Formation of Contract Flashcards
Offer definition
A clear and unambiguous undertaking to be bound by specified terms, which becomes binding upon acceptance.
Offer terms
Offer must be definite and clear in its terms. An offer may be made to:
- A person; or
- A group of persons; or
- All the world.
Responses to offers
- Accept the offer and all of its terms; or
- Reject the offer; or
- Ask for further information or seek clarification; or
- Make a counter offer.
Counter offers definition
Amounts to the rejection of the original offer and the substitution of a new offer.
Termination of offer
- Revocation of offer
- Rejection of offer
- Lapse of time
- Death of a party
- Supervening incapacity
Acceptance definition
Unconditional assent by the offence to the terms of the offer communicated to the offeror.
Acceptance general principle
- The acceptance must come to the notice of the offeror before the offer expires.
- The manner of acceptance may be specified in the offer.
- Mere silence will not constitute acceptance.
The postal rule
- Acceptance is effective where written acceptance by post or telegram is contemplated by the parties.
- It becomes effective on posting (not on receipt)
- This rule only applies to letters and telegrams.
- Postal rule will not apply if letter (or telegram) is wrongly addressed due to fault of offeree.
Ostensible Authority
A representation that a person has authority:
- Either express or implied conduct; or
- By appointing a person to a position that would normally include the authority to enter into an agreement of that kind.
Revocation of acceptance
- Acceptance may be revoked if revocation is communicated to the offeror before acceptance is received.
- Revocation of acceptance is not possible if postal rule applies.
Intention to be Bound presumptions
- Parties to business and commercial agreements intend to be legally bound.
- Parties to a social or domestic agreement do not intend to be legally bound.
Executory consideration
A promise to do something (or refrain from doing something) in the future.
Executed consideration
Something given or done etc. at the moment of the contract coming into existence.
Sufficiency of Consideration - Existing duties
- Existing duties imposed by law.
- Existing contractual duty to the other party.
- Part payment of a debt.
But note 292 Judicature Act
Forbearance
- Agreeing not to do something you are otherwise entitled to do.
- Forbearance to sue, provided the case is at least arguable will be good consideration.
Property Law Act 2007
- Contracts for the disposition of land (s24)
- Dispositions of certain interests in Land (s250)
- Guarantees (s27)
Supervening Incapacity
If the offeror had full capacity when the offer was made but lost that capacity before the offer could be accepted, the offer would no longer be valid.
Invitation to treat
Preliminary communication that invites other to make an offer, but is not itself an offer, meaning it cannot be accepted to form a binding contract.
Unilateral Contract
One party makes a promise, the other party accepts by performing an act.
Bilateral Contract
Both parties make promises, and are both obligated to fufil them.
Consideration
The price paid by the promisee for the promise of the promisor.
Orthodox view of consideration
Consideration is essentially the value that is promised in return for a performance or promise from the other party. It can be money, goods, services, or a pledge to refrain from an action.
