Elements of an offer?
- Objective intention/expression of willingness to be bound
- Certain, clear and uneqivical terms
- That are capable of acceptance
What is an invitation to treat, is it an offer, and what are the exceptions?
They are declarations of willingness to enter into negociation.
Shop displays
General rule: Display of goods in a store does not create an offer. Customer selection becomes offer and payment is acceptance
Exception: An offer, if done in a way where any reasonable observeer would think it is an offer to the world.
Advertisments
General rule: Not an offer as supplier may be overwhelemed with accpetances and unable to supply.
Exception: unilateral contract - where the ad specifies exactly what needs to be done thus, performance would be acceptance.
E.g. Carlill v Carbolic Smoke
Request for information
General rule (Boulder v Tangaere): respone to a request is usually an ITT, not counteroffer.
E.g. Gibson v Manchester City Council
Auctions
General rule (Payne v Cave and Harris v Nickerson): notice of auction = ITT, Bid = offer, Announcement of success = acceptance, performance.
Exception (without reserve): notice of auction = offer, highest bid = acceptance, anncoement of success = completed contract.
E.g. Warlow v Harrison; Barry v Davies
Tenders
General rule: invitation to submit tenders is an ITT. Even if this costs money (Spencer v Harding; South Waikato v GHB).
Exception: Where the invitation is particular in requirments it may amount to an offer to deal or enage in negoctiations.
E.g. Pratt Contractors v Palmerston North Council - tenderer submitted lowest price tender requested.
Transport
Two competing views:
1. transport srervice is an offer for pasenger to accept (Wilkie v LPTB)
2. Passenger makes offer by booking ot purchasing a tikcet and transport service accepts (The Eagle)
Communicating offers
General rule: offer becomes effective when communciated to offeree until this they are free to bargain with others.
Gjergja v Cooper - causal link between offer and acceptance, communicated befroe acceptance
Tinn v Hoffman - must know about the offer to accept it
Termination of offers
Counter-offer/rejection
Butler Machine tool; Cospak; Tekdata
- Rejection kills the offer and any attempt to accept on new terms is a counteroffer
Revocation
Payne v Cave
- Can revoke any time before acceptance
- Must reach the offeror or offeree
In unilateral contracts: the offeror can revoke obly before oferee embarks on performance
Lapse of time
Dysart
- If there is an expressed time, the offer can expire
Kean v Dunfoy
- Reasonable time
Occurrance of terminating condition/change in circumstances
- Can be express “offer will terminate if Y”
(if not express) Dysart v Nielson
- fundamental basis of agreemnet must be dramatically altered.
- Consider if offeror had this event in their contemplation when offering
Death and supervening incapacity
Offeree
- Offer ends
Offeror
- Depends if obligations can be fulfilled by estate
General rules of acceptance
- Must not contradict the offer (exld. minimal differences)
- Only perosn whom offers have been expressed to can accept (Lee v Sayers; McMahon v Gilberd). Exception for unilateral contracts where people in the identified audiance can accept (NZ Shipping v Satterthwaite)
- In conditional agreements
- despite acceptance, fomation can be subject to specific terms
- Exception: if conduct is inconsistent
Communication of acceptance
General rule: oferee must express and communicate acceptance, brought to attention of offeror. Mere acknowledgement is not acceptance.
Specified mode
Must be clear and is a directed/reccomended method as other mathods can satasfy (Manchester Diocesan Council)
Waiver
Acceptance by doing the act (Carllil v Carbolic)
Silence
General rule: not acceptance (Re Selectmove)
Exception: unless indicated silence will indicate acceptance if the contrary is not indicated by an acertainable time.
Instantanious
Communcation is not effective until recieved by the other party (governed by law where acceptance is recieved by offeror)
Postal
General rule: acceptance is when letter is posted (Adams v Lindsell)
In cases of lost or damaged mail: as long as letter can be proved to have been posted (Household Fire v Grant)
Electronic
CCLA Part 4 governs with dispach and recipt of electronic communications.
Battle of the Forms (traditional and holistic/global approach/)
Definition: when there are two competing “standard forms” that don’t align - which will win?
