CONTRACT LAW
CONTRACT LAW 1. The nature and development of contract law What is a contract? ‘A contract is a promise or a set of promises that is legally binding. A promise is an undertaking by one person to do something or refrain from doing something if another person does something or refrains from doing something or makes a promise in return.’- Contract Law Primer The Importance of Contract Law – its rationale ‘Contracts underpin our society’ – similar view expressed by Kirby P in Biotechnology Aus Pty Ltd V Pace (1988) We live in a democratic society, very core of almost everything we do. Commercial transactions Consumer transactions Increasingly the delivery of govt services Businesses: concerned with buying, selling, leasing, hiring etc. Without contracts goods and services could not be produced, sold or distributed Stephen Smith makes the observation that, from an ‘economic perspective, the primary reason a law of contract is needed is that most exchanges of any complexity cannot be performed simultaneously … Parties must have confidence that the other will perform’ (CCZ 5) Customers: purchase of goods or services facilitated by a contract Victoria legislation has developed to provide consumers with remedies where unfair terms are included in their contracts and the common law may also provide assistance in limited cases The Nature of Contract Law Contract law is largely judge made and contractual obligations are (subject to limited statutory exceptions) self imposed. a) Largely judge made: Trade Practices Act 1974 (Cth), the Goods Act 1958 (Vic), the Fair Trading Act 1999 (Vic) and the Insurance Contracts Act 1984 (Cth). Modern contract law is thus a mix of case law and statute law, although the former is still the most important ingredient, especially in non consumer transactions. b) Self imposed: In most cases parties are free to decide whether or not to enter into a contract and, if so, what obligations they will undertake towards each other. Finally, they are free to determine what the consequences of the breach of their obligations are to be ‐ whether damages will be recoverable and if so, how much. Comparative Law Increasingly globalised world, frequently contractual arrangements cross national borders e.g. Amazon.com India: The Indian Contract Act 1872 China: Much more recently, China developed its own statutory contract law (1999).
Part 1: Formation
PART 1: Formation
1.
2. Consideration
Agreement
3.
4.
5.
Intention
Capacity
Formalities
2. Agreement The nature of an agreement Agreement, “an understanding between two parties that one of them will do something, or will promise to do so, in return for the other doing something, or promising to do so.” 2 Elements: 1. Meeting of the minds (consensus ad idem) 2. At least one promise. Consensus ad idem: agreement to do the same thing. Common consent necess for binding contract Must be entered into voluntarily Whether parties have reached an agreement is determined objectively Agreement is required only about entering into a contract and its terms, not about the desirability of doing so, or the motivation actuating its formation Can exist even if one or both of the parties believe that they were forced to enter the contract because of their economic or personal circumstances Can exist even though one of the parties is not happy about its terms and has entered into it only reluctantly. International Perspectives: India and China require voluntary agreement. India: ‘contracts if made with the free consent of the parties’ s.10 China: neither party may impose their will on the other (a.3), nor external parties interfere with the right of an individual to enter into a contract (a.4). Abide by principles of fairness (a.5) and good faith (a.6)
Smith v Hughes
(1871) LR 6 QB 597 (Court of Queen's Bench) Smith (D) offered to sell oats to Hughes (P) P believed oats were OLD and purchased at price stated P discovered oats were NEW and D knew this D refused to take them back and sued for contract price 1st: for D Appeal: Cockburn CJ- condition of the oats (old or new) was not a term of the contract.
Offer and acceptance International perspectives: India: offer called a ‘proposal’ China: ‘a contract is concluded by the exchange of an offer and an acceptance’ (a.13), must manifest an intention to enter into the contract (a.14), have ‘specific and definite’ terms (a.14.a) and indicate that upon acceptance the offeror will be bound (a.14.b), acceptance ‘is the offeree’s manifestation of the intention to assent to an offer’ (a.21) Offer Most cases: agreement is reached by 1 party communicating to the other an “offer” which the latter “accepts.” Any form of words or conduct may amount to an offer or acceptance Offer: ‘a communication amounting to a promise to do (or not to do) something if the person to whom it is addressed responds in a certain way” General and Specific Offers ‐ to whom can an offer be made?
