Fundamentals of Law (BL502) Law of Contract Offer – Withdrawing, Rejecting and Accepting

Fundamentals of Law (BL502) Fate of An Offer  Withdrawn by offeror  Accepted by offeree  Rejected by offeree  Lapse due to passing of time  Lapse due to death of offeror or offeree  Lapse due to failure of condition precedent

Fundamentals of Law (BL502) Withdrawing an Offer  Cannot be withdrawn after accepted  The withdrawal of the offer must be communicated to the offeree  Special cases:  Unilateral offers  Options cannot be withdrawn

Fundamentals of Law (BL502) Withdrawing an Offer after Acceptance  A contract is made when the offer is accepted  Once accepted the offer cannot be withdrawn  Attempted withdrawal may be a breach of a contract

Fundamentals of Law (BL502) Withdrawing an Offer Before Acceptance Generally, an offeror may withdraw an offer at any time before acceptance Routledge v Grant (S&OR p78) But, options cannot be withdrawn –an option is a separate enforcable obligation and cannot be withdrawn –Exists where the offeree has given consideration to keep an offer open –Goldborough Mort v Quinn (S&OR p 80)

Fundamentals of Law (BL502) Withdrawal Must be Communicated  Offeror must let the offeree know that the offer is withdrawn  Byrne & Co v Tienhoven & Co S&OR p79)  Offeror does not have to communicate withdrawal personally  Would a reasonable person in the position of the offeree conclude that the offer had been withdrawn?

Fundamentals of Law (BL502) Withdrawing a Unilateral Offer  Involves a unilateral promise e.g. Carllil v Carbolic Smoke Ball Co (S&OR p74)  If offeree has acted on the promise then offeror cannot withdraw until offeree has had a reasonable opportunity to complete

Fundamentals of Law (BL502) Rejecting an Offer  Once rejected, an offer cannot be accepted  May be rejected expressly or by implication  Implied  Offeree’s actions are inconsistent with an intention to accept

Fundamentals of Law (BL502) Rejecting An Offer (Cont.)  A counter offer is a rejection  Hyde v Wrench (S&OR p81)  Any material alteration is a counter offer  Restating the offer when accepting is not a counter offer  Turner Kempson v Camm (S&OR p81)

Fundamentals of Law (BL502) Rejecting An Offer (Cont.)  A counter offer is a rejection (cont.)  Asking for clarification is not a counter offer  Reasonable person test  examine all circumstances

Fundamentals of Law (BL502) Accepting the Offer  Only offeree may accept  Acceptance must be final & unqualified  Must be communicated to the offeree (some exceptions)

Fundamentals of Law (BL502) Accepting the Offer (Cont.)  Acceptance must be final & unqualified  “Subject to Formal Contract”  There is a contract & one of terms is that documentation be prepared  There is a contract but nothing can happen until contract prepared

Fundamentals of Law (BL502) Accepting the Offer (Cont.)  Acceptance must be final & unqualified (cont.)  “Subject to Formal Contract” (cont.)  There is no contract  Masters v Cameron (S&OR p82)  Plastyne Products v Gall Engineering (S&OR p83)  Communications after acceptance are irrelevant

Fundamentals of Law (BL502) Acceptance Must be Communicated  Silence does not amount to acceptance  Large companies  Who must receive acceptance?  Depends on intention of parties  Acceptance occurs when the communication is received in the ordinary course of business or would have been received if ordinary course of business were followed

Fundamentals of Law (BL502) Acceptance Must be Communicated  Internet  Electronic Transactions Act  Receipt occurs when it enters designated information system  Otherwise, when it comes to attention of addressee

Fundamentals of Law (BL502) Acceptance Must be Communicated  Express Communication of Acceptance is not necessary where  Implied from past dealings between parties  Industry custom  Acceptance indicated by conduct  Unilateral contracts  Postal rule

Fundamentals of Law (BL502) Acceptance Must be Communicated  The Postal Rule  Offeree has expressly or impliedly accepted the post as the means of communication between the parties  Acceptance occurs at time of posting not receipt  Does not apply where communication is instantaneous  Often determines jurisdiction  Berinkibon v Stahag Stahl (S&OR p 86)

Fundamentals of Law (BL502) Acceptance Must be Communicated  Mode & timing of acceptance must conform to offeree’s requirements  Nominating a mode of acceptance may not set the only mode of service  Spectra v Pindari  Agent of the offeror may accept  Powell v Lee (S&OR p87)

Fundamentals of Law (BL502) Lapse of Offer  Due to death of either party if  Not an option  Does not involve personal skill or service by the deceased  Due to failure of condition precedent  Due to time  Express time limit  Otherwise, offer remains open for a reasonable time

Fundamentals of Law (BL502) Lapse of Offer (Cont.)  Due to time (Cont.)  What is reasonable time depends on:  Method by which offer made  Nature of the transaction  Terms of Proposed Contract  Actions of parties between offer & purported acceptance  Intimations as to time by offeror

Fundamentals of Law (BL502) Agreement Must be Certain  Must be sufficiently certain in all its essential elements especially:  Subject matter  Price  Must not contain unclear, ambiguous or contradictory terms  Courts will uphold contract where possible  Whitlock v Brew (S&OR p 89)

Fundamentals of Law (BL502) Agreement Must be Certain (cont.)  Agreement to agree  Agreement to negotiate  Subject to contract  Subject to finance etc

Fundamentals of Law (BL502) Has an offer been made? No Contract Did the offeror intend to revoke the offer? Did the offeror communicate revocation? Has the offer lapsed? Has acceptance been received by the offeror? Was acceptance made under the postal rule? Contract No Yes No Yes

Fundamentals of Law (BL502) Law of Contract Intention & Consideration

Fundamentals of Law (BL502) Intention to Contract  Parties must intend their agreement to be legally binding i.e. enforceable by a court  An intention to be morally binding is not enough  Objective test  Distinction between  Social/domestic agreements  Commercial agreements

Fundamentals of Law (BL502) Domestic Agreements  Court presumes that parties did not intend to contract  Presumption may be rebutted  Todd v Nicholls (S&OR p94)  Roufos v Brewster (S&OR p94)

Fundamentals of Law (BL502) Domestic Agreements (cont.)  Court will look at  Terms of agreement  Circumstances surrounding the agreement  Effect of the agreement on the parties  Parties conduct subsequent to agreement

Fundamentals of Law (BL502) Commercial Agreements  Courts presume that the parties intended to contract  Clear words are needed to rebut the presumption  Onus is on party seeking to disprove the contract  Rose & Frank v J R Crompton (S&OR p95)  Edwards v Skyways (S&OR p95)

Fundamentals of Law (BL502) Commercial Agreements (Cont.)  Contrast with Clauses excluding courts jurisdiction which are are invalid  Letters of Comfort  Kleinworth Benson v Malaysia Mining  Banque Brussels Lambert v Australian National Industries

Fundamentals of Law (BL502) Commercial Agreements (Cont.)  Heads of Agreement/Letters of Intent  Air Great Lakes v K S Easter (S&OR p98)  Coal Cliff Collieries v Sijehama (S&OR p98)  “Without prejudice” documents