Essential Elements-

Acceptance and Consideration

CRICOS Provider Number 00103D

 Acceptance of offer
• The acceptance must be absolute
and unqualified.
• The acceptance must be made in
reliance on the offer and on its
terms.
• Any conditions as to the method of
acceptance must be complied with.
• The acceptance must be
communicated to the offeror.

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 Unqualified acceptance
• If a purported acceptance introduces
any qualifications or new terms, it is
a counter offer, which destroys the
previous offer (same as revocation).
• Case: Masters v Cameron (1954)

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 Reliance on the offer
• The acceptance must be made in
reliance on the offer and on its terms
– you cannot accept something you
do not know about
• Case: R v Clarke (1927)

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 Method of acceptance
• The offeror can prescribe a particular
method of acceptance (then,
generally, the acceptance is only
binding on the offeror if completed in
that form).
• Case: Eliason v Henshaw (1819)

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 Communication of acceptance
• Acceptance is only effective when it
is communicated to the offeror.
• Case: Felthouse v Bindley (1862)
• Exception – Acceptance of a
unilateral offer need not be
communicated.
• Case: Carlill v Carbolic Smoke Ball Co
(1893)

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 Communication of acceptance
• Exception – The postal rule states that where it
is appropriate to use the post as the method of
communicating acceptance – either specified or
reasonable - the acceptance takes effect at the
time of posting (even if the offeree never receives
the letter).
• Case: Adams v Lindsell (1819) B & Al
681
• Household Fire & Carriage Accident Insurance
Co (Ltd) v Grant (1879)

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 Vague agreements
• If an agreement is too vague, it will
not be enforced. Case: Scammell and
Nephew Ltd v HC and JG Ouston
(1941)
• An agreement will not be enforced if
it leaves out something that turns
out to be important in a subsequent
dispute.
• Case: May and Butcher Ltd v R (1934)

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 B. Intention to create legal
relations
• In must be shown that the parties to
the agreement intended to be legally
bound by the agreement.

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 B. Intention to create legal
relations
• Courts will presume that agreements
between friends and/or family
members are not intended to be
legally enforceable.
• Case: Balfour v Balfour (1919)
• The presumption can be rebutted.
• Case: Wakeling v Ripley (1951)

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 B. Intention to create legal
relations
• Courts will presume that agreements
arrived at in a commercial context
are intended to be legally
enforceable.
• The presumption can be rebutted.
• Case: Jones v Vernon Pools Ltd (1951)

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 C. Consideration
• An agreement will not be enforceable
unless it was supported by
consideration.
• Consideration is the price paid in
exchange for the promise that the
promisee is attempting to enforce.
• Consideration must move from the
promisee, but not necessarily to the
promissor.
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 C. Consideration
• An agreement will not be enforceable
unless it was supported by
consideration.
• Consideration is the price paid in
exchange for the promise that the
promisee is attempting to enforce.
• Consideration must move from the
promisee, but not necessarily to the
promissor.
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 3. Consideration
• Executory consideration: The act
of consideration is yet to occur, e.g.
a promise to do something.
• Executed consideration: The act
of consideration has been performed.
• Past consideration: The act of
consideration pre-dates the promise.

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 C. Consideration
• An act of consideration may be a
forbearance, deliberately and
intentionally not doing something,
e.g. forbearance to sue.

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 C. Consideration
• Consideration need not be adequate.
• Case: Chappell & Co Ltd v Nestle Co Ltd
(1960)
• Consideration must be sufficient, i.e. not:
• illusory
• past
• performance of a public duty
• performance of a previous contractual
obligation
• part payment of an existing debt.
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 Past consideration
• An agreement will not be enforced if
the consideration pre-dates the
promise.
• Case: Roscorla v Thomas (1842)

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 Existing public duty
• A promise to perform an act one is
already obliged to perform under
some public duty is not sufficient
consideration.
• Case: Collins v Godefrey (1831)
• Case: Glasbrook Bros Ltd v Glamorgan
County Council (1925)

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 Existing contractual duty
• A promise to perform a pre-existing
contractual duty is not sufficient
consideration.
• Case: Stilk v Myrick (1809)
• Case: Hartley v Ponsonby (1857)
• Compare with Williams v Roffey Bros &
Nicholls ( Contractors ) Ltd [1999] 1 QB
1

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 Promissory estoppel
• A party may be prevented from insisting on
his or her strict rights if, having regard to
the dealings that have taken place between
the parties, it would be inequitable to allow
such insistence because the promisee has
altered his or her position in reliance on the
promise.
• Case: Central London Property Trust v
High Trees House Ltd (1947)
• Case: Waltons Stores (Interstate) Ltd v
Maher (1988)

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