Contract law Essay Example

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Agreement

An agreement is made up of an offer and acceptance. The parties must enter into the contract voluntarily; furthermore, there must be a meeting of the minds. An offer is an equivocal statement of an expression of a party’s willingness to be bound. Therefore, if a person accepts such an offer, a valid contract is made. An offer is distinguished from an invitation to treat, many statements that are made are not necessarily offers despite them seeming like so. Statements such as advertisements (Partridge v Crittenden [1968] 2 All ER 421), statements of price (Harvey v Facey [1893] AC 552) and display of goods for sale (Fisher v Bell [1961] 1 QB 394) are not offers. The offer may be oral, written or implied. The offer may be specific or general. It can be made to a single specific person or to the whole world (Carlill v Carbolic Smoke Ball Co [1892] EWCA Civ 1).

Acceptance has been defined as an unconditional agreement to terms specified in an offer. The acceptance of the offer brings the offer to an end. Acceptance is only done by the person to whom the offer was made. The person accepting the offer should not come up with new terms, if he or she does, it amounts to a counter offer (Pickfords Ltd v Celestica Ltd [2003] All ER (D) 265). The acceptance must be communicated (Entores v Miles Far East Corporation [1955]
2 QB 327). The only exemption to this rule is where the acceptance is done via post where the letter of acceptance is properly addressed and left at the post office (Adams v Lindsell [1818] 106 ER 250 ).

Intention

Parties must show that they intended to be legally bound. Under common law, it was presumed that all commercial agreements were intended to form legal relations (Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117). On the other hand, social agreements were presumed not to be intended to form legal relations (Balfour v Balfour [1919] 2 KB 571). However, if it is found that a party in social agreements or arrangements gave enough consideration, then a binding contract would exist (Jones v Padavatton [1969] 2 All ER 616). Rendering services in a church can also create binding contracts (
Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95.)

Consideration

There have been arguments about the place of consideration in Australian law of contract. However, it is governed by several principles. The consideration must be bargained for (Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424), this is used to differentiate between consideration and gifts. Consideration must not move from any other person apart from the promisee (Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460.). Consideration must not be past (Pao On v Lau Yiu Long [1980] AC 614). Lastly, it must not be an existing duty (Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1).

References

Adams v Lindsell [1818] 106 ER 250

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424

Balfour v Balfour [1919] 2 KB 571

Carlill v Carbolic Smoke Ball Co [1892] EWCA Civ 1

Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460

Entores v Miles Far East Corporation [1955]
2 QB 327

Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95

Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117

Fisher v Bell [1961] 1 QB 394

Harvey v Facey [1893] AC 552

Jones v Padavatton [1969] 2 All ER 616

Pao On v Lau Yiu Long [1980] AC 614

Partridge v Crittenden [1968] 2 All ER 421

Pickfords Ltd v Celestica Ltd [2003] All ER (D) 265

Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1