Contract: Backbones Notes
Binding Contract
Offer and Acceptance
o Valid offer – clear and certain with intention to be bound
Invitation to treat – will not form a binding contract
Advertisement – invitation to treat unless amounting to a
unilateral offer.
Display of goods for sale – invitation to treat
Invitation to tender (auction)
o Auctioneer’s request for bids is an invitation to treat and
a contract is made when the hammer falls
o Without reserve auctions – unilateral offer given the
promise that the auction is without reserve.
o Valid acceptance
In response to the offer
Mirror rule – unqualified
Prescribed mode of acceptance may be required
Acceptance must be communicated
Instantaneous communication – takes place when received if
during ordinary office hours.
Postal rule – where post is a deemed method of
communication, acceptance takes place once properly posted,
even if lost in the post.
o Has the offer been terminated?
Rejection
Counter-offer will amount to a new offer and rejects the initial offer
Request for information will not terminate
Lapse – prescribed period/death
Revocation – withdrawal effective where properly communicated
(postal rule will not apply)
Intention to create legal relations
o Objective test – determined by the actions of the parties in the circumstances
Commercial agreements: presumed that there is ICLR but this can be
rebutted
Domestic agreements: presumed that there is no ICLR but this can be
rebutted.
Consideration – to enforce a promise, something must be provided in return for that
promise. Must be sufficient but need not be adequate.
o Promises to pay more – general rule: not binding
Exceptions
Went beyond their existing obligations
A practical benefit and no duress/fraud
, o Promises to accept less – general rule: not binding
Exceptions
Payment at a different time or place
Payment of a lesser sum by a third party
Practical benefit
Promissory Estoppel (clear, unequivocal promise)
Full legal rights may be resumed but only with reasonable
notice
Would otherwise be inequitable to go back on.
Shield not a sword
Capacity
o Minors – generally not bound, though another adult party would be
o Exception
Necessaries – for their benefit
Employment – for their benefit
o Mental Capacity
Contract for necessaries binding unless they did not understand AND
the other party knew this to be the case.
Duress
A lack of practical choice
Illegitimate pressure
‘But for’ the duress, the contract would not have been entered into.
Undue Influence
Overt acts of pressure or coercion or
Taking advantage of influence of ascendancy
o Presumed for: parent/child, solicitor/client, trustee/beneficiary, doctor/patient
o Bank/lender will need to make sure another party to a loan/mortgage
understands what they are signing.
Contract Terms
Term of the contract?
o Did the parties intend the statement to be binding?
Timing
Importance attached
Reduction of contract o writing
Special knowledge or skill
Assumption of responsibility
Express
o Signed, written contract
o Incorporation by notice
Reasonable steps taken to bring it to their attention
Binding Contract
Offer and Acceptance
o Valid offer – clear and certain with intention to be bound
Invitation to treat – will not form a binding contract
Advertisement – invitation to treat unless amounting to a
unilateral offer.
Display of goods for sale – invitation to treat
Invitation to tender (auction)
o Auctioneer’s request for bids is an invitation to treat and
a contract is made when the hammer falls
o Without reserve auctions – unilateral offer given the
promise that the auction is without reserve.
o Valid acceptance
In response to the offer
Mirror rule – unqualified
Prescribed mode of acceptance may be required
Acceptance must be communicated
Instantaneous communication – takes place when received if
during ordinary office hours.
Postal rule – where post is a deemed method of
communication, acceptance takes place once properly posted,
even if lost in the post.
o Has the offer been terminated?
Rejection
Counter-offer will amount to a new offer and rejects the initial offer
Request for information will not terminate
Lapse – prescribed period/death
Revocation – withdrawal effective where properly communicated
(postal rule will not apply)
Intention to create legal relations
o Objective test – determined by the actions of the parties in the circumstances
Commercial agreements: presumed that there is ICLR but this can be
rebutted
Domestic agreements: presumed that there is no ICLR but this can be
rebutted.
Consideration – to enforce a promise, something must be provided in return for that
promise. Must be sufficient but need not be adequate.
o Promises to pay more – general rule: not binding
Exceptions
Went beyond their existing obligations
A practical benefit and no duress/fraud
, o Promises to accept less – general rule: not binding
Exceptions
Payment at a different time or place
Payment of a lesser sum by a third party
Practical benefit
Promissory Estoppel (clear, unequivocal promise)
Full legal rights may be resumed but only with reasonable
notice
Would otherwise be inequitable to go back on.
Shield not a sword
Capacity
o Minors – generally not bound, though another adult party would be
o Exception
Necessaries – for their benefit
Employment – for their benefit
o Mental Capacity
Contract for necessaries binding unless they did not understand AND
the other party knew this to be the case.
Duress
A lack of practical choice
Illegitimate pressure
‘But for’ the duress, the contract would not have been entered into.
Undue Influence
Overt acts of pressure or coercion or
Taking advantage of influence of ascendancy
o Presumed for: parent/child, solicitor/client, trustee/beneficiary, doctor/patient
o Bank/lender will need to make sure another party to a loan/mortgage
understands what they are signing.
Contract Terms
Term of the contract?
o Did the parties intend the statement to be binding?
Timing
Importance attached
Reduction of contract o writing
Special knowledge or skill
Assumption of responsibility
Express
o Signed, written contract
o Incorporation by notice
Reasonable steps taken to bring it to their attention
