Part 1: Intention to create legal relations, Agreement, Termination of offer

INTENTION TO CREATE LEGAL RELATIONS

If there is no intention of a readiness to be bound, then it is
at most an invitation to treat

Intention to create legal relations is assessed objectively (ie.

Payne v Cave (auction)
use reasonable persons interpretation of the words &
Calling for bids = invitation to treat, submitting a
conduct of the parties)
bid = offer, hammer fall = acceptance

There is a presumption that business deals are, &

Pharmaceutical Society GB v Boots (display in shop)
social/domestic arrangements are not, intended to be legally
*Self-service shop displayed goods on shelves
enforceable
Display of goods is an invitation to treat, not an
offer because customers can change their minds
Business deals
after taking goods off the shelf
If the context of the agreement is commercial, legal relations
Customer makes the offer to buy, which the shop
are presumed to be intended
owner can accept or reject
This presumption of fact can be displaced by a contrary Advertisements
intention
Where the context of the advertisement is a proposed
Rose & Frank Co v J R Crompton & Bros Ltd (express
bilateral contract (promise for promise), it will
contrary intention)
normally be an invitation to treat [Sale cant have
Parties to a commercial deal may expressly provide
contract with whole world no readiness to be bound
that their agreement is binding in honour but not in
invitation to treat]
law
Where the context of the advertisement is a proposed
Admin. of Papua New Guinea v Leahy (implied
unilateral contract (promise for a particular act), it will
contrary intention)
normally be an offer [Reward advertiser simply
Arrangement was of the government supplying a
wants an act done no contemplated further
gift not a private contract implied no
negotiations readiness to be bound offer]
intention to create legal relations
Carlill v Carbolic Smoke Ball Co (proposed unilateral
Domestic deals
contract, mere puff, world at large)
If the context of the agreement is social or domestic, legal
*$100 reward to those who contract influenza/cold
relations are presumed not to be intended (Cohen v Cohen)
after using ball as prescribed
This presumption of fact can be displaced by a contrary
*$1000 deposited to show firms sincerity
intention
Deposit sentence shows that the reward was not a
Todd v Nichol (implied contrary intention)
mere puff (reasonable person would take the
*Sister-in-law & niece were offered free
reward seriously)
accommodation if they moved from UK to
Possible to have an offer to the whole world
Adelaide
Lefkowitz v Great Minneapolis Surplus Store (proposed
The consequences of acting in reliance upon the
bilateral contract)
agreement were serious implicit that the sister *Advertised fur coat sale 1st customer can buy a
in-law & niece wouldnt had made such a major
fur coat at a bargain
move without an intention to be legally bound
Proposed bilateral contract, but it was clearly an
under the circumstances, the presumption was
offer & didnt leave any doubt
displaced

If intention is made clear enough, there is no

Jones v Padavatton (presumption not displaced)
reason why an advertisement in sale cannot be an
*Mother promised daughter that she will give
offer
house if she moved from USA to England and
studied law there
Acceptance
*Daughter never contemplated the possibility of
Acceptance occurs when offeree says or does something that
her mother going to court to enforce legal
indicates an intention to accept the proposed terms
obligations
No intention to accept the terms proposed if:

Circumstances were short of displacing the

offeree introduces a new term to the offer (counterpresumption
offer)
offeree accepts subject to contract [there is no
intention to be bound until the formal contract is
signed] (Masters v Cameron)
AGREEMENT
Acceptance can be inferred from conduct (eg. unilateral
contracts)
Contract cannot be formed unless

General
rule: Brinkibon Ltd v Stahag Stahl mbH

no further negotiations are needed (ie. offer & acceptance

Acceptance
is not effected until it is communicated to
exist), and
the
offeror

the parties are ready to be bound

Contract is formed at the place where the acceptance
was received by the offeror
Offer

Exceptions
to general rule
Offer occurs when one party has

Acceptance
by post
stated their terms, and
Postal acceptance rule: If the parties contemplate
indicated their readiness to be bound when the other
that the acceptance might be posted, acceptance
party accepts them

