Agreement needs one party (offeror) to make an offer to another (offeree) who accepts it unequivocally

Must be

• Clean and certian= 'may' not suffficient
• Show intention to be bound = objective test: what reasonable man would say Parties intended ('will' good indication)

1st step in negotiation which may / may not lead to offer

CANNOT be accepted to form contract

EXCEPTION: If ad amounts to a unilateral offer
indicated by:

• clear prescribed act + its performance constitutes acceptance + clear intention to be bound

2. Display of goods for sale (in window)

• Regardless of if shop states they are offer

EXCEPTION: if tender invitation expressly provides that they will accept lowest / highest bid

Binding contractual obligation to consider tenders if:

• tenders solicited from specified parties to requesting party
• absolute deadline for submission
• requesting party laid down absolute and non-negotiable conditions for submission

4. Auction sales

• Offer can be accepted or rejected by hammer fall
  IF there is reserve price + no bids above it are received = seller can keep goods
  
  

IF NO reserve price = seller promises to sell to highest bidder (if not = breach of contract)

• In this case there is first a bilateral contract and then a unilateral one

1. Rejection

• . Once rejected, CANNOT be accepted + takes effect once communicated to the offeror
  
  

Counter offer = accepting offer on new terms

• Rejecting 1st offer and making counter offer on different terms
  
  

Request for info = offeree can seek term clarification + see if offeror would change term > offer remains valid

2. Lapse

a. By passage of time

• IF acceptance is not made within prescribed period OR
• IF no prescribed period > w/in reasonable time
  
  
  

b. Death of one of the parties

• Offeror dies = offeree knows > offer lapse / not know > valid
• Offeree dies = offer lapse
  

3. Revocation

• Offeror may withdraw offer at any time before acceptance but once accepted = offer is BOUND
  
  

a. Communication essential = revocation effective upon actual notice reaching offeree (if by post > effective once received)

b. Indirect communication = if offeror has shown by words or conduct a clear intention to revoke their offer + notice has reached the offeree > effective

c. Revocation of unilateral offer = revocation is possible prior to completion of required act BUT if offeree has partly performed + is able to complete > offeror has implied obligation not to revoke offer once performance has commenced

d. Revocation of unilateral offer to whole world = no requirement on those performing to communicate to offeror BUT offeror can revoke by taking reasonable steps to ensure those who read offer know about revocation

1. Must be in response to an offer

• Only offeree can accept offer
• If made to world > acceptable by anyone with notice of offer

2. Must be unqualified

• Must corresond with offer term (mirror image rule)
• Communication is examined to see if offeree assented to terms
  IF qualified = decided if counter offer / info request

3. Prescribed mode of acceptance

• Can be communicated in any manner BUT offer can ask for one + clearly state they will not be bound by any other methods

EXCEPTION:
POSTAL RULE = acceptance is effective when posted (putting in post box / given to post office) NOT received

• Applies even where the acceptance is delayed or lost in the post
  
  

Not apply:

• If not contemplated that post will be used
• To letters revoking offers (only acceptance letters)
• If incorrectly addressed
• If disapplied by offeror (offeror sets aside postal rule)

Communication by instantaneous means = takes place when received

• If offeror's fault caused delay in receiving it = will not be able to rely on this rule
• Acceptance via emaail = effective when received (late on Friday > received money morning)

All material terms must be certain and complete for agreement to be enforced by court.

