Contract Law: Offer and Acceptance
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Questions and Answers

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?

  • 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'?

  • 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?

    <p>Partridge v Crittenden.</p> Signup and view all the answers

    What common misconception might someone have regarding displaying goods for sale in a store?

    <p>It is always an offer to sell.</p> Signup and view all the answers

    What was Wendy's initial response to Trevor's offer of $15 per kilo?

    <p>She counter-offered at $14 per kilo.</p> Signup and view all the answers

    What is required for an offer to be considered promissory?

    <p>It must involve a promise to do or refrain from doing something.</p> Signup and view all the answers

    What did Trevor do when Wendy made her counter-offer of $14 per kilo?

    <p>He accepted her offer.</p> Signup and view all the answers

    What distinguishes an offer from an invitation to treat?

    <p>An offer is intended to create a binding contract upon acceptance.</p> Signup and view all the answers

    According to the Placer Development Ltd v Commonwealth ruling, what makes a promise unenforceable?

    <p>A promise that does not specify the payment amount.</p> Signup and view all the answers

    Which of the following best describes an executory contract?

    <p>A contract that is legally binding but not yet performed.</p> Signup and view all the answers

    What criteria did the High Court use to determine the enforceability of the promise made by the government?

    <p>The promise must be enforceable against government discretion.</p> Signup and view all the answers

    What does it mean for an offer to be 'sufficiently certain'?

    <p>The offer must not leave any terms open to interpretation.</p> Signup and view all the answers

    What was M's argument for refusing to complete the transaction with C?

    <p>The agreement was a non-binding preliminary agreement.</p> Signup and view all the answers

    Which category describes the agreement between M and C as determined by the court?

    <p>Non-binding until a formal contract is executed.</p> Signup and view all the answers

    What constitutes a binding agreement in category one as per the court's categorization?

    <p>The parties intend to be bound immediately while restating terms.</p> Signup and view all the answers

    In what situation can an offeror withdraw their offer?

    <p>Anytime before acceptance occurs.</p> Signup and view all the answers

    Under what condition does acceptance become invalid?

    <p>If the offer has expired or been withdrawn.</p> Signup and view all the answers

    Which statement is true regarding acceptance to create a binding contract?

    <p>Acceptance must occur while the offer is still active.</p> Signup and view all the answers

    What may happen if a formal contract is required in an agreement?

    <p>The parties intend to create a non-binding agreement until formal documentation is executed.</p> Signup and view all the answers

    What is the implication of a signed memorandum according to the court's decision?

    <p>It is classified as a non-binding preliminary agreement.</p> Signup and view all the answers

    Under what condition is a promise to keep an offer open enforceable?

    <p>The promisee has provided consideration to the promisor.</p> Signup and view all the answers

    What happens if acceptance does not comply with the requirements specified in the terms of the offer?

    <p>The acceptance is not valid, regardless of other factors.</p> Signup and view all the answers

    When is acceptance generally considered effective?

    <p>When the offeree communicates acceptance to the offeror.</p> Signup and view all the answers

    What is the postal acceptance rule?

    <p>Acceptance is effective as soon as it is posted, if the offer allows postal acceptance.</p> Signup and view all the answers

    In Henthorn v Fraser, when was H's acceptance considered effective?

    <p>When H sent the letter of acceptance via post.</p> Signup and view all the answers

    What was F's legal standing when he attempted to withdraw his offer after H posted their acceptance?

    <p>F's attempt to withdraw was ineffective as the contract was valid.</p> Signup and view all the answers

    What must acceptance comply with to be valid?

    <p>It must meet the conditions specified in the offer.</p> Signup and view all the answers

    Which of the following is NOT an exception to the general rule regarding acceptance?

    <p>Acceptance by silence.</p> Signup and view all the answers

    When does acceptance occur if communicated by post?

    <p>As soon as it is posted.</p> Signup and view all the answers

    What must an offeror do to exclude the postal acceptance rule?

    <p>Indicate that acceptance by post is unacceptable.</p> Signup and view all the answers

    How is acceptance communicated if done via fax or email?

    <p>At the moment it is received by the offeror.</p> Signup and view all the answers

    In the Brinkibon case, where was the contract determined to be formed?

    <p>In Austria, where the acceptance was received.</p> Signup and view all the answers

    What was the court's decision regarding the postal acceptance rule for telex communication?

    <p>It is not applicable to telex communications.</p> Signup and view all the answers

    When is an email considered received, based on current legislation?

    <p>When the recipient’s server acknowledges receipt.</p> Signup and view all the answers

    What similarity is drawn between telexes and other forms of communication?

