Legal Issues for Accountants

Topics: Contract, Invitation to treat, Option contract Pages: 8 (2402 words) Published: August 20, 2013
ACCT90015 Legal Issues for Accountants

Week 4

This Week Page Title / heading goes here

Topics
•  What is a contract •  Formation of a contract •  Equitable estoppel

Contract Page Title / heading goes here

Meaning
•  An agreement that the law recognises as a contract

Formation of a Contract Page Title / heading goes here

Requirements
•  Offer •  Acceptance •  Consideration •  Certainty of terms •  Intention to create legal relations •  Formalities

Offer Page Title / heading goes here

Promise
•  A final proposition made by one party Ø  compare Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040 (Unreported, Palmer J, 15 November 2001) (‘subject to the Board’s approval’) Ø  question of substance, not form (see, eg, Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424)

Scope
•  May be made to the world at large Ø  Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, 268 (Bowen LJ)

Offer Page Title / heading goes here

Distinguished from Invitation to Treat
•  Invitation to make an offer (ie non-promissory) (see, eg, Harvey v Facey [1893] AC 552) Ø  ‘cases in which you offer to negotiate, or you issue advertisements that you have got a stock of books to sell, or houses to let, in which case there is no offer to be bound by any contract. Such advertisements are offers to negotiate — offers to receive offers’: Carlill [1893] 1 QB 256, 268 (Bowen LJ) •  Examples Ø  Partridge v Crittenden (1968) 132 JP 367 (advertisement) Ø  Grainger v Gough (Surveyor of Taxes) [1896] AC 325, 334 (price list) Ø  Timothy v Simpson (1834) 6 C & P 499, 500; Fisher v Bell [1961] 1 QB 394; Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 (shop displays) Ø  Spencer v Harding (1870) LR 5 CP 561 (tenders); compare Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 Ø  Payne v Cave (1789) 3 TR 148; Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 (call for bids at auction)

Offer Page Title / heading goes here

Does an Offer Remain Open Forever?
•  What happens if: Ø  no time limit applies to the offer and a reasonable time has passed since the offer was made? (see, eg, Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93, 110 (Dixon CJ and Fullagar J)); or Ø  the offer is rejected? (see, eg, Hyde v Wrench (1840) 3 Beav 334; compare Stevenson, Jaques & Co v McLean (1880) 5 QBD 346, 350 (Lush J))

Options
•  Even if the offeror has promised to keep the offer open until a certain time, the offer may be withdrawn at any time before it is accepted (by the offeree being made aware of the withdrawal) unless the promise to keep the offer open is supported by consideration Ø  see, eg, Byrne & Co v Van Tienhoven (1880) LR 5 CPD 344; Dickinson v Dodds (1876) 2 Ch D 463; Watson v Phipps (1985) 63 ALR 321

Acceptance Page Title / heading goes here

Unconditional Agreement to the Offer
•  Question of substance, not form Ø  see, eg, Brogden v Metropolitan Railway Co (1877) 2 App Cas 666; Trollope & Colls Ltd v Atomic Power Constructions Ltd [1963] 1 WLR 333; Stevenson (1880) 5 QBD 346, 350 (Lush J) •  Gibson v Manchester City Council [1978] 2 All ER 583, 586 (Lord Denning MR) Ø  ‘To my mind it is a mistake to think that all contracts can be analysed into the form of offer and acceptance. I know in some of the textbooks it has been the custom to do so; but, as I understand the law, there is no need to look for a strict offer and acceptance. You should look at the correspondence as a whole and at the conduct of the parties and see therefrom whether the parties have come to an agreement on everything that was material. If by their correspondence and their conduct you can see an agreement on all material terms, which was intended thenceforward to be binding, then there is a binding contract in law even though all the formalities have not been gone through’

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