Podcast
Questions and Answers
What is the primary distinction between an invitation to treat and an offer?
What is the primary distinction between an invitation to treat and an offer?
- An invitation to treat is legally binding.
- An invitation to treat invites others to make offers. (correct)
- An invitation to treat is a definitive proposal for a contract.
- An offer can never be retracted once made.
In the case of Carlill v Carbolic Smoke Ball Co, what characteristic of the advertisement determined it was an offer?
In the case of Carlill v Carbolic Smoke Ball Co, what characteristic of the advertisement determined it was an offer?
- Expressions of uncertainty.
- Ambiguous language used.
- Definite and promissory language. (correct)
- Vague suggestions of sincerity.
According to the case Pharmaceutical Society of Great Britain v Boots Cash Chemists, when were the non-prescription drugs considered 'sold'?
According to the case Pharmaceutical Society of Great Britain v Boots Cash Chemists, when were the non-prescription drugs considered 'sold'?
- When customers selected them from the shelves.
- When they were displayed on the shelves.
- When the customer approached the cashier.
- When the cashier processed the sale. (correct)
Which case illustrates that advertising goods does not automatically constitute an offer?
Which case illustrates that advertising goods does not automatically constitute an offer?
What common misconception might someone have regarding displaying goods for sale in a store?
What common misconception might someone have regarding displaying goods for sale in a store?
What was Wendy's initial response to Trevor's offer of $15 per kilo?
What was Wendy's initial response to Trevor's offer of $15 per kilo?
What is required for an offer to be considered promissory?
What is required for an offer to be considered promissory?
What did Trevor do when Wendy made her counter-offer of $14 per kilo?
What did Trevor do when Wendy made her counter-offer of $14 per kilo?
What distinguishes an offer from an invitation to treat?
What distinguishes an offer from an invitation to treat?
According to the Placer Development Ltd v Commonwealth ruling, what makes a promise unenforceable?
According to the Placer Development Ltd v Commonwealth ruling, what makes a promise unenforceable?
Which of the following best describes an executory contract?
Which of the following best describes an executory contract?
What criteria did the High Court use to determine the enforceability of the promise made by the government?
What criteria did the High Court use to determine the enforceability of the promise made by the government?
What does it mean for an offer to be 'sufficiently certain'?
What does it mean for an offer to be 'sufficiently certain'?
What was M's argument for refusing to complete the transaction with C?
What was M's argument for refusing to complete the transaction with C?
Which category describes the agreement between M and C as determined by the court?
Which category describes the agreement between M and C as determined by the court?
What constitutes a binding agreement in category one as per the court's categorization?
What constitutes a binding agreement in category one as per the court's categorization?
In what situation can an offeror withdraw their offer?
In what situation can an offeror withdraw their offer?
Under what condition does acceptance become invalid?
Under what condition does acceptance become invalid?
Which statement is true regarding acceptance to create a binding contract?
Which statement is true regarding acceptance to create a binding contract?
What may happen if a formal contract is required in an agreement?
What may happen if a formal contract is required in an agreement?
What is the implication of a signed memorandum according to the court's decision?
What is the implication of a signed memorandum according to the court's decision?
Under what condition is a promise to keep an offer open enforceable?
Under what condition is a promise to keep an offer open enforceable?
What happens if acceptance does not comply with the requirements specified in the terms of the offer?
What happens if acceptance does not comply with the requirements specified in the terms of the offer?
When is acceptance generally considered effective?
When is acceptance generally considered effective?
What is the postal acceptance rule?
What is the postal acceptance rule?
In Henthorn v Fraser, when was H's acceptance considered effective?
In Henthorn v Fraser, when was H's acceptance considered effective?
What was F's legal standing when he attempted to withdraw his offer after H posted their acceptance?
What was F's legal standing when he attempted to withdraw his offer after H posted their acceptance?
What must acceptance comply with to be valid?
What must acceptance comply with to be valid?
Which of the following is NOT an exception to the general rule regarding acceptance?
Which of the following is NOT an exception to the general rule regarding acceptance?
When does acceptance occur if communicated by post?
