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CONTRACT LECTURE NOTES Week 1 4 Factors which are necessary for an enforceable contract: Parties must reach an agreement;

must have consensus. Consideration must be provided by each party in return for the obligation underta ken by the other. It must appear objectively that the parties intended to create a legally enforcea ble relationship. The agreement must be complete and certain. Even with these four factors, an agreement may not be enforceable: Formalities. E.g. Writing by the parties is required. Capacity: if one of the parties is a minor, disabled, drunk, drugged or have a re duced mental capacity. A party to the contract was under duress while agreeing to the conditions. Formation of a Contract: The traditional approach to determine if there is a consensus/agreement is to analyse offer and acceptance. There are transactions where offer/acceptance does not work. It occurs w here the service is performed and a fee is due. For example: buying a train tick et from a machine, doctor appointments. There are also exceptions when acceptance/offer is not evident but the a greement still continues where you cannot identify an offer/acceptance, the law r ecognises that if the parties conduct themselves in a manner which shows that th ey believe that a contract has been concluded and exist, then the law will recog nise that contract. Must show that both parties know that a contract already exists. Not just conduct that shows that the parties want or are keen for a contract. Brambles Holdings v. Bathurst City Council (2001) 53 NSWLR 153 Nature of an offer: An offer is an expression of willingness to enter into a contract on certain stat ed terms. An offer is a proposal that affords the offeree an opportunity to accept or rejec t. An offer only amounts to an offer if there is some indication that acceptance is invited and will conclude the agreement between the two parties. That is, the of feror intends to be bound if the offeree accepts the offer. The test is objectiv e, not subjective. We dont look at the exact thought process of the party, but r ather the outward manifestation of the person is examined. This is known as the test of a reasonable bystander, where context is taken into c onsideration. There are implied terms, which are terms that the law puts in automatically even if you dont say it. Week 2 Mere puff: used to exaggerate the product. Carlill v. Carbolic Smoke Ball: 5 Reasons from the Defendant: 1) Not brinding: cant contract with the whole world. 2) Carlill never accepted. 3) Meant to be a mere puff. 4) Too vague & no meaning. 5) No consideration & therefore shouldnt be enforceable. Was it a mere puff? No, Carbolic Smoke Ball stated that there were rewards: $10,0 00 pounds are deposited at Alliance Bank. This showed that they were sincere abo ut their offer, and hence a reasonable person would think that the advertisement is an offer. It was an offer to the whole world, but only a contract to those who gets the pri ze.

The wording was specific which made it an offer. Carbolic Smoke Ball had confused the terms. Offer can be made to the world, but t hen it becomes a contract to those who come to meet the conditions, which is a l imited proportion of the public, who performed on the faith of the advertisement . Unilateral Contracts (99.9% of contracts are bilateral, where two parties promis ing to perform their duties in return for each others promises) In a unilateral contract, only one party makes an expressed promise or undertakes a performance in return for each others promises, without first requiring or sec uring a reciprocal promise from the other party. For example, there is a reward of $100 to find a puppy. There are no expectations from me to any specific person to do something. Howeve r, if someone carries out the conditions of finding the puppy, then I must give them a reward in return. The performance of the act requires: 1) The acceptance. 2) The performance. 3) The consideration. Aspects of a unilateral contract: Acceptance Can you withdraw the offer? Carlill never accepted the offer Normally, offeror must be notified of the accep tance of the offer, as both parties must know of the offer and acceptance. Howev er, communication is for the benefit of the offeror. The offeror has the chance to make any condition for acceptance. Interpret offers of gifts (acceptance, consideration, performance is all intertwi ned in the performance) Vague: Doesnt matter what is the wording or possible meaning of the advertisement. True meaning of Carlill: Prima facie, every advertisement is an offer to treat/n egotiate/request for other party to make an offer. It is not an offer. It is only an offer where there are certain aspects which indicate clearly that an offer was intended. It is an offer to treat unless there are certain features /aspects. Carlill is an exception to the general rule. Another special case: Lefkowitz v. Great Minneapolis Surplus Storm (1957) USA One Black Lapin Stole worth $139.50 for $1. First come, first serve. Store only sold to women. Judges said that if the advertisement was an offer, and Lefkowitz has ac cepted, then the company cant make extra conditions. However, it must be proven that it was an offer and it was proven just t hat. If an advertisement is an offer, and not an invitation to treat, then le gal intentions of parties rather than actions matters. Hence, an advertisement is always an invitation to treat, and the determ ination of whether it is an offer depends on the certain circumstances such as t hat in Lefkowitz and Carlill. Goods displayed in a shop (offers to treat, and if shop makes a mistake on the of ferings (pricings), then you wont get the product) Granger & Sons v. Gough (1896) AC395 All advertisements are to be treated as offers to treat, and customers can make t he offer, and Grangers & Sons can accept some part of the customers offer and dec line the rest. Its not the law to say that if a customer offers $4.95, the shop has to accept th at price at $4.95. It is just part of the shops practice to tag their prices corr ectly. Counter offers and new offers made after the rejection of a previous offer can b

e made in which the other party can accept or reject. Bait advertising & deceptive conduct: shops tries to use advertisements as baits in that they advertisement unreasonable prices and supply numbers in order to ge t customers into stores. Exception: If you have caused the shop to mix things up that cant be unmixed, the n by law, you have to pay for them. For example, the mixing of coffee at a coffe e store. However, if you wanted to buy a bike and ask the store manager to change the cha in, but then you decide to buy something else, then its not against the law, sinc e you can change the chain back. AUCTION SALES Each bidder makes an offer. The auctioneer accepts the highest bid . Auctions can be with/without a reserve. A reserve is the amount the seller wants. If highest bid is lower than the reserve, the seller can decide to not sell it. A pass means that the auction didnt reach the reserve that the auctioneer/seller w anted. Contract for conditions of an auction: rules under which the auction will work. E.g. All bids are in $AU No bidder may withdraw a bid. All payments may be cash or bank guaranteed cheques. All goods sold must be removed by a certain time. It is your responsibility to examine the goods. In this case, the auctioneer is the offeror, while the bidders accept the offer (this is done automatically by bidding). Tendering Builders hand in possible prices of service via envelope, and then the l owest tender is accepted by customer. However, there can be exceptions, where th e highest tender can be accepted as well. Rules for Tendering Lowest tender not necessarily accepted. You offer to run the tender on certain circumstances. Actual tender: People offering to supply their work and provide a second agreemen t which outlines the conditions of the tender. Ticket Cases Refers to a situation where you buy a ticket. There are conditions printed on the ticket. These conditions are not what you hav e negotiated for. However, they are essential conditions according to the law. When you get the ticket with conditions, that is considered as an offer. You can have time to accept or reject it. You often accept by attending the event. Howev er, you wont get your money back since your money wont be returned would be a condit ion of the ticket.