Contract Law: Week One

Front 1

What is a unilateral contract?

Back 1

- Only two parties to the contract
-The offeree accepts the offer by performing his or her side of the bargain.

Front 2

What is a bilateral contract?

Back 2

- Two (or more) parties to a contract
- Each party exchanges something for the promise (e.g. money exchanged for a car)
- their actions are executory (performed after formation of contract)

Front 3

What is an invitation to treat?

Back 3

A communication by one person inviting another:
–to make an offer
–to enter into negotiations to make a contract

Front 4

4 elements to a contract

Back 4

- Agreement (offer and acceptance)
- Consideration
- Intention to create legal relations
- Agreement must be complete and certain

Front 5

How do you determine if an offer has been made?

Back 5

Objective test- reasonable person.
Whether it would appear to a reasonable person in the position of the offeree that an offer was intended, and that a binding agreement would be made on acceptance.

Front 6

Gibson v Manchester City Council
What is the issue and what is the holding?

Back 6

Was there a binding contract?

- No legally enforceable contract. Uncertainty over price and other terms. Language of the letter; note 'if' and 'may'

‘If you would like to make a formal application to buy your house, please complete the enclosed application form and return it to me as soon as possible’‘

may be prepared to sell the house to you at the purchase price of …

Front 7

Carlill v Carbolic Smoke Ball Company 1893
(Issue)

Back 7

Is there a binding contract between Carbolic Smoke Ball Company and Mrs Carlill?
Is there an offer? Or was it a ‘mere puff’? To whom was it made? Was it sufficiently certain?
Was acceptance of the offer communicated and, if so, when?
Did Mrs Carlill provide consideration?

Front 8

Carlill v Carbolic Smoke Ball Company 1893
(Holding)

Back 8

The advertisement should be construed objectively according to what an ordinary (reasonable) person reading it would think, rather than by reference to what the Carbolic Smoke Ball Company actually intended.

There was a clear offer - express promise to pay £100 upon certain events taking place

Depositing of £1000 in the bank demonstrates more than a mere puff

It was sufficiently certain – but different judges construed it differently
Lord Justice Lindley – reward is offered to anyone who contracts the disease within a reasonable time frame after having used the smoke ball

It is possible to make an offer to the world at large – however, contracts only formed with people who act in accordance with the offer. That act is acceptance; communication can be dispensed with.

Front 9

MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975)
(ISSUE)

Back 9

Is a pre-paid ticket an agreement (contract)?

Front 10

MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975)
(HOLDING)

Back 10

- The issuing of a ticket is not the conclusion of an agreement.

Barwick CJ:
Ticket is a receipt of payment
Passenger makes the offer by presenting at the airport; airline accepts by carrying passenger

Front 11

Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)
(Issue)

Back 11

Offer v Invitation to Treat
-What is the offer and what is the acceptance?

Front 12

Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)
(Holding)

Back 12

Display of goods= invitation to treat
Offer = customer taking the goods to the checkout and indicating the goods to be purchased
Acceptance = shopkeeper accepting payment for the goods (under supervision of Pharmacist if prescription goods)

Front 13

AGC (Advances) Ltd v McWhirter (1977)
(Issue)

Back 13

Auctions; when is a contract formed?
What is the offer and what is the acceptance?

Front 14

AGC (Advances) Ltd v McWhirter (1977)
(Holding)

Back 14

Auction (call for bids) = invitation to treat
Bid= Offer
No contract until the bid is accepted. (acceptance/ fall of the hammer).

Front 15

Tenders; general rules

Back 15

Call for tenders = invitation to treat
Tender = offer
Selection of successful tenderer = acceptance

Front 16

Tender; exceptions

Back 16

When the call for tenders is really an ‘offer’ (Harvela Investments)

When the parties enter into a ‘Tender Process Contract’ to conduct and participate in the tender according to specified terms and conditions (Hughes Aircraft Systems)

Front 17

Harvela Investments Ltd v Royal Trust Co of Canada (1986)
(Facts)

Back 17

Royal Trust Co. of Canada decides to sell its 12% stake to either Harvela or Sir Leonard by tender
Trust sent a telex to each in which it:
‘invited’ each party to submit a ‘single offer’ for the Trust’s shares
stated that it would ‘accept’ the highest offer.


Harvela offers CAN$2,175,000
Sir Leonard offers CAN$2,100,000 ‘or CAN$101,000 in excess of any other offer which you may receive which is expressed as fixed monetary amount, which ever is the higher.’

Front 18

Harvela Investments Ltd v Royal Trust Co of Canada (1986)
(Issue)

Back 18

- To whom is the Trust bound to sell its shares?

Front 19

Harvela Investments Ltd v Royal Trust Co of Canada (1986)
(Holding)

Back 19

- In this case, the call for tender was not an invitation to treat, but an offer to sell the shares to the party that bid the highest fixed amount. The bids were acceptance of that offer.

