what are the three basic requirements of a contract?
- agt (offer + acceptance)
- consideration
- intent to create legal relations
what amounts to an offer?
An expression of intention to be willing to undertake an obligation, which becomes binding upon acceptance.
- objective intent
- certain, clear terms
- capable of acceptance
What are NOT offers?
- transport situations (two views)
- shop displays (general rule that customer selecting the goods is an offer, with payment being acceptance)
- advertisements (unless clear intention to deal with buyers, prospective and may be!)
- puffs/commercial puffery (promotional statement in which maker does not want audience to intent to take it seriously)
Auctions (notice of auction - invitation to treat; auction w/o reservice = notice of auction is offer, announcment of successful bid is acceptance) - request for information (Boulder v Tangere)
- tenders
What is the first type of tender?
- invitation to submit tenders = absolute discretion. South Waikato - the right to reject the lowest offer tenders is held, even if the document indicates otherwise - here, other facts were taken into account (2 tenders in second stage; must consider all bids fairly)
second type of tender?
invitation for tenderers for specific requirements may amount to an offer to deal/engage with negotiations w/ conforming tender. just a bid to negotiate on e.g. price, duration just not necessarily accept. if not negotiated with, parties can sue (creation of a preliminary contract).
GPI Piling Ltd - highlights necessity of certainty in contracts, and essential terms here were not involved
GHP Piling Ltd
Facts: A company invited tenders for a construction contract but subsequently refused to accept the best tenderer, who then sued for breach of contract.
Judgement: The court ruled that the invitation for tenders did not amount to an offer, primarily because essential terms like liquidated damages, which are crucial in construction contracts, were not sufficiently described.
Applicable Law: This case highlights the importance of certainty in contract formation, specifically that an “offer” must contain clearly expressed essential terms, such as those related to risk allocation like liquidated damages in construction contracts
third type of tender?
offer to deal w/ successful tender.
What is acceptance?
an unqualified acceptance of an offer from an offeror to an offeree
what is the first requirement of acceptance?
- acceptance must not contradict offer (they must be the mirror image of each other)
what is the second requirement of acceptance?
effective/valid communication of acceptance from oferee to offeror. Silence does not count (unless of situations of practicality - Carlill)
What happened in Re Selectmove?
S owed back taxes to the IR; proposed a payment plan to an IR authority; he had no authority - there was no response from them. S tried to argue that due to silence, there was no explicit rejection. this was NOT binding
what is the third “consideration” of a valid acceptance?
A valid mode/method of acceptance communication
what are the default rules of acceptance?
postal rule - acceptance once letter is posted (criticised as defies common sense)
instantaneous communication - issue if over different time zones; solution is that contract accepted once received
can agents accept?
if they have authority (Re Selectmove)
Who can accept offers?
Only persons to whom offer is expressed to - offer made to “whole world” or unilateral offer can be accepted by anyone willing
When can an offer be revocated?
only before acceptance
What ammounts to termination of offers?
Dystart - lapse of time (if there is an expressed time)
Dystart - fundamental change in conditions since offer was made
Death of offeree
Essential terms not communicated to offeree
Mere acknowledgement
Dystart Timbers
Facts: Nielsen offered a settlement to Dysart Timbers for a guaranteed debt; however, after the offer was made but before acceptance, Nielsen’s chances of winning at court improved significantly5.
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Judgement: The court held that once an offer is made, a contract is formed upon acceptance unless validly withdrawn, and the change in Nielsen’s circumstances did not automatically revoke the broad offer.
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Applicable Law: This case demonstrates that an offer is generally effective upon acceptance, and a subsequent improvement in the offeror’s position does not inherently invalidate an otherwise broad, unconditional offer
Boulder Consolidated Ltd v Tangaere
Facts: Following the mutual termination of an earlier land sale agreement, the vendor provided the buyer with a list of available properties, from which the buyer later sought to purchase a specific parcel6.
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Judgement: The court determined that the vendor’s provision of a property list did not constitute an offer to sell, but rather merely supplied information, even if it included prices6.
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Applicable Law: This case distinguishes between an offer and an invitation to treat, clarifying that a true offer requires a clear expression of willingness to be bound along with specific conditions
