Offer and Acceptance
- Created by: Austen Poole
- Created on: 02-10-17 13:22
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- Formation of a contract
- Bi-lateral and unilateral contracts
- Bi-lateral contracts
- All the parties assume an obligation under the contract
- Unilateral contracts
- Only one party assumes an obligation under the contract
- Bi-lateral contracts
- Offer
- An offer is an expression of willingness to contract - with the intention that it is binding on the other party
- Types of offer
- Bilateral offers
- This includes most offers
- Consists of a promise made in return for a promise
- Unilateral offers
- A promise made in return for the completion of a certain act
- Bilateral offers
- Clearly stated terms
- A statement may not be held if it is too vague
- There must be a clear intention to do business
- Counter offers
- This is to terminate or end the original offer
- Stevenson Jaques & Co vs Mclean (1880)
- Communication
- Offers must be communicated before the agreement
- An offer is not valid until it is received by the offeree
- The communication rule - no person can agree to an offer that they do not know about
- Payne vs Cave (1987)
- Termination
- If it is not accepted, the contract is terminated
- The time period for acceptance can lapse
- It can be properly withdrawn
- A reasonable time can have lapsed
- If one of the parties dies
- Acceptance
- The offeree agrees to be bound by the contract
- The acceptance must be a mirror image of the offer
- It must be firm
- It must be communicated to the offeror
- The postal rule
- Invitations to treat
- Fisher vs Bell (1960)
- Statements advertising goods, land or services for sale are not usually treated by the courts as indicating the necessary intention to form an offer
- Without acceptance no contract exists
- Consideration
- The price you pay for the other persons promise or action
- Doesn't have to be of equal value
- Consideration vs Moral obligation
- A moral obligation will not support a promise
- Trivial or worthless items may constitute consideration
- Chappell and co ltd vs Nestle ltd
- Eastwood vs Kenyon
- Rules of consideration
- Can be executory or executed but not 'past'
- Executory
- Promise still to be performed
- Executed
- Promise already performed
- Executory
- Consideration must move from the promisee or agent - but it is not necessary for it to move to the promisor
- Consideration needs to be sufficient but not adequate
- Can be executory or executed but not 'past'
- The price you pay for the other persons promise or action
- Privity
- A person not a party to the contract cannot either sue or be sued under it
- Dunlop vs Selfridge (1915)
- Consequences of the rule
- A person receiving the goods as a gift may be unable to sue where the goods are defective
- If the purchaser sue, he may only be able to recover damages for himself not the recipient of the gift
- Exceptions to the rule
- Soome statutory exceptions such as third party motor insurance
- Where a trust is created for the benefit of a third party
- Restrictive covenents
- Collateral covenants
- The contracts (rights of third parties) act 1999
- Only the rights set out in the contract can be enforced
- Exclusions
- Contracts where other legislation applies
- Consequences of the act
- A wide range of third party rights will be enforceable under the act
- Many exceptions will still apply
- Collateral warranties
- Intention to create legal relations
- Two presumptions
- In social or domestic arrangements it is presumed that there is no intention to be legally bound
- Where husband and wife are estranged agreements are legally binding
- Where money has changed hands it is legally binding
- Arrangements are usually left for family members to sort out
- Merritt vs Merritt (1970)
- In business or commercial agreements it is presumed that there is an intention to be legally bound
- Always binding unless evidence can show otherwise
- In social or domestic arrangements it is presumed that there is no intention to be legally bound
- Two presumptions
- Bi-lateral and unilateral contracts
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