CHAPTER TWO Agreement 1 Introduction [201] Importance of agreement. The lew of contract is concerned with the sights end obligations which arise from the making of « promise ‘which the law will enforce. Except in the case of contracts under sea) Gch consequences arte only when ta or more parties have reached ‘agreement, nd the starting point of our study must therefore be the roles ‘ployed by the Inw in idendfVing those circumstances in which parties ‘oho afe alleged to have become contractually bound wil be rega¢ded a5 faving reached agreement, The foundation of the legal relations which we call conteuct i thus the agreement of the parties, and this remains so even ‘hough the law increesingly imposes rights and obligations upon Contracting patties without refence to the question of what their real Intentions may have been. Ta the absence of agreement (or, pethaps more ttecurtely, ia the absence of circumstances which the Iw teats 25 giving fise to egreement),? there can be no contact. OF course, although the fxinence of agreement is essentil, itis not of itself sufficient, for an fgreement may ful to take effect as en enforceable contract because ofthe Sbyence of another ettential clement, such at consideration’ oF ‘ontaetual inteation* or some required formality 202] The traditional approach. The tadivional approach to the ‘guettion whether parties contemplating a contract have concluded negotiations and reached agreement isto inguie whether there hus been ‘oth offer und acceptance, thst i a clea indication Coffer) by one party (he offeror) of x willingness to be bound on certain terms accompanied ‘by an unqualified assent to that offer communicated by the other party (a “offere’) to the offeror (‘acceptance’). So accustomed have lawyers become to the analysis of problems of formation of contract in terms of offer and acceptance that it is often overlooked that this method of tnalyis is of comparatively recent orgin and appears indeed 10 heve Geveloped in the nineteenth cenary as 2 result of the need to provide a 1 See Chapter 3 2 For exnpe of sucint in which crn ofthe lel canseuences of contrac are ‘sed yew sep o what te pts Cr, are Hy one tes 97 ive ins, th ics io Chapter fearon ae ech aus ‘Reiasanereaocton 3 Seite A 4 Se Cie 3 ° 5 Sex Che 1 6 Seehaper4 (om) FORMATION OF CoTRAGT: framework for the increasing number of cases where parties dealt sith tach other ata clatance by communicating by letter or telegram (or, more recent, by telephone, telex or facsimile) [203] Limitations on traditional approach. So embedded in the thinking of lawyers bes offer and acceprance become that some writers Insot Gat the correspondence of ofler and ecceptance is an. inevitable requirement of contractual agreement! And yet in some important Sadone such an analysis can be maintained only at the cost of much trificialty. Where # contract is formed by both pares signing a writen ‘document, it may sometimes be possible to regard the party who signs fiat an being the offeror,’ and yer ie will usually be a matter of chance ‘which party bappens to put pen to paper frst. Moreover, contracts for the fale of land are very commonly formed by the panics (or their representatives) exchanging, duplicate copies of the agreement, so that ‘ech party possesses # copy signed by the other. In such a case it seems poiatless (as weil ae artificial) £0 attempt to analyse the formation of Eereement interme oft succession of offer and acceptance." "The classic Hustration of «care which seems to defy analysis in terns of ‘offer and acceptance is Clarke © Dunrauer!® where the owness of yachs ‘entered in a ace run by a yachting club agreed with the eub co be bound ‘by the cub rules, When the defendant's yacht, in breach of the rulss collided wich that of the plain, it wus held that each owner had impliedly contracted with every other ower to be bound by the rules, ‘The Hovse of Lords bad lite difSculry in holding dhat such x series of ‘contracts hed aren (the main point of discussion being the correct inespretation of the rules), and yet it seems impossible to provide # Sstitactory analysis explaining this result in terms of offer and feceptance.! Te is suggested thet the trae situation i that concurrence of Offer and acceptance i not an ineviable prerequisite of a binding ‘agreement. In the eaves just discussed, indeed, such a concurrence need ‘not be sought for a there ie Hite doubr on the facss tha agreement bas i fact been reached. It in eases where ene party denies the other party's 118 Sealer “Oe, Pome and Agree, (1999) 50 Mandan UL eo 483 a SASH tad, Suning 9 Doan" (i982) 9 al L293. See ho AW B ‘Sept, temraton in Neca Coney Conese sw (1973) 01 LOR 27. 