Brief outline of administrative matters 1.1 1. Contract

Formation 1.0 Background and context – What is a contract? 1.1 1.0 What is a contract? Essential elements 1.2 1.1 Agreement – the offer 2.1 1.1 Agreement – the offer (cont) 2.2 1.2 Agreement – acceptance 3.1 1.2 Agreement – acceptance (cont) 3.2 1.3 Certainty and completeness 4.1 1.3 Certainty and completeness (cont) 4.2 1.4 Intention to enter legal relations 5.1 1.5 Consideration 5.2 1.5 Consideration (cont) 6.1 1.5 Consideration (cont); Estoppel 6.2 1.6 Estoppel (cont) 7.1 1.7 Privity 7.2 1.8 Capacity 8.1

2. Terms of contract 2.1 Ascertaining terms 8.2 2.2 Express terms 9.1 2.2 Express terms (cont) 9.2 2.3 Implied terms; construction of terms 10.1 2.4 Construction and exclusion clauses 10.2

3. Discharge of contract

3.1 Discharge by performance 11.1 3.2 Discharge by agreement 11.2 3.3 Discharge by breach/termination 12.1 3.4 Discharge by frustration 12.2

Summary and information about exam 12.2 #£#

1.#Contract#Formation#.#What#Is#A#Contract?#Essential#Elements#• Contract(–(#

o an#agreement#giving#rise#to#legally#enforceable#obligations#containing#elements#of#formation#o A#promise#or#set#of#promises,#for#which#a#law#gives#remedy#if#there#is#a#breach.#Or,#a#promise#

or#duty#that#is#recognized#under#law.#o A#body#of#law#that#provides#from#the#creation,#performance,#and#termination#of#duties#

#ELEMENTS(OF(FORMATION(

1) Capacity(–(two#or#more#parties#with#legal#capacity#2) Agreement(–#Offer#&#Acceptance#3) Certainty(#4) Intention(–(to#enter#legal#relations#5) Consideration((or(deed(or(estoppel)#6) Complies(with(formal(requirements#7) No(illegality((fraud,#duress#etc.)##

(Assumptions#

• Freedom#of#contract#–#choice#of#whether#to#enter,#who#we#contract#with,#when,#and#upon#what#terms.##3rd#party#vehicle#registry#contradicts#this.#

• Negotiation#prior#to#agreement#• Equal#bargaining#power#(what#about#tickets,#vending#machines#–#where#the#terms#come#first#and#

the#acceptance#comes#second#in#a#‘mute#offer’#• The#buyer#of#goods,#not#the#vendor##makes#the#offer.##Concepts#such#as#‘shrinkwrap’#(terms#not#

provided#until#product#is#opened#and#‘clickwrap’#contradict#this,#and#do#not#give#the#buyer#time#to#accept#the#terms.#

#Tensions#

• Individualism#v#welfarism#(Does#the#law#decide#what’s#good#for#the#consumer#–#Consumer#Law?)#• Certainty#v#flexibility#• Subjective#intent#v#objective#intent#(what#the#reasonable#intelligent#bystander#would#say#• National#v#international#

#######################

1.#Contract#Formation#–#The#Offer#(Agreement)#Agreement#

• Agreement:#coming#about#through#the#interlocking#mechanism#of#offer#and#acceptance.#• Requires#consensus'ad'idem#–#a#meeting#of#the#minds.#Cannot#be#ascertained#subsequently#• Agreement#can#be:#[1]#written;#[2]#oral;#[3]#implied#from#words/conduct/surrounding#

circumstances#–#Case:((Clarke#v#Dunraven#[1897]#AC#59;#[4]#imposed#by#law.(• Global(Approach:#used#where#offer#and#acceptance#are#unclear.##Here,#courts#look#at#the#‘totality#

of#the#evidence’#and#make#a#“judgment#call”#on#the#existence#of#the#argument#between#parties.#Case:(( Butler#Machine#Tool#Co#v#ExDCellDO#Corp#(England)#Ltd#[1979]#1#WLR#401#

• Agreement#takes#place#when#and#where#an#offer#is#accepted#with#consideration.((