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 English Court of Appeal Carbolic Smoke Ball Company (D) produced the Carbolic Smoke Ball, designed to prevent users contracting a cold of flu. Advertised product reading, “100 pounds reward will be paid by the CSMC to any person who contracts the increasing epidemic influenza, colds of any disease...” P used as directed, caught flu, claimed reward D refused to pay P succeeded at 1st instance, D appealed Appellants (CSMC) argued ‘promise’ was made to the world, a puff Court rejected argument, pointing to deposit Offers distinguished from invitations to deal Party making communication must intend that an affirmative response will give rise to an agreement, rather than further negotiation Offer: intent is that affirmative response will give rise to a final agreement Invitation to deal: no intent for affirmative response to constitute agreement, merely further negotiation
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd
[1953] 1 QB 401 (English Court of Appeal) Boots, self-service store, pharmacy department Take items to cashier desk, pharmacist supervised sale P alleged D infringed Pharmacy and Poisons Act, 1933 Claim failed 1st, society appealed Contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. P case failed at the time, the sale was supervised as required by legislation.
Test - If communication clearly indicates a person does not intend to be bound by the recipients assent it will not be an offer - Mere use of the words ‘offer’ or ‘acceptance’ are not decisive but will be relevant - If it would be commercially inconvenient for a communication to constitute an offer it is more likely to be regarded as an invitation to deal - If further discussion is required between the parties before an agreement can be concluded (invitation to deal) - Communications inviting submission of tenders are generally invitations to deal Advertisements - Example of Invitation to deal Bait advertising - Trade Practices Act 1974 (Cth), s. 56 prohibits bait advertising whereby retail stores advertise goods at low prices to attract customers with the intention of selling them other goods. Auctions - When an auction is advertised as being ‘without reserve’ the auctioneer is offering to knock down the property to the highest bidder
AGC (Advances) Ltd v McWhirter
(1977) 1 BLR 9454 P put property up for sale, subject to reserve Highest bid $70, 000 P instructed to withdraw reserve, D bid $70, 500 Not accepted, P did not think D could pay Property sold to earlier bidder at $70, 000 D claimed once reserve was removed, there was an offer to sell to highest bid Rejected D submission finding that bidders at auctions are merely making offers that may or may not be accepted.
Tenders Standing offer- tenders are invited for the supply of goods and services when required over a period of time Fixed tender- relates to a fixed quantity of goods or a specific supply of services. Provision of tender constitutes an offer, which may be accepted or rejected.
Blackpool & Flyde Aero Club v Blackpool Borough Council
[1990] ER Tenders would not be considered if not received by a stipulated date Council error recorded Aero Club as having been received late, not considered P alleged breach of contract, claim council had promised to consider all tenders by due date Invitation to tender was an offer and the Club’s timely submission an acceptance.
