AGREEMENT

If you are told on the facts of the problem that there has been an agreement then just state there is one and move on.Only explore if there is some uncertainty

OFFER“a clear statement of the terms by which the person making the offer is prepared to be bound’

A mere puff: a non-promissory statement which may be used as advertisement to induce another to enter into contract. Exaggerated statements a reasonable wouldn’t hold to be true

An invitation to treat: not an offer but an invitation to other parties to make an offer. A person who responds to an invitation to treat is in fact making the offer which may then be accepted or rejected, eg goods in catalogue, auctioneers request for bids, announcements inviting tenders etc Grainger v Gough

Standing Offers:Offers to provide goods or services when required. These offers are accepted each time an order is placed. Can be revoked at any time prior to acceptance Great Northern Railway Co v Witham; Colonial Ammunition Co v Reid

Communication:An offer becomes effective once it is communicated to the offeree or his or her agent Cole v Cottingham eg if a reward is offered but unaware of reward cannot claim later when hearing of the reward R v Clarke

TERMINATION OF AN OFFER:An offer may be terminated at any time before it has been accepted, but once an offer has been accepted then it cannot be revoked Great Northern Railway Co v Witham

Revocation: the formal withdrawal of an offer by the offeror, can only occur prior to acceptance.

Revocation will only be effective once it is communicated to, and received by, the offeree Byrne v Tienhoven

Revocation by a reliable third party may be sufficient Dickingson v Dodds If consideration has been given to keep the offer open for a period of time

offer may be revoked until the expiration of that time Goldsborough Mort v Quinn.

If acceptance if the performance of an act then once that act has begun the offer cannot be revoked Abbott v Lance

Rejection: Once an offer is rejected by an offeree it cannot later be accepted Where a person purports to accept an offer but introduces new terms the offer

is rejected and a new offer is made which can then be accepted or rejected by the other party (counter offer) Hyde v Wrench unless the new condition is minor or of a trivial nature Turner Kempson and Co Pty Ltd v Camm

The rejection is effective once communicated to the offeror. If a party intends to accept the offer but changes their mind they may be able to reject the offer if it is prior to the communication of the acceptance

Lapse of Time: An offeror may stipulate their offer must be accepted within a period of time, and of the offeree fails to accept the offer is said to lapse

If there is no time prescribed, the offer may be accepted in a reasonable amount of time Ramsgate Victoria Hotel v Montefiore

Conditional Offers: An offer may be made conditional on the happening of a certain event. If a condition on which the offer is made is not fulfilled then the offer lapses McCaul (Aust) Pty Ltd v Pitt Club Ltd

Death: If an offeror dies then it is still possible for the offeree to accept the ofer thus binding the deceased’s estate. An offeree cannot accept an offer after hearing of the death of the offeror Coultart v ClementsonIf Offeree dies then the offer more than likely lapses Reynolds v Atherton assistant

ACCEPTANCE

Acceptance is the expression, either in words or conduct, of assent to the terms of the offer. In a unilateral agreement the acceptance is taken as the first person who accepts or performs the act Robinson v M’Ewan

Communication: An acceptance has no effect until it is communicated to the offeror Byrne and Co v Leon Van Tienhoven and Co Acceptance must be communicated by the offeree or their agent Dickinson v Dodds. Silence does not constitute an acceptance Felthouse v Bently

Postal Acceptance Rule: Must be in comtemplation of parties that the post will be used as the form of response. Acceptance is effective at the time of posting not at the time of receiving Adams v Lindsell

Revocation: It is possible to revoke acceptance as long as the revocation is communicated to the offeror before the acceptance is communicated Entores Ltd v Miles Far East Corporation

CERTAINTY

If a contract is to vague or uses uncertain terms then the contract may be deemed void Whitock v Brew. However the courts endeavour to make contracts valid where they can Hilas and Co v Arcos Ltd

Meningless terms: A contract which contains meaningless term may be unenforceable unless the contract could stand on it own Fitsgerald v Masters

WHERE A CONTRACT IS ‘SUBJECT TO’

Subject to financeSee terms

Subject to Formal AgreementWhere a contract is made ‘subject to contract’ there are three categories of interpretation as set out in Masters v Cameron

1. Where the parties have reached finality in their negotiations and intend to be bound immediately but propose to restate the terms in a more formalised manner

2. Where parties have completely agreed but have made performance of one of the terms conditional upon execution of a formal document

3. where the parties do not intend to be bound unless and until a formal document is entered into

Only in the first and second categories will the parties be immediately bound by their agreement whether the formal document comes into existence or not Masters v CameronIn the third case the terms of the agreement are not intended to be binding and therefore are not

Go off the facts of the case to determine their intentions as evidenced by their actions.

