MIND MAP

3. Formation of a contract
A legally enforceable contract must have 3 elements:

1. Agreement

2. Intention to be legally bound

State clearly:
What is being bought/sold?
Price payable?
Was there an OFFER and
ACCEPTANCE?
NOTE: Offer + Acceptance = Agreement

Offer must be satisfied

1. Sufficiently complete
2. Promissory (Harvey v
Facey)
3. Intention to result in a
contract if accepted
(Partidge v Crittenden
and PSGB v Boots
Cash Chemist
(Southern) Ltd)
4. Addressed to a
person/identified group
(Carlill v Carbolic
Smoke Ball Co)
5. Has the offered
expired, been
withdrawn or a countoffer made?

Acceptance must be
satisfied
1. In the same terms as
offer
2. Made while the offer is
still in existence
3. Made by the person to
whom the offer was
addressed
4. Made in acceptable
form
How was the offer accepted?
1. Instantaneous (face-toface, fax or phone)
- Fax (N M
Superannuation Pty
Ltd v Baker)
2. Email similar to
instantaneous

Judged objectively reasonable person

test
What sort of agreement is it?
o Domestic not binding
o Commercial binding
NOTE: Presumptions are rebuttable.

Domestic agreements
Presumption
not intended to be
legally binding
(Woodward v
Johnston)
Presumption
rebutted (Todd v
Nicol)

3. Deed or consideration

Is it a formal or informal contract?

Formal deed = enforceable
contract
Informal Is there consideration?
o No unenforceable contract
o Yes see below

Commercial agreements
Presumption
intended to be
legally binding
(Esso Petroleum v
Commissioners of
Customs and
Excise and
Ermogenous v
Greek Orthodox
community of SA
Inc)

Consideration must be:

Something of value (Thomas v
Thomas)
Can be a thing, money or
promise
Cannot be something done or
completed in the past (Stylk v
Myrick)

designated info system

3.

Post Postal
acceptance rule
(Adams v Lindsell)

Updated semester 1, 2014

Curtin Business School
Developed by S.Mera (2011 Teaching Assistant)
Curtin University is a trademark of Curtin University of Technology.

CRICOS Provider Code 00301J (WA), 02637B (NSW)

Do I need to know all the required cases?

Yes, but you should also have a very clear idea of WHY you need to know these cases, i.e. which legal principle does each case support.
Please keep in mind that not all cases are relevant to the question. For instance, there is no point running through the facts of Thomas v Thomas when the question
is asking you whether a valid agreement has been reached. WHAT IS THE QUESTION ASKING? Look out for key words and refer to mind map above.
If the Q is asking about ...

You should mention these cases

The cases are the legal authority for the these legal principles

Privity of contract

Jackson v Horizon Holidays

Right to enforce contractual obligations.

Capacity

McLaughlin v Darcy

A minor can only enforce a contract for necessities.

1. Harvey v Facey
2. Partridge v Crittenden
3. PSGB v Boots Cash Chemists(Southern) Ltd
4. Carlill v Carbolic Smoke Ball Co
1. N M Superannuation Pty Ltd v Baker

Offer must be promissory.

Intention to result in a contract: invitation to treat.
Invitation to treat.
Offer rarely made to the world at large, but this case an exception.
General rule acceptance effective when received. Acceptance made by fax is
considered instantaneous; acceptance effective once received at offerors
end.
Postal acceptance Rule acceptance is effective when posted.

Agreement
Offer

Acceptance

2. Adams v Lindsell
Intention
Domestic agreements

1. Woodward v Johnston
2. Todd v Nicol

Commercial agreements

Consideration

1. Esso Petroleum Ltd v Commissioners of Customs and

Excise
2. Ermogenous v Greek Orthodox Community of SA Inc
1. Thomas v Thomas

2. Stylk v Myrick

Agreement between spouses not legally enforceable.

Presumption NOT rebutted, considering the circumstances.
Successful rebuttable of the presumption the court held that the agreement
between relatives was legally enforceable.
Commercial or business transactions presumed to be legally binding.
Existence of an intention to be legally bound ultimately depends on the
relevant facts!
May be a thing, money or promise to give or do something, OR a promise
NOT to do or give something. Needs to be sufficient not necessarily
adequate.
Past consideration is insufficient.

Updated semester 1, 2014

Curtin Business School
Developed by S.Mera (2011 Teaching Assistant)
Curtin University is a trademark of Curtin University of Technology.

CRICOS Provider Code 00301J (WA), 02637B (NSW)