Offers, requests for information, and statements of possible terms Offer: intention that affirmative response will give rise to an agreement Request for further info: not intended to have legal consequences, affirmative response will not give rise to a contract Termination Once terminated an offer can no longer be accepted - Revocation: Offeror withdrawals offer, must occur BEFORE acceptance Only effective when communicated to offeree (postal rule does not apply)
Dickinson v Dodds (1876) 2 Ch D 463, English Court of Appeal Dodds (D )offered in writing to sell house to Dickinson (P) P did not communicate acceptance, informed by 3rd party that property had sold to another buyer P left a formal acceptance at D’s residence D declined transfer P succeeded at 1st, D appealed
Byrne v Van Tienhoven (1880)
D offered to sell goods to P 1st Oct D posted letter revoking offer 8th Oct, received on 20th Oct P telegraphed accepting offer, 11th Oct P sued for damaged
United Nations Convention on Contracts for the International Sale of Goods, 1980 Article 16 (1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has despatched acceptance (2) However, an offer cannot be revoked: (i) It is indicated, whether by stating a fixed time for acceptance, that it is irrevocable (ii) If it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer
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Rejection or counter offer by the offeree: Terminates offer, when communicated to offeror Can change mind if communicated before rejection is received Counter: offer made in response to an offer, rejects original offer Failure to accept on time: Offers cannot be accepted after the time for acceptance has lapsed May be specified, must be reasonable UN Convention Death: If the offeree does not know of the offerors death If the terms of the offer contemplate that the contract could be performed by the offerors estate Overrides will Failure of a condition: May terminate on occurrence or non occurrence of a condition
International perspectives: Indian Contract Act 1872 (similar to Australia) S.3 provides broad def of what constitutes ‘communication,’ ‘any act or omission’ S.4 communication of a proposal (offer) is effective when it comes to the knowledge of the offeree China A.15 differences between invitations to deal (invitation to offer) and offers A.16 offers made by email A.17 and 18 withdrawal of offer and revocation A.19 irrevocable offers
Acceptance Unequivocal statement (oral, written or by conduct) by the offeree agreeing to the offer Relationship between offer and acceptance - Statement or conduct must occur in response to the offer - Compliance with the terms of an offer, acts done in response to the offer - E.g. offer of a reward for returning a lost dog will be accepted by returning the dog, even if the person who found the dog might have returned it anyway, if they were at least in part motivated by the offer for the reward this will be sufficient to constitute acceptance.
Crown v Clarke (1927) CLR (High Court)
WA Government (Crown) offered reward (£1,000) for info about murdered policemen Clarke was arrested, made statement, other men arrested Claimed reward No legal or moral claim
Who can accept an offer? Only by person to whom the offer is directed, single person, whole world Acceptance by conduct An offeree may accept an offer by their conduct. Test- ‘whether a reasonably bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted’ Correspondence between offer and acceptance Must be consistent with the offer, otherwise = counter offer Communication of acceptance How- must be communicated When- at the time acceptance is received by the offeror rather than when it was sent (fax: received when the message is given to the offeror, not when they read it) Where- deemed to occur where it is received rather than where it is sent from
Felthouse v Bindley (1862) 142 ER 1037 - Felthouse offered to buy horse from nephew - If I hear no more about him, I consider the horse mine’ - Did not reply, did not sell horse -Auctioneer should horse, Felthouse sued - Did the horse belong to Felthouse? -Not bound to sell Felthouse the horse on the day of the auction Exceptions to general rule: - Waiver: when offeror says to the offeree that they don’t have to communicate the acceptance o You can’t force a contract on someone o E.g. Carlill accepted the offer, but didn’t call and let the CSBC know. - Estoppel: occurs when the conduct of the offeror prevents them claiming communication has not occurred. o i.e. if acceptance is sent by fax but the ink in the receiving fax machine has run out and acceptance cannot be read - Postal Rule: exception to general rule that acceptance occurs when and where it reaches the offeror. o Applies to letters/telegrams, offeror must have contemplated acceptance Does not apply to: Instantaneous forms of communication, fax, phone, email If post is not contemplated If offeror makes it clear that acceptance will not be effective until a letter is received If letter is lost or delayed because it was wrongly addressed or stamped If it is unreasonable to use post, e.g. postal strike In Bressan v Squires [1974], view that parties had contemplated the post could be used and that therefore, prima facie, the postal rule could apply. However, court decided the postal rule did not apply because clause 1 of agreement provided ‘this option may be exercised by you by notice in writing …’. The Court interpreted 'by notice' to mean when communicated (actually communicated to the offeror).