Part 1: Intention to create legal relations, Agreement, Termination of offer

occurs when the letter of acceptance is posted
*V took active steps to secure the subdivision
(Henthorn v Fraser)
*After commencement but before completion, C
The rule does not extend to instantaneous or near
revoked offer
instantaneous modes of communication, which are
Where the offeree has already started doing the acts
effective acceptances only when received by the
which, when completed, will constitute acceptance,
offeror
then the offer becomes irrevocable
The offeror can choose to negate the rule, if the
As long as commencement of the act indicates
terms of the offer expressly require actual notice of
intention to accept, the offer becomes irrevocable
acceptance (Bressan v Squires)
The offeror need not know whether the act has
Dispensing with the requirement of communication of
commenced (because unilateral contract
acceptance
requirement of communication impliedly dispensed
The requirement that acceptance be communicated
with)
is for the benefit of the offeror, who may expressly
An act preparatory to performance will not do
or impliedly dispense with it
Intention to accept
Bilateral contract waiver of communication
Williams v Cawardine
must be express
*Def offered reward to anyone giving information
Unilateral contract implicit that the offeror
about a murder
just wants the act done without prior
*Pl gave the information to ease conscience (acted
acknowledgement that the offer is being
entirely by motive)
accepted acceptance need not be
Provided the offeree knew of the offer (which the
communicated (Carlill v Carbolic Smoke Ball
Pl did), then motive is irrelevant
Co)
R v Clarke
Felthouse v Bindley
*Govt offered reward for info leading to conviction
Offeror cannot impose a contract on the offeree
of murder
by stipulating silence as acceptance (ie. Offeror
*Pl gave the info which led to the conviction
cant say that a failure to reject will be
*C gave the info solely to avoid murder charges,
acceptance)
and did not have the money in mind when giving
But the offeree can impose a contract on the
info
offeror, because the offeree shows an intention
Pls motive was inconsistent with an intention to
to accept binding contract
accept (unlike Williams v Carwardine)
If the contract is not being imposed on the
(This is not objective?)
offeree, there will be no objection to silence
Provided the offeree knew of the offer at the time of
being acceptance
acceptance, it will be inferred that there was an
Where the offeror prescribes a specific mode of
intention to accept. But this inference can be displaced
communicating acceptance, the prescribed mode could be
by a completely different motive.
acceptable or indispensable
Manchester DCE v Commercial & General Investments
Ltd
*Offeree sent post to surveyors rather than
offerors address
*Held that sending to the different address was no
less advantageous to the offeror acceptance
effective
Generally, acceptance should be by the mode
prescribed or any other mode which is no less
advantageous to the offeror
If the offeror intends an exclusive mode of
communicating acceptance, he must make this clear
This rule is for the protection of the offeror, who
may dispense with the requirement if desired
Time of acceptance what happens if the proposed
unilateral contract is revoked in the middle of the act?
Abbott v Lance
*If L sells his property to someone else while A
travels to & inspects it, L must pay A 100 pounds
*L revoked the offer when A was halfway to Ls
property
Ls promise to pay was a potential unilateral
contract
As commencement of travel constituted acceptance
& consideration
Veivers v Cordingley
*C promised to pay V extra $200k if councils
approval was forthcoming within 12 months

Part 1: Intention to create legal relations, Agreement, Termination of offer

TERMINATION OF OFFER
*Pl replied Please wire whether you would accept 40
for delivery over 2 months or if not longest time limit
Revocation
you would give
Byrne v Van Tienhoven
Pls reply was a mere inquiry (there was nothing
A revocation terminates the offer when it is
specific by way of offer or rejection) should not be
communicated to the offeree
treated as a rejection
Although the offeror changed his mind before
acceptance, the revocation had not reached the offeree Death of either offeror or offeree
at the time of effective acceptance (posting) Where personality of the dead party would be involved in
Ineffective revocation
the performance of the prospective contract (eg. performing
Dickinson v Dodds
in concert or writing book), the offer is terminated at the
time of death
*Def offered to sell Pl houses for 800 pounds

Where personality of the dead party is not involved (eg.

*Def stated that the offer was open until Friday 9am
rd
paying money), the offer can be accepted anytime before the
*Def sold houses to 3 party before promised time
th
death comes to notice of the living party
*Pl heard of the sale from a 4 person
Def was allowed to break the promise of keeping the
offer open, since there was no consideration for it
Communication of revocation can come from any
source
Revocation of a proposed unilateral contract?
Shuey v United States: Offers to the world at large can
be validly withdrawn in the same way that they were
made (it does not matter that the revocation does not
reach the particular offeree)
Lapse of Time
Offeror may effectively impose a time limit on the offer
Where no time limit is expressed
The offer will lapse after a reasonable time
In most cases a considerable time is needed for lapse of
offer, because the offeror is free to revoke beforehand
Occurrence of a condition subsequent
The offeror may specify an automatic termination of the
offer upon the occurrence of some external event, regardless
of whether the parties are aware of that events result
Rejection
An offer is terminated when the offeree communicates
rejection to the offeror
Hyde v Wrench
*Def offered to sell farm for 1000 pounds
*Pl replied offering 950 pounds, which the Def refused
*Pl then agreed to pay the originally asked 1000 pounds
A counter-offer implies rejection
Pls agreement to pay the original 1000 pounds was a
new offer, which the Def was free to reject
Butler Machine Tool Co Ltd v Ex-cell-O Corp Ltd
*Pl supplier sent a quote containing terms that included
a price variation clause
*Def buyer sent an order with no price variation clause
*Supplier signed a tear-off slip which accepted the
order on the buyers terms
*Supplier invoked the price variation clause
Sellers quotation was an offer, but the buyers reply
order was a counter-offer because the terms were
different
This counter-offer was accepted by the seller when they
completed & returned the tear-off slip
Stevenson Jaques v McLean
*Def telegraphed offering to sell iron at 40s per ton