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63 Cards in this Set

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What is an offer?

Statement or communication made with the intention of being bound on the acceptance of the other party

What is a unilateral contract?

Individual accepted offer by satisfying the conditions

What was held in Carlill v Carbolic Smoke Company?

Have to read the advert as would a reasonable person

An offer, which can be accepted by those who comply with the requirements

Offer last for as long as using the smoke ball

100 Pounds if smoke ball did not cure influenza when used 3x daily for 2 weeks

The test for agreement (according to the objective theory?)

An objective test: what a reasonable person would have thought if they had known all the facts

Invitations to treat?

Offers made without the intention to be bound on the acceptance of the other party

e.g. Shop displays


Is a tender capable of being an binding offer and acceptance?

No, it is an invitation to quote, not an offer capable of acceptance - Asher J

GHP Piling Ltd v Leighton Contractors Pty Ltd

In the case of GHP Piling v Leighton was factors were lacking towards whether a contract was formed?

Absence of registration

Absence of deposit

Absence of formal procedure

Documents not detailed

Language was of negotiation, not acceptance

important terms not defined

No test for picking tender winner

Language of offer, acceptance, consideration.

Why did the tender in Roading & Asphalt Ltd v South Waikato DC fail?

Though usually the lowest price is best (which R & A were) the council had reserved the right to evaluate tenders and could accept a tender other than the lowest price offered

Tender Bids

Highest Offer

Privilege clauses

Communication of an offer must be?

Must be communicated before it is accepted. Cannot be in ignorance of an offer - the law requires a causal link

How to terminate an offer?

Revocation: An offer may be revoked at any time prior to acceptance. Must be clearly communicated

Can a unilateral contract be revoked?

Yes, even when someone has commenced performance.

What is the restitution for unilateral contracts?

Offeror obliged to compensate for work done. Assumes partial performance was of benefit

What does a counter offer do?

Kills the offer. Once rejected, cannot change mind an accept.

Hyde v Wench

'The offeree who makes counteroffer loses the power of the original offer

What if there has been a lapse of time after the offer?

If express time limit in offer, it cannot be accepted after that time. If not limit = reasonableness

What did the dissenting judgement in Dysart Timbers v Nielsen hold about offers?

Offer lapses in a fundamental change or circumstances prior to acceptance. The question is how great of change must it be

Wilson J & Tipping J

What did the SC hold in Dysart Timbers v Nielsen

Offer did not lapse. Offeror knew of possibility that leave to appeal would be granted before acceptance. Must be a fundamental change that affects terms of the contract (objectively assessed)

Different from Wilson J & Tipping J

How can an offer be revived?

Through express words or conduct. The offeree can make it again

What is the general approach to acceptance?

Acceptance should be a mirror image of the offer. Must be same terms and acceptance unequivocal and unconditional

Mirror image principle

What is the rule of acceptance with 'Battle of the Forms'

Traditional offer and acceptance analysis. Providing a degree of certainty

Dyson Lj in Tekdata

What were the two possible outcomes to a battle of the form situation in Goodman v Cospak

Traditional offer and acceptance OR

Global approach: Goodman and Cospak's terms can co-exist as is a practical approach and consistent with trend in modern law

What was held in Bulter v Ex-Cell-O?

In a battle of the forms, there is a contract as soon as the last form is sent and received without objection

Won by man whoever fires last shot

What was re-affirmed in Tekdata about the approach to battle of the form cases?

Traditional offer and acceptance should be adopted unless documents showed a differing common intention

Mandatory vs Directory mode of communication of acceptance?

Very clear language needed - acceptance in specified mode vs. equally advantageous method will suffice

Strict vs. Loose

Can a 3rd party accept?

Acceptance only binding if it is communicated by the offeree or their authorised agent

What is real authority?

Principal gives an agent specific authority to do something

What is ostensible (apparent) authority?

Form of deemed authority, attributed to a person because of outward appearances. Needs representation by the principal that person has authority

What did the agent do wrong in Re Selectmove?

Agent did not imply he had ostensible authority and no proof of actual authority. So deal is not binding on principal

Why did Air NZ in Barton v Air NZ have actual authority?

Clauses in the contract signed by Barton gave actual authority to Air NZ to make changes at their discretion

Can you accept by silence?

General rule, silence does not bind offeree

In St John Tug Boat v Irving Refinery why was St John entitled to recover for additional services?

Irving's silence after arrangement expired was acceptance of ongoing services.

Can an English company sue a Austrian company>

Where the contract was made and agreed to will the law must claim under

Postal rule?

Acceptance occurs when the letter is posted

What are the limitations to the posting rule?

Reasonable contemplation of the parties

Properly stamped and addressed

Not excluded by the terms of the offer

Can an offeree withdraw acceptance before it is received?

No, Dunmore v Alexander: Once posted, offer cannot be revoked.

What are the 3 principles from AG v Barker Bros for certainty?

1. True intention of the parties was not to enter binding agreement until unsettled terms were agreed upon. Until then contract never came into existence

2. If intention was to enter immediate and binding contract, courts will give effect to this

3. Lacking of certainty will be cured by some machinery or formula that can be used

What is the 'Two Stage' analysis test from ECNZ v Fletcher Challenge?