Form If the offeror stipulates form: - If that method is made obligatory, acceptance will not be effective until this method is adopted - Merely suggested, fast or faster methods will be sufficient
Manchester Diocesan Council for Education v Commercial & General Investments Ltd [1970] 1 WLR 241 -
MD called for tenders C&G submitted, acceptance was to be notified by post MD sent acceptance to CGs solicitor, not address given CG knew of acceptance, but wanted to get out of buying property Method prescribed had not been mandatory- acceptance was effective
Electronic Transactions (Victoria) Act 2000 Where email is contemplated, acceptance occurs WHEN the email is sent If place of business is Melb, it will be accepted in Melb, even if person is in Hong Kong Unilateral Agreements Bilateral: both parties make promises to each other Unilateral: only one party makes a promise Refers to number of promises, not people Look to intention of the parties, rather than the words or the form used I will pay you $1000 if you paint my house (unilateral, no reciprocal promise sought) I will pay you $1000 if you find my lost dog (unilateral, no reciprocal promise sought) Use of unilateral contracts People are asked to do something, rather than asked to promise to do something Offeree is better off because they don’t have to make a promise in return Bilateral: offeror asks the offeree to do something, but also asks them to promise to do something Acceptance of an offer of a unilateral contract Daulia v Four Millbank it was suggested that in the case of offers of unilateral contracts, the offer is accepted and a contract is made when an unequivocal commencement of the act has occurred. Agreement without identifiable offer and acceptance Court must look at documents exchanged between parties and the conduct of the parties to determine whether an agreement has been reached.
Certainty- in all material aspects -
Vagueness or ambiguity: If you can’t give a definite meaning to the words used in an agreement, no contract can result - Illusory: Performance of a contractual promise a matter for the party’s discretion. E.g. ‘I promise to supply you with applies if you promise to pay me at a price to be determined by you’ - Incompleteness: Prices are required Possible to postpone determination of details for the future Importantly, however, the Court will imply a term that both parties must to ‘all that is reasonably necessary to enable a prescribed mechanism to operate’ (Booker Industries) – for example, by nominating their preferred arbitrator. - Agreements to agree: Agreements to enter into an agreement in the future are not binding and will not be enforced If it is partly completed a court may find that it is effective
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) NSWCA (CCZ 86) - Parties entered into a ‘heads of agreement’ to jointly develop mining rights - Failed to reach final agreement, years later negotiations were terminated - Sijehama alleged breach of ‘heads of agreement’ - Succeeded at trial (agreement to negotiate) The result of uncertainty If the uncertain aspect of the contract is not important and can be ‘severed’ from the remaining terms of the contract, the remaining parts will still be enforceable. Requires an assessment of the intention of the parties.
Life Insurance Co of Australia Ltd v Phillips (1925) High Court (CCZ90) - Phillips entered into 2 life insurance agreements, premiums = payment upon death or on a specified date - Entitled to house loan after 3 years - Sough to have policies set aside and premiums recovered - Were the premiums too vague to be enforced? - Too vague to be enforced - No ambiguity in relation to the death cover and premiums, they could be severed from the rest of the contract Conditional Contracts Parties may not wish to be immediately bound by an agreement they have reached. Making contract conditional, suspend or qualify their obligations until condition is satisfied E.g. subject to finance clauses, depends on wording used by parties
Part 1: Formation
PART 1: Formation
1.
2. Consideration
Agreement
3.
4.
5.
Intention
Capacity
Formalities
2. Agreement The nature of an agreement Agreement, “an understanding between two parties that one of them will do something, or will promise to do so, in return for the other doing something, or promising to do so.” 2 Elements: 1. Meeting of the minds (consensus ad idem) 2. At least one promise. Consensus ad idem: agreement to do the same thing. Common consent necess for binding contract Must be entered into voluntarily Whether parties have reached an agreement is determined objectively Agreement is required only about entering into a contract and its terms, not about the desirability of doing so, or the motivation actuating its formation Can exist even if one or both of the parties believe that they were forced to enter the contract because of their economic or personal circumstances Can exist even though one of the parties is not happy about its terms and has entered into it only reluctantly. International Perspectives: India and China require voluntary agreement. India: ‘contracts if made with the free consent of the parties’ s.10 China: neither party may impose their will on the other (a.3), nor external parties interfere with the right of an individual to enter into a contract (a.4). Abide by principles of fairness (a.5) and good faith (a.6)
Smith v Hughes
(1871) LR 6 QB 597 (Court of Queen's Bench) Smith (D) offered to sell oats to Hughes (P) P believed oats were OLD and purchased at price stated P discovered oats were NEW and D knew this D refused to take them back and sued for contract price 1st: for D Appeal: Cockburn CJ- condition of the oats (old or new) was not a term of the contract.