4 Semon Wilamn, Pracgn of Law Coware 1949.9 7 3 Seer Guar subuhen Proper Law Clarke (999) SASK 221 (omerding purer ZeSiof dwunen sich wore bet en), so Sieh a aay pape wae ree ne de arg expla by al se, eee eB [4a] 1 C99: Rw Teor (1963) 69 WN OF 1) (NSW) 96, 1 flee ace 1 Als esp bare bon made t bse come, he view ered Sn he TPR en chondagy cathe by reel, Ze Law of Coma Bh ce 1991, ppb. 1 mk Whee sme ge, atte, to recone te pace of Pescras ith ie ty oF fr ae acca a eknet of cesT ‘Sibhow fae Pm 1990) SASH 9044220 per Nap, laces by HC Lace och 3 tid Lk a0 See ao Vow Bw on Bring Group Lat (984) 2 VR 32, Sear gen Mawr Cay Arana id» Ren Mon Mr Py Ua (1998) 2 Toa 177-8 per Tage 1s as ies tem ll nh Unio Sten x manettion of atl ast my be ‘rake Se ooh mehr ofl ane sessmnce cn be eed wet even hou Ce ‘Ronse tfomaton cnet be deerme” (Recstne (2) Cac, $222. 2 freee nen eene AGREEMENT: post isi that agreement had been finlined that an analysis of the facts in ferm of offer and accepeance will prove useful. Offer and acceptance is hun seen af am analytic] tool which, in at least the great majority of ‘Gaputed ceses, wil iluminate the one ulkimate question with which the fiw is here concemed, namely whether the parties iad completed ‘Regotations envisaging an agreement an had in fat reached agreement, ‘The student reading textbook accounts of the law of offer and + gccepuance (end judicial opinions on problems of formation of contract) Should always bear in mind that the analytical proslem involved in Spprotching any given factual situation i ane of stating the facts ina form ch hss usvally not been done by the parties themselves. Businessmen Uo not always (or even normally) conduct negotiations in terms of such ‘Sencepis a8 afer, acosptace, revocation and counteroffer with which the ‘dent wil be faint by the time tis chapter has been read. TI will be ‘how later, for example, that a statement described by its suthor as an ‘acceptance’ may very well be, in legal effet, a ‘counter-oifer. Our tsk i rather fo [00k (o the intentions of the partie as disclosed by their words Und conduct and to attempt, by applying such concepts to the facts, to see ‘whether agreemient was ever reached. [204] Lengthy negotiations. Where agreement has been reached after Jengthy negotstion, the analysis of those negotiations in terms of offer tind acceptance may at times seem rather unrealistic. In paticula, where ‘oevcs of offre ace put and rejected and replaced by counter proposal, it ‘wil be a matter of pure chance as to which of the partis is ultimately seen Th offeror and which a offece (acceptor) Te is suggested that this Should not disturb us, for in such eases the analysis will usually indicate ‘whether or not the party ie correct who insists tht et some point in time negotiations ceased and final agreement was reached. So long as the Analytical tls employed enable us to answer this ultimate question, it tatters not which party made the final offer which was converted into & Contract on acceptance by the other pasty." Iris true thatthe ecbitrory Chiracterisation of one of the parties as acceptor rather than offeror may hive crucial consequences when the question arises a5 tothe place where a ‘contract was formed,” but this isa result not so much ofthe inadequacies (of the rules governing formation of contract but of the use of those roles tee an ene ferent problem for which they may not be wel [205] Agreement inferred from conduct. The formation of Agreement will in many cases be inferred from the conduct ofthe parties. , vt Pinal? a 14 emule rote pase a bases ben eae th omens ie fan fa cated oesuee ct meinem och 4 peo frogs ewes Sips de anes San Chere Pon, tw gf Car Wee 1s Partum ace Howpaed Man Py Ll » Eman & Yt Py [2 1967) SASK 100; Teed Lang etry Let Pips Bsn! Py La (1869) 99 WM {Behn 693 Sr to Dk Lal's Satay Seb Om 1989} 2 AC 3 a 80 1 he rbleme tc noe ert each re) aes to emc e ss a as O ‘eo pita rms ae nots mah Rr a ate? ting aon par a {hl aber aftr bur bom the stench le ond Sexepince as ft fereapend ee B23) Se ieh01 FORMATION OF CONTRACT. Sometimes there may be no identiable offer and acceptance becruse the parties have not exprestly discussed the formation of contract but heve Indicated by their conduct thet they didi fact intend co coatract.!