Agreement

Offer

Elements-

• Statement by offereor containing stated terms
• Statement made to another person
• Offeror indicates a preparedness to be bound

Bilateral or Unilateral

Offers to public at large (Carlill v Carbolic Smoke Balls)

What is not an offer

• Mere puff (Carbolic)
• Supply of information (Harvey v Facey)
• Invitation to treat. Advertisements, catalogue and websites pricing. Concern about stock by retailers.

Standing offers – A agrees to tender for 12 months. Offer is accepted by a each month.

Offer must be communicated (Cole v Cottingham) , the communication must be by the offeror or by someone authorised by the offerer(ibid)

Termination of Offer

• Can be withdrawn anytime before accepted (Goldsbrough Mort), this is even so the offeror has promised to keep the offer open for a period of time. If the offeree has provided consideration to the offeror to keep the offer open, the position is different.
• If offeree rejects the offer it is terminated and cannot be reopened. Stevenson Jaques & Co v Mclean

Acceptance

Offeree must accept terms of offer

Acceptance must be unqualified – “Subject to formal contract” clause would not make parties bound if their intention is not to have legal relationship until the formal contract. However, if they have intention they will still be bound.

Acceptance must be communicated to offeror

Postal Acceptance Rule – Henthhorn v Fraser. Only available when post is one of the accepted method of acceptance.

Acceptance in unilateral contract

Offer can only be accepted by whom it is made to = Reynolds v Atherton

Certainty and Completeness

Terms of agreement are formulated with sufficient certainty and agreement has been reached on all of the terms necessary to carry out the contract

“A contract containing language that is so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention’ will be unenforceable. The uncertainty may relate to one or more pivotal terms of agreement” Viscount Maugham in G Scammell.

Even here uncertain or ambiguous language is not used, if the parties have not agreed on all of the essential terms of the agreement, the contract will be unenforceable

Heads of agreement is an agreement to agree and is not enforceable

‘Subject To’ agreements

Subject to contract  -  Page 107

Intention to create legal relations

Before a contract can be created, the parties must have intended to enter into legal relations – Atkin LJ in Rose and Frank Co.

Objective test

• Subject matter of the agreement
• Status of parties
• Parties relationship
• Language used by parties
• Subsequent conducts of parties
• Context in which the agreement was made

New approach in Ermogenous in family context – pg 120

Onus is on party saying yes there is intention.

Circumstances indicating absence of intention

• Honour clauses
• Free gifts – p131

Consideration

Is there consideration?

• Consideration must move from promise(Dunlop)
• Benefit need not move to promisor, can move to third party
• Joint promisees – B and C agrees with A that A may quarry and remove stone from land owned by B in exchange for A paying royalties to B and C. C has no consideration but it’s a joint promisee and can sue(Coulls V Bagot’s)

Doctrine of privity – p145

• Only a person who is party of contract can sue – A and B agrees that if B does work for A, A will pay C $500. C cannot sue because he is a stranger to the consideration (Coulls)

Doctrine of consideration

• Same with above case if they sign contracts. C still cannot sue because theres no consideration

Consideration must be bargained for – p146

Consideration must be sufficient – Thomas v Thomas

Consideration need not be adequate – p148

Consideration can be nominal

Some consideration cases – p149

Consideration must not be past

No consideration required for formal signed agreements.

Performance of existing contractual duties – p155

Equitable estoppel

P175

Combe v Combe by Denning DJ– Where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted upon accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise cannot afterwards be allowed to revert to the previous legal relations as if no such promise had been made by him.

Elements – pg180

Establishing Contractual Terms

Person is bounded by the terms contained in an agreement signed by that person – L’Estrange v F Graucob Ltd. Exceptions-

• signature does not signify assent to the terms.
• Or when it is signed under fraud or misrepresentation: Pg 210.
• Document signed is not contractual in nature p210
• Non est factum – person does not know what he is signing p213

Could be bound if no document is signed (tickets)

• Reasonable notice of existence is given and was give n before or upon contract formation. Question of fact. P214 Onus is on defendant.
• Signs
• Website

Terms can be included by reference –p220

Oral Terms

Mere puff, Representation or term p223

A statement will be a term of contract if it is intended to be promissory in nature. A statement will be promissory in nature if the statement-maker ‘warrants’ its truth – Lord Denning LJ. Otherwise is a representation only.

• Words and conduct of the parties – Objective test

n   Harling v Eddy – Seller promised something was excellent in oral and exclude liability in written. Held that the oral term was a condition and enforceable.

• Statement-maker has control in relation to the information p227
• Oral statement not reduced to writing when writing up contract p227
• Interval of time

Collateral contract

P229

Consideration for the promisor’s promise is the promisee’s entry into the main conract – De Lassalle v Guideford. Elements examined in JJ Savage & Sons v Blakney

• A statement is made to induce entry into the contract
• The statement is relied upon
• The statement relied upon was promissory in nature

Consistency with main contract

Circumstances which collateral contracts are likely to be pleaded

Parol Evidence rule

Lord Denman in Goss v Nugent: if there be a contract which has been reduced into writing, verbal evidence is not allowed to be given of what passed between the parties either before the written agreement was made, or during the time that it was in a state of preparation so as to add to or subtract for in any manner vary or qualify the written contract.

Still operates in aus = Mercantile Bank of Sydney v Taylor

Extrinsic material also not allowed to be used to assist interpretation – Codelfa.

Only applies when terms of the agreement are wholly in writing – Gordon v MacGregor

Exceptions – p237

• Collateral contracts
• Written contract still not in force
• Evidence that the written contract was later discharged p238
• Evidence to imply a term
• Evidence necessary for rectification.

