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Using case law and legislation to solve legal problems. Source of legal rights. Contract. Torts. Statute. A contract is an agreement that is enforceable at law. Contract. How do we know whether or not a contract has been formed? Case law. OFFER/ACCEPTANCE ANALYSIS. OFFER

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source of legal rights
Source of legal rights




  • How do we know whether or not a contract has been formed?
  • Case law
offer acceptance analysis






intention to create legal relations

“To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly”

Atkin LJ in Rose & Frank Co v JR Crompton & Bros Ltd [1923] 2 KB 261 at 293

rebuttable presumptions
Rebuttable presumptions
  • In social and domestic agreements there is a presumption against legal obligations
    • Balfour v Balfour [1919] 2 KB 571
    • Cohen v Cohen (1929) 42 CLR 91
    • Jones v Padavatton [1969] 1 WLR 328
  • The presumption is rebuttable
    • Merritt v Merritt [1970] 1 WLR 1211
    • Wakeling v Ripley (1951) 51 SR (NSW) 183
balfour v balfour
Balfour v Balfour

“There are agreements between parties which do not result in contracts within the meaning of that term in our law. The ordinary example is where two parties agree to take a walk together, or where there is an offer and acceptance of hospitality. Nobody would suggest in ordinary circumstances that those agreements result in what we know as a contract, and one of the most usual forms of agreement which does not constitute a contract appear to me to be the arrangements which are made between husband and wife…they are not contracts because the parties did not intend that they should be attended by legal consequences.”

Atkin LJ at 578

rebuttable presumptions9
Rebuttable presumptions
  • In business or commercial agreements, there is a rebuttable presumption that the parties did intend to create legal obligations
    • Carlill v Carbolic Smoke Ball [1893] 1 QB 256
    • Rose & Frank Co v Crompton & Bros Ltd [1925] AC 445
    • Honour clause
offer acceptance analysis10







“the indication by one person to another of his or her willingness to enter into a contract with that person on certain terms”

Carter and Harland, “Contract Law in Australia” 4th edn p28

essential features of an offer
Essential features of an offer:
  • The offeror must intend to be bound by the offer
    • Distinguish from request for information or invitation to treat
  • The offer must be communicatedto the offeree
  • The offer may be made to one person, a class ofpersons, or the whole world
  • The offer must contain enough information (certainty) to allow a binding contract to come into existence
intention to be bound
Intention to be bound

An offer is not:

  • A request for the supply of information
    • Harvey v Facey [1893] AC 552
  • An invitation to treat
    • Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1QB 401.
    • Gibson v Manchester City Council [1979] 1AllER 972
harvey v facey
Harvey v Facey

“the mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at the lowest price.”

Lord Morris at 556

examples of invitations to treat
Examples of Invitations to Treat
  • advertisements/circulars
  • price lists
  • displays of goods in shops
  • calls for bids at auctions, and
  • calls for tenders.
carlill v carbolic smoke ball 1893 1 qb 256
Carlill v Carbolic Smoke Ball[1893] 1 QB 256
  • Distinguish offer from invitation to treat by looking at intention of offeror
  • Offer can be made to world at large
  • Unilateral contract – communication of acceptance not required
  • Consideration can equal detriment/effort

Text of ad:


A FINAL and UNQUALIFIED assent to the terms of an offer made in the manner specified or indicated by the offeror

The “yes” which ends negotiations

  • Must respond to the offer
  • Must be communicated
    • Subject to exceptions - Postal Acceptance Rule
  • Must not be conditional
acceptance must respond to the offer
Acceptance must respond to the offer
  • So, only those persons:
    • to whom the offer was made; and
    • who have the offer in mind at the point of “acceptance” may accept
  • R v Clarke(1927) 40 CLR 227
r v clarke
R v Clarke

“it is not an absolute proposition of law that one who, having the offer before him, acts as one would naturally be induced to act, is deemed to have acted on the faith of or in reliance upon that offer. It is an inference of fact and may be excluded by contraryevidence.”

Starke J at 244

acceptance must be communicated
Acceptance must be communicated
  • Silence is not sufficient
    • Felthouse v Bindley(1862) 11 CB(NS) 869
  • Conduct may communicate acceptance
    • Brogden v Metropolitan Railways (1877) 2 App Cas 666
    • Empirnall Holdings v Machon Paul (1988) 14 NSWLR 523

The price paid for the promise

  • A promise asked for, or relied upon, as an aspect of a bargain between the parties to the contract
    • Dunlop Pneumatic Tyre Company v Selfridge & Company [1915] AC 847

“An act or forbearance of one party, or promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable”

Sir Frederick Pollock, adopted by theHouse of Lords in Dunlop Pneumatic Tyre Company Ltd v Selfridge & CompanyLtd at 855

past consideration is not good consideration
Past consideration is not good consideration

If what is done is not done as a reaction to the promise, it cannot be good consideration

  • Roscorla v Thomas (1842) 3QB 234
  • Eastwood v Kenyon (1840) 113 ER 482
privity of contract

Only parties to a contract may enforce, or be bound by, a contract

wedding cake
Wedding cake

As well, Mavis is being threatened with legal action by Chrissie Saranrap. Chrissie was married a month ago and was expecting Mavis to provide her specialty – the “nouveau doveau” - a tiered tower of cupcakes, iced in white and arranged to resemble the wings of doves – as the centrepiece cake for her wedding reception. Mavis loves doing cakes for weddings – in fact she now makes more money from doing wedding cakes than she does from her regular cooking classes.


Chrissie saw information about Mavis’ cake services after an article in the local paper, and called round to see Mavis, and look at the different cakes she could make. They discussed possibilities and pricing and Chrissie left with a price list. Apparently, Chrissie called and left Mavis a message on the answering machine ordering the “nouveau doveau” for her wedding, to be delivered on 2nd May at the wedding reception, for $2,000 COD. In her message, Chrissie had said: “If I don’t hear to the contrary, I’ll assume everything is OK. Call me if there is a problem – otherwise I will see you on the 2nd. Looking forward to your lovely creation.”


Unfortunately, because of all the work being done to the kitchen and problems with electrical work and electrical supply, Mavis had experienced a number of black outs which had interrupted her answering machine. Mavis – never received the message from Chrissie, and so of course, had not provided the cake. Chrissie is very angry and claims her wedding was ruined without the cake. She has threatened to sue Mavis.