When does acceptance occur if communicated by post?
What must an offeror do to exclude the postal acceptance rule?
What must an offeror do to exclude the postal acceptance rule?
How is acceptance communicated if done via fax or email?
How is acceptance communicated if done via fax or email?
In the Brinkibon case, where was the contract determined to be formed?
In the Brinkibon case, where was the contract determined to be formed?
What was the court's decision regarding the postal acceptance rule for telex communication?
What was the court's decision regarding the postal acceptance rule for telex communication?
When is an email considered received, based on current legislation?
When is an email considered received, based on current legislation?
What similarity is drawn between telexes and other forms of communication?
What similarity is drawn between telexes and other forms of communication?
What is the nature of communications established by the cases discussed?
What is the nature of communications established by the cases discussed?
A contract is formed when there is a meeting of the minds between the parties involved.
A contract is formed when there is a meeting of the minds between the parties involved.
Acceptance of an offer requires a varying response to the initial terms proposed.
Acceptance of an offer requires a varying response to the initial terms proposed.
A counter-offer signals the acceptance of the original offer.
A counter-offer signals the acceptance of the original offer.
Consideration is a key requirement for the enforceability of a contract.
Consideration is a key requirement for the enforceability of a contract.
An offer can be a general invitation to treat, which does not constitute an enforceable contract.
An offer can be a general invitation to treat, which does not constitute an enforceable contract.
The manifestation of willingness to enter into a bargain is vital for defining an offer.
The manifestation of willingness to enter into a bargain is vital for defining an offer.
The intention to create legal relations is not necessary for a binding agreement.
The intention to create legal relations is not necessary for a binding agreement.
A contract is enforceable only when all formation requirements are satisfied.
A contract is enforceable only when all formation requirements are satisfied.
An offer can be enforced even if the promisee has not provided consideration to the promisor.
An offer can be enforced even if the promisee has not provided consideration to the promisor.
In the case of Henthorn v Fraser, H's acceptance was effective when F received the letter.
In the case of Henthorn v Fraser, H's acceptance was effective when F received the letter.
Sending an email can be considered a valid acceptance if the offer specifies acceptance must be in person.
Sending an email can be considered a valid acceptance if the offer specifies acceptance must be in person.
Under the postal acceptance rule, acceptance is effective when the acceptance letter is posted.
Under the postal acceptance rule, acceptance is effective when the acceptance letter is posted.
The contract is formed when the acceptance is communicated to the offeror in cases of unilateral contracts.
The contract is formed when the acceptance is communicated to the offeror in cases of unilateral contracts.
An offeror can withdraw an offer after an acceptance letter has been posted but before it is received.
An offeror can withdraw an offer after an acceptance letter has been posted but before it is received.
For acceptance to be valid, it must comply with the conditions specified by the offer.
For acceptance to be valid, it must comply with the conditions specified by the offer.
Electronic communications can be treated as acceptance regardless of the terms of the offer.
Electronic communications can be treated as acceptance regardless of the terms of the offer.
The agreement between M and C was a non-binding preliminary agreement.
The agreement between M and C was a non-binding preliminary agreement.
Acceptance can occur even if the offer is expired.
Acceptance can occur even if the offer is expired.
For an acceptance to be binding, it must not be subject to any conditions.
For an acceptance to be binding, it must not be subject to any conditions.
An offeror is entitled to withdraw their offer only if they made a contractual commitment to keep the offer open.
An offeror is entitled to withdraw their offer only if they made a contractual commitment to keep the offer open.
The court suggested that agreements can be categorized into four distinct types regarding their binding nature.
The court suggested that agreements can be categorized into four distinct types regarding their binding nature.
If a formal contract is required for an agreement, it is automatically binding once an informal agreement is made.
If a formal contract is required for an agreement, it is automatically binding once an informal agreement is made.
One can accept an offer after it has been explicitly withdrawn by the offeror.
One can accept an offer after it has been explicitly withdrawn by the offeror.
The first category of agreements, as described by the court, allows parties to express intent to be bound while finalizing the terms.
