Part II Agreement

Offer
Offer is a statement of a willingness by one party to be bound to the terms stated immediately on acceptance without
further negotiation. A question of fact (AWM v Cth).
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Invitation to treat is NOT an offer e.g. self-service system (Pharmaceutical Society of Great Britain v Boots
Cash Chemists Ltd (1953))
o Offer is made by customer to purchase for stated price
Offers can be made to the whole world (Bowen LJ, Carlill v Carbolic Smoke Ball Co (1893))
o Unilateral contract offer is accepted by doing an act
o Notification of acceptance need not precede performance
Offers may be withdrawn at any time prior to acceptance if it is communicated to offeree (Dickinson v Dodds
(1876))
o No formal language of revocation is required; does not have to be personally communicated to offeror
(communication by 3rd party may suffice)
o Revocation may be inferred from conduct
o Offer can be revoked even if act has been part performed under a unilateral contract, unless there is an
implied ancillary contract (Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998))
Offers of option contracts must be kept open for the agreed time (i.e. irrevocable) if consideration has been
paid (Goldsborough Mort and Co Ltd v Quinn (1910))
An offer is terminated if rejected by offeree
o Asking for credit terms is not a rejection/counter-offer (Stevenson Jaques Co v McLean (1880))

Acceptance
Acceptance is an unqualified assent to the terms of an offer.
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Communication of acceptance is generally required

o Silence does not generally constitute acceptance (Felthouse v Bindley (1862))
o Silence by offeree as conduct can be construed as acceptance e.g. consistently taking actions
consistent with contract infers acceptance (Empirnall Holdings Pty Ltd v Machon Paul Partners Pty
Ltd (1988))
Acceptance must correspond with the offer (Butler Machine Tool Co Ltd v Ex-Cell-O Co Ltd (1979))
o Introducing new terms = counter-offer (Battle of the forms)
(Exception) Postal acceptance rule contract is formed upon posting of acceptance by offeree
o Only applies when parties contemplate that acceptance would be communicated by post
o If offer stipulates that it must be accepted by notice to offeror, postal rule does not apply
Knowledge of offer is required for acceptance. Offeree must perform conditions of the offer. (R v Clarke
(1927))

Certainty
Contracts must be sufficiently complete and sufficiently certain, with no illusionary promises.
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Sufficiently complete all essential terms are specified

Sufficiently certain
o Courts will strive to attribute a meaning to a clause which has multiple meanings. Courts will try to
ascertain the intention of the parties objectively. (Upper Hunter v Australian Chilling Freezing (1968))
o Where a clause is uncertain, courts will seek to sever the clause and enforce the rest of the contract.
If severance is not possible (e.g. clause forms material part of the contract) then the contract will fail
(Whitlock v Brew (1968))

Agreements to agree & agreements to negotiate generally unenforceable due to uncertainty (Coal Cliff
Collieries v Sijehama (1991)). However, if structure and machinery for negotiation are present (e.g.
arbitration clause) then A2N may be valid.
Conditional promises (subject to). 3 classes of case (Masters v Cameron):
Parties bound immediately, but propose to restate terms more precisely, but not different in
effect
Parties bound, but performance is conditional upon execution of a second contract
Parties not bound unless and until they execute a second contract
Effect of subject to depends on parties intention (qn of construction)

Consideration
Currie v Misa: A valuable consideration, in the sense of the law, may consist in some right, interest, property or
benefit accruing to the one party, or some forbearance, detriment, responsibility, given suffered or undertaken by the
other. Deeds do not require consideration.
Consideration must:
- Be referrable to the promise. The promise must be bargained for (and not a conditional gift), quid pro quo
(AWM v Cth)
- Move from the promise, but need not move to the promisor. Only one of the joint promises need to provide
consideration. (Coulls v Bagot)
- Be sufficient (valuable in the eyes of the law), but need not be adequate (in comparison with the market
value of the promise).
Existing legal duties
A variation to a contract necessitates fresh consideration. Promise to perform existing legal duty is not valid
consideration, unless:
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Duty is exceeded
o Police providing extra protection (Glasbrook bros v Glamorgan Count)
o Wife returning to husband when not compelled to do so (Popiw v Popiw)
o Mother taking care of child confers benefit to father (Ward v Byham)
Performance confers a practical benefit on the other party
o RB pays W additional $ to perform existing duty RB reduces the risk of paying liquidated damages
for delay (Williams v Roffey Bros)
Forbearance to sue or bona fide compromise of a legal claim is good consideration, providing that
performance is more advantageous to the promisee than remedies available to him for breach of contract
(Wigan v Edwards)

Other principles
- Past consideration is not good consideration. (Roscorla v Thomas)
- Must be distinguished from executed consideration (promise exchanged for act) (Re Caseys Patents) and
executory consideration (promise exchanged for a promise).
- Consideration must not be illusory i.e. promisor has unfettered discretion in relation to performance (Placer
Developments v Cth)
- Part payment of a debt is not good consideration (Pinnels case)
o P did not give up right to claim interest (even if P did, it would not be a binding contract as D did not
provide consideration) (Foakes v Beer)
Estoppel
- Promissory estoppel concerns a promise (about the future) by A to B
- Prevent unjust departure by one party from the assumption adopted by another in circumstances where party
would suffer detriment unless assumption adhered to.
- (1) assumption; (2) inducement; (3) detrimental reliance; (4) unconscionability

Intention to create legal relations

- Test of intention is objective
- Family and social situations presumption of no ITCLR
- Commercial situations presumption of ITCLR
o Parties may expressly exclude intention through honour clauses (Rose and Frank Co v JR Crompton
& Bros Ltd)
Contracts requiring written evidence
- Conveyancing Act 1919 (NSW) s54A retains the requirement from the State of Frauds that contracts for the
sale, lease or other disposition of land be evidenced in writing
- Oral variation is not enforceable, but oral discharge is effective matter of construction; determining parties
intention (Morris v Baron & Co)