Contract Law Final Exams Notes

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PART 2: AGREEMENT
A. Offer and acceptance
Offer
* Objective approach: offer must normally be interpreted in the sense in which it would reasonably be understood by an ordinary person, even though the offeror’s actual meaning was otherwise. * Definition: indication by one person to another of his or her willingness to enter into a contract with that person on certain terms. The ‘offer’ must indicate a willingness by the offeror to be bound without further negotiation as to the terms of the proposed contract. * Offer creates in the offeree a power to create a contract by their unilateral action. * Whether a statement is an offer depends on whether the person to whom it is addressed would reasonably interpret it as such. Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd * Display of goods in a store is an invitation to treat rather than offer. Somervell LJ

* The contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. * No reason for implying from this self-service arrangement any implication other than that it is a convenient method of enabling customers to see what there is and choose, and possibly put back and substitute, articles which they wish to have, and then to go up to the cashier and offer to buy what they have so far chosen. Birkett LJ

* It would be wrong to say that the shopkeeper is making an offer to sell every article in the shop to any person who might come in and that that person can insist on buying any article by saying ‘I accept your offer’. * The mere fact that a customer picks up a bottle of medicine from the shelves in this case does not amount to an acceptance of and offer to sell. * It is an offer by the customer to buy and there is no sale effected until the buyer’s offer to buy is accepted by the acceptance of the price. Australian Woollen Mills Pty Ltd v Cth

Facts
* 1946 Commonwealth government introduced scheme whereby wool purchased by manufacturers for local use was subsidised by the government. * AWM purchased large quantities of wool over the next two years. * June 1948, the government discontinued the subsidy scheme. * Because AWM’s wool stocks were so high, it required AWM to repay some of the money it had received. * AWM claimed this breached a unilateral contract between it and the government. Issue: Did the Commonwealth’s conduct amount to an offer to be contractually bound? Resolution: Judgment for the defendant (commonwealth).

Reasoning
* Between the statement, which is put forward as an offer capable of acceptance by the doing of an act, and the act which is put forward as the executed consideration for the alleged promise, there must subsist, so to speak, the relation of a quid pro quo (fair exchange). * Test: ask whether there has been a request by the alleged promisor that the promise shall do the act on which the latter relies. Such a request may, of course, be expressed or implied. This is the same as asking whether the ‘offer’ was made in order to induce the doing of the act. * The alleged promise must be made in return for the act performed. * Test: did the offeror expressly/impliedly request the doing of the act by the offeree? Offers can be made to the whole world or a more limited group Difference between an invitation to treat and offer is the offeror’s intention to be bound by any potential acceptance. Carlill v Carbolic Smoke Ball Company

* The specificity of the offer and the deposit of money into the account are sufficient evidence of an intention to be contractually bound. * An acceptance of an offer made ought to be notified to the offeror, in order that the two minds may come together. * As notification of acceptance is required for the benefit of the offeror, the offeror may dispense with notice to himself if he thinks it desirable to do so, and I suppose there can be no...
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