Step one: Traditional approach to offer and acceptance
- ‘Last shot’ wins (Tekdata v amphenol)
Likely not applicable if:
- (Tekdata) history of dealings of one party has constistantly dictated terms
- (Butler Machine) party seeking to dictate has failed to incorporate terms properly)
Step two (if required): Global appraoch
Looks at history of dealings betwen parties - whos terms have prevailed?
- (Goodman v Cospak) Court states “mirror rule” if terms can “co-exist” this will provide harmoneous result
- BP Oil International Ltd v Glencore Energy anti last shot clause
Uncertain terms
Did the parties intend for the agreement to be legally binding? (documents; transactional circumstances; behaviour/conduct/evidence of parties intention).
- The more nebulous essential terms are - the less likely parties did not intend to reach an agreement (Fletcher).
- For supply contracts - these are generally essential terms:
Price; Duration; Date of delivery.
If yes, then even if essential terms are nebulous, the parties have demonstrated a strong intention to bargain (Aotearoa International).
- Courts will strive to cure the uncertainty to salvage the contract where it is reasonable or just.
Discuss what consideration is, what it includes/limited by, and when it is due?
Formation or variation of a contract must be accompanied by consideration (Re Selectmove) as a valuble sign of an intention to be bound (Antons Trawling)
Consideration need not be adquate but sufficent
(Chappell & Co Ltd v Nestlé Co Ltd).
- This includes nominal consideration
- Hamer v Sidway, gave up drinking, smoking, swearing
Consideration must not be past
(Re McArdle)
- Act must be undertaken becuase of consideration
Types of contracts
Executed: Consideration is provided upon contractual formation (little time between formation and performance)
Executory: Consideration takes the form of a promise to perform at a future time (significant time gap between formation and performance)
Long term relational: Exist over a long time, court is strict to require consideration especially variation.
Discuss the legal uncertainty regarding exitsing and future obligations.
Original position (Stilk v Myrick): obligations under existing legal duty are not sufficent consideration
Exception (Hartley v Ponsonby): Unless it can be proved something they did was radically different. InHartley there was significantly more danger and an increase in pay.
Exception to the exception!! In varying ongoing/future obligations
Williams v Roffey Bros:
- If the promisor recieves a further practical benefit as consideration.
- In Roffrey Bros an agreement to raise the sub-contract price to ensure the sub-contractors finish on time (even though that was their contractual duty) was enforceable as D recieved practical benefit of work completed on time and avoid late penalty with head contract.
Gloria Jean’s Coffees International Pty Ltd v Daboko Ltd
- Obiter: This was a long term contract. For that reason there is no need for consideration to be given (for variation) so long as the parties have mutually agreed to the variation to the contract. As long as there was no form of duress, or unconsciously bargaining, or any form of wrongdoing, the variation will be valid.
Antons Trawling Co Ltd v Smith
- Revealed NZ’s openness to “manufacturing consideration”.
Discuss variation of past debts or obligations already owed (rule in pinnels case) and how promissory estoppel may be an exception
Rule in Pinnel’s case: This is because the creditor is always entitled to resile from that promise and insist on the payment of the entire sum owed (even if they say otherwise)
Promissory estoppel
1. Clear promise or assurance to concede a contractual right; and
2. reliance by the other party whom the assurance was made to
Suspensory effect
Perhaps an exception to Pinnel’s
If a party had taken steps to amend debt making it unconscionable for the rule to apply.
Example: High Trees - promised 1/2 rent during WWII. Full amount reenstated later. Had the landlord sought the residual rent from the discount years they would have been estopped.
Discuss variation of past debts or obligations already owed (rule in pinnels case) and how accord & satasfaction may be an exception?
British Russian Gazette v Associated Newspapers: Allows parties to a contract to settle a dsipute or discharge an obligation by substituting a new, agreed-upon performance for the original one.
However this is UNLIKELY to succeed (cf promissory estoppel) as it requires a clear offer, acceptance and consideration.
Part-payment must be accompannied by other benefits
- Early payment
- Payment at a different place or time
- Part payment plus goods (a chattel)
Hirachand Punamchand v Temple
- If a third party pays part of a debtor’s obligation and the creditor accepts it as full settlement, the creditor cannot later pursue the debtor for the balance.