The first category of agreements, as described by the court, allows parties to express intent to be bound while finalizing the terms.
The time of receipt occurs when the electronic communication reaches the designated address.
The time of receipt occurs when the electronic communication reaches the designated address.
A contract can be formed even if the language used by the parties has multiple possible meanings.
A contract can be formed even if the language used by the parties has multiple possible meanings.
Uncertainty in contract language only raises a formation problem if the language is clear.
Uncertainty in contract language only raises a formation problem if the language is clear.
In a contract, the place of receipt determines when the acceptance is effective.
In a contract, the place of receipt determines when the acceptance is effective.
The Electronic Transactions (Victoria) Act 2000 (Vic) allows the offeror to designate how acceptance should be communicated.
The Electronic Transactions (Victoria) Act 2000 (Vic) allows the offeror to designate how acceptance should be communicated.
Acceptance is considered effective as soon as it is communicated for all forms of communication.
Acceptance is considered effective as soon as it is communicated for all forms of communication.
In the case of telex communication, the postal acceptance rule applies.
In the case of telex communication, the postal acceptance rule applies.
An offeror can state that acceptance by email is not acceptable.
An offeror can state that acceptance by email is not acceptable.
When acceptance occurs via fax, it is considered instantaneous.
When acceptance occurs via fax, it is considered instantaneous.
The acceptance in the Brinkibon case was formed in London.
The acceptance in the Brinkibon case was formed in London.
E-mail acceptance is treated the same way as postal acceptance.
E-mail acceptance is treated the same way as postal acceptance.
The development of common law regarding electronic communications provides guidance on the treatment of emails.
The development of common law regarding electronic communications provides guidance on the treatment of emails.
Acceptance by telex should be treated differently from other instantaneous communications.
Acceptance by telex should be treated differently from other instantaneous communications.
Why is advertising considered an invitation to treat rather than an offer?
Why is advertising considered an invitation to treat rather than an offer?
What role does the specific language in an advertisement play in determining if it is an offer or an invitation to treat?
What role does the specific language in an advertisement play in determining if it is an offer or an invitation to treat?
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, when were the drugs considered actually sold?
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, when were the drugs considered actually sold?
How does the concept of an invitation to treat affect the display of goods in stores?
How does the concept of an invitation to treat affect the display of goods in stores?
What was the significance of the case Carlill v Carbolic Smoke Ball Co in relation to advertising offers?
What was the significance of the case Carlill v Carbolic Smoke Ball Co in relation to advertising offers?
What is required for an agreement to be formed in contract law?
What is required for an agreement to be formed in contract law?
Explain what constitutes a counter-offer in contract negotiations.
Explain what constitutes a counter-offer in contract negotiations.
What role does 'consideration' play in the formation of a contract?
What role does 'consideration' play in the formation of a contract?
How does the concept of 'intention' influence contract formation?
How does the concept of 'intention' influence contract formation?
What is meant by 'a meeting of the minds' in the context of contract law?
What is meant by 'a meeting of the minds' in the context of contract law?
Describe what happens when acceptance does not mirror the terms of the offer.
Describe what happens when acceptance does not mirror the terms of the offer.
In what scenarios might an offer be withdrawn before acceptance?
In what scenarios might an offer be withdrawn before acceptance?
What legal implications arise from an invitation to treat compared to an offer?
What legal implications arise from an invitation to treat compared to an offer?
What does the Electronic Transactions (Victoria) Act 2000 (Vic) define as the 'time of receipt' in relation to electronic acceptance?
What does the Electronic Transactions (Victoria) Act 2000 (Vic) define as the 'time of receipt' in relation to electronic acceptance?
How does the Electronic Transactions (Victoria) Act 2000 (Vic) determine the 'place of receipt' for a contract?
How does the Electronic Transactions (Victoria) Act 2000 (Vic) determine the 'place of receipt' for a contract?
What is required for a contract to be considered expressed with sufficient certainty?
What is required for a contract to be considered expressed with sufficient certainty?
In the context of the Electronic Transactions (Victoria) Act, when does receipt occur if the offeror has not designated an electronic address?