    <p>Both types must be received to constitute acceptance.</p> Signup and view all the answers

    What is the nature of communications established by the cases discussed?

    <p>They are all treated as instantaneous communications.</p> Signup and view all the answers

    A contract is formed when there is a meeting of the minds between the parties involved.

    <p>True</p> Signup and view all the answers

    Acceptance of an offer requires a varying response to the initial terms proposed.

    <p>False</p> Signup and view all the answers

    A counter-offer signals the acceptance of the original offer.

    <p>False</p> Signup and view all the answers

    Consideration is a key requirement for the enforceability of a contract.

    <p>True</p> Signup and view all the answers

    An offer can be a general invitation to treat, which does not constitute an enforceable contract.

    <p>True</p> Signup and view all the answers

    The manifestation of willingness to enter into a bargain is vital for defining an offer.

    <p>True</p> Signup and view all the answers

    The intention to create legal relations is not necessary for a binding agreement.

    <p>False</p> Signup and view all the answers

    A contract is enforceable only when all formation requirements are satisfied.

    <p>True</p> Signup and view all the answers

    An offer can be enforced even if the promisee has not provided consideration to the promisor.

    <p>False</p> Signup and view all the answers

    In the case of Henthorn v Fraser, H's acceptance was effective when F received the letter.

    <p>False</p> Signup and view all the answers

    Sending an email can be considered a valid acceptance if the offer specifies acceptance must be in person.

    <p>False</p> Signup and view all the answers

    Under the postal acceptance rule, acceptance is effective when the acceptance letter is posted.

    <p>True</p> Signup and view all the answers

    The contract is formed when the acceptance is communicated to the offeror in cases of unilateral contracts.

    <p>False</p> Signup and view all the answers

    An offeror can withdraw an offer after an acceptance letter has been posted but before it is received.

    <p>False</p> Signup and view all the answers

    For acceptance to be valid, it must comply with the conditions specified by the offer.

    <p>True</p> Signup and view all the answers

    Electronic communications can be treated as acceptance regardless of the terms of the offer.

    <p>False</p> Signup and view all the answers

    The agreement between M and C was a non-binding preliminary agreement.

    <p>True</p> Signup and view all the answers

    Acceptance can occur even if the offer is expired.

    <p>False</p> Signup and view all the answers

    For an acceptance to be binding, it must not be subject to any conditions.

    <p>True</p> Signup and view all the answers

    An offeror is entitled to withdraw their offer only if they made a contractual commitment to keep the offer open.

    <p>False</p> Signup and view all the answers

    The court suggested that agreements can be categorized into four distinct types regarding their binding nature.

    <p>False</p> Signup and view all the answers

    If a formal contract is required for an agreement, it is automatically binding once an informal agreement is made.

    <p>False</p> Signup and view all the answers

    One can accept an offer after it has been explicitly withdrawn by the offeror.

    <p>False</p> Signup and view all the answers

    The first category of agreements, as described by the court, allows parties to express intent to be bound while finalizing the terms.

    <p>True</p> Signup and view all the answers

    The time of receipt occurs when the electronic communication reaches the designated address.

    <p>True</p> Signup and view all the answers

    A contract can be formed even if the language used by the parties has multiple possible meanings.

    <p>True</p> Signup and view all the answers

    Uncertainty in contract language only raises a formation problem if the language is clear.

    <p>False</p> Signup and view all the answers

    In a contract, the place of receipt determines when the acceptance is effective.

    <p>False</p> Signup and view all the answers

    The Electronic Transactions (Victoria) Act 2000 (Vic) allows the offeror to designate how acceptance should be communicated.

    <p>True</p> Signup and view all the answers

    Acceptance is considered effective as soon as it is communicated for all forms of communication.

    <p>False</p> Signup and view all the answers

    In the case of telex communication, the postal acceptance rule applies.

    <p>False</p> Signup and view all the answers

    An offeror can state that acceptance by email is not acceptable.

    <p>True</p> Signup and view all the answers

    When acceptance occurs via fax, it is considered instantaneous.

    <p>True</p> Signup and view all the answers

    The acceptance in the Brinkibon case was formed in London.

    <p>False</p> Signup and view all the answers

    E-mail acceptance is treated the same way as postal acceptance.

    <p>False</p> Signup and view all the answers

    The development of common law regarding electronic communications provides guidance on the treatment of emails.

    <p>True</p> Signup and view all the answers

    Acceptance by telex should be treated differently from other instantaneous communications.

    <p>False</p> Signup and view all the answers

    Why is advertising considered an invitation to treat rather than an offer?

