Contract Law

Click here to load reader

  • date post

  • Category


  • view

  • download


Embed Size (px)


Contract Law. Matters affecting Formation Privity Formalities. Elements of Formation Offer Acceptance Intention Consideration. Content: Terms Express Implied. Offer. Expression to another of a willingness to be legally bound by the stated terms - PowerPoint PPT Presentation

Transcript of Contract Law

  • Contract LawMatters affecting FormationPrivityFormalitiesElements of FormationOfferAcceptanceIntentionConsiderationContent: TermsExpress Implied

  • OfferExpression to another of a willingness to be legally bound by the stated termsAustralian Woollen Mills v CommonwealthRequirementsStatement to offeror containing stated termsStatement is made to another personOfferor indicates a preparedness to be boundIf requirements are metIf requirements not metMere PuffTest: RMHow would RM interpret Ad. In position of offeree?Manufacturers Material Insurance v John Boardman Insurance BrokersSupply of InfoTest: CategorisationSupplying information is not an offer.Harvey v FaceyInvitation to treatAdvertisementTest: (TOF) Language & circumstanceAnything that states an intention to be legally bound is an offerRE Mt Tomah Blue MetalsDisplay of GoodsNo test. Does not constitute an offerTaking goods to counter isFisher v BellAdvertisement for AuctionNot an offerHarris v NickersonAuctions w/reserve Invitation to treatPayne v Cave

    UnilateralA uni. Contract involves an offer made by offeror to act/ref. Act if someone performs as requested. Offeree not bound to do so. Acceptance is also considerationCarlill v Carbolic Smoke Ball Company BilateralUnder [bilateral contracts] each party undertakes to do/ref. From doing something and in the event that either fails to perform, the law provides other party a remedyLord Diplock, United Dominions Trust v Eagle Aircraft ServicesStanding offersIndication of willingness of one party to provide goods/services over a specified periodMay be revoked at any time before acceptanceGreat Northern Railway v WhithamOptionsRevokable at any time unless consideration is provided to keep openMachineOffer is machine ready to accept $Acceptance is placing in $Terms cannot be introduced after this point except where reasonable time to view terms before carriage.Thornton v Shoe Lane Parking

    Prior to carriageProminent notices can be incorporatedSee incorporation of termsTickets for transportExemption/exclusion clauses only incorporated before formationSpecial issuesAmbiguousAuctions without reserveEarly English offerWarlow v HarrisonOR each bid represents an offer that can be accepted or rejected by auctioneerAGC Advances v McWhirterTenderUsually invitation to treatEXCEPT: Offer when highest bid acceptedHarvela Investments v Royal Trust Company of CanadaMust consider all tendersHughes Aircraft Systems International v Air Services Australia

  • TerminationWithdrawal by OfferorCan be withdrawn at any time before acceptanceGoldsbrough Mort & Co v QuinnThere needs to be actual communication to offereeBryne & Co v Leon Van Tien Hoven & CoCommunication by reliable source other than offeror or agent acceptableDickinson v DoddsUnilateral ContractsCannot withdraw offer once acceptance commencedAbbott v LanceOffers to World at LargeLess than actual communication acceptableUse same medium to withdraw offerShuey v United StatesRejection by OffereeRejection = terminationStevenson Jacques & Co v McLeanMust be communicated to offerorIf offeree responds with new terms = counter offerHyde v WrenchLapse of TimeOnce time limit expires, offer unable to be acceptedWhen not stated, time is set to reasonableManchester Diocesan Council for Education v Commercial & General InvestmentsFailure of conditionIf offeree fails to comply with condition of conditional offer, it is terminatedFinancings v StimsonDeathDeath of offerorOffer cannot be accepted after deathException: Property which can be completed by deceased estateDickinson v DoddsDeath of OffereeIf offeree dies, no offer.Exception: Sale of propertyReynolds v AthertonOptionsIf offer involved personal services, option will not enforce offerProperty may apply:If conditional contract enforceableIf irrevocable offer - unenforceable

  • AcceptanceAgreements is formed once an offer is acceptedRequirementsOfferee must intend to accept terms of offerIntention must be communicated to the offeror(Consensus Ad Idem)Acceptance must correspond to offerOfferee must have knowledge and act in reliance on offerCrown v ClarkeCounter offer is not acceptanceHyde v WrenchAcceptance couched in different language may be acceptable(IE different forms)

    ExceptionsAgreement not prevented if offeree seeks concession for performance before formationIf offerees conduct more favourable than terms of offer, agreement existsEx Parte FealeyRequest for alternate mode of acceptance not prevent contract formationClive v Beaumont