In the context of the Electronic Transactions (Victoria) Act, when does receipt occur if the offeror has not designated an electronic address?
What implication does the uncertainty in language have for contract formation according to the information provided?
What implication does the uncertainty in language have for contract formation according to the information provided?
In Pharmaceutical Society of Great Britain v Boots Cash Chemists, how was the customer’s role characterized in the sales process?
In Pharmaceutical Society of Great Britain v Boots Cash Chemists, how was the customer’s role characterized in the sales process?
What did the court conclude about the nature of the advertisement in Partridge v Crittenden?
What did the court conclude about the nature of the advertisement in Partridge v Crittenden?
What is a key requirement for acceptance to be valid according to the provided content?
What is a key requirement for acceptance to be valid according to the provided content?
In the context of Masters v Cameron, what does it mean for acceptance to be 'unqualified'?
In the context of Masters v Cameron, what does it mean for acceptance to be 'unqualified'?
What does the outcome of the case consider regarding the concept of 'invitation to treat'?
What does the outcome of the case consider regarding the concept of 'invitation to treat'?
Why was the advertisement in Partridge v Crittenden significant with respect to statutory prohibitions?
Why was the advertisement in Partridge v Crittenden significant with respect to statutory prohibitions?
What general rule regarding acceptance can be derived from the provided content?
What general rule regarding acceptance can be derived from the provided content?
What role does the wording of an advertisement play in determining if it is an offer or invitation to treat?
What role does the wording of an advertisement play in determining if it is an offer or invitation to treat?
What was the significance of the memorandum in relation to M and C's agreement?
What was the significance of the memorandum in relation to M and C's agreement?
In which category did the court place M and C's agreement, and what was the rationale?
In which category did the court place M and C's agreement, and what was the rationale?
What conditions must be met for an offer to be considered still valid for acceptance?
What conditions must be met for an offer to be considered still valid for acceptance?
What happens when an offeror withdraws their offer before acceptance?
What happens when an offeror withdraws their offer before acceptance?
How does a contractual commitment to keep an offer open affect the offeror's ability to withdraw the offer?
How does a contractual commitment to keep an offer open affect the offeror's ability to withdraw the offer?
What role does intention play in determining whether an agreement is binding or non-binding?
What role does intention play in determining whether an agreement is binding or non-binding?
What are the implications if acceptance of an offer does not meet the terms specified in the offer?
What are the implications if acceptance of an offer does not meet the terms specified in the offer?
Why is it important for acceptance to occur within a reasonable period if no expiration is stated?
Why is it important for acceptance to occur within a reasonable period if no expiration is stated?
Advertising goods usually involves an invitation to ______.
Advertising goods usually involves an invitation to ______.
In the case of Carlill v Carbolic Smoke Ball Co, the advertisement used very definite and promissory ______.
In the case of Carlill v Carbolic Smoke Ball Co, the advertisement used very definite and promissory ______.
Boots claimed that the non-prescription drugs were 'sold' when the ______ processed the sale.
Boots claimed that the non-prescription drugs were 'sold' when the ______ processed the sale.
In the case of Partridge v Crittenden, the advertisement contained very little detail and no promissory ______.
In the case of Partridge v Crittenden, the advertisement contained very little detail and no promissory ______.
Displaying goods in a store amounts to an invitation to ______, not an offer to sell.
Displaying goods in a store amounts to an invitation to ______, not an offer to sell.
The agreement was made subject to the preparation of a formal contract of sale which shall be acceptable to my [C’s] ______.
The agreement was made subject to the preparation of a formal contract of sale which shall be acceptable to my [C’s] ______.
M argued that he was entitled to refuse to complete because there was no binding ______ of sale between himself and C.
M argued that he was entitled to refuse to complete because there was no binding ______ of sale between himself and C.
The court found that the agreement between M and C fell into the third category, indicating it was ______ to a condition and not binding.
The court found that the agreement between M and C fell into the third category, indicating it was ______ to a condition and not binding.
Acceptance must occur while the offer is still in ______.
Acceptance must occur while the offer is still in ______.