To determine if the parties have reached an agreement: OBJECTIVE TEST =

• in all circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations
  
  

IF agreement is incomplete / uncertain > court may not be able to enforce it = e,g, hire purchase agreement

HOWEVER courts try to enforce the agreement where possible

1. Must not be past

Act that occurred prior to the promise to pay > cannot be consideration as it is not in exchange for that promise

EXCEPTION: prior act / service was provided by the promisee at promisor's request + always understood that payment would be made for that act or service.
a. Act must have been done at the promisor's request
b. Parties must have understood the act was to be rewarded by payment /conferment of benefit
c. Payment / benefits must have been legally enforceable if promised in advance

2. Must move from the promisee

Party who has not provided consideration may not bring an action to enforce a contract

3. Need not be adequate

Freedom of contract = courts will not interfere with a bargain freely reached by the parties.
NOT court's duty to assess the relative value of each party's contributions

1. An existing contract between the same parties

Party A is already contractually bound to Party B to do something > agreeing with Party A again to do that thing is NOT good consideration for a new contract

HOWEVER if B promises to pay A more for existing obligation is that enforceable?
a. Has A done something to exceed their duty
YES = B's promise of more money is enforceable
NO = is Williams v Roffey applicable

b. W v R established that promise of extra payment can be enforced is there is factual consideration = nothing new is promised but B is getting something from deal:

• B has reason to doubt whether A will / be able to complete his side of the bargain
• B promises A extra payment in return for A's promise to perform his obligations on time
• B gains a practical benefit / obviates a disbenefit
• B's promise is not given as a result of economic duress or fraud on the part of A
  
  
  

• Benefit to B = consideration for B's promise > promise will be legally binding
  IF NO BENEFIT = promise not legally binding

2. A public duty

If party claiming to have given consideration has done any more than they were already obliged to do under public law

• Carrying out public duty = NOT sufficient consideration
• Police offering provision information to individual + offering reward = good consideration

3. Existing obligations to a third party

Party A has pre-existing contract with a third party and wants to reply on that consideration for contract with Party C

Performance of the pre-existing duty owed to a Party B = sufficient consideration for a promise given by Party A

• Can amount to valid consideration for Party C who obtains the benefit of a direct obligation which he can enforce

HOWEVER there are common law exceptions allowing part payment of a debt to be good consideration to discharge the whole debt:

• Payment at different place / time / by providing a different thing in place of money
• Payment of a lesser sum by a third party (3P agrees with creditor)
• Practical benefit
  
  

IF one of the exceptions applies = promise to do something they are already obliged to do is good considertaion

IF NOT apply = does the equitable exception of promissory estoppel apply?

Equitable exception: PROMISSORY ESTOPPEL

Allows promise to be enforced despite not being supported by consideration > protects party who has relied on that promise

Used in part payment of debt = debtor may defend a debt action against them by arguing that they have relied on creditor's promise that they will not require the debt to be paid in full

1. Does it apply to the facts?

a. It acts as a shield and not a sword = only a defence not a cause of action (no right to sue)
b. Clear and unequivocal promise (words / conduct) that strict legal rights will not be fully enforced = must affect legal relations)
c. Change of position in reliance on the promise = promisor cannot go back > detrimental reliance is NOT necessary
d. Inequitable to allow the promisor to go back on their promise (fairness principle) = court assessed the conduct to determine whether they can grant the defect

2. Yes it applies

• The creditor's promise is enforceable so their strict legal rights are suspended directly estoppel period BUT can be resumed once the period ceases to operate / by giving reasonable notice
  
  
  

3. No, it does not apply

• Creditor's promise is unenforceable

1. Commercial agreements

ICLR is presumed so agreement is legally binding unless this is rebutted

• Commercial agreements can be between 2 businesses, individuals and businesses and agreements between individuals
• IF party wants to rebut resumption of ICLR the onus is on them
  
  

TO REBUT:
- Clear wording must be shown or actions

HOWEVER = statute states that NO ICLR can be inferred unless there is an express provision to the contrary that the parties intended it to be binding

Subject to contract = NOT binding until formal execution of contract

2. Social and domestic agreements

ICLR is NOT presumed so agreement is NOT legally binding unless this is rebutted

TO REBUT:

• Circumstances and language are examines (e.g. spouses separating + entering into agreement = enforceable)

1. Minors

Not bound even if the other party contracting does not know of this fact / the minor has lied about their age.

