v Bell 1961 2. Advertisements (Bilateral contract only) Partridge v Crittenden 1968 4. Request for Tenders 5. Auctioneer’s request for bids Warlow v Harrison 1859

 Communicating the Offer:  

Communication must be effective There can be no agreement without knowledge since there won’t be a meeting of minds (R v Clarke 1927, Australian case): “There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing of it or forgetting it after hearing it”

 Acceptance of the Offer:    

For a contract to be formed an offer must be accepted Contractual acceptance is established objectively Acceptance can be made by words or conduct (Brogden v Metropolitan Railway 1877) New terms added by the offeree when accepting the contract will be deemed as a counter offer and not an acceptance.(Hyde v Wrench 1840) An inquiry made by the offeree is neither an acceptance nor a rejection.

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 Communicating the Acceptance:   

Acceptance is not effective until communicated to the offeror. Silence does not amount to acceptance (Felthouse v Bindley). In some cases the offeror may waive off the need to communicate acceptance (Carlill v Carbolic Smokeball)

 Unilateral Offers: A unilateral contract is one where one party makes an offer to pay another if they perform or refrain from some act.  In this case acceptance is usually made through performance and there isn’t a need to communicate this acceptance in advance of performance. (Carlill v Carbolic Smokeball)

 Postal Acceptance Rule:  

General principle is that Acceptance is only good once it arrives. Exception to the general principle: Postal Acceptance Rule, which states that acceptance is completed when it is posted. Rule will only prevail when: 1. Use of Post was reasonably contemplated by parties or stipulated by offeror 2. When post is the only reasonable form of communication available 

Postal rule will NOT allow a contact to be concluded by posting the letter to a wrong address. Problems with the Postal rule:  Contracts can be formed without the offeror being aware of the contract.  Offeror may contract with another party as well and be in breach of initial contract.

 Method of Acceptance: An offeror may stipulate what method to use and if the offeree uses a different method then it needs to be one that is no less advantageous to the offeror as the one stipulated. (Unless stated explicitly).

 The End of an Unaccepted Offer: Change of mind:  Either party may change their mind and withdraw from negotiations any time before acceptance is made.  If a time limit is set, the offer will automatically lapse after set time.  For revocation of an offer to be effective, there must be actual communication of the revocation(Byrne v Van Tienhoven)  Communication of revocation to the offeror through a reliable source is also sufficient (Dickinson v Dodds 1876)  If an offeree rejects an offer (even by a counter offer) it is the end of that offer.  If a condition in an offer isn’t fulfilled, the offer will be terminated(the condition may even be implied)  If the offeror dies the offer dies, however if the offeree accepts the offer in ignorance of death, then contract will remain intact.(Dickinson v Dodds)

Problems = Unilateral Contracts: Revocation after the offeree has begun performance is not allowed in most cases for example, Errington v Errington 1952 and Soulsbury v Soulsbury 2007....