At common law, an offeror is entitled to ______ their offer at any time before it has been accepted.
At common law, an offeror is entitled to ______ their offer at any time before it has been accepted.
The court suggested three ______ into which agreements that are ‘subject to contract’ could be placed.
The court suggested three ______ into which agreements that are ‘subject to contract’ could be placed.
M sought to recover the ______ after refusing to complete the transaction.
M sought to recover the ______ after refusing to complete the transaction.
If no period has been stated, the offer will expire after the passing of a reasonable period of ______.
If no period has been stated, the offer will expire after the passing of a reasonable period of ______.
A promise to keep the offer open is only enforceable where the promisee has provided ______ to the promisor.
A promise to keep the offer open is only enforceable where the promisee has provided ______ to the promisor.
According to the general rule, a contract is not formed until acceptance of the offer has been communicated by the ______ to the offeror.
According to the general rule, a contract is not formed until acceptance of the offer has been communicated by the ______ to the offeror.
If the offeror states that the offer must be accepted in person, sending an ______ would not amount to acceptance.
If the offeror states that the offer must be accepted in person, sending an ______ would not amount to acceptance.
The postal acceptance rule provides an exception to the general rule that a contract is not formed until acceptance is ______ to the offeror.
The postal acceptance rule provides an exception to the general rule that a contract is not formed until acceptance is ______ to the offeror.
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, Boots argued that the display of goods was an invitation to ______.
In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, Boots argued that the display of goods was an invitation to ______.
In Henthorn v Fraser, H's acceptance was effective as soon as he ______ the letter.
In Henthorn v Fraser, H's acceptance was effective as soon as he ______ the letter.
In Partridge v Crittenden, the court ruled that the advertisement was an invitation to ______, not an offer.
In Partridge v Crittenden, the court ruled that the advertisement was an invitation to ______, not an offer.
The postal acceptance rule applies when acceptance occurs via post and the offeror intended that the offer could be accepted by ______.
The postal acceptance rule applies when acceptance occurs via post and the offeror intended that the offer could be accepted by ______.
Acceptance must occur while the offer is still in ______.
Acceptance must occur while the offer is still in ______.
Acceptance must comply with requirements specified by the ______ of the offer.
Acceptance must comply with requirements specified by the ______ of the offer.
In the Wendy and Trevor example, the contract was formed when Trevor agreed to Wendy's offer without suggesting any ______.
In the Wendy and Trevor example, the contract was formed when Trevor agreed to Wendy's offer without suggesting any ______.
Under the considerations of unilateral contracts, acceptance is effective when the offeree performs the ______.
Under the considerations of unilateral contracts, acceptance is effective when the offeree performs the ______.
To be valid, acceptance must not be subject to a ______.
To be valid, acceptance must not be subject to a ______.
The phrase 'evidence unqualified assent' refers to the need for acceptance to indicate ______ of the offer's terms.
The phrase 'evidence unqualified assent' refers to the need for acceptance to indicate ______ of the offer's terms.
Unless advertisements come from manufacturers, they should be construed as invitations to ______ and not offers for sale.
Unless advertisements come from manufacturers, they should be construed as invitations to ______ and not offers for sale.
The case of Masters v Cameron highlighted that an acceptance must comply with requirements specified by the terms of the ______.
The case of Masters v Cameron highlighted that an acceptance must comply with requirements specified by the terms of the ______.
An offeror is free to state that acceptance by post is not acceptable, in which case the postal acceptance rule does not __________.
An offeror is free to state that acceptance by post is not acceptable, in which case the postal acceptance rule does not __________.
Acceptance made by fax or email is considered __________ and acceptance is effective when the fax/email is received by the offeror.
Acceptance made by fax or email is considered __________ and acceptance is effective when the fax/email is received by the offeror.
Telex communications should be treated in the same way as other instantaneous __________, not as communications via the post.
Telex communications should be treated in the same way as other instantaneous __________, not as communications via the post.
The acceptance took place where the telex was received, which was in __________, when the acceptance was communicated to the offeror.
The acceptance took place where the telex was received, which was in __________, when the acceptance was communicated to the offeror.
