Law of Contract Offer – Withdrawing, Rejecting and Accepting

1. Law of Contract Offer – Withdrawing, Rejecting and Accepting

2. Fate of An Offer Withdrawn by offeror Accepted by offeree Rejected by offeree Lapse due to passing of time Lapse due to death of offeror or offeree Lapse due to failure of condition precedent

3. Withdrawing an Offer Cannot be withdrawn after accepted The withdrawal of the offer must be communicated to the offeree Special cases: Unilateral offers Options cannot be withdrawn

4. Withdrawing an Offer after Acceptance A contract is made when the offer is accepted Once accepted the offer cannot be withdrawn Attempted withdrawal may be a breach of a contract

5. Withdrawing an Offer Before Acceptance Generally, an offeror may withdraw an offer at any time before acceptance Routledge v Grant (S&OR p78) But, options cannot be withdrawn an option is a separate enforcable obligation and cannot be withdrawn Exists where the offeree has given consideration to keep an offer open Goldborough Mort v Quinn (S&OR p 80)

6. Withdrawal Must be Communicated Offeror must let the offeree know that the offer is withdrawn Byrne & Co v Tienhoven & Co S&OR p79) Offeror does not have to communicate withdrawal personally Would a reasonable person in the position of the offeree conclude that the offer had been withdrawn?

7. Withdrawing a Unilateral Offer Involves a unilateral promise e.g. Carllil v Carbolic Smoke Ball Co (S&OR p74) If offeree has acted on the promise then offeror cannot withdraw until offeree has had a reasonable opportunity to complete

8. Rejecting an Offer Once rejected, an offer cannot be accepted May be rejected expressly or by implication Implied Offeree’s actions are inconsistent with an intention to accept

9. Rejecting An Offer (Cont.) A counter offer is a rejection Hyde v Wrench (S&OR p81) Any material alteration is a counter offer Restating the offer when accepting is not a counter offer Turner Kempson v Camm (S&OR p81)

10. Rejecting An Offer (Cont.) A counter offer is a rejection (cont.) Asking for clarification is not a counter offer Reasonable person test examine all circumstances

11. Accepting the Offer Only offeree may accept Acceptance must be final & unqualified Must be communicated to the offeree (some exceptions)

12. Accepting the Offer (Cont.) Acceptance must be final & unqualified “Subject to Formal Contract” There is a contract & one of terms is that documentation be prepared There is a contract but nothing can happen until contract prepared

13. Accepting the Offer (Cont.) Acceptance must be final & unqualified (cont.) “Subject to Formal Contract” (cont.) There is no contract Masters v Cameron (S&OR p82) Plastyne Products v Gall Engineering (S&OR p83) Communications after acceptance are irrelevant

14. Acceptance Must be Communicated Silence does not amount to acceptance Large companies Who must receive acceptance? Depends on intention of parties Acceptance occurs when the communication is received in the ordinary course of business or would have been received if ordinary course of business were followed

15. Acceptance Must be Communicated Internet Electronic Transactions Act Receipt occurs when it enters designated information system Otherwise, when it comes to attention of addressee

16. Acceptance Must be Communicated Express Communication of Acceptance is not necessary where Implied from past dealings between parties Industry custom Acceptance indicated by conduct Unilateral contracts Postal rule

17. Acceptance Must be Communicated The Postal Rule Offeree has expressly or impliedly accepted the post as the means of communication between the parties Acceptance occurs at time of posting not receipt Does not apply where communication is instantaneous Often determines jurisdiction Berinkibon v Stahag Stahl (S&OR p 86)

18. Acceptance Must be Communicated Mode & timing of acceptance must conform to offeree’s requirements Nominating a mode of acceptance may not set the only mode of service Spectra v Pindari Agent of the offeror may accept Powell v Lee (S&OR p87)

19. Lapse of Offer Due to death of either party if Not an option Does not involve personal skill or service by the deceased Due to failure of condition precedent Due to time Express time limit Otherwise, offer remains open for a reasonable time

20. Lapse of Offer (Cont.) Due to time (Cont.) What is reasonable time depends on: Method by which offer made Nature of the transaction Terms of Proposed Contract Actions of parties between offer & purported acceptance Intimations as to time by offeror

21. Agreement Must be Certain Must be sufficiently certain in all its essential elements especially: Subject matter Price Must not contain unclear, ambiguous or contradictory terms Courts will uphold contract where possible Whitlock v Brew (S&OR p 89)

22. Agreement Must be Certain (cont.) Agreement to agree Agreement to negotiate Subject to contract Subject to finance etc

23. Has an offer been made? No No Contract Yes Did the offeror intend to revoke the offer? Did the offeror communicate revocation? Yes Yes No Has the offer lapsed? No Yes No Has acceptance been received by the offeror? Yes No Was acceptance made under the postal rule? Contract No Yes

24. Law of Contract Intention & Consideration

25. Intention to Contract Parties must intend their agreement to be legally binding i.e. enforceable by a court An intention to be morally binding is not enough Objective test Distinction between Social/domestic agreements Commercial agreements

26. Domestic Agreements Court presumes that parties did not intend to contract Presumption may be rebutted Todd v Nicholls (S&OR p94) Roufos v Brewster (S&OR p94)

27. Domestic Agreements (cont.) Court will look at Terms of agreement Circumstances surrounding the agreement Effect of the agreement on the parties Parties conduct subsequent to agreement

28. Commercial Agreements Courts presume that the parties intended to contract Clear words are needed to rebut the presumption Onus is on party seeking to disprove the contract Rose & Frank v J R Crompton (S&OR p95) Edwards v Skyways (S&OR p95)

29. Commercial Agreements (Cont.) Contrast with Clauses excluding courts jurisdiction which are are invalid Letters of Comfort Kleinworth Benson v Malaysia Mining Banque Brussels Lambert v Australian National Industries

30. Commercial Agreements (Cont.) Heads of Agreement/Letters of Intent Air Great Lakes v K S Easter (S&OR p98) Coal Cliff Collieries v Sijehama (S&OR p98) “Without prejudice” documents