Contract 1: Offer

Question 1

Must contracts be in writing?

Answer 1

Only contracts for:
- Guarantees
- for sale or other disposition or land
- consumer credit agreements

And Deeds

Question 2

What are the requirements for a deed?

Answer 2

• in writing
• makes clear it is intended as deed
• executed by both parties in presence of witness
• delivered (“delivered as deed on X date”)

Question 3

What must be included in an offer?

Answer 3

• Clear and certain offer and intention to create legal relations
• Should not have “may” or “might”
• Must be communicated to offeree

Question 4

What is a unilateral offer?

Answer 4

• Promise to do something if offeree does something in return
• Acceptance only through performance

Question 5

What are examples of things that are not offers?

Answer 5

• Responses to requests for information
• Adverts / price lists
• displays of goods for sale
• invitations to tender
• price quotations
• auction sales (depending on sequence of events)

Question 6

When is offer and acceptance for auctions?

Answer 6

• auctioneer’s request for bids is an invitation to treat
• Bids are offers
• Fall of hammer makes auctioneers acceptance of offer final

Without Reserve Offers (2 contracts)
- bilateral contract proceeds on the usual analysis of an auction sale whereby the bidder makes an offer
- unilateral contract based on the promise that the auction will be without reserve. If a reserve is not applied and the goods are withdrawn from sale there is a breach of this unilateral contract and the highest bona fide bidder is entitled to be compensated not, however, entitled to the goods

Question 7

When does an offer terminate (offeror)?

Answer 7

Directly
- communicating revocation to offeree

Indirectly
- if offeree receives correct information, from a reliable source, of acts of the offeror which would indicate to a reasonable
- Eg. Told that by reliable 3rd party that offereor has just sold goods to someone else

Question 8

What might prevent termination of offer from offeror?

Answer 8

• If there is a collateral contract to keep original offer open (requires consideration)
• Offer irrevocable if performance is begun in unilateral offer (although no contract until finished)
• Acceptance of bilateral contract offer by performance (if no prescribed form of acceptance)

Question 9

When is offer terminated by offeree?

Answer 9

Rejection
- effective when received by offeror

Counter Offer
- form of rejection

Lapse of Time
- either specified or depending on what is reasonable

By operation of law
- death of offeror or offeree
- destruction of subject matter
- illegality
- failure of any condition of offer

Question 10

What are conditions for accepting of an offer?

Answer 10

Must be in response to offer
- from person who was given offer (or agent)

Must be unqualified

Must be in prescribed mode of acceptance
- can include by conduct if offeror is aware
- cannot be silence

Question 11

What are the requirements to accept with prescribed mode of acceptance?

Answer 11

Only mandatory if:
- clear words are used an other modes are excluded

Otherwise can use other method that is no less advantageous to offeror

Question 12

How are unilateral offers accepted?

Answer 12

• only when performance is complete
• offeree must give notice within reasonable time after completion

Question 13

When does postal rule apply?

Answer 13

Acceptance by post
- creates contract at moment of posting (in a post-box or hand of qualified postman)

Exception
- letter not properly addressed
- it was not reasonable to use use post
- postal rule is expressly disapplied in offer

Question 14

does the postal rule apply to instantaneous methods of communication?

Answer 14

No
- contract only formed on delivery/receipt

Question 15

If both sides try to use own standard forms for contract, which are used?

Answer 15

Last one to make offer on their terms (with out it being rejected) wins
- or last before performance

Prevail Clause
- Means clause stating that their terms will apply
- rarely effective as cancelled out by counter offer

Question 16

When is there an intention to create legal relations?

Answer 16

Re-Buttable Presumption against
- domestic situations
- social situations

Re-buttable presumption for
- commercial situations

Question 17

Can can you rebutt presumption of intention to create legal relations?

Answer 17

• Objective evidence
• if commercial context
• where friends/family enter race or competition together

Cannot rebut
- if one party knows other party had no such intentions

Question 18

How can you rebutt presumption of intention to create legal relations?

Answer 18

• Must be clear and unambiguous evidence to contrary
• Can be rebutted in the contract itself (ie. “subject to contract” or “binding in honour only”.)
• Oral statement in anger may also be enough

Question 19

When does a minor have capacity to enter contract?

Answer 19

Contract for Necessary goods/services
- suitable to the conditions in life of the person concerned;
- suitable to their actual requirements at time of sale and devilry.

Contract for Employment
- if terms are to their benefit

Certain contracts for acquisition of permanent interest in property
- unless they expressly repudiate contract

Question 20

What happens if minor enters contract without capacity?

Answer 20

Voidable
- may have to return property if considered just and fair
- can ratify contract once 18

Question 21

When is someone mentally in-capable of entering contract?

Answer 21

Means they are unable to:
- understand the relevant information
- retain the relevant information
- use the relevant information; or
- communicate the decision

Question 22

What happens if contract is entered by someone lacking metal capacity?

Answer 22

• Contract voidable if other party knew they lacked capacity.
• Can ratify upon recovery

Exception
- Contract entered into for necessary goods/services at a reasonable price

Question 23

What are the rules for someone entering contract whilst intoxicated?

Answer 23

Same rules as metal incapacity