Offer and Acceptance

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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
    • 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
      • 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        • It can be properly withdrawn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
        • 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
    • 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

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