1. Is there an intention to be immediately bound? (objectively assessed)

2. Courts will try give effect to this intention by filling gaps of uncertainty

What are the limitations of the Two Stage analysis from ECNZ v Fletcher Challenge?

If essential matters have not been agreed upon and are not determinable by machine or formula, may be beyond courts ability.

If gap too wide, can only enlarge or clarify express terms.

Cannot Create Contract and Cannot Impose Terms!

Bigs Gaps

Out of depth

What are the 2 types of uncertainty?



What does vagueness mean?

When the language is unclear and hard to prescribe the meaning

What were the methods Kirby P set out when the contract is vague? (Biotechnology v Pace)

1. Vagueness is fact dependent

2. Objectively assessed

3. If ambiguity or term illusionary, need to regard extrinsic evidence to find meaning agreed

4. Will try to uphold contract

5. Will not introduce new terms

6. Illusionary contracts where consideration is at the discretion of one party is unenforceable


Reasonable person

One party determines X

What did Fletcher Challenge v ECNZ hold on vagueness?

Vagueness in essential terms that the court cannot determine what parties meant = agreement will be void

Vagueness, cant fix = void

According to S10(1) of the SOG 1908 how can a price be ascertained?

1) may be determined by the course of dealing between the parties

2) Where price is not determined, buyer must pay reasonable price

Previous course of dealing

What if a term is meaningless? (Fletcher Challenge v ECNZ)

Where term in question is meaningless but inessential it will be disregarded in determining the rights of the parties under the contract

What constitutes incompleteness?

Execution of further formal document contemplated

When parties haven't agreed on vital terms

What is the NZ position of execution of a further formal document contemplated?

In NZ parties do not intend to be bound before the agreement has been constructed and executed by both parties.

What the exceptions to the NZ outlook of further formal documents contemplated?

1. The initial agreement is binding, later agreement is to confirm

2. No binding agreement until formal document completed

Courts will determine this objectively and look at parties conduct

In what scenarios will courts not enforce contracts? (Coachman Properties Ltd v Panmure Video Club)

1. An arrangement, which is just an expression of the parties intention to negotiate

2. Contracts will come into existence if & when a condition precedent is satisfied

3. A contract that is unconditionally binding from its inception

4. Contract, binding from inception but subject to discharge if condition subsequent is not satisfied

What did Fletcher Challenge v ECNZ say were the prerequisites for a formation of a contract?

1. Intention to be bound immediately

2. An agreement express or implied on every term which is

- legally essential

- Essential to the parties themselves

What did May & Butcher v R hold on 'agreements to agree'?

Agreements to agree in the future on vital matters are not contracts. If a critical part of the contract is left undetermined, not a contract.

Vital matters

Critical parts

How did Fletcher Challenge v ECNZ differ from May & Butcher v R on 'agreements to agree'?

If the court is satisfied that parties intended to be bound immediately it will strive to give effect to that intention by filling the gap


Gap filling

What did Walford v Miles hold on contracts to negotiate?

Concept of a duty to carry on negotiations in good faith is repugnant to the adversarial position of parties. Each party is entitled to pursue own interest, so long as avoid misrepresentations

Good faith

Own interest


What did Wellington City Council v Body Corporate hold on negotiating in good faith?

Good faith is a subjective concept, no way to determine if parties are acting this way.

The concept is too uncertain and thus can't be enforced

Are best endeavour clauses enforceable? (Fletcher Challenge v ECNZ)

Depends on the complexity. If simple, may be able to intervene and for the parties to prescribe what can be done making it enforceable.

In this case - Not enforceable

What is machinery?

Person whose job it is to resolve uncertainty


What is formula?

External standard by which uncertain matters can be resolved

Market Price

What if there is no machinery or formula?

S10(2) SOG Act 1908

Price of contract of sale may be fixed by parties, or left to be fixed, or determined by previous course of dealing.

If not determined with foregoing provisions buyer must pay reasonable price


What if there is no machinery but formula?

Courts may assume the role of the machinery

Andrews v Colonial Mutual Life

What if there no formula but machinery?

Courts may imply the standard of reasonableness

What did Biotechnology v Pace hold on the court using reasonableness?

Court can use reasonableness if parties intention was to be bound immediately. However cannot be used where contract is illusory, terms unreasonable and uncertain

What change did Sudbrook Trading Estate v Eggleton bring with machinery?

Previously if machinery frustrated, contract failed.

Now alternative machinery will be substituted. Only where it is not considered an essential term of the agreement

What happened in Nelson v Cooks McWilliams Wines Ltd

Followed Sudbrook v Eggleton

Machinery was essential for formula of market price required specialist knowledge

Court didn't have expertise to be substituted machinery

If alternative machinery can't be applied, formula is useless = contract is uncertain & unenforceable

Test for whether nominated machinery is essential?

1. Nature of designated machinery (expertise subjective) or general appointment (objective)

2. Nature of substituted machinery (easy or difficult)

3. Nature of prescribed formula (specific and easy can be substituted)