More exceptions p298

• Ambiguity
• Identification of subject matter
• Identification of parties
• Identification of real consideration
• Custom or usage
• Rectification

Implied Terms

Business efficacy p241 elements in: BP Refinery v Shire of Hastings

Five-tier rules

• The term must be reasonable and equitable
• The term must be necessary to give business efficacy to the contract, so that no term will be implied If that contract is effective without it
• The term must be so obvious that it goes without saying
• The term must be capable of clear expression
• The term must not contradict any express term of the contract

Inadmissible evidence

Subjective intention

Prior negotiation

Subsequent conduct

Types of promissory terms

Conditions 304

A term that lies at the root of the contract and is so important that any breach of it entitles the innocent party to terminate further performance of the contract and to claim damages for the breach

Test of essentiality – whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into contract unless he had been assured of a strict or substantial performance of the promise. – Tramways advertising

Can claim damage and terminate contract. Court doesn’t like this because they promote fixing the actual problem than terminating contract.

Warranties 306

“An agreement with reference to goods which are the subject of a contract, but collateral to the main purpose of such contract, the breach of which gives rises to a claim for damages but not to a right to reject the goods and treat the contract as repudiated” – Sale of Goods Act

Can only claim damage cannot terminate contract – Ellul v Oakes

Possible for termination if breached multiple times

Intermediate Term 308

Different remedies depending on gravity of breach – Hongkong Fir

-          Degree of performance up to the time of the breach compared with the performance required under the contract

-          Whether damages would adequately compensate the lost expectations of the innocent party

-          whether the expectations of the party in breach would be unfairly prejudiced by terminating the contract

-          the attitude and conduct of the party in breach, including the likelihood of the breach persisting.

Exemption Clause p313

-          Whether the clause forms part of the contract

-          Whether on the true construction of the clause it covers the liability that has arisen.

The nature and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract and where appropriate construing the clause contra proferentum in case of ambiguity.

Contra proferentum – construed strictly against party whose benefit is inserted. – Thomas national transport

Attempts to exempt negligence p 315

Trade Practices Act – p319

n   S68

More clauses p320

Formalities

Guarantees – S56(1) PLA requires contracts of guarantee to be in writing and signed by party to be charged in order to be enforceable.

Contracts relating to land must be in writing and signed – s59 PLA. P368

Contents:

• Act does not specify the content so common law must be followed” must contain all the essential terms of the agreement – Harvey v Edwards
• 4 elements  in content of writing – Twynam Pastoral v Anburn

u  Document must contain the parties to the contract

u  The property must be adequately described

u  If property is part only of a particular lot, care must be taken to specifically identify the portion being sold.

u  Consideration for the promise namely the price, must be recorded.

u  The principal terms of the contract must be disclosed

• Acknowledgement of agreement p371 – writing need to contain concluded agreement on sales – Tiverton Estates v Wearwekk

Signature:

• Must be signed by party to be charged
• Does not need to sign it physically as long as name appears p368

Joinder of documents 372

It is possible to join documents either by reference to another document or to some other transactions – Harvey v Edwards

Reference to document 374

• Document physically connected
• Document executed at same time

Documents cannot be joined if the document is a later document

Reference to a transaction 375

Electronic writing and signature 378

Effect of statutory non-compliance :common law 386

Contract is unenforceable – Actions cannot be brought for specific performance or for damages for breach

Contract valid to pass title – In case of two contracts for one land, it is not relevant if one contract lack in writing.

Recovery of money under unenforceable contract – If Seller’s default -> have to return deposite. Buyer’s default -> doesn’t have to return deposit

Part of performance 388

Doctrine of part-performance – if parties enter into an oral contract for sale of land and reply on that contract, one party does certain acts, the courts may be prepared to grant that person specific performance for the contract.

4 Elements

-              Act must be sufficient part of performance

-              Acts are unequivocally referable to such contract as that alleged. Acts must be connected with the contract. (Regent V Millett)

-              Acts done in reliance on the agreement and with knowledge of the other party

-              Acts done by party seeking to enforce contract

-              Oral contract must be otherwise enforceable

Estoppel for Oral statement

A party may be estopped from relying on the property law act. Waltons Stores v Maher.

To be successful, the assumption or expectation must be more than assumption that a contract exists. It must be that an enforceable contract exists, for example, a representation that the defendant will execute a formal contract -  Powercell Pty Ltd

Privity

General Rule: Only parties to the contract are legally entitled to enforce it

Australia case – Trident

Abrogated in s55(1) PLA in qld

-              Promisor – Party who actually makes the promise for the benefit of the beneficiary

-              Beneficiary – Incidental beneficiary cannot rely on the section, Re burns Philp Trustees(has Both competing view but this is a better view)

-              Promise is defined in s55(6)

-              Acceptance – Defined in s55(6)

Exceptions common law 423

If there is no statutory or preconditions are not meet to abrogate privity law.

Agency – Can sue. Can be protected by exemption clause if 4 conditions are met (NZ Shipping v Satterthawaite)

-              Must make it clear that the party is intended to be protected.

-              Must make it clear that the carrier is contracting not only on its own behalf but also as agent for the party in relation to the exemption

-              The agent was so authorised by the  third party,

-              Any difficulties concerning consideration moving from the party can be overcome

Related posts:

1. Australian Torts Law Notes II (QLD)
2. Australian Torts Law Notes I (QLD)
3. Australian Criminal Law Notes I (QLD)