    <p>Advertising is seen as an invitation to treat because it invites potential customers to make offers rather than guaranteeing a contract upon acceptance.</p> Signup and view all the answers

    What role does the specific language in an advertisement play in determining if it is an offer or an invitation to treat?

    <p>The specific language, particularly if it is definite and promissory, determines whether the advertisement constitutes an offer or merely invites offers.</p> Signup and view all the answers

    In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, when were the drugs considered actually sold?

    <p>The drugs were considered sold only when the cashier processed the sale under the supervision of a registered pharmacist.</p> Signup and view all the answers

    How does the concept of an invitation to treat affect the display of goods in stores?

    <p>The display of goods in stores is treated as an invitation to treat, meaning customers make offers to buy the goods, which the seller can accept or reject.</p> Signup and view all the answers

    What was the significance of the case Carlill v Carbolic Smoke Ball Co in relation to advertising offers?

    <p>The case established that advertisements can constitute offers if they use clear, promissory language, indicating a serious intent to create legal obligations.</p> Signup and view all the answers

    What is required for an agreement to be formed in contract law?

    <p>An agreement requires a clear offer made by one party and an acceptance by the other party.</p> Signup and view all the answers

    Explain what constitutes a counter-offer in contract negotiations.

    <p>A counter-offer occurs when the offeree responds to an initial offer with new terms, effectively rejecting the original offer.</p> Signup and view all the answers

    What role does 'consideration' play in the formation of a contract?

    <p>Consideration refers to something of value exchanged between the parties, which is necessary for a contract to be enforceable.</p> Signup and view all the answers

    How does the concept of 'intention' influence contract formation?

    <p>Intention refers to the parties' desire to create a legally binding agreement, which is essential for the contract to be valid.</p> Signup and view all the answers

    What is meant by 'a meeting of the minds' in the context of contract law?

    <p>A meeting of the minds occurs when both parties mutually understand and agree to the essential terms of a contract.</p> Signup and view all the answers

    Describe what happens when acceptance does not mirror the terms of the offer.

    <p>If acceptance does not correspond precisely with the terms of the offer, it is no longer valid acceptance and is treated as a counter-offer.</p> Signup and view all the answers

    In what scenarios might an offer be withdrawn before acceptance?

    <p>An offer can be withdrawn any time before acceptance, unless the offeror has made it irrevocable, typically through consideration.</p> Signup and view all the answers

    What legal implications arise from an invitation to treat compared to an offer?

    <p>An invitation to treat is merely an indication to negotiate and does not constitute a binding offer, while an offer invites acceptance and creates an intention to form a contract.</p> Signup and view all the answers

    What does the Electronic Transactions (Victoria) Act 2000 (Vic) define as the 'time of receipt' in relation to electronic acceptance?

    <p>The 'time of receipt' is when the electronic communication reaches the designated address as specified by the offeror.</p> Signup and view all the answers

    How does the Electronic Transactions (Victoria) Act 2000 (Vic) determine the 'place of receipt' for a contract?

    <p>The 'place of receipt' is defined as where the electronic communication is considered to have reached the designated address specified by the offeror.</p> Signup and view all the answers

    What is required for a contract to be considered expressed with sufficient certainty?

    <p>A contract must be expressed in clear and precise terms, ensuring that even if there are multiple meanings, the language is not meaningless.</p> Signup and view all the answers

    In the context of the Electronic Transactions (Victoria) Act, when does receipt occur if the offeror has not designated an electronic address?

    <p>Receipt occurs when the offeror becomes aware of the electronic communication.</p> Signup and view all the answers

    What implication does the uncertainty in language have for contract formation according to the information provided?

    <p>Uncertainty in language only raises a formation problem if the language used is deemed meaningless; otherwise, it can be interpreted by the courts.</p> Signup and view all the answers

    In Pharmaceutical Society of Great Britain v Boots Cash Chemists, how was the customer’s role characterized in the sales process?

    <p>The customer was seen as making an offer to the cashier when selecting goods for purchase.</p> Signup and view all the answers

    What did the court conclude about the nature of the advertisement in Partridge v Crittenden?

    <p>The advertisement was determined to be an invitation to treat, not an offer.</p> Signup and view all the answers

    What is a key requirement for acceptance to be valid according to the provided content?

    <p>Acceptance must evidence unqualified assent to the terms of the offer and not be subject to any conditions.</p> Signup and view all the answers

    In the context of Masters v Cameron, what does it mean for acceptance to be 'unqualified'?