Offer and acceptance International perspectives: India: offer called a ‘proposal’ China: ‘a contract is concluded by the exchange of an offer and an acceptance’ (a.13), must manifest an intention to enter into the contract (a.14), have ‘specific and definite’ terms (a.14.a) and indicate that upon acceptance the offeror will be bound (a.14.b), acceptance ‘is the offeree’s manifestation of the intention to assent to an offer’ (a.21) Offer Most cases: agreement is reached by 1 party communicating to the other an “offer” which the latter “accepts.” Any form of words or conduct may amount to an offer or acceptance Offer: ‘a communication amounting to a promise to do (or not to do) something if the person to whom it is addressed responds in a certain way” General and Specific Offers ‐ to whom can an offer be made?
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 English Court of Appeal Carbolic Smoke Ball Company (D) produced the Carbolic Smoke Ball, designed to prevent users contracting a cold of flu. Advertised product reading, “100 pounds reward will be paid by the CSMC to any person who contracts the increasing epidemic influenza, colds of any disease...” P used as directed, caught flu, claimed reward D refused to pay P succeeded at 1st instance, D appealed Appellants (CSMC) argued ‘promise’ was made to the world, a puff Court rejected argument, pointing to deposit Offers distinguished from invitations to deal Party making communication must intend that an affirmative response will give rise to an agreement, rather than further negotiation Offer: intent is that affirmative response will give rise to a final agreement Invitation to deal: no intent for affirmative response to constitute agreement, merely further negotiation
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd
[1953] 1 QB 401 (English Court of Appeal) Boots, self-service store, pharmacy department Take items to cashier desk, pharmacist supervised sale P alleged D infringed Pharmacy and Poisons Act, 1933 Claim failed 1st, society appealed Contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. P case failed at the time, the sale was supervised as required by legislation.
Test - If communication clearly indicates a person does not intend to be bound by the recipients assent it will not be an offer - Mere use of the words ‘offer’ or ‘acceptance’ are not decisive but will be relevant - If it would be commercially inconvenient for a communication to constitute an offer it is more likely to be regarded as an invitation to deal - If further discussion is required between the parties before an agreement can be concluded (invitation to deal) - Communications inviting submission of tenders are generally invitations to deal Advertisements - Example of Invitation to deal Bait advertising - Trade Practices Act 1974 (Cth), s. 56 prohibits bait advertising whereby retail stores advertise goods at low prices to attract customers with the intention of selling them other goods. Auctions - When an auction is advertised as being ‘without reserve’ the auctioneer is offering to knock down the property to the highest bidder
AGC (Advances) Ltd v McWhirter
(1977) 1 BLR 9454 P put property up for sale, subject to reserve Highest bid $70, 000 P instructed to withdraw reserve, D bid $70, 500 Not accepted, P did not think D could pay Property sold to earlier bidder at $70, 000 D claimed once reserve was removed, there was an offer to sell to highest bid Rejected D submission finding that bidders at auctions are merely making offers that may or may not be accepted.
Tenders Standing offer- tenders are invited for the supply of goods and services when required over a period of time Fixed tender- relates to a fixed quantity of goods or a specific supply of services. Provision of tender constitutes an offer, which may be accepted or rejected.
Blackpool & Flyde Aero Club v Blackpool Borough Council
[1990] ER Tenders would not be considered if not received by a stipulated date Council error recorded Aero Club as having been received late, not considered P alleged breach of contract, claim council had promised to consider all tenders by due date Invitation to tender was an offer and the Club’s timely submission an acceptance.
