Formation of a Contract - Week 4 Flashcards
What is the definition of a contract?
A legally binding agreement giving rise to legally enforceable obligations
What are the essential features of a valid contract?
Consensus in idem (agreement)
Consent
Capacity
Formality where required
Not unlawful
Not impossible
Not trivial
Not indeterminate
What are flawed contracts?
They may be:
Void – no contract ever existed
Voidable – valid until set aside by court
Unenforceable – not legally enforceable, binding in honour only
What is required for consent to contract?
There must be an intention to be legally bound
Rebuttable presumptions:
Commercial agreements – intention is present
Social agreements – intention is absent
Exception: Robertson v Anderson (2003)
What forms a contract?
Offer + Acceptance = Contract
Both can be express or implied, but must show agreement on the essentials (consensus in idem)
What are the features of a valid offer?
Definite and capable of acceptance
- The offeror intends to be bound if accepted
- Acceptance leads directly to contract formation
What is the difference between an offer and an invitation to treat?
An offer can be accepted to form a contract
An invitation to treat is an invitation to make an offer – cannot be accepted as is.
What are examples of invitations to treat?
Display of goods in shops
Tenders
Adverts (generally, unless conditions are met e.g. Carlill case)
How can an offer be revoked?
Express or implied revocation before acceptance
Cannot be revoked if a binding promise to keep it open is made
What are examples of implied revocation of an offer?
Rejection
Counter-offer (Wolf & Wolf v Forfar Potato Co)
Death, insanity or bankruptcy
Expiry of time limit
No response in reasonable time
Who can accept an offer?
Generally, only the person the offer was made to
Exceptionally, an offer to the public can be accepted by anyone (e.g. Carlill)
What is acceptance?
Final, unqualified assent to the offer
Usually express, but can be implied
Silence is not usually acceptance
What are the rules around communication of acceptance?
Must usually be communicated to be valid
If a method is required, it must be followed
Communication can be waived (e.g. Carlill)
What are the postal rules for contracts?
Rule 1 – Acceptance is effective when posted (Jacobsen v Underwood)
Rule 2 – Revocation must be received before acceptance is posted (Thomson v James, Dunmore v Alexander)
