Topic B - Agreement

Question 1

Smith v Hughes (1871) LR 6 QB 597

Answer 1

The reasonable person in the position of the offeree is the test for determining whether an offer has been made by an offeror to the offeree.

Question 2

OT Africa Lines v Vickers [1996] 1 Lloyd’s Rep. 700

Answer 2

Offeror is not bound to an agreement if the offeree knew that the offeror had made a mistake in the offer.

Question 3

Harvey v Facey [1893] AC 552

Answer 3

A mere statement of price is not an offer.

Question 4

Grainger & Sons v Gough [1896] AC 325

Answer 4

The transmission of a price list is not an offer. Instead, the transmission of a price list is an invitation to treat. Advertisements and catalogues are also invitations to treat.

Question 5

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401

Answer 5

Goods on a shelf at a listed price is an invitation to treat.

Question 6

Sommerville v Rice (1912) 31 NZLR 370

Answer 6

Revocation of an offer must be communicated by the offeror to the offeree to be effective.

Question 7

Payne v Cave (1789) 3 TR 148

Answer 7

Revocation of an offer terminates an offer.

Question 8

Kean v Dunfoy [1952] NZLR 611

Answer 8

After a reasonable period of time has elapsed following the making of an offer, that offer shall terminate. It is for the courts to decide what a reasonable period of time is, given the circumstances.

Communication of acceptance by the offeree to the offeror is necessary for acceptance to be effective. However, communication of acceptance is not necessary where an offeror has waived their right to receive communication of acceptance (see Commerce Commission v Telecom Mobile [2006]).

Question 9

Dysart Timbers Ltd v Nielson [2009] 3 NZLR 160

Answer 9

In some offers, there may be an implied condition that an offer may terminate if some fundamental change in circumstances occurs. For example, if A offers to sell one unit of corn to B, there may be an implied condition that the offer would terminate if a tornado destroys A’s crop of corn, as this would be a fundamental change in circumstances.

Question 10

Robinson v Hemachandra Holdings (NZ) Ltd (2006) NZCPR 245

Answer 10

The reasonable person in the position of the offeror is the test for determining whether an acceptance has been made by an offeree to the offeror. This test is the converse of the test from Smith v Hughes (1871).

Question 11

Brogden v Metropolitan Rly Co. (1877) 2 App Cas 666

Answer 11

Agreement may result from the conduct of the parties, not necessarily their words as put in a formal contract.

Question 12

Airways Corp v Geyserland [1996] 1 NZLR 116

Answer 12

If the offeror knows that the offeree is not accepting an offer, acceptance has not occurred.

Question 13

Lee v Sayers (1909) 28 NZLR 804

Answer 13

An offer may only be accepted by the person to whom it was offered.

Question 14

Hyde v Wrench (1840) 3 Beav 334

Answer 14

Counter-offers terminate the original offer. Thus, if an offeree makes a counter-offer to the offeror, and if that offeror rejects that counter-offer, the offeree cannot then attempt to accept the first offer, as it is already terminated.

Question 15

Reporoa Stores v Treloar [1958] NZLR 177

Answer 15

If an offeree makes a counter-offer by mistake while trying to accept the first offer, then the reasonable person in the position of the offeror test applies. Thus, if a reasonable person in the position of the offeror would perceive that a counter-offer had been made to them, then a counter-offer has indeed been made.

Question 16

Stevenson v Mclean (1880) 5 QBD 346

Answer 16

An inquiry usually does not amount to a counter-offer.

Question 17

Powierza v Daley [1985] 1 NZLR 558

Answer 17

The reasonable person in the position of the offeror test applies when determining whether a counter-offer or a mere inquiry has been made.

Question 18

Tinn v Hoffman & Co (1873) 29 LT 271

Answer 18

Cross-offers are identical offers that cross in the post. Cross-offers do not form a contract.

