Composition of an Agreement - Fundamentals of Law - Lecture Slides, Slides of Law

Download Composition of an Agreement - Fundamentals of Law - Lecture Slides and more Slides Law in PDF only on Docsity! Composition of an Agreement An agreement is: • generally characterised by an ‘OFFER’ by one party and an ‘ACCEPTANCE’ by another Docsity.com Is there agreement between the parties? • For the agreement to stand there must be a ‘meeting of the parties’ minds’, and one must ask whether there has been a firm offer and acceptance of that offer in this light. • The ‘offer and acceptance’ approach is not the only approach. The courts sometimes use a ‘global approach’ examining the acts and conduct of the parties (Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110). Docsity.com Has an offer been made? Facts: • Smith owns an organic farm. • Jones wants to buy Smith’s farm. • Jones emails Smith asking: “Will you sell me your farm? Let me know your lowest price.” • Smith emails back saying: “The lowest price for my farm is $350,000.” • Jones then responds by saying: “I agree to buy your farm for the sum of $350,000 asked by you.” Docsity.com What are the legal issues? Issue: Did one party (the offeror) make an offer? Did the other party (the offeree) accept that offer? Docsity.com Harvey v Facey [1893] AC 552 Facts: – Facey (F) owns Bumper Hall Pen (BHP). – Harvey (H) wants to buy BHP. – H sent a telegram to F asking: “Will you sell us BHP? Telegraph lowest cash price.” – F responded: “Lowest price for BHP £900.” – H then responded: “We agree to buy BHP for the sum of £900 asked by you.” Docsity.com Supply of information Principle: A person who is merely supplying information in response to an inquiry is not making an offer. CASE: Harvey v Facey [1893] AC 552 Docsity.com Offer or invitation to treat? An invitation to treat: • is not an offer but an invitation to other persons to make an offer or an offer to consider offers; and • cannot create an agreement if there is a purported acceptance. Invitations to treat can include: Advertisements CASE: Partridge v Crittenden [1968] Price lists, circulars and catalogues CASE: Grainger & Sons v Gough (1895) Docsity.com Offer or invitation to treat? Auctions Principle: Where there is a ‘reserve price’, the auctioneer calling for bids is not making an offer but is asking for offers from prospective purchasers. If there is no ‘reserve price’ the auctioneer becomes the offeror and must sell the goods to the highest bidder. CASE: Harrison v Nickerson [1873] Tenders Principle: Tenders are not normally offers unless the tender states its exact needs, as distinct from what it may only require. CASE: Spencer v Harding (1870) Docsity.com Options An option arises when the offeror promises to keep the offer open for a specified period. However, it will be unenforceable unless it is supported by the offeree’s consideration (e.g. money in the form of a deposit). CASE: Goldsborough Mort & Co Ltd v Quinn (1910) Docsity.com Termination of an offer Termination of the Offer Revocation/ (Withdrawal) Rejection/ counter-offer Lapse of time Death Failure of condition Subject to condition Condition precedent (before contract formed) Condition subsequent (after contract formed) Docsity.com Revocation of an offer Principle: An offer can be revoked by the offeror any time before it is accepted. Exception – Where a promise to keep the offer open is made and is given in exchange for consideration A revocation is not effective until the offeree becomes aware of it. CASE: Dickinson v Dodds [1876] CASE: Byrne & Co v Leon Tienhoven & Co [1880] Docsity.com Lapse due to change in circumstances (e.g. failure of condition) Principle: An offer will lapse if it expressly or impliedly depends on a particular state of affairs that ceases to exist prior to acceptance. CASE: Financings Ltd v Stimson (1952) Docsity.com Rejection of an offer Principle: If the offeree rejects the offer, the offer is terminated and cannot later be accepted. CASE: Hyde v Wrench [1840] Docsity.com Rules relating to acceptance The acceptance: 1. must be made in reliance of the offer. 2. must comply with any conditions in the offer. 3. must be communicated to the offeror. 4. cannot be a cross-offer or counter offer. 5. can only be made by the party to whom the offer was made. 6. must be absolute and unqualified. 7. cannot be revoked without the assent of the offeror. Docsity.com Who can make an acceptance? Principle: Acceptance must be conveyed by someone with authority. CASE: Powell v Lee (1908) Docsity.com Unqualified acceptance Principle: Acceptance must be absolute and unqualified. If a purported acceptance introduces any qualifications or new terms, it is a counter offer, which destroys the previous offer. CASE: Masters v Cameron (1954) Docsity.com Who may accept? Principle: Only the person to whom an offer has been made may accept. CASE: Tinn v Hoffman & Co (1873) Docsity.com