    <p>Unqualified acceptance means agreeing to the original offer without suggesting any changes or conditions.</p> Signup and view all the answers

    What does the outcome of the case consider regarding the concept of 'invitation to treat'?

    <p>The case reinforces that displaying goods for sale typically constitutes an invitation to treat rather than a direct offer.</p> Signup and view all the answers

    Why was the advertisement in Partridge v Crittenden significant with respect to statutory prohibitions?

    <p>It was significant as it clarified that if the ad was an invitation to treat, the seller did not breach the prohibition against selling wild birds.</p> Signup and view all the answers

    What general rule regarding acceptance can be derived from the provided content?

    <p>Acceptance is generally effective when it is communicated while the offer is still valid.</p> Signup and view all the answers

    What role does the wording of an advertisement play in determining if it is an offer or invitation to treat?

    <p>The wording determines its nature, as specific terms may indicate an offer rather than a mere invitation to negotiate.</p> Signup and view all the answers

    What was the significance of the memorandum in relation to M and C's agreement?

    <p>The memorandum was deemed a non-binding preliminary agreement, indicating the parties did not intend to be bound until a formal contract was executed.</p> Signup and view all the answers

    In which category did the court place M and C's agreement, and what was the rationale?

    <p>The court placed the agreement in the third category, concluding that the parties did not intend to create a binding agreement until a formal contract was executed.</p> Signup and view all the answers

    What conditions must be met for an offer to be considered still valid for acceptance?

    <p>Acceptance must occur while the offer is still in existence, and it must happen within a reasonable period if no expiration time is set.</p> Signup and view all the answers

    What happens when an offeror withdraws their offer before acceptance?

    <p>An offeror can withdraw their offer at any time before it is accepted, unless they have made a commitment to keep it open for a specified period.</p> Signup and view all the answers

    How does a contractual commitment to keep an offer open affect the offeror's ability to withdraw the offer?

    <p>If an offeror has made a contractual commitment to keep an offer open, they cannot withdraw the offer until the specified period has elapsed.</p> Signup and view all the answers

    What role does intention play in determining whether an agreement is binding or non-binding?

    <p>The intention of the parties at the time of making the agreement is crucial; if they intend not to be bound until a formal contract is signed, the agreement is non-binding.</p> Signup and view all the answers

    What are the implications if acceptance of an offer does not meet the terms specified in the offer?

    <p>If acceptance fails to comply with the terms of the offer, it is considered invalid, leading to no binding contract being formed.</p> Signup and view all the answers

    Why is it important for acceptance to occur within a reasonable period if no expiration is stated?

    <p>It ensures that the parties have a definitive timeframe for the agreement, which protects both the offeror and offeree from indefinite obligations.</p> Signup and view all the answers

    Advertising goods usually involves an invitation to ______.

    <p>treat</p> Signup and view all the answers

    In the case of Carlill v Carbolic Smoke Ball Co, the advertisement used very definite and promissory ______.

    <p>language</p> Signup and view all the answers

    Boots claimed that the non-prescription drugs were 'sold' when the ______ processed the sale.

    <p>cashier</p> Signup and view all the answers

    In the case of Partridge v Crittenden, the advertisement contained very little detail and no promissory ______.

    <p>language</p> Signup and view all the answers

    Displaying goods in a store amounts to an invitation to ______, not an offer to sell.

    <p>treat</p> Signup and view all the answers

    The agreement was made subject to the preparation of a formal contract of sale which shall be acceptable to my [C’s] ______.

    <p>solicitors</p> Signup and view all the answers

    M argued that he was entitled to refuse to complete because there was no binding ______ of sale between himself and C.

    <p>contract</p> Signup and view all the answers

    The court found that the agreement between M and C fell into the third category, indicating it was ______ to a condition and not binding.

    <p>subject</p> Signup and view all the answers

    Acceptance must occur while the offer is still in ______.

    <p>existence</p> Signup and view all the answers

    At common law, an offeror is entitled to ______ their offer at any time before it has been accepted.

    <p>withdraw</p> Signup and view all the answers

    The court suggested three ______ into which agreements that are ‘subject to contract’ could be placed.

    <p>categories</p> Signup and view all the answers

    M sought to recover the ______ after refusing to complete the transaction.

    <p>deposit</p> Signup and view all the answers

    If no period has been stated, the offer will expire after the passing of a reasonable period of ______.

    <p>time</p> Signup and view all the answers

    A promise to keep the offer open is only enforceable where the promisee has provided ______ to the promisor.

    <p>consideration</p> Signup and view all the answers

    According to the general rule, a contract is not formed until acceptance of the offer has been communicated by the ______ to the offeror.