Offers, requests for information, and statements of possible terms Offer: intention that affirmative response will give rise to an agreement Request for further info: not intended to have legal consequences, affirmative response will not give rise to a contract Termination Once terminated an offer can no longer be accepted - Revocation: Offeror withdrawals offer, must occur BEFORE acceptance Only effective when communicated to offeree (postal rule does not apply)
Dickinson v Dodds (1876) 2 Ch D 463, English Court of Appeal Dodds (D )offered in writing to sell house to Dickinson (P) P did not communicate acceptance, informed by 3rd party that property had sold to another buyer P left a formal acceptance at D’s residence D declined transfer P succeeded at 1st, D appealed
Byrne v Van Tienhoven (1880)
D offered to sell goods to P 1st Oct D posted letter revoking offer 8th Oct, received on 20th Oct P telegraphed accepting offer, 11th Oct P sued for damaged
United Nations Convention on Contracts for the International Sale of Goods, 1980 Article 16 (1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has despatched acceptance (2) However, an offer cannot be revoked: (i) It is indicated, whether by stating a fixed time for acceptance, that it is irrevocable (ii) If it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer
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Rejection or counter offer by the offeree: Terminates offer, when communicated to offeror Can change mind if communicated before rejection is received Counter: offer made in response to an offer, rejects original offer Failure to accept on time: Offers cannot be accepted after the time for acceptance has lapsed May be specified, must be reasonable UN Convention Death: If the offeree does not know of the offerors death If the terms of the offer contemplate that the contract could be performed by the offerors estate Overrides will Failure of a condition: May terminate on occurrence or non occurrence of a condition
International perspectives: Indian Contract Act 1872 (similar to Australia) S.3 provides broad def of what constitutes ‘communication,’ ‘any act or omission’ S.4 communication of a proposal (offer) is effective when it comes to the knowledge of the offeree China A.15 differences between invitations to deal (invitation to offer) and offers A.16 offers made by email A.17 and 18 withdrawal of offer and revocation A.19 irrevocable offers
Acceptance Unequivocal statement (oral, written or by conduct) by the offeree agreeing to the offer Relationship between offer and acceptance - Statement or conduct must occur in response to the offer - Compliance with the terms of an offer, acts done in response to the offer - E.g. offer of a reward for returning a lost dog will be accepted by returning the dog, even if the person who found the dog might have returned it anyway, if they were at least in part motivated by the offer for the reward this will be sufficient to constitute acceptance.
Crown v Clarke (1927) CLR (High Court)
WA Government (Crown) offered reward (£1,000) for info about murdered policemen Clarke was arrested, made statement, other men arrested Claimed reward No legal or moral claim
Who can accept an offer? Only by person to whom the offer is directed, single person, whole world Acceptance by conduct An offeree may accept an offer by their conduct. Test- ‘whether a reasonably bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted’ Correspondence between offer and acceptance Must be consistent with the offer, otherwise = counter offer Communication of acceptance How- must be communicated When- at the time acceptance is received by the offeror rather than when it was sent (fax: received when the message is given to the offeror, not when they read it) Where- deemed to occur where it is received rather than where it is sent from
Felthouse v Bindley (1862) 142 ER 1037 - Felthouse offered to buy horse from nephew - If I hear no more about him, I consider the horse mine’ - Did not reply, did not sell horse -Auctioneer should horse, Felthouse sued - Did the horse belong to Felthouse? -Not bound to sell Felthouse the horse on the day of the auction Exceptions to general rule: - Waiver: when offeror says to the offeree that they don’t have to communicate the acceptance o You can’t force a contract on someone o E.g. Carlill accepted the offer, but didn’t call and let the CSBC know. - Estoppel: occurs when the conduct of the offeror prevents them claiming communication has not occurred. o i.e. if acceptance is sent by fax but the ink in the receiving fax machine has run out and acceptance cannot be read - Postal Rule: exception to general rule that acceptance occurs when and where it reaches the offeror. o Applies to letters/telegrams, offeror must have contemplated acceptance Does not apply to: Instantaneous forms of communication, fax, phone, email If post is not contemplated If offeror makes it clear that acceptance will not be effective until a letter is received If letter is lost or delayed because it was wrongly addressed or stamped If it is unreasonable to use post, e.g. postal strike In Bressan v Squires [1974], view that parties had contemplated the post could be used and that therefore, prima facie, the postal rule could apply. However, court decided the postal rule did not apply because clause 1 of agreement provided ‘this option may be exercised by you by notice in writing …’. The Court interpreted 'by notice' to mean when communicated (actually communicated to the offeror).