Offer#• Offer:#A#manifestation#of#expression#by#one#party#(offeror)#to#the#other#party#(the#offeree)#of#a#

willingness#to#be#bound#by#certain#terms#if#the#other#party#is#prepared#to#accept#those#terms.#o There#must#be#a#promise/undertaking#o Legal#intention#o Serious#commitment#to#be#bound#upon#acceptance#

• Offers#cannot#be#[1]#puffs;#[2]#Supplying#Information;#[3]#Invitations#to#treat##Case:( Gibson#v#Manchester#CC#[1979]#1#WLR#294#Facts:#The#plaintiff#was#invited#to#make#a#formal#offer#to#purchase#council#housing#after#the#defendant#indicated#they#would#be#prepared#to#sell#for#£2180.#The#defendant#rejected#the#plaintiff’s#offer.#Held:#Objective(test#–#examining#conduct,#language,#objective#circumstances.#The#parties#still#negotiating#and#showed#no#intention#to#be#bound.#Ergo,#no#offer#by#defendant#as#the#formal#application#was#the#offer.#(#

Unilateral#Contract#• Unilateral(Contract(–(you#have#a#promise,#and#in#return#is#the#acceptance#and#performance#of#an#

act.##Only#becomes#contractual#once#the#act#is#carried#out;#e.g.#a#reward#contract.#• Only#one#party#(the#promisor)#assumes#an#obligation#and#is#bound,#but#not#until#the#requested#

action#is#performed#by#the#promisee#(on#the#faith#of#the#offer).#• Referred#as#a#“if…#then”#contract#• The#problem#is#consideration#–#something#in#return.##Consideration#is#“executed”#(ie,#acceptance,#

consideration,#and#performance#all#occur#simultaneously)#• A#promise#in#return#for#a#requested#action##

Bilateral#Contract#• Bilateral(Contract(S(promise#in#return#for#a#promise.##Both#parties#are#obliged#to#do#something#and#

the#act#of#the#doing/paying#occurs#sometime#later.##• Each#party#assumes#an#obligation#and#both#are#bound#immediately#upon#exchanging#promises.#• Consideration#may#be#“executory”,#consisting#in#a#mutual#exchange#of#promises'(“promise”#here#

meaning#“acceptance#of#an#obligation#intended#to#be#binding#in#law”)##

Offer#For#Sale#v#Invitation#To#Treat#• Offers#are#distinguished#from#invitations#to#treat#(which#lack#legal#commitment)#• Invitations#to#treat;#[1]#attempt#to#induce#offers#or#[2]#offer#to#engage#in#negotiations#• There#is#an#assumption#that#brochures,#catalogues,#newspaper#advertisements,#and#priced#goods#

on#display#do#NOT#constitute#offers,#as#it#would#lead#to#indeterminate#liability#in#advertising.##Case:( Partridge#v#Crittendon#[1968]#2#All#ER#421#(5)(Facts:##Appellant#accused#of#illegally#offering#to#sell#of#birds#under#‘Classified#Advertisements’#at#25#s#each.#The#words#‘offer#for#sale’#were#not#used.#Held:#An#advertisement#does#not#become#an#‘offer#for#sale’#until#a#transaction#has#occurred#and#consideration#has#been#given#by#the#offeree.#It#was#an#invitation#to#treat.#

Objective#Test#

Case:( Fisher#v#Bell#All#ER#(1960)#(1)(Facts:#The#defendant#(a#shopkeeper)#displayed#in#his#window#a#switch#knife#with#a#4#s#ticket#behind#it,#contrary#to#the#Restriction#of#Offensive#Weapons#Act#that#prohibits#‘offers#for#sale.’#Issue:#Was#the#knife#an#‘offer#for#sale’#or#an#‘invitation#to#treat?’#Held:#In#absence#of#statutory#definition,#‘offer#for#sale’#should#be#given#its#contractual#meaning.##Exhibiting#an#item#in#a#shop#window#comprises#an#invitation#to#treat,#the#acceptance#of#which#constitutes#a#contract.#Ergo,#no#liability#arises.###Case:# Pharmaceutical#Society#v#Boots#Cash#Chemists#[1952]#2#QB#795#(6)(Facts:#The#defendant#was#operating#a#self.serve#drug#store,#where#pharmaceuticals#were#displayed#upon#shelves.#The#buying#process#was#monitored#by#a#certified#pharmacist.##Held:#The#contract#is#not#completed#until#the#shopkeeper#accepts#the#offer.#Taking#an#item#off#the#shelf#does#not#constitute#acceptance#of#an#offer,#which#occurs#when#the#item#is#paid#for.####

