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

What is required of the essential terms of an offer?

Answer 2

The essential terms must be definite and certain, and not too vague, uncertain, or incomplete

Question 3

What is the basic inquiry required to determine if an offer contains definite and certain terms?

Answer 3

Whether enough of the essential terms have been provided so that a contract including them would be capable of being enforced

Question 4

How does an offeree acquire knowledge of an offer?

Answer 4

The offer must be communicated to them

Question 5

What is a unilateral contract?

Answer 5

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.
* accepted by performance.

Question 6

What is a revocation?

Answer 6

A retraction of an offer by the offeror

Question 7

How is an offer revoked directly?

Answer 7

By directly communicating the revocation to the offeree before acceptance

Question 8

How is an offer revoked indirectly?

Answer 8

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

Question 9

What is required for revocation to be effective?

Answer 9

It must be communicated to the offeree.

• postal rule does not apply - revocation only takes effect when received by offeree.

Question 10

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

Answer 10

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

Question 11

Why is a unilateral offer irrevocable once performance has begun?

Answer 11

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

Question 12

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 12

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 13

How may an offeree terminate an offer?

Answer 13

By rejection, either expressly, or impliedly e.g. through a counteroffer

Question 14

What is an express rejection?

Answer 14

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

Question 15

When is a rejection effective?

Answer 15

When received by the offeror

Question 16

What is the effect of a counteroffer?

Answer 16

Acts as a rejection to the original offer and makes a new one, reversing the roles of the parties

(Cf. from request for information - not act as a rejection)

Question 17

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

Answer 17

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

Question 18

How is an offer terminated through lapse of time?

Answer 18

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

Question 19

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

Answer 19

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 20

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

Answer 20

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 21

How can an offer be accepted?

Answer 21

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

Question 22

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

Answer 22

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

Question 23

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

Answer 23

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

Question 24

What is the postal rule?

Answer 24

Acceptance by post is effective when posted.
* not apply to instantaneous methods of communication.

Question 25

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

Answer 25

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 26

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

Answer 26

Acceptance

Question 27

What is the battle of the forms?

Answer 27

In a battle between parties regarding whose standard terms to use, the last party to make an offer on their own terms is likely to win the battle, because the other party will have accepted that offer by their conduct

Question 28

What is a prevail clause?

Answer 28

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

Question 29

What difficulty do prevail clauses present?

Answer 29

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 30

What is required for revocation of a unilateral offer to be effective?

Answer 30

must be given the same notoriety.
- ie. published in source with same readership as the original unilateral offer.

Question 31

What does the postal rule provide?

Answer 31

When an acceptance is posted, it takes effect at the moment it is ‘properly’ posted.
- placed into an official letterbox or handed to operative authorised to receive letters.

Question 32

When will the acceptance still take effect under the postal rule?

Answer 32

where the acceptance is delayed or lost in the post.

Question 33

When is acceptance via instantaneous means effective?

Answer 33

if acceptance sent during ordinary office hours, it is effective when received and not seen.

Office hours - meaning depends on particular context of communication.