    <p>offeree</p> Signup and view all the answers

    If the offeror states that the offer must be accepted in person, sending an ______ would not amount to acceptance.

    <p>email</p> Signup and view all the answers

    The postal acceptance rule provides an exception to the general rule that a contract is not formed until acceptance is ______ to the offeror.

    <p>communicated</p> Signup and view all the answers

    In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists, Boots argued that the display of goods was an invitation to ______.

    <p>treat</p> Signup and view all the answers

    In Henthorn v Fraser, H's acceptance was effective as soon as he ______ the letter.

    <p>posted</p> Signup and view all the answers

    In Partridge v Crittenden, the court ruled that the advertisement was an invitation to ______, not an offer.

    <p>treat</p> Signup and view all the answers

    The postal acceptance rule applies when acceptance occurs via post and the offeror intended that the offer could be accepted by ______.

    <p>post</p> Signup and view all the answers

    Acceptance must occur while the offer is still in ______.

    <p>existence</p> Signup and view all the answers

    Acceptance must comply with requirements specified by the ______ of the offer.

    <p>terms</p> Signup and view all the answers

    In the Wendy and Trevor example, the contract was formed when Trevor agreed to Wendy's offer without suggesting any ______.

    <p>variation</p> Signup and view all the answers

    Under the considerations of unilateral contracts, acceptance is effective when the offeree performs the ______.

    <p>condition</p> Signup and view all the answers

    To be valid, acceptance must not be subject to a ______.

    <p>condition</p> Signup and view all the answers

    The phrase 'evidence unqualified assent' refers to the need for acceptance to indicate ______ of the offer's terms.

    <p>agreement</p> Signup and view all the answers

    Unless advertisements come from manufacturers, they should be construed as invitations to ______ and not offers for sale.

    <p>treat</p> Signup and view all the answers

    The case of Masters v Cameron highlighted that an acceptance must comply with requirements specified by the terms of the ______.

    <p>offer</p> Signup and view all the answers

    An offeror is free to state that acceptance by post is not acceptable, in which case the postal acceptance rule does not __________.

    <p>apply</p> Signup and view all the answers

    Acceptance made by fax or email is considered __________ and acceptance is effective when the fax/email is received by the offeror.

    <p>instantaneous</p> Signup and view all the answers

    Telex communications should be treated in the same way as other instantaneous __________, not as communications via the post.

    <p>communications</p> Signup and view all the answers

    The acceptance took place where the telex was received, which was in __________, when the acceptance was communicated to the offeror.

    <p>Austria</p> Signup and view all the answers

    E-mail, like faxes and telexes, are a form of __________ communication.

    <p>instantaneous</p> Signup and view all the answers

    Legislation defines when receipt of electronic __________, such as e-mails, takes place.

    <p>communications</p> Signup and view all the answers

    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 __________.

    <p>posted</p> Signup and view all the answers

    A dispute arose between the parties regarding where the __________ had been formed.

    <p>contract</p> Signup and view all the answers

    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:
        1. Finality in agreement with immediate binding effect, but with future restating in fuller form.
        2. Agreement on all terms, but performance conditional on the execution of a formal document.
        3. 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

    • An invitation to treat invites others to make offers.

    • 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.

    • 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.

    • The language used in an advertisement will determine whether it is an invitation to treat or a contractual offer

    • In Partridge v Crittenden, the court held that the advertisement was an invitation to treat, not an offer to sell.

    • 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

    • 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

    • In Masters v Cameron, the court concluded that “subject to contract” agreements can fall into one of three categories:

      1. Parties intend to be immediately bound and only seek a fuller/more precise contract document. Agreement is binding.
      2. Parties agree on all terms but performance of one or more terms are subject to a formal document being executed. Agreement is binding.
      3. Parties do not intend to enter a binding agreement until a formal contract is executed. Agreement is not binding.

    • Offers expire after a reasonable amount of time unless a specific period of time is stated.

    • 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.

    • The offeror can specify acceptance requirements, eg "acceptance must be in person".

    Communication of Acceptance

    • Acceptance is generally effective when it is communicated to the offeror.

    • There are exceptions to this rule:

      • Postal acceptance rule
      • Electronic communications

    • The postal acceptance rule is an exception that applies when:

      • Acceptance is made via post

      • The offeror intended that the offer could be accepted by post

      • Acceptance takes effect as soon as the acceptance is posted. (Henthorn v Fraser)

    • 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.

    • Faxes, emails, and telexes are considered instantaneous communications. Acceptance is effective upon receipt by the offeror.

    • 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.

    • 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.

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