Next explore whether or not the contract is enforceable eg if it is a contract for the sale of land

CONSIDERTAION

Past Considertaion: Past consideration is not good consideration. Consideration is past when the promise is made after the act or performance and is usually independent of it Roscorla v ThomasException – When services are performed at another’s request and a subsequent promise is made for payment, that promise will be enforceable if, when it was made, both parties were under the assumption that services were to be paid for Lampleigh v Braithwait

Consideration must move from the promisee but does not need to move to the promisor Dunlop Pneumatic Tyre v Selfridge & Co

In the case of joint promisees it is sufficient if the consideration is given by one party on behalf of all parties Coulls v Bagot’s Excecutor & Trustee Co Ltd

Consideration must be something of value in the eyes of the law A moral obligation to perform a promise does not constitute good

consideration Eastwood v Kenyon The act or forebearance constituting consideration must be done in reliance of

the promise, and not done for other reasons Combe v Combe

Consideration must be sufficient but need not be adequate Chappell & Co v Nestle Where a public duty is imposed on the plt, performance of the duty is

insufficient consideration for the def promise of payment for the performance of that duty Collins v Godefroy But if they act in access of that duty that performance will be sufficient consideration to support the promise of payment Glasbrook Bros v Glamorgan County Council

Where the plt is bound by a contractual duty to the def, performance of that duty will not amount to sufficient consideration to support a further promise of payment by the def Musumeci v Winadell Pty Ltd; Williams v Roffery Bros

Where the plt is bound by an existing contract to a 3rd party, performance of the duty is sufficient consideration for the def promise Shadwell v Shadwell

In certain circumstances, giving up the right to sue in return for a settlement may be good consideration Callisher v Bischoffsheim

Part payment of a debt is not good consideration for the promise to forgo the balance Pinnels Case However, equitable estoppel may in some circumstances be used to evade the rule in Pinnels Case

A forebearance to sue may constitute goo consideration even if there is a chance that the proposed action would not have succeeded.The promisee must show

The action must not be frivolous or vexatious The plt in the action must believe that he or she has a reasonable chance of

success The plt must not knowingly conceal from the def any fact that could affect the

validity of the claimCallisher v Bischoffsheim

INTENTION TO CREATE LEGAL RELATIONS

Domestic and Social AgreementsIn domestic and social agreements the courts presume that the parties did not intend for their agreement to be binding Balfour v Balfour. The domestic presumption will not arrise where a married couple have separated Merritt v Merritt

Factors the courts will take into consideration in determining intention How close was the relationship What did the parties say to one another What were the surrounding circumstances when the statements were made Whether the parties have commercial interest involved How serious are the consequences of one party acting on the promise

Business and Commercial AgreementsThere is a strong presumption that a commercial contract is intended to create legal relations Carlill’s Case

Rebuttal of the presumptionWhere parties expressly state that their agreement is not intended to have any legal effect this will be upheld by the court Rose and Frank v Crompton Ltd

Government AgreementsWhere a government enters into an agreement pursuant to some policy proposal or in carrying out some government function, it is generally not contractually bound Australian Woollen Mills v The CommonwealthWhere a government departments contracts with an individual or a corporation, the agreement will be binding unless the purpose of the agreement was to provide some kind of assistance to the other party or the community in general.

ORAL STATEMENTS

If the document is signed then state the general rule with respect to signed documents is that where a party signs a document, he or she is generally bound by its terms L’Estrange v GraucobIs the term a mere representation?