E-mail, like faxes and telexes, are a form of __________ communication.
E-mail, like faxes and telexes, are a form of __________ communication.
Legislation defines when receipt of electronic __________, such as e-mails, takes place.
Legislation defines when receipt of electronic __________, such as e-mails, takes place.
Where the circumstances are such that it must have been within the contemplation of the parties, the acceptance is effective as soon as it is __________.
Where the circumstances are such that it must have been within the contemplation of the parties, the acceptance is effective as soon as it is __________.
A dispute arose between the parties regarding where the __________ had been formed.
A dispute arose between the parties regarding where the __________ had been formed.
Study Notes
Agreement: Offer and Acceptance
- An agreement is formed when there is a meeting of minds between the parties; both parties understand and agree on the same terms.
- Trevor offers to sell tomatoes to Wendy for $15 a kilo.
- Wendy rejects that offer, then offers $14 a kilo.
- Trevor accepts Wendy's offer.
- An executory contract is formed: Both parties are obligated to perform their part of the agreement.
Offer: Promissory
- An offer must be a promise to do or refrain from doing something.
- In Placer Development Ltd v Commonwealth, the Commonwealth promised a subsidy of an unspecified amount.
- The High Court found this promise was not legally binding because the Commonwealth had complete discretion to determine the amount.
- An illusory promise is not enforceable.
Offer: Invitation to Treat
- Advertising and displaying goods for sale is usually an invitation to treat.
- The individual making the invitation to treat is inviting others to make offers.
- Partridge v Crittenden: An advertisement in a magazine was found to be an invitation to treat, not an offer.
- Pharmaceutical Society of Great Britain v Boots Cash Chemists: Goods displayed in a self-service chemist are an invitation to treat.
Offer: Intent to Create Agreement
- An offer must be intended to result in a contract if accepted.
- Carlill v Carbolic Smoke Ball Co: The advertisement contained very definite, promissory language and an expression of sincerity, therefore it was an offer.
- Partridge v Crittenden: The advertisement had very little detail and no promissory language, therefore it was an invitation to treat.
Acceptance: Subject to a Condition
- Masters v Cameron: A signed memorandum stated that the agreement was "subject to the preparation of a formal contract of sale which shall be acceptable to my [C’s] solicitors on the above terms and conditions."
- The court determined that the memorandum was a non-binding preliminary agreement, not a binding contract.
- Acceptance should not be subject to a condition.
Acceptance: Offer Expiry/Withdrawal
- Acceptance must occur while the offer is still in existence - the offeror can withdraw the offer at any time.
- An offeror can state a time limit for the offer.
- If no time is stated, the offer will expire after a reasonable time.
- To keep an offer open for a specific duration, the offeror must have a contractual commitment to do so.
- This promise to keep an offer open is only enforceable if there is consideration from the offeree.
Acceptance: Compliance with Offer Terms
- Acceptance must comply with requirements specified in the offer.
- For example, if the offer requires acceptance in person, then an email acceptance is not valid.
Acceptance: Effectiveness
- Acceptance is generally effective when communicated to the offeror by the offeree.
- Trevor said “Agreed” to Wendy - this constituted acceptance, and an agreement was formed.
- Exceptions to the rule:
- Postal acceptance rule
- Electronic communications
- Unilateral contracts
Acceptance: Postal Acceptance Rule
- Henthorn v Fraser: Acceptance by post is effective as soon as it is posted.
- This rule only applies when it is contemplated by both parties that the acceptance will be made by post.
- The offeror can state that acceptance by post is not acceptable, in which case the postal acceptance rule does not apply.
Acceptance: Fax/Email
- Acceptance made by fax or email is considered instantaneous and effective when it is received by the offeror.
Acceptance: Telex
- Brinkibon Ltd v Sthalwharenhandelsgesellschaft: Telex is an instantaneous communication method, not like post.
- Acceptance takes place where the telex is received.
Acceptance by e-mail
- E-mail is treated like faxes and telexes: instantaneous communication.
- Acceptance is generally considered to be effective when the email is received, not when it is sent.