® In ‘many eases a more realistic explanation is that by the time a dspace arises, peshaps many years after the alleged contract sas entered into, no direct evidence is available of what was sad by the parties and yet their conduct is consistent only withthe hypothesis that an agreement wa infact made by them.) In other cases an express offer hat been made which was never expressly sccepted oF rejected, bur the subsequent conduct of the offerce in performing the gets contemplated in the offer indicate an intention £0 accept, ‘Thus, in Brown v Brown? the defendant inetruced her architect to prepare @ contract and call for tenders for the erection of a house The architect, acting under the defendanc'e instructions, accepted the plaintiff tender. The defendant never signed che contract, not was she aware of is terms, but the house was built and certain interim payments ‘were made by the defendant, and in correspondence she refered to ‘the Contra, In there circumstances it was beld that ahe wat bound by the ‘writen contract. It willbe noted that in cates such es thie the defendant's consent i infered from conduct, even though it may be impossible to stabi a precise point in time when the offer of the other party was Accepted, (Tris pe of situation mut be clealy distinguished from that, ofan offer ofa unslatert contrat, calling for sceeptance by performance Of the act stipulated in the offer; we are bere concerned with contracts Where the commencement of performance by the offeree it seen 88 Implying a promise to complete that performance, that is an acceptance, aiving vise to a bilateral contact, i inferred from the actions of the offeree.) [206] Objective approach. It must be remembered that, as i Indicated more fully elsewhere, the law isin general concerned with the inteprecation which would be placed upon the words and actions of the partes by a reasonable person, rather chan upon thelr subjective intentions This approach is based parly upon practical problems of roof, and party upoa the notion thats perton is ented to act an the Basis that what another appears to intend wil be binding upon him or he ‘Ths an offer must normally be interpreted inthe sense in which i would rearonably be understood by an ordinary person, even though the affroc's actual menning was otherwise. Likewise, even ita party is convinced! that 8 contract was formed oa the sending ofa letter by that party, no contract ‘vill result ithe meaning that would be conveyed to an ordinary sensible 1 Seg gla vA 8 WAL 15a Por Ri We Asa 19 See 4 Dra © Go Py Lad v Gaon (960) VR 278 282 25 (1905) 5 Si OSH) 196 For fre carols sr Dido © Mareen Ray Co {BT 2 ap Crs Ee; Sita w Ate Mi Sapp Copa 1822) SOS 572 Bape ig Py Lad echo Pal arr ey Eat (00) LA NSWLR 29 ‘Ser alo Irn Cnptr Sere Dy Ll © Dial Ep Cap (A) Py Lah (oa 3 IR 320, 24 Brcesed (40) 250) 22 See {fe}, (03) (1024, (1213 4 AORERMENT on ‘by thet leter’ was that there wes no binding contract and that the Pere wee ail open to negottion.2> ‘Conversely, ats otherwke amounting to acceptance ere not prevented som being eilective because of a rerervation not communicated to the ‘Sher party” Farther, he law will sometimes hold that an acceptance by ails effeclve even though, unknown co the offerce, a leuer withdrawing the offer had previously been posted to him.* Nonetheles, the frequency (iis which such cates occur should not be exaggerated, for in the great Tejon of cates a person's apparent intention wil in fact reflect thet real {prention. ‘The extent 10 which our law has committed itself to the ‘bectve spproach ie respect of questions of intention is a matter of ‘Gapute, but iis in general ve to sy that che common law is in principle Gommited to an objective spprosch, even dough occacionlly this fpprosch is not applied with complete consistoncy.® Much of the ‘Diicley of the law of mistake (disused ia Chapcer 12) arises from oafision over this point. 2 Offer [207] Definition, An offar may be described as che indication by one person to another of his or her willingness to enter into # contract with {het person on certain terms." The statement alleged to be an offer must Indicate wilingness by the offeror co be bound without further ‘Repoliation as tothe terms ofthe proposed contract. Aithough the making tf an offer cannot of course in itself give rise to a contract, an offer docs fave legal significance in tht it creates fn the offree a pouer subsequently to create a contract by the ofeee's unilateral action, that i, by accepting the offer (provided that the off has not previously been withdrawn or otherwise terminated). ‘Whether 2 statement is an offer depends on whether the person ‘whom it 8 addressed would reasonably interpret it as such, and this {Quettion depends on the interpretation of what has been seid by the pardes. Where ic is alleged for cxarape, that x letter or series of lerers thould be read as containing an offen, the correspondence asa whole must bbe looked at, and itis not permissible to regard a particular phrase or sentence a8 amounting to an offer to contrat ifthe correspondence a8 a ‘whole indicates a contrary intention. A good example is to be found in “Australien Weollen Mills Pry Led v Ths Coronontoath;® where letters were iheld'to contein merely a statement of government policy as to proposed 23 Jan Haman Co Nae) La 0 PKL 96911 Lon ep 308 2 Be eta tp Contre Pyke Dre (7 QI 38 Sct cmon ini Great Laks Py La © X'S Bane ed) Py Ta (1985) 2 [