Objective test based on the intention of the parties Oscar Chess v WilliamsFive subsidiary tests

1. Words and conduct of the partiesThe importance of the term in the minds of the parties as indicated by words and conduct Harling v Eddy; Couchman v Hill

2. Knowledge or expertise of the statement makerIf the party who made the statement is in a better position than the other party to ascertain the accuracy of the statement, it is probably a term Oscar Chess Ltd v Williams

3. Statement maker has control in relation to informationHospital Products Ltd v United States Surgical Corporation

4. Oral Statement not reduced to writingIf the statement is made orally and it is not included when the contract is reduced to writing, it is probably not a tem. This does not really help as it will never satisfy pro making it a condition. However, if a pre-printed standard form contract is used then it may be argued that this signifies the written contract was not intended to contain all the terms.

5. Interval of timeIf there is a long interval between the making of a statement and the conclusion of the contract, it is probably not a term of the contract Routledge v McKay

The parole evidence rule does apply where the parties contract partly in writing and partly orally Couchman v Hill

If it is a term is it a condition, warranty or intermediate term (state everything below) condition – is a term which is essential or so important to the contract that is it

is breached the innocent party has the right to terminate the contract and sue for damages Tramways Advertising Ltd v Luna Park

Warranty – a term that is subsidiary to the main purpose of the contract. If breached the innocent party is entitled only to damages Bettini v Gye

Intermediate term – is a term which is not able to be categorised as either a condition or a warranty. Remedy for breach depends on the seriousness of the breach Hong Kong Fir Shipping

Identify which type of term you feel it isIf it is a mere representation then list belowThere are three different types of misrepresentations

Innocent misrep – damages only Negligence misrep – termination of contract and damages in tort Fraudulent misrep – termination and damages in tort

Is it a collateral contract (see above)Define and apply three elementsRemedy is damages only

RREPRESENTATION OR TERM

The general test is the intention of the parties, that its, did the maker of the statement intend to guarantee the truth of the statement.Objective test – what would a reasonable third person have understood the statement to be Oscar Chess Ltd v Williams

Time – Where there is a long interval between the maing of a statement nd the conclusion of the contract, it is probably not a term of the contract but merely a representation Routledge v McKay

Reduction of the statement into writing – where a statement is made orally and is not included when the contract is reduced to writing, it is probably not a term Routledge v McKay; If the contract is not reduced to writing the oral statement would more than likely be viewed as a term United Hospital Surgical Corporation v Hospital Products International Pty Ltd

Importance in the minds of the parties – where a statement is important in the minds of both parties it is probably a term Couchman v Hill

Special Skill and knowledge – where the statement maker is in a better position than the other party to ascertain the accuracy of the statement, it is probably a term Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd

If the test indicates the statement was a representation which is shown to later be false (misrepresentation) the innocent parties will not have remedies under the contract but may have an equitable right to bring the contract to an end. If the misrepresentation is fraudulent or negligent the innocent party may also have the right to sue for damages in the deceit or negligence

COLLATERAL CONTRACTS

Where you have a promissory statement made which does not become part of the main contract may have formed the basis of a collateral contract.The consideration for the promise is usually the making of the main contract Heilbut Symons v Buckleton

Bipartite – are made between the same parties who enter into the main contract Shepperd v The Council of the Municipality of RydeTripartite – where the promissory statements which induces the innocent party to enter into the main contract may have been made by a third party eg manufacturer makes statement and plt buy goods from def Wells (Merstham) Ltd v Buckland Sand and Silic Co LtdThree elements must be established:

1. an intention by the statement maker that the statement be relied upon2. reliance by the other party on the statement that has been made3. an intention by the statement maker to guarantee the truth of the statement

Savage v BlakneyThe terms of the collateral contract must be consistent with the terms of the main contract Hoyts v SpencerOnly remedy for breach of collateral contract is damages cannot terminate or enforce the main contract

EXEMPTION CLAUSES

First determine as per below whether or not the exemption clause is part of the contract and binds the def and pltSigned Document The general rule with respect to signed documents is that where a party signs a document, he or she is generally bound by its terms L’Estrange v GraucobExceptions:

1. If the document signed is thought to have no contractual effect DJ Hill and Co Pty Ltd v Walter H Wright Pty Ltd (delivery docket)