Form If the offeror stipulates form: - If that method is made obligatory, acceptance will not be effective until this method is adopted - Merely suggested, fast or faster methods will be sufficient
Manchester Diocesan Council for Education v Commercial & General Investments Ltd [1970] 1 WLR 241 -
MD called for tenders C&G submitted, acceptance was to be notified by post MD sent acceptance to CGs solicitor, not address given CG knew of acceptance, but wanted to get out of buying property Method prescribed had not been mandatory- acceptance was effective
Electronic Transactions (Victoria) Act 2000 Where email is contemplated, acceptance occurs WHEN the email is sent If place of business is Melb, it will be accepted in Melb, even if person is in Hong Kong Unilateral Agreements Bilateral: both parties make promises to each other Unilateral: only one party makes a promise Refers to number of promises, not people Look to intention of the parties, rather than the words or the form used I will pay you $1000 if you paint my house (unilateral, no reciprocal promise sought) I will pay you $1000 if you find my lost dog (unilateral, no reciprocal promise sought) Use of unilateral contracts People are asked to do something, rather than asked to promise to do something Offeree is better off because they don’t have to make a promise in return Bilateral: offeror asks the offeree to do something, but also asks them to promise to do something Acceptance of an offer of a unilateral contract Daulia v Four Millbank it was suggested that in the case of offers of unilateral contracts, the offer is accepted and a contract is made when an unequivocal commencement of the act has occurred. Agreement without identifiable offer and acceptance Court must look at documents exchanged between parties and the conduct of the parties to determine whether an agreement has been reached.
Certainty- in all material aspects -
Vagueness or ambiguity: If you can’t give a definite meaning to the words used in an agreement, no contract can result - Illusory: Performance of a contractual promise a matter for the party’s discretion. E.g. ‘I promise to supply you with applies if you promise to pay me at a price to be determined by you’ - Incompleteness: Prices are required Possible to postpone determination of details for the future Importantly, however, the Court will imply a term that both parties must to ‘all that is reasonably necessary to enable a prescribed mechanism to operate’ (Booker Industries) – for example, by nominating their preferred arbitrator. - Agreements to agree: Agreements to enter into an agreement in the future are not binding and will not be enforced If it is partly completed a court may find that it is effective
Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) NSWCA (CCZ 86) - Parties entered into a ‘heads of agreement’ to jointly develop mining rights - Failed to reach final agreement, years later negotiations were terminated - Sijehama alleged breach of ‘heads of agreement’ - Succeeded at trial (agreement to negotiate) The result of uncertainty If the uncertain aspect of the contract is not important and can be ‘severed’ from the remaining terms of the contract, the remaining parts will still be enforceable. Requires an assessment of the intention of the parties.
Life Insurance Co of Australia Ltd v Phillips (1925) High Court (CCZ90) - Phillips entered into 2 life insurance agreements, premiums = payment upon death or on a specified date - Entitled to house loan after 3 years - Sough to have policies set aside and premiums recovered - Were the premiums too vague to be enforced? - Too vague to be enforced - No ambiguity in relation to the death cover and premiums, they could be severed from the rest of the contract Conditional Contracts Parties may not wish to be immediately bound by an agreement they have reached. Making contract conditional, suspend or qualify their obligations until condition is satisfied E.g. subject to finance clauses, depends on wording used by parties