EXCEPTIONS#–#Carlill#v#Carbolic#Smoke#Ball#Co#[1893]#

#Case:( Carlill#v#Carbolic#Smoke#Ball#Co#[1893]#1#QB#256#(4)(Facts:#Defendant#advertised#£100#for#a#customer#contracting#a#malady#following#the#correct#use#of#the#carbolic#smoke#ball.##The#contract#stated#that#£1000#had#been#deposited#in#the#bank#as#a#sign#of#their#sincerity.##The#plaintiff,#attacked#by#influenza,#believed#herself#entitled#to#collect#the#reward.#Held:#There#was#an#“offer#to#the#world”,#which#“ripened”#into#a#unilateral#contract#upon#performance#of#its#conditions.#The#1000#pounds#deposit#shows#sincerity#and#an#objective#legal#intention#to#be#bound.##Not#a#puff,#but##a#very#clear#PROMISE,#the#consideration#for#which#was#the#performance#of#the#terms.#Test:#look#at#the#plain#language,#what#would#members#of#the#public#have#taken#the#statement#to#mean?####

Auctions#(Case:( #Payne#v#Cave#(1789)#100#ER#502#Held:#The#call#for#bids#is#only#an#invitation#to#treat.#In#an#auction,#a#bid#formulates#an#offer#whilst#the#dropping#of#the#hammer#concludes#acceptance.##

• Auctions#‘without#reserve’#sell#items#to#the#highest#bidder,#as#there#is#no#reserve#price.#Is#it:#o A#unilateral#contract;#or#o 2#contracts#.#Promise#to#sell#to#the#highest#bidder#(unilateral)#whilst#there#exists#a#separate#

to#the#contract#of#sale#(bilateral).##This#is#probably#the#Queensland#jurisdiction#approach.#Tenders#

• Tenders#–#can#tender#invitations#(invitation#to#treat),#where#people#submit#tenders#they#indicate#readiness#to#supply#and#cost#(offer)#for#the#receivers#acceptance.#

• Tender#requests#for#highest#or#lowest#price#can#be#considered#a#unilateral#contract#(offer)#and#tender#submissions#(acceptance).##Can#add#clauses#saying#“pending#on#(circumstances)”#relinquishing#government#responsibility.##Very#hard#to#prove#damages.#

Case:# Harvela#Investments#v#Royal#Trust#[1986]#1#AC#207#Held:#Where#invitations#say#to#the#highest#or#lowest#bidder,#this#constitutes#an#offer#for#a#separate#unilateral#contract.#

#• There#is#no#rule#saying#that#

newspaper#advertisements#etc.#are#never#capable#of#being#offers.#

• It#is#a#matter#of##o [1]#construction;#and##o [2]#objectively#

ascertained#legal#intention#

Duration#of#An#Offer#An#offer#may#be#terminated#by:#[1](Lapse(of(time#–#can#specify#in#the#offer#itself#the#duration,#or#the#offer#will#relapse#after#a#reasonable#period#of#time.##Reasonable#amount#of#time#should#be#determined#by#the#circumstances,#language,#conduct,#reasonable#expectation#of#the#offeror#–#OBJECTIVE#Case:( Barrick#v#Clark#[1950]#SCR#177#Held:#The#nature#and#character#of#the#transaction#(e.g.,#the#subject#matter)#can#affect#the#period#of#reasonableness#–#circumstances,#conduct,#norms#for#the#type#of#transaction,#and#reasonable#expectations##[2]#Rejection(or(counterSoffer#–#counter.offer#is#an#implied#rejection#of#an#offer,#cannot#re.enliven#a#previous#offer.##Must#objectively#ascertain#intention#of#the#counter.offeror.#Case:( #Hyde#v#Wrench#(1840)#49#ER#132:#Facts:#1000#pound#offer#made#to#the#plaintiff#to#sell#estate#!#plaintiff#counter.offered#950#!#defendant#refused#950#!#plaintiff#attempted#to#restore#to#the#acceptance#of#1000#and#enforce#that#offer.###Held:#Invalid,#as#any#counter.offer#annuls#any#previous#offer.#([3]#Failure(of(Condition:#e.g.#while#stocks#last##[4]#Revocation(of(an(offer:#formally#withdraw#an#offer#at#any#time#before#it#is#accepted.###