2. If the person seeking to rely upon the clause has misrepresented its effect Curtis v Chemical Cleaning Co

3. ‘Non est factum’ a person who signs a document may be able to plead non est factum, that is, they did not know what was being signed. To succeed, plts must show that there is a radical difference between what was signed and what they thought they were signing and that they were not just careless in signing Petelin v Cullen, hard to succeed but if plt is successful the document is rendered void

NoticeA term may be incorporated into a contract is sufficient notice of the term of the contract is given by the party who later may wish to rely upon it.The party seeking to rely upon the exclusion clause must show that he or she did all that was reasonable, in the circumstances of the case, to bring the term to the attention of the other party Balmain New Ferry Co Ltd v RobertsonThe notice must be given prior to or at the time of entry into to contract Olley v Marlborough Court Ltd

Unsigned DocumentsIn the case of unsigned documents which contain an exemption clause, a party who does not know of the exemption clause will only be bound by it if the following id shown:

1. It would be assumed by a reasonable person to be a contractual document Causer v Browne (nowadays less likely to prove as most consumers expect recipts etc to include contractual terms)

2. Reasonable steps were taken to give the class of person, to which the recipient belonged, notice of the existence of the term Parker v South Eastern Railway Co

3. These steps were taken before the contract was made Thornton v Shoe Lane Parking Ltd

4. It appears not to matter that the recipient did not read the terms or that they were unable to read Thompson v LM and S Railway

Consistent Course of Prior DealingsIf there is no document signed the def wishes to rely on an exemption clause in contracts signed during previous course of dealings Henry Kendall & Sons v William Lillico & Sons

It is not necessary to show the plt had actual knowledge of the term, it is enough if it can be shown they ought to have known about the clause Henry Kendall v LillicoWhat constitutes consistent course of prior dealings depends on the facts of the case. In Henry Kendall it was held three or four occasions over three years was sufficient. However, in Hallier v Ramblin Motors three or four dealings over five years was held to be not sufficient.

Once it is determined the exemption clause forms part of the contract it is necessary to determine whether or not it covers the breach

The courts generally construe an exemption clause according to its natural and ordinary meaning in light of the contract as a whole Darlington Futures

There are a number of rules on construction the courts use to assist in interpreting an exemption clause

1. The party inserting the clause cannot be protected by it if they misrepresent the meaning of it Curtis’s Case

2. The clause will be construed strictly Wallis v Pratt & Hayes3. Clause is read contra proferentem (against the def) in case of ambiguity

Darlington Futures4. In the case of negligence:

Express exclusion is effectiveWhere the only possible cause of action is an action in negligence, the court

will interpret a ‘wide’ clause to cover the def’s liability for negligence Alderslade v Hendon Laundry Ltd

Where a cause of action may be based on some other ground other than negligence (such as breach of contract) a ‘wide’ clause must be confined to the heads other than negligence White v John Warwick

5. Corners Rule Sydney City Council v West – relates only to the person relying on the exemption clause

IMPLIED TERMS

Terms implied by custom or usageThe parties to a contract are presumed to contract with reference to whatever customs that prevail in the trade or locality in question Con-Stan Industries of AustraliaPty Ltd v Norwich Winterthur Insurance set out a number of rules that must be satisfied before a term will be implied

1. the existence of a custom or usage that will justify the implication of a term into a contract is a question of fact

2. there must be evidence that custom or usage relied upon is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract; however, the custom need not be universally accepted

3. a term will not implied on the basis of custom or usage where it is contrary to the express terms of the agreement

4. a person may be bound by a custom notwithstanding the fact that they had no knowledge of ti

Terms implied by statueSale of goods and provision of services contracts have a number of terms impliedly incorporated into them.

Implied warranties that the seller is to have quiet possession of the goods and that the goods are free of encumbrances s15(b), (c) Sale of Goods Act (Qld)

Implied conditions that in a sale by description, the goods will correspond with that description s16 SoGA

Implied conditions that goods are reasonable fit for the purpose s17 SoGA Implied conditions that goods are of merchantable quality s17(c)SoGA

S74 Trade Practices Act applies to the provision of servicesS68 TPA parties cannot contract out of these terms implied under the TPA

Terms implied by custom or usage in the marketCon-Stan Industries of Aust Pty Ltd v Norwich Winterthur Insurance

1. the existence of a custom or usage that will justify the implication of a term into a contract is a question of fact