- Legislation outlines the timing for receipt of electronic communications.
Contract Formation: Agreement and Certainty
- Contract law is primarily derived from common law rules established by courts.
- A contract is formed when specific requirements are met: agreement, certainty, consideration/deed, and intention.
Agreement
- Agreement is established by demonstrating a meeting of the minds between parties.
- This is typically tested by identifying an offer from one party and acceptance by the other.
- Offer: A manifestation of willingness to enter a bargain, inviting another party's assent to conclude the deal.
- Acceptance: Unqualified assent to the terms of an offer, matching the offer precisely.
- Counter-offer: A response that modifies the original offer, rejecting the initial proposal.
- Acceptance must occur while the offer is still valid and not subject to conditions.
- Offers can expire after a specified time or a reasonable period if no time is set.
- An offeror can withdraw an offer before acceptance unless there's a contractual obligation to keep the offer open.
- A promise to keep an offer open is only enforceable if the promisee provides consideration.
- Acceptance must meet the requirements set out in the terms of the offer.
Acceptance
- General rule: A contract is formed when the offeree communicates acceptance to the offeror.
- Exceptions:
- Postal acceptance rule: Acceptance is deemed effective when the acceptance letter is posted, as long as the offeror intended acceptance by post.
- Electronic communications: Acceptance of an offer via fax or email is considered instantaneous and effective upon receipt by the offeror.
- Unilateral contracts: Acceptance occurs when the offeree performs the required action specified in the contract (e.g., Carlill case).
Certainty
- A contract must be expressed in sufficiently clear and precise terms.
- If language has multiple possible meanings, courts will interpret the terms to determine the intended meaning.
- Uncertainty only poses a formation problem if the language is meaningless.
Formation Requirements: Overview
- Contract formation rules are established through common law.
- A valid contract requires four essential formation requirements: agreement, certainty, consideration/deed, and intention.
Formation Requirement: Agreement
- Agreement involves a "meeting of the minds" between parties.
- Typically, agreement is established through an offer and acceptance.
- A contractual offer demonstrates a willingness to enter a bargain, justifying the other party's understanding that their assent is invited and will create a contract.
- Acceptance is the unqualified assent to the terms of the offer, mirroring its terms precisely.
Agreement: Offer and Acceptance
- An offer is a statement of willingness to be bound by terms, inviting acceptance.
- A counter-offer rejects the original offer, creating a new offer.
Invitation to Treat
- Invitation to treat: an invitation to negotiate or make offers, not a binding offer.
- Advertising goods: the language used determines if it's an invitation to treat or a contractual offer.
- Carlill v Carbolic Smoke Ball Co: This case demonstrates a definitive, promissory language and expressions of sincerity leading to an offer.
- Partridge v Crittenden: This case illustrates less detail and a lack of promissory language, resulting in an invitation to treat.
Invitation to Treat: Display for Sale: Pharmaceutical Society of Great Britain v Boots Cash Chemists
- Facts: Boots ran a self-service chemist where non-prescription drugs were displayed on shelves.
- Legal issue: Whether the non-prescription drugs were "sold" to the customer before they took them to the cashier.
- Possible outcome 1: Boots argued that the display of goods was an invitation to treat, the customer made the offer to the cashier, and the cashier supervised by a pharmacist accepted.
- Possible outcome 2: The Pharmaceutical Society argued that the display of goods was an offer, and the customer accepted by selecting the goods.
- Outcome: Boots' argument prevailed.
Invitation to Treat: Advertisement: Partridge v Crittenden
- Facts: Partridge advertised "Bramblefinch cocks and hens, 25/- each" in a newspaper, potentially violating a statutory prohibition on selling wild birds.
- Legal issue: Was the advertisement an offer (violating the law) or an invitation to treat?
- Decision: The advertisement was an invitation to treat, inviting negotiation, not an offer.
- Reasoning: Advertisements, unless from manufacturers, are generally invitations to treat.
Formation Requirement: Acceptance
- Acceptance must demonstrate unqualified assent to the terms of the offer and be free of conditions.
