- Information
- AI Chat
Formation of Contract Rules Flow chart
Commercial Law (LAW2442)
Royal Melbourne Institute of Technology
Recommended for you
Preview text
1 Forming a Contract Yes Valid offer? Valid acceptance? No No contract No No contract Yes Intention to contract? Yes Yes Consideration? No No No contract No contract Promissory Yes Prima facie VALID CONTRACT Offeree will get access to legal remedies No No access to legal remedies To be a contract, the arrangement between the parties must show certain elements. If those elements are not present, the agreement is not a contract and the courts will not assist in its enforcement. Offer and Acceptance Definitions and Rules: indication of willingness to enter into contract on certain a proposal the offeror intended to create an agreement upon its acceptance the offeree An offer is not: (1) sales puff (2) mere supply of information (Harvey v Facey) (3) an invitation to treat (Partridge v Crittendon Pharmaceutical Society v Boots Cash Chemists display of goods) Termination of Offer: (1) revocation is effective when communicated (rne v Van Dickinson v Dodds) (2) counter offer destroys original offer (Hyde v Wrench) (3) lapse of time destroys offer (Ramsgate Victoria Hotel v Montefiore) Note also: (1) advertisements can sometimes be offers (Carlill v Carbolic Smoke Ball) (2) a request for information is not a counter offer (Harvey v Facey) 2 (3) option irrevocable offer (Goldsborough Mort Co Ltd v Quinn) assent to terms of offer in manner specified Rules: (1) with knowledge of and in reliance on offer (R v Clarke) (2) communicated to offeror (Felthouse v Powell v Lee), but note exceptions. (3) postal rule acceptance on posting (Adams v Lindsell) (4) however, postal rule probably does not apply to emails, so that an acceptance email should be received to be effective. Under s 14A(1) of the Electronic Transactions Act (Cth) an electronic communication is received when it becomes capable of being retrieved the receiver. (5) must be clear and certain (6) cannot be conditional (Masters v Cameron) (7) method of acceptance: as specified or means no less advantageous to offeror Intention to Contract 1. If the agreement is social or domestic, there is a presumption that the parties do not intend to be legally bound (Balfour v Balfour). However, this presumption can be rebutted, eg if the consequences of the agreement are serious (Wakeling v Ripley) 2. If the agreement is made in a commercial context, the court will presume that it is intended to be legally enforceable. However, this presumption can be rebutted evidence that the parties do not intend to be legally bound (Rose and Frank v Crompton). Consideration Consideration is the price given one party for the promise received from the other party. Consideration may take the form of (a) payment of money, (b) provision of goods services, (c) refraining from doing something, (d) undertaking some obligation, or (e) a promise to do any of the above. Rules: (1) consideration must occur in response to the promise (2) consideration cannot be past (Roscorla v Anderson v Glass) (3) consideration need not be adequate (Thomas v Thomas) (4) however, consideration must be sufficient something of value. Hence, (a) consideration cannot be vague (White v Bluett) (b) consideration cannot be a prior legal obligation (Stilk v Myrick) unless the party does something more than what the original contract required
Formation of Contract Rules Flow chart
Course: Commercial Law (LAW2442)
University: Royal Melbourne Institute of Technology