- Lord Diplock referred to it as an ‘if’ contract – I will sell you the shares if you bid the highest price

Front 20

Hughes Aircraft Systems International v Airservices Australia (1997)
(Issue)

Back 20

Harvela claimed that the tender failed to comply with the defined procedures and criteria and sued for breach of contract.

- What contract could the sue upon?

Front 21

Hughes Aircraft Systems International v Airservices Australia (1997)
(Holding)

Back 21

The March 1993 letter was not a mere invitation to treat. It was an offer to conduct the tender fairly and in accordance with specified procedures and criteria.
Hughes Aircraft Systems signing the letter was their acceptance of it, and a binding contract to conduct the tender in accordance with its terms was formed.

Front 22

Termination/ Revocation of an Offer: General Rules

Back 22

An offer may be withdrawn at any time before acceptance

Withdrawal is effective when its communication is received by the offeree

An offer expressed to be open to acceptance for a particular period will lapse at the end of that period

If no period is specified, the offer will lapse after a reasonable period of time has passed (what is a “reasonable” period of time will depend on the facts of each case)

Front 23

Goldsbrough, Mort & Co Ltd v Quinn (1910)
(Issue)

Back 23

Goldsbrough paid to keep offer open for one week for purchase of Quinn's land. Quinn withdrew offer within that one week. Goldsbrough accepted within that week.

- Had a contract been formed?

Front 24

Goldsbrough, Mort & Co Ltd v Quinn (1910)
(Holding)

Back 24

General rule: an offer may be withdrawn any time before acceptance
Exception: when consideration is paid to keep the offer open for a specified time – then it is not a mere promise and becomes an option.

Front 25

Fong v Cilli (1968)
(Issue)

Back 25

Proposal by Fong to sell piece of land that Cilli were tenants. Document drawn up which Cilli brother joint purchasers. Fong and Peter Cilli signed the document. Fong later died and Luigi subsequently signed the document knowing this.

What effect did Fong Goon’s death have on the offer?

Front 26

Fong v Cilli (1968)
(Holding)

Back 26

An offer cannot be accepted after the death of the offeror by an offeree having notice of such death
The obligations of the offerors here were joint (this meant both had to sign the agreement to achieve “acceptance”). Since Luigi executed it knowing Fong Goon had died, the document never became a contract

Front 27

Laybutt v Amoco Australia Pty Ltd (1974)
(Facts + Issue)

Back 27

Facts:
On 24 July 1972, Laybutt granted Amoco an option to purchase certain land, which option could be exercised by notice in writing to Laybutt on or before 24 October 1972 “and by payment to the said agent within the said time of the deposit mentioned below”
On 28 July 1972, Laybutt died. His widow was the executrix and sole beneficiary of his estate
On 23 October 1972, Amoco served notice of exercise of the option on the widow and on 24 October 1972 delivered a cheque for the deposit to the solicitors acting for the estate

Issue:
Could the option be exercised after the death of the vendor?

Front 28

Laybutt v Amoco Australia Pty Ltd (1974)
(Holding)

Back 28

- Option could still be exercised.

As a general rule, upon the death of a party to a contract his liabilities thereunder pass to his personal representatives (liability passes on to deceased's estate)

This rule will not apply if the performance of the contract depends upon:
the personal skill or judgment of the deceased party; or
if the contract otherwise revealed an intention that it should be enforceable only against that party personally

An option to purchase is a contract to sell the land upon condition that the grantee gives the notice and does the other things stipulated in the option.

Front 29

Dysart Timbers Ltd v Nielsen (2009)
Issue

Back 29

Parties engaged in litigation. Nielsen made application for appeal, but made an offer of settlement that would discontinue settlement. Dysart accepted. Appeal granted. Neilsen withdrew offer stating condition was based on the appeal.





Change in circumstances: What was the effect of the granting of leave to appeal on the offer?

Front 30

Dysart Timbers Ltd v Nielsen (2009)
Holding

Back 30

An offer would lapse in circumstances not expressly provided for in the offer if they constituted a fundamental change in the circumstances on which the terms of the offer were based.

This is to be determined objectively, and is a high test.

A change which an objective observer would see as very considerable in its consequences for the offeror.

In this case, Court decided (3:2) granting of leave had not amounted to a fundamental change of circumstances – therefore, the offer had been on foot when accepted.

Front 31

Stevenson, Jacques, & Co v McLean (1880)
Facts + Issue

Back 31

McLean had offer open until following Monday. On that Monday SJ made an inquiry. McLean later responded revoking the offer at 1.25. At 1.34 SJ accepted offer (revocation had not reached SJ).

What was the effect of SJ’s telegraph of 9.42 am – was it a rejection of the offer?
What was the effect of McLean’s telegraph of 1.25 pm – was it a revocation of the offer?

Front 32

Stevenson, Jacques, & Co v McLean (1880)
Holding

Back 32

SJ’s telegraph of 9.42 am was not a counter-offer but merely an inquiry whether he would modify the terms of the offer
McLean was entitled to revoke the offer, but such revocation would only be effective if it reached SJ prior to SJ accepting it – which did not occur
Therefore, McLean's offer was still open when SJ accepted it