EXCEPTIONS binding minors:

a. Necessaries = minor bound by a contract to supply necessaries (goods suitable to their life / requirements) to them if contract is for their benefit + minor must pay reasonable price NOT actual

b. Contracts of employment, apprenticeship or education = minor bound if contract is for their benefit

UNLESS one exception applies > contract CANNOT be enforced against the minor BUT minor can enforce it against the other party.

IF minor ratifies a contract once they are 18 > contract will be binding

2. Mental incapacity and intoxication

Person lacks capacity if he is unable to make a decision for himself in relation to the matter at time contract is made > whether impairment is permanent or temporary

• Impairment = unable to understand / retain / use relevant info + communicate decision
• Consequence = deciding one way / failure to make decision
  
  

Capacity must be checked for particular decision

Effect of entering into contract with a person lacking capacity

Person without capacity = liable to pay reasonable price for 'necessaries

In any other case = contract is binding unless the person claiming incapacity can establish:
a. they did not understand what they were doing
b. the other party knew that to be the case:

Drunk person = liable to pay reasonable price for necessaries but NOT bound by any other contract they make

1. Agency

Agency relationship = one party (agent) is authorised expressly / by implication,by the principal to contract on their behalf

The basic requirements for agency relationship:
a. Principal should be named + be clear that the agent is contracting on the principal's behalf

b. Agent should be authorised to act as agent > no freedom to enter into any contract it wishes = principal only bound by acts of the agent which are within the agent's authority

c. Consideration has moved from the principal

Principal can sue and be sued > agent is not a party to the contract

2. Collateral contract

Between the promisor and the third party

IF PRESENT + there is consideration = privity difficulties are avoided

3. Assignment

A has a contractual obligation to B and B assigns their contractual rights to C = C can sue A on their promise to B.

Right can be assigned UNLESS there is a prohibition against it > any attempted assignment is likely to be unsuccessful

4. Actions in tort

If breach of contract between A and B causes breach of duty of care to C = C can sue A /B even if not a party to contract

5. Judicial attempts to avoid the doctrine

A contracts with B to provide something of benefit to C.

B fails to do so + C suffers loss, but cannot bring a claim because it is not party to the contract

A is a party to the contract, but has suffered no loss.

Court takes flexible approach to doctrine of privity

Third party, in limited circumstances, who is not a party to contract + has not given consideration = can enforce BUT contract CANNOT be enforced against them

Existing common law and statutory exceptions are preserved.

NOT APPLY to employment contracts + contracts between company and members

Circumstances where a 3P may enforce a term:

• Contract specifically provide that 3P can enforce a term (3P need not be in existence at the date of the contract + can be identified as a member of an identified class / particular description)
  
  

OR

need not be stated specifically IF:

• agreement confers benefit on 3P AND
• it is not the case that contracting parties did not intend the term to be enforceable by 3P
  IF NO benefit = not enforceable
  
  

HOWEVER - there may be a clause excluding 3P rights

Remedies available to 3P

IF 3P has enforceable right = parties CANNOT vary / rescind contract to vary 3P right without 3P consent if:

• 3P has communicated (words / conduct) his assent to the term to the promisor (by post = effective when received)
• Promisor is aware that 3P has relied on the term
• Promisor can foresee that 3P would rely on term + 3P has relied on it.
  
  

HOWEVER court can dispense with 3P consent if:

• they cannot be found
• they are mentally incapable
• their reliance on the term cannot be reasonably ascertained
  
  

If contracting parties wish to allow variation or rescission without the consent of the third party = can do so by including an express term in the contract

Defences against 3P claim

Promisor's defences against 3P are same as ones against the promisee + 3P CANNOT be placed in a better position than if they had been a party to the contract themself

Any award to 3P may be reduced by the court if the promisee has already recovered a sum in respect of the 3P loss or the expense incurred by the promisee in making good to the 3P the default of the promisor