Tests

Question 1

Formation of a Contract

Answer 1

• Offer
• Acceptance
• Intention to be Bound
• Consideration

Types of Contract:

• Unilateral contract - when someone promises something if the other person will do something. Acceptance comes when they do the thing.
• Bilateral contract - when both parties are under obligation to do something.

Question 2

Offer

Answer 2

Clear and unambiguous undertaking to be bound by specified terms, which becomes binding upon acceptance.
An offer must be definite in its terms.
An offer may be made to:
- A person; or
- A groups of persons; or
- All the world.
An invitation treat like an advertisement or a display of goods is not an offer.
Responses to offers:
- Accept the offer and all of its terms; or
- Reject the offer; or
- Ask for further information or see clarification; or
- Make a counter-offer meaning the rejection of the original offer and substitution of a new offer.
Termination of Offer:
- Revocation of the offer - by the offeror but can’t be done once it has been accepted.
- Rejection of the offer - by the offeree.
- Lapse of time - can put a time frame on the offer but if no time frame is set then it is up to the judge to deem the reasonable amount of time.
- Death of a party - cannot accept if the other party is dead unless you do not know they are dead.
- Supervening Incapacity - something happens that means the contract would no longer be able to be fulfilled and so the contract cannot be accepted.

Question 3

Acceptance

Answer 3

Unconditional assent by the offeree to the terms of the offer communicated to the offeror.
Acceptance can only be an unqualified assent to the terms of the offer.
General Principle for the manner of acceptance:
- The acceptance must come to the notice of the offeror before the offer expires (Note Postal Rule exception).
- The manner of acceptance may be specified in the offer.
- Mere silence will not constitute acceptance.
Ostensible Authority is a representation that a person has authority:
- Either express or implied by 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 the revocation is communicated to the offeror before the acceptance is received.
- Revocation of acceptance is not possible if the Postal Rule applies.

Question 4

The Postal Rule

Answer 4

• Acceptance is effective where written acceptance by post or telegram is contemplated by the parties.
  It becomes effective on posting, not when received.
• This rule applies to letters and telegrams only.
• Rule will not apply if letter (or telegram) is wrongly addressed due to fault of offeree.
• Need to imply that the rule applies to the offer, if only be circumstance.

Question 5

Intention to Create Legally Binding Relations

Answer 5

Presumptions:
1. Parties to Business and Commercial agreements intended to be legally bound.
2. Parties to a social or domestic agreement do not intend to be legally bound.
These may be rebutted if you have evidence. Onus is on the part seeking to rebut presumption.
Just having something written down does not make it legally binding. If you make it clear that the agreement is not intended to be legally binding, then it won’t be.
The surrounding circumstances have a lot to do with telling what kind of deal it was and how serious it was.

Question 6

Consideration

Answer 6

Consideration is the price paid by the promisee for the promise of the promisor.
Types of Consideration
- Executory Consideration - A promise to do something (or refrain from doing something) in the future.
- Executed Consideration - Something given or done at the moment the contract comes into existence.
Blanket Rule: It doesn’t matter what the value of the consideration is, that is for the parties to decide… Even if the party wanted to give consideration of a peppercorn then it would still count.
Sufficiency of Consideration:
Existing Duties - if you are already obligated to do the duty:
- Existing duty imposed by law.
- Existing contractual duty to the other party - if you are already bound to do it by an existing contract for the same party, but it’s ok if it is two different parties.
- Partial payment of a debt - note s92 Juristicture Act - acknowledgement by the creditor in writing that a receipt for part payment can override the whole deal. This is to make sure that there is still some value to be received.
Forbearance is agreeing to something that you are otherwise entitled to do, which is good consideration, like forbearance to sue, provided the case is at least arguable will be good consideration.