2. there must be evidence that the custom or usage relied upon is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract; however, the custom need not be universally excepted

3. A term will not be implied on the basis of custom or usage where it is contrary to the express terms of the agreement

4. A person may be bound by a custom notwithstanding that they had no knowledge of it

Terms implied as a matter of fact for the purpose of business efficacyWhen a term is said to be implied for the purpose of business efficacy, it generally means that the partied require that term in order for the contract to work. Rules for implying a term on the basis of business efficacy set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings; Codelfa v State Rail Authority

1. it must be reasonable and equitable to imply the term2. it must be necessary to give business efficacy – that is the contract will be

ineffective unless the term is implied3. it must be so obvious that it goes without saying4. it must be capable of clear expression5. it must not contradict any express terms of the contract

Terms implied from a previous course of dealingsThe courts will often look into past dealings between parties to assist in determining the terms of their present arrangements.There must be a previous consistent course of dealings of a sufficient length of timeHenry Kendell and Sons v William Lillyco and Sons – three or four times a month over three years held sufficientMcCutcheon v David MacBayne Ltd – risk note everytime previous to this one but this time not required – court held nothing to indicate an intention that the terms of the risk note would be incorporated into the present contract

Hollier v Rambler Motors (AMC) Ltd – three or four dealing in the course of five years held not sufficient

FORMALITIES

Contracts for the Sale and Disposition of Lands59 Property Law Act 1974 (Qld) provides that contracts for the sale or disposition of land must be in writing for them to be valid.

Some memorandum or note thereof

It is not necessary for the contract to be in writing, it is sufficient if it is witness in writing s59 Property Law Act 1974 (Qld)

1. There must be and acknowledgement by the party to be charged that the contract is concluded Tiverton Estates v Wearwell Ltd

If the document say ‘subject to contract’ or similar then it is not concluded Masters v Cameron

2. Must contain all the material terms of the agreements Harvey v Edwards Dunlop and Co Ltd

Sufficient description of the parties Williams v Burns Sufficient description of the subject matter Pirie v Saunders The consideration for the promise Burgess v Cox (unless guarantee) A statement of any special conditions

If a term is missing but it is deemed not to be essential then contract may still be enforceable

3. Must be started from a document signed by the party to be charged. A full signature is not required, so long as the name of the party to be

charged appears on the document that will be sufficient. A printed or written name appearing on the document will suffice so long as it was intended to authenticate the whole of the document Durrell v Evans

4. JoinderIf document signed does not satisfy 2 then documents may be joined together if

There is some reference, wither express or implied, in the document signed by the party to be charged to some other document/s

If there is reference in document signed by the party to be charged that refers to the transaction (eg ‘our deal’ or ‘out arrangement’) then parole evidence can be introduced to explain the transaction and bring in any documents relating to the transaction. Can include documents that come into existence after the transaction Popiw v Popiw

If contemporaneous (eg receipt immediately follows cheque) then they may be joined. If there is a delay then this principle will not apply

Things that are physically joined may joined together eg. A letter and its envelope may be joined Pearce v Gardiner

State BelowA contract that does not fulfil the statutory requirement is still valid but is unenforceable should the contract be breached. However there are still some situations in which a court will enforce the contract.

Where an agreement is partly written and partly oral, the courts may enforce the agreement despite the fact it does not satisfy the requirements of writing.

5. Doctrine of Part PerformanceActs of part performance must be unequivocally referable to some such contract as that alleged McBride v Sandland; Regent v MilletThere has to be no deposit whatsoever. Payment of deposit and taking of possession is not enough; but making repairs, alterations, mortgage repayments are good established examplesActs must be done by plaintiff in reliance on the agreement with the knowledge of the other partyIf Doctrine of Part Performance is applied then the equitable remedy is the specific performance of the contract.

GUARENTEESs56 Property Law Act 1974

It is important to distinguish between guarantees and indemnitiesAn indemnity is a primary liability ie I will see you paidA guarantee is a secondary liability ie If X defaults then I will pay

If a guarantee then the same requirements stand as for a contract for the sale of land.