    Acceptance must be unqualifiedIf subject to exists, TOI to determine whether acceptance is unqualfiedMasters v CameronMere inquiry not acceptanceStevenson Jacques & Co v McLeanExceptionsNotification of AcceptanceMethod of acceptanceMethod of acceptance stipulated by offerorOfferor can stipulate how communication is affectedIf accepted in manner more advantageous to offeror offer validTinn v Hoffman & CoMethod for benefit of offereeIf method is for offerees benefit, they may chose to accept in another method Manchester Diocesan Council for Education v Commercial & General InvestmentsMultiple methodsPrescribed method may not be only effective method on construction of termsConduct may constitute acceptanceEmpirnall Holdings v Mark Machon Paull PartnersInstantaneous CommunicationContract will be formed when acceptance of the offer is communicated to the offeror. The contract is formed when and where the offeror receives that communication. Entores L D v Miles Far East Corporation

    Postal Acceptance RuleWhere circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary uses of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.Lord Hershell, Henthorn v FraserContract formed when letter is postedAdams v LinsellSome argument about precisely when this takes placePowel v LeeIf takes longer than usual to reach, risk is upon offerorHousehold Fire and Carriage Insurance v GrantDisplacement of RuleCan be displaced by offeror stipulating in contract that acceptance is not affected until actual receiptRevocation prior to acceptanceContract is formed even if offer is notified of rejection before receipt of acceptanceNunin Holdings v Tullamarine EstatesMultiple technologiesA offeree can use multiple technologies to accept an offerExpress Airways v Port Augusta Air ServicesAcceptance in Unilateral ContractSee notes pp. 09

  • Ambiguity and UncertaintyIndividual TermsAgreements to NegotiateSaving Ambiguous, Uncertain or Meaningless ContractsSaving Incomplete AgreementsVague, ambiguous and uncertain terms are voidMeaningless clauses = uncertain clausesFitzgerald v MastersCourt will try to uphold an agreement where parties show intention to be boundLend Lease Financial Planning v SouthcapIf parties to agree on terms at later time, not enforceable Agreement to agree.Booker Industries v Wilson ParkingIf terms are sufficiently certain and consideration is provided, may be enforceableCoal Cliff Collieries v SijehamaMethod of increasing certainty ref. 3rd partyLink to external standardUncertain clause may be enforceable if referenced to an external standardHawthorn Football Club v HardingLink to reasonableness standardCourts will apply principle of reasonable ness (RM) to make terms certainSeveranceInvalid term may be severed from contract and the remainder is enforceableFitzgerald v MastersDivisible ObligationsIf uncertainty arises in one area due to multiple types of obligations, it can be severed and save the contractLife Insurance Company of Australia v PhillipsWaiver of Removal of UncertaintyIf clause is entered into for sole benefit of one party, it may be waived and contract savedIf uncertainty removed before commencement, specific performance may be grantedMacAulay v Greater Paramount TheatresIncomplete AgreementAgreement contains mechanism to completeIf the parties do not finalise all the terms of the agreement but provide a mechanism for doing so, the agreement may be enforceable. Reference to 3rd party even essential terms may be decided by 3rd partyGodecke v KinwanBreakdown of mechanism to completeCourt will not substitute its own view if mechanism to complete failsMilnes v GeryBreakdown RE Sales of GoodsIf price is determined by third parties, governed under sales of goods act (1896) s.12(1)If prevented from making decision by party, the other may sue for damagess.12(2)If goods have been delivered and appropriated, they must pay for themss.12(1a)Implication of TermsCourts have shown a willingness to imply termsHillas & Co v ArcosMore likely when willing to be boundHillas & Co v ArcosMore likely when contract partially executedHall v BusstNo agreement on price, parties and subject matter no implicationHall v Busst

    Sale of GoodsMore likely to implyWill imply reasonable price if contract is silentFoley v Classique CoachesLikely to uphold agreement in futureLikely to infer price if contract makes reference to payment at reasonable priceSale of LandWill not imply priceLikely to uphold future agreementNot likely to imply price when contract refers to reasonable price. (except rent, which they may determine via their own mechanism). Also applies to unique goods.Ambiguous, Uncertain or Meaningless Contracts

  • Subject to AgreementsSubject to FinanceSubject to ContractIntention of parties can fall into three categoriesTest: Test of intentions. Language & conduct taken into accountMasters v CameronParties have finalised all terms and intend to be immediately bound to perform those terms but propose to have the same terms restated in a form that is fuller or more precise but no different in effectBINDINGBranca v Corbarro2.The parties have completely agreed upon all terms and intend no departure from or addition to those