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Rules On Offer and Acceptance PDF

This document outlines the legal rules relating to offers and acceptances for forming a valid contract. It states that an agreement requires an offer and acceptance. It then discusses the key elements of a valid offer, including the intention to be bound, clear communication of terms, and ways an offer can be terminated before acceptance. The document also summarizes the legal rules for a valid acceptance, such as accepting the original offer, communicating the acceptance to the offeror, and acceptance being absolute and unconditional. It concludes by discussing rules for acceptances using postal mail or instantaneous communication methods.

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Shishir Lohani
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126 views2 pages

Rules On Offer and Acceptance PDF

This document outlines the legal rules relating to offers and acceptances for forming a valid contract. It states that an agreement requires an offer and acceptance. It then discusses the key elements of a valid offer, including the intention to be bound, clear communication of terms, and ways an offer can be terminated before acceptance. The document also summarizes the legal rules for a valid acceptance, such as accepting the original offer, communicating the acceptance to the offeror, and acceptance being absolute and unconditional. It concludes by discussing rules for acceptances using postal mail or instantaneous communication methods.

Uploaded by

Shishir Lohani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Generally characterised by an ‘offer’ by one party and an ‘acceptance’ by another.

Agreement = Offer + Acceptance

Legal Rules relating to Offers

(i) Intention or willingness to be bound

(ii) A firm promise

(iii) Communication of the offer (in writing, orally or by conduct)

(iv) Invitation to Treat: An offer must be distinguished from an invitation to treat. This is an offer
to consider offers and cannot create an agreement if there is a purported acceptance.
Invitations to treat include: auctions; advertisements; catalogues / Internet; price lists;
goods in shop windows and shelves (Pharmaceutical Society of Great Britain v Boots Cash
Chemists (Southern) Ltd [1953] )

(v) Requests for Information: A request for information is not a firm promise and so is not an
offer. Nor does it destroy the offer as it is only an attempt to elicit information. (Harvey v
Facey [1893])

(vi) Notice of the offer: The offer must be communicated to the offeree(s). The offer may be
directed to one person, a group of people, the world at large: (Carlill v Carbolic Smoke Ball
Co. (1893))

(vii) Terms of the Offer: Any terms contained in the offer must be brought to the notice of the
offeree.

(viii) Termination of Offer: An offer can be terminated (prior to acceptance) by:

• Revocation: To be effective, withdrawal by the offeror must be brought to the notice of the
offeree before acceptance, although the offeree can learn of the withdrawal directly or
indirectly: Dickinson v Dodds (1876) , Byrne v Leon Van Tienhoven (1880)

• Rejection / Counter-offer: Refusal by the offeree or a counter-offer by the offeree will


terminate the offer: Hyde v Wrench (1840)

• Failure of condition precedent: Non-acceptance within:

➢ a reasonable time
➢ a stipulated time
➢ or death of either party before acceptance
➢ …can terminate the offer in many circumstances, especially where the contract calls
for personal service.
➢ Lapse of time / Death
Legal Rules relating to Acceptance

(i) Must be made in reliance of the offer

- R v Clarke (1927)

(ii) Must be strictly in accordance with the terms of the offer

◦ If the offeror specifies a method of acceptance it must be followed:

◦ Gilbert J McCaul Pty Ltd v Pitt Club Ltd (1954)

(iii) Acceptance must be communicated

◦ Acceptance must be communicated to the offeror, either by words or by conduct.


Felthouse v Bindley (1862)

(iv) Acceptance must be conveyed by someone with authority

Powell v Lee (1908)

(v) Cross-offers do not give rise to an agreement

Tinn v Hoffman & Co (1873)

(vi) Acceptance must be absolute and unconditional

◦ Acceptance must be absolute and unqualified or it may amount to a counter-offer.

- Masters v Cameron (1954)

(vii) The Postal Acceptance Rule

Where the parties contemplate the use of the post as a method of acceptance, the
acceptance will be effective as soon as it is posted. Adams v Lindsell (1818)

(viii) Instantaneous communications

Where the communication of acceptance is instantaneous (telephone, fax or email), the contract is
effective when the acceptance is received.

Entores Ltd v Miles Far East Corp (1955)

The Electronic Transaction Act 1999 (Cth) provides guidance on times for receipt and dispatch.

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