Contract Formation

Contract Formation

1. AGREEMENT

   • Offer/ Acceptance
     • 1. Offer?
       • An expression of willingness to be bound immediately on certain terms without further negotiation
       • Yes
         • Unilateral
           • An offer made to the whole world to be accepted through performance
           • Carlill v Carbollic Smoke Ball Company (1983)
           • Australian Wollen Mills v Commonwealth (1954)
         • Bilateral
           • Between two private parties
       • No
         • Invitation to Treat
           • An invitation to another party to make further negotiations
           • Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)
     • 2. Acceptance
       • Unequivocal or unqualified response to the offer. It must meet all the same terms (mirror).
       • Communicated or inferred by conduct?
         • Conduct: through performing the conditions of the offer
           • Empirnall Holdings v Machon Paull Partners (1988)
             • Implied acceptance, the oferee takes the benefits
           • Mobil Oil Australia Ltd v Wellcom International Pty Ltd (1988)
             • Acceptance through meeting conditions of the specific language of the offer
             • Unilateral offer can be revoked
         • Does silence count?
           • No
             • Felthouse v Bindley (1862)
           • Only in very specific cases
             • MacRobertson Miller Airline Services v. Comissioner of State Taxation (WA) (1975)
               • Silence meant that the plaintiff was no stating disagreement with the terms and was therefore accepting
       • Was the acceptance received?
         • Postal Services
           • Postal acceptance rule, only valid if both parties have considered it as a form of acceptance
             • Acceptance is enforced as soon as it is sent
               • Bressan v Squires (1972)
         • Can it be revoked prior to acceptance?
           • Yes, has to be communicated and can be done by a third party
             • Dickinson v Dodds (1876)
               • Bilateral contract
             • Mobil Oil Australia Ltd v Wellcom International Pty Ltd (1988)
               • Unilateral Offer
       • Does it correspond with the offer?
         • No
           • Counter-Offer?
             • Changing the terms of the offer for the same exchange
             • Butler Machine Tool Co v Ex-Cell-O Corp (1979)
           • Mere enquiry
   • 3. Inferred
     • Agreement on meeting the terms with no clear offer or accceptance
       • Brambles Holdings v Bathurst City Council (2001)

2. CERTAINTY

   • Sufficiently Complete?
   • Terms clear and certain?
   • Illusory promise?
   • Agreement to negotiate

3. CONSIDERATION

   • The price paid for the promise
   • Benefit to promisor and detriment to the promisee in rturn for the premise
     • Currie v Misa (1875)
   • Unilateral offer?? performance = consideration
   • Sufficient?
     • A promise is enough
     • Adequate?
       • Peppercorn

4. Intention to Create Legal Relations

   • The courts will only enforce a contract if there was an intention to create a legal relationship and to use the court to enforce that promise. A mere promise is not enough
   • Traditional Apporach
     • Based on presumptions
       • Family and social settings people do not intend for it to be a legal relationshp
         • Balfour v Balfour (1919)
       • Commercial settings assume it is to create a legal relation unless explicitly stated otherwise
         • Rose & Frank Co v JR Crompton & Bros Ltd [1923]
         • "Letters of comfort"
           • Banque Brussels Lamert SA v ANI
             • Acording to presumptions, promissory language is assumed to be ITCLR
         • Preliminary Agreements ("Subject to contract")
           • Masters v Cameron (1954)
   • Modern Approach
     • Objective assesment
       • Emogenous v Greek Orthodox Community of SA (2002)
     • Common Intention
     • Look at the relevant circumstances and factors
   • Formalities
     • Requirements such as in writing, email, memorandum, note.
     • Depending on the specific statute
     • Under the common law, writing is NOT a requirement
     • S54A Conveyancing Act 1919 (NSW)
       • Requires a written contract and a signature to the party charged
         • Popiw v Popiw (1959); Harvey & Edwards Dunlop & Co Ltd (1927)
         • Pirie v Saunders (1961) signed to the party charged
         • If via email:
           • Electronic Transactions Act 2000 (NSW): ss 7 and 9
   • Part Performance
     • Equity may step in
     • "The acts must be unequivocally and on their own nature referable to some such agreement as that alleged"
       • Ogilvie v Ryan (1976)
     • Khouri v Khouri
   • Enforcement Options
     • Quantum Meruit
       • Pavey % Matthews Pty Ltd v Paul (1987)