• 2#exceptions:#contract#is#an#[1]#‘option’#contract,#[2]#offeree#must#be#informed#of#the#revocation.####• An#‘option’#contract#.#offer#to#keep#an#offer#open#for#a#specified#period#of#time.##An#option#is#

binding,#providing#there#is#consideration#(something#in#return).##• Offers#to#world#can#be#revoked#by#the#same#mean#in#which#they#originally#made#the#offer#–#same#

audience,#same#quantity.##• A#revocation#can#still#be#affected#even#if#the#offeree#is#informed#about#the#revocation#from#a#3rd#

party#(provided#3rd#party#=#reasonably#reliable#source.)###Case:( Dickinson#v#Dodds#(1876)#2#Ch#D#463#Facts:#The#defendant#offered#to#sell#his#house#to#the#plaintiff,#giving#him#a#signed#offer#with#an#expiration#date.#The#plaintiff#subsequently#heard#from#a#3rd#party#that#the#property#had#already#been#sold#to#someone#else#prior#to#the#expiration#date.#Held:#Revocation#does#not#need#to#be#delivered#by#the#offeror.#With#am#‘option’#contract,#no#party#is#bound#until#the#acceptance#occurs,#or#consideration#is#made.##

Withdrawal#of#a#Unilateral#After#Acceptance#Has#Begun###Case:( Mobil#v#Wellcome#International#(1998)#153#ALR#198#Facts:#Mobil#announced#an#incentive#scheme,#which#it#stated#was#subject#to#further#work.##This#incentive#scheme#was#said#to#give#tenure#benefits#to#its#franchisees#if#they#achieved#90%#or#more#in#the#‘Circle#of#Excellence’#over#a#number#of#years.#Within#that#period,#Mobile#withdrew#the#benefits.##Held:#[1]#No#offer#had#not#been#made#as#the#terms#too#vague;#[2]#No#rule#that#can’t#revoke;#[3]#But#may#be#a#breach#of#an#implied#promise#not#to#revoke;#[4]#No#such#implied#promise#in#this#case###

Battle#of#the#Forms#Last(Shot(Over(the(Bow(S(If#you#get#your#terms#and#conditions#over#the#counter#last#before#receipt.#Applies#between#suppliers#and#consumers.##Case:( Butler#v#ExDCellDO#Corp#(England)#[1979]#1#WLR#40#(18)(Facts:#B#(seller)#gave#a#quote#for#a#machine#with#terms#that#stated#‘would#prevail#over#any#terms#and#conditions#of#the#buyer’s#order.’#Included#a#price.escalation#clause.#E#places#order#with#a#counter.offer#for#fixed#price,#to#which#B#tears#off#the#slip#for#acknowledgement#of#receipt#with#a#note#saying#‘in#accordance#with#our#revised#quotation’#which#included#price#escalation#upon#delivery.##Held:#‘revised#quotation’#only#affected#price/deliverydid#not#reinstate#B’s#terms.#So#fixed#not#floating#price.#B’s#final#counter.offer#may#not#apply#after#the#offer#has#already#been#accepted.##Obiter:#The#forms#may#be#harmoniously#combined#if#the#differences#are#not#vast.#

1.#Contract#Formation#–#Acceptance#(Agreement)#Acceptance:#An#unqualified#external#manifestation#or#expression#of#assent#–#consensus#ad#idem.#Determined#objectively#by#the#courts.##