The note must contain the same material facts as mentioned above for the sale of landHowever, consideration is not considered an essential term s56(2) Property Law Act

The writing requirement of the statute will not operate in certain situations:1. a promise by a guarantor made to the debtor to pay the debt is not a guarantee

Eastwood v Kenyon2. where one agrees to take over the debt of another, it is not a guarantee Gray v

Pearson3. where the guarantee forms part of a larger transaction, for example a sale or

lease agreement Anthoness v Melbourne Malting and Brewing Company; Harburg India Rubber Comb Co v Martin

4. where the guarantee imposes no personal liability, such as where the debt is secured on the property of the promisor Harvey v Edwards Dunlop

PRIVITY

General rule of PrivityOnly a party to a contract may sue on it or be subject to obligations created by it Wilson v Darling Island Stevedoring Co

Argue whether or not they are third party or they are joint promisees. State that a third party beneficiary not a joint promisee and that they have not provided consideration Coulls v Bagot

Statutory Exceptions If Insurance then:

If in the contract of insurance the person is named, either specifically or otherwise, as a person whom the insurance will cover then that person has the right to recover losses from the insurer under the contractS48 Insurance Contract Act 1984 (Qld)Applies Trident v McNiece

If Other then:3rd party may sue if they are specified in the contract and they accept the benefit of the promise within the specified/a reasonable time of ti coming to their attention. Acceptance can be by words or conduct.S55 & 6 Property Law Act (Qld)Prior to acceptance of the benefit, the promisor and promisee may without the consent of the beneficiary vary or discharge the promise s55(2) Property Law Act

Common Law Exceptions Agency – legal relationship between the 3rd party and the promisee whereby

the principal gives the agent the authority the act on their behalf Trident v McNiece

Trust – A promisee in a contract holds the promise on behalf of the 3rd party. 3rd party still cant sue but can legally compel the trustee to enforce the contract Deane j Trident v McNiece

Unjust Enrichment – where the promisor receive an unjust benefit to the detriment of the 3rd party Gauldron J Trident v McNiece. Note that there is difficulty association with the interpretation applied by Guadron

Estoppel (see below)Remedies – common law damages Trident

EQUITABLE ESTOPPEL

For equitable estoppel to apply there must be unconscionable conduct by one party Walton Stores Ltd v Maher

Clear and unambiguous assumption or expectation by Party A Legione v Hateley

Encouraged or induced by Party B Waltons Stores Ltd v Maher Party A acts or abstains from acting in reliance on the assumption (the

reliance must be reasonable) Waltons Stores Ltd v Maher Party B knew or intended Party A to do so Waltons Stores Ltd v Maher

Party A will suffer detriment if expectation is not fulfilled Thompson v Palmer

Party B fails to avoid the detriment by fulfilling the assumption or expectation otherwise Waltons Stores Ltd v Maher

Remedies for EstoppelMinimum equity to do justice between the parties Waltons Stores Ltd v MaherThe remedy will be proportionate to the unconscionability.The amount compensated for be the loss incurred in reliance on the assumption rather than making good the expectation Commonwealth v Verwayen

THIRD PARTY RELYING ON EXEMPTION CLAUSE

General Rule of PrivityOnly a party to a contract may sue on it or be subject to obligations created by it Wilson v Darling Island Stevedoring Co

May be able to rely on exemption clause if satisfy the following four conditions1. the clause makes it clear that the def is intended to be protected by the

provisions in it which limit liability2. the contract makes it clear that the carrier in addition to contracting for these

provisions on his own behalf, is also contracting as an agent for the stevedore that these provisions should apply to the stevedore

3. the carrier has authority from the stevedore to do that4. that any difficulties about consideration moving from the stevedore were

overcome5. Scruttons Ltd v Midland Silicones Ltd; New Zealand Shipping Co Ltd v AM

Satterwaite & Co LtdWhere these four conditions are met, the courts are prepared to hold, through application of agency principles, that a contract comes into existence between the original promisor and the third party.

If the def performs it duty of unloading and storing the goods, good consideration is given to the plt. Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd

If the above are fulfilled then through the application of agency principles a contract comes into existence between the original promisor and the third party.In this way, the third party will receive the benefit of the terms of the contract without the privity doctrine being offended

Then explore the conditions as to whether the exemption clause can be extended to cover act in ‘terms’ section.