Question 19

Commerce Commission v Telecom Mobile [2006] 1 NZLR 190

Answer 19

Communication of acceptance by the offeree is not necessary if the offeror has waived their right to receive communication of acceptance.

Question 20

Allbrite Industries v P & C Gill Contractors [2002] NZCA 317

Answer 20

If an offeror stipulates a particular mode of acceptance, then the offeree must follow that particular mode if their acceptance is to be deemed valid. If an offeror merely suggests a particular mode of acceptance, then the offeree must not communicate acceptance by any mode less advantageous to the offeror than the one suggested. For example, if an offeror suggests that the offeree communicates acceptance via text message, then the offeree must not communicate acceptance via post. This is because post is less advantageous to the offeree as it can take several days for a letter to be received, whereas text messages are an instantaneous mode of communication.

Question 21

Corrick v Silich [2018] NZCCLR 21

Answer 21

Offeree must communicate acceptance via the form anticipated by the offeror. The rule in Allbrite pertains to the mode of communication, whereas in Corrick the rule pertains to the form of communication. A mode of communication is a particular type of communication (e.g. text message, email, post, etc). A form of communication is the correct use of a particular type of communication (e.g. sending an email to a personal email address instead of a business email address, or posting a letter of acceptance to the offeror’s home address instead of their business address, etc).

Question 22

Adams v Lindsell (1818) 1 B & Ald 681

Answer 22

Communication of acceptance via post is effective upon the posting of the letter of acceptance.

Question 23

Holwell Securities Ltd v Hughes [1974] 1 All ER 161

Answer 23

The postal rule from Adams does not apply if the offeror and offeree have a shared understanding that acceptance by the offeree is effective only upon actual communication between themselves and not the mere posting of a letter of acceptance.

Question 24

Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469

Answer 24

A process contract may bind the parties involved. Process contracts are common in tenders and auctions.

Question 25

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Answer 25

Unilateral offers may be accepted by an offeree performing their part of the contract.

Question 25

Mobil Oil Australia v Lyndel Nominees (1998) 153 ALR 198

Answer 25

Unilateral offers may be revoked but this depends on the circumstances. If an offeree has gone to considerable length to perform their side of the bargain, the offeror may not be able to revoke the offer, especially if the offeror knows that the offeree has gone to such a considerable length.

Question 26

Carruthers v Whitaker [1975] 2 NZLR 667

Answer 26

Preliminary agreements are binding if it is the intention of the parties involved to be legally bound.

Question 27

France v Hight [1990] 1 NZLR 345

Answer 27

Lexical connotations, structural and legal coherence and consistency, and intentions of immediacy all work together to imply that the parties are legally bound.

Question 28

Fletcher Challenge Energy v ECNZ [2002] 2 NZLR 433

Answer 28

For a contract to be valid, there must be an intention to be immediately bound upon acceptance and an agreement (or a means of reaching agreement) upon every term that is deemed legally essential or that the parties deemed to be essential.

Question 29

Oracle NZ v Price Waterhouse Administration [2010] 1 NZLR 553

Answer 29

Phrases such as “in principle” help to indicate whether an agreement is preliminary. This is especially the case in commercial agreements, where there is no point labouring over specifics until there is a general sense of agreement in principle between the parties.

Question 30

Butler Machine Tools Co v Ex-Cell-O Corporation [1979] 1 All ER 965

Answer 30

Where two parties have different standard terms and conditions, the party that sent the last document is successful in having their terms and conditions prevail. It may be argued that a more holistic approach to identifying contract formation would be beneficial to the law of contract.

Question 31

New Zealand Shipping Co v A M Satterthwaite & Co [1974] 1 NZLR 505

Answer 31

It may be argued that the English doctrine of contract formation (offer and acceptance, consideration, etc) is too inflexible and theory-laden.

Question 32

Boulder Consolidated v Tangaere [1980] 1 NZLR 560

Answer 32

An objective and holistic test for identifying contract formation may be more rewarding than the traditional dissection of a contract into offer and acceptance.