Rules(of(Acceptance(([1](Acceptance(By(A(Person(To(Whom(The(Offer(Was(Made(

• Not#a#3rd#Party(Case:( Carbolic#Smoke#Ball#–#the#offer#was#made#to#‘all#the#world’#and#was#so#validly#accepted#by#Carlill.##(([2](Acceptance(In(Reliance(Upon(The(Offer(

• A#cross.ffer#cannot#be#accepted#as#there#is#no#consensus#ad#idem#–#Case(Tinn#v#Hoffman#(1873)((Case:( R#v#Clarke#(1927)#40#CLR#227#Facts:#The#plaintiff#gave#information#to#the#police#regarding#murders#of#2#WA#policemen.#The#plaintiff#did#so#because#he#was#a#primary#suspect,#and#had#forgotten#the#£100#reward#whilst#giving#information.#Held:#Cannot#be#assent#without#knowledge#of#the#offer;#this#is#the#same#as#not#hearing#or#forgetting#about#hearing.#For#a#unilateral#contract#addressed#to#the#world,#the#plaintiff#must#act#in#reliance#upon#the#offer.###[3](Acceptance(Must(Be(Unqualified(And(Correspond(With(The(Offer((Mirror(Image(Rule)(

• Minor#divergences#benefitting#the#offeror#cannot#be#called#a#counter.offer#• Supplying#or#requesting#information#cannot#be#a#counter.offer.#

#[4](Must(Be(Communicated(To(The(Offeror(

• The#right#to#communication#may#be#waived#expressly#or#impliedly##Case(Carbolic#Smoke#Ball#Held:#“if#the#person#making#the#offer#…#intimates#that#it#will#be#sufficient#to#act#on#the#proposal#without#communicating#acceptance#…#performance##of#the#condition#is#sufficient#without#communication”##[5](Can(Silence(Be(Acceptance?(

• An#offeror#cannot#compel#the#offeree#to#take#positive#steps#to#reject#the#offer#• Silence#does#not#usually#constitute#acceptance#

Case:( Felthouse#v#Bindley#(1862)#142#ER#1037#Facts:#Felthouse#wrote#to#the#defendant#offering#to#buy#his#horse#for#£30#saying;#“if#I#hear#no#more#from#you,#I#consider#the#horse#mine#at#that#price.”#Nephew#did#not#reply#and#the#horse#was#sold#to#a#3rd#party.#Held:#Not#binding#–#no#specific#date#of#acceptance.##[6](Acceptance(By(Conduct(

• Leads#to#problem#of#‘inertia#selling’##Case:( Empirnall#Holdings#Pty#Ltd#v#Machon#Paull#Partners#Pty#Ltd#(1988)(Facts:#The#‘Man#Who#Never#Signed#contracts’#made#payments#to#an#architect#under#the#contract#without#having#signed#it.#The#architect#started#building,#which#led#to#property#issues,#when#the#defendant#tried#to#withdraw#from#the#contract.#Held:#The#defendant#had#taken#the#benefit#of#the#performance#offered.#Progress#payments#+#taking#the#benefit#of#the#architects#designs#and#work#was#considered#to#be#acceptance.##[7](Specified(Method(of(Acceptance(

• If#the#offeror#specifies#the#method#of#acceptance,#then#that#is#how#you#should#accept.###• If#no#method#of#acceptance,#can#accept#by#any#method#objectively#intended.#

Case:( Manchester#Diocesan#Council#for#Education#v#C&G#Investments#(1970)#1#WLR#241(Facts:#C&G#submitted#a#tender#(offer#to#buy).#The#tender#stated#that#acceptance#was#to#be#notified#by#letter#sent#‘by#post#addressed#to#the#address#given#in#his#tender’.##MD#sent#their#acceptance#to#the#CG's#solicitor,#which#was#not#the#address#given#in#the#offer.##C&G#knew#of#this#acceptance.##Held:#The#method#of#acceptance#prescribed#in#the#tender#was#not#mandatory#–#here#the#offeror#was#made#aware#of#the#acceptance#by#an#equally#effective#method#and#thus#the#acceptance#was#effective.#