- Masters v Cameron:
- Facts: Parties signed a memorandum for a property sale, subject to a formal contract acceptable to the seller's solicitors.
- Decision: The memorandum was a non-binding preliminary agreement as it was subject to a condition.
- The court identified three categories for "subject to contract" agreements:
- Finality in agreement with immediate binding effect, but with future restating in fuller form.
- Agreement on all terms, but performance conditional on the execution of a formal document.
- No binding agreement until a formal contract is executed.
- Acceptance must occur while the offer is still in existence and before its expiry or withdrawal.
- The offeror can specify an expiry time; otherwise, the offer expires after a reasonable period.
- An offeror can withdraw an offer at any time before acceptance unless contractually committed to keeping the offer open for a specified period.
- Electronic Transactions (Victoria) Act 2000 (Vic):
- Defines the time of receipt of an electronic communication to determine the effectiveness of the acceptance.
Formation Requirement: Certainty
- A contract must use clear and precise language.
- If the language has multiple possible meanings, the courts will interpret and decide which meaning to apply.
- Uncertainty is a formation problem only if the language is entirely meaningless.
Invitation to Treat
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An invitation to treat invites others to make offers.
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Displaying goods for sale in a store is considered an invitation to treat: A customer’s selection of goods is not considered acceptance, but an offer to buy. This offer is then subject to the cashier's acceptance or refusal at the time of payment.
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In Pharmaceutical Society of Great Britain v Boots Cash Chemists, the court ruled that displaying drugs for sale in a self-service store was an invitation to treat.
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The language used in an advertisement will determine whether it is an invitation to treat or a contractual offer
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In Partridge v Crittenden, the court held that the advertisement was an invitation to treat, not an offer to sell.
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In Carlill v Carbolic Smoke Ball Co, the court held that the advertisement was an offer due to the specific and promissory language used in the ad.
Acceptance
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Acceptance must be:
- Unqualified assent to the offer’s terms
- Not subject to a condition
- Masters v Cameron
- Occur while the offer is still in existence
- Comply with requirements specified by the offer
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In Masters v Cameron, the court concluded that “subject to contract” agreements can fall into one of three categories:
- Parties intend to be immediately bound and only seek a fuller/more precise contract document. Agreement is binding.
- Parties agree on all terms but performance of one or more terms are subject to a formal document being executed. Agreement is binding.
- Parties do not intend to enter a binding agreement until a formal contract is executed. Agreement is not binding.
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Offers expire after a reasonable amount of time unless a specific period of time is stated.
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An offeror is generally free to withdraw an offer before acceptance. Unless a promise is made to keep the offer open for a period of time, and in such a case, the offeror must receive a reasonable amount of consideration from the promisee to ensure enforceability.
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The offeror can specify acceptance requirements, eg "acceptance must be in person".
Communication of Acceptance
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Acceptance is generally effective when it is communicated to the offeror.
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There are exceptions to this rule:
- Postal acceptance rule
- Electronic communications
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The postal acceptance rule is an exception that applies when:
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Acceptance is made via post
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The offeror intended that the offer could be accepted by post
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Acceptance takes effect as soon as the acceptance is posted. (Henthorn v Fraser)
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In Henthorn v Fraser, the court upheld the postal acceptance rule and ruled that the acceptance occurred when the letter was posted, thereby preventing the offeror from withdrawing their offer and entering a contract with another party. The court emphasized that where post is a contemplated means of communication, acceptance is effective from its posting.
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Faxes, emails, and telexes are considered instantaneous communications. Acceptance is effective upon receipt by the offeror.
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In Brinkibon v Sthalwharenhandelsgesellschaft the court held that the postal rule does not apply to electronic communications.
- Telex communications are judged based on the same principle as other instantaneous methods - acceptance is effective on receipt.
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When electronic communications are used, legislation will generally define when an electronic communication has been received.
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Description
This quiz explores the concepts of offer and acceptance in contract law, focusing on how agreements are formed between parties. It dives into the definitions of promises and the distinction between offers and invitations to treat, illustrated with legal cases. Test your understanding of these fundamental legal concepts.
