2. Agreement - Offer and Acceptance

Question 1

What is required for a communication to be an offer?

Answer 1

It must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of all material terms contained in the offer

Question 2

An expression of what is required for a communication to be an offer?

Answer 2

An expression of a promise, undertaking, or commitment to enter into a contract

Question 3

What are the requirments for a valid offer?

Answer 3

• The terms of the offer must be definite and certain enough (for a court to enforce)
• The offeree must have knowledge of the offer (thus, returning a lost dog is not an acceptance of a reward offer if the finder was not aware of thereward).

Remember:
A statement made to request information (what’s the lowest price you’d take for the car?) is not an offer.
A statement made in response to a request for information will not be sufficient to constitute an offer.

Question 4

How does an offeree acquire knowledge of an offer?

Answer 4

The offer must be communicated to them

Question 5

Is a statement made in response to a request for information an offer?

Answer 5

No

Question 6

What is a unilateral contract?

Answer 6

A contract which arises when an offeror promises to do something if the offeree does something in return and the offeree actually does this thing

Question 7

What is a revocation?

Answer 7

A retraction of an offer by the offeror

Question 8

How is an offer revoked directly?

Answer 8

By directly communicating the revocation to the offeree before acceptance

Question 9

How is an offer revoked indirectly?

Answer 9

If the offeree receives:

1. Correct information
2. From a reliable source
3. Of acts of the offeror which would indicate to a reasonable person that the offeror no longer wishes to make the offer (for example, the offeree receives reliable information that the offeror sold the car the offeree was offered)

Question 10

When becomes a revocation effective?

Answer 10

A revocation is effective when received by the offeree.

Question 11

What are two limitations on an offeror’s power to revoke?

Answer 11

1. Collateral contract
2. Beginning performance under an offer for a unilateral contract

Question 12

What is a collateral contract?

Answer 12

A separate contract which is collateral to an offer, in which the offeror promises (supported by consideration from the offeree), e.g., not to revoke an offer within an agreed time period.

Question 13

Why is a unilateral offer irrevocable once performance has begun?

Answer 13

Because it would be unfair on the offeree if the offeror could revoke the offer after the offeree has already begun performance

Question 14

Even though a unilateral offer is irrevocable once performance has begun, when is the contract formed and what is the effect of this for the offeree?

Answer 14

The contract is formed when performance is complete.

This allows the offeree to withdraw from performance at any time, even though the offeror cannot revoke after they begin.

Question 15

Even though beginning performance under a unilateral and bilateral offer both make the offer irrevocable, what are the differing reasons for this?

Answer 15

Unilateral: beginning performance would make it unfair for offeror to revoke, even though contract is not formed until completion
Bilateral: beginning performance accepts the offer and a contract is formed

Question 16

How may an offeree terminate an offer?

Answer 16

• An offeree may terminate an offer by rejection - either expressly or impliedly, such as through a counteroffer.
• Offeree can impliedly reject an offer by failure to accept within the time stated, or if no time is stated, within a reasonable time (you can’t accept my offer to sell you an ice lolly I’m holding an hour after I make the offer).

Question 17

What is an express rejection?

Answer 17

A statement by the offeree that they do not intend to accept the offer

Question 18

When is a rejection effective?

Answer 18

When received by the offeror

Question 19

What is the effect of a counteroffer?

Answer 19

It rejects the original offer and makes a new one, reversing the roles of the parties

Question 20

What is the test for whether a communication is a counteroffer or a mere inquiry consistent with the original offer being live?

Answer 20

Whether a reasonable person would believe that the original offer had been rejected

Question 21

Does rejection or counteroffer regarding a collateral contract affect the offer that the collateral contract concerns?

Answer 21

No

Question 22

How is an offer terminated through lapse of time?

Answer 22

If offeree does not accept within a time specified by the offeror, or within a reasonable time if no time is specified

Question 23

What does the court take into account when determining if a time period is reasonable for the purposes of lapse?

Answer 23

The subject matter of a contract, e.g. a reasonable time in which to accept an offer for perishable goods will be shorter than non-perishable

Question 24

What are the four ways in which an offer may be terminated by operation of law?

Answer 24

1. Death of offeror/offeree
2. Destruction of subject matter of offer/proposed contract
3. Supervening illegality
4. Failure of a condition contained in the offer

Question 25

What is acceptance?

Answer 25

A manifestation of unqualified assent to the terms of an offer

Question 26

Who has the power to accept an offer?

Answer 26

Anyone (including anyone within a particular class) to whom the offer was made

Question 27

Can the power to accept be assigned?

Answer 27

No

Question 28

Why does an agent accepting the terms of an offer on behalf of a principal not breach the prohibition on assigning the power to accept?

Answer 28

Because the agent is entering the agreement on behalf of the principal, and it is the principal who will be party to the contract

Question 29

Can a person accept an offer they are not aware of?

Answer 29

No.

Even if they unknowingly perform what would be required of an offeree, there is no contract if they were not aware of the offer.

Question 30

How can an offer be accepted?

Answer 30

Unless a specific method is stipulated in the offer, an offer can be accepted in any reasonable manner and by any reasonable medium

Question 31

What is the effect of an offeree accepting the offer but not through a method stipulated in the offer?

Answer 31

The acceptance is not valid, unless the method is just different but no less advantageous to the offeror

Question 32

Is someone who starts performance concerning a unilateral offer obligated to complete performance?

Answer 32

No

Question 33

Is the offeree in a unilateral offer required to notify the offeror that they have begun performance?

Answer 33

No

(applies to unilateral only)

Question 34

What is the offeree in a unilateral offer required to notify the offeror of?

Answer 34

That performance has been completed, within a reasonable time after completion

Question 35

If a non-unilateral offer is to be accepted by conduct, what must the offeree do?

Answer 35

Make the offeror aware, so as to satisfy the communication of acceptance requirement

Question 36

Must acceptance always be communicated?

Answer 36

Yes, unless the offer provides that acceptance need not be communicated

Question 37

Must waiver to communication of acceptance be express?

Answer 37

No, it can be implied through conduct. In such a case, the offeror must be aware of the offeree’s conduct so as to satisfy the requirement of communication.

Question 38

What is the postal rule?

Answer 38

Under the postal rule, acceptance by post creates a contract at the moment of posting, even if the letter gets lost in the post

Question 39

What are 3 instances in which the postal rule will not apply?

Answer 39

1. Letter not properly addressed and stamped
2. Unreasonable for acceptance to be communicated by post
3. Offer stipulates, expressly or impliedly, that acceptance is not effective until received

Question 40

What is the only element to which the postal rule applies?

Answer 40

The postal rule applies only to acceptance. It does not apply to other events in the contract, such as rejection or revocation.

Question 41

Does the postal rule apply to instantaneous communication, e.g. email?

Answer 41

No

Question 42

What is the battle of the forms?

Answer 42

If offers and acceptances are exchanged containing different terms and each says its terms control (a battle of the forms situation), it is usually the last set of terms that were not objected which control (the party who fired the last shot before performance began wins).

Question 43

What is a prevail clause?

Answer 43

A clause in a party’s draft contract stating that their terms will prevail over any terms which the offeror seeks to introduce

Question 44

What difficulty do prevail clauses present?

Answer 44

When the other party makes a counteroffer to enter into the contract on their terms, they are rejecting the whole of the original offer, which would include the prevail clause

Question 45

Additional Bullshit:

In an auction without a reserve price may the highest bidder in the auction bring an action to enforce the contract, if the bidder doesn’t accept the bid?

Answer 45

Yes. Under s57 (2) of the sale of goods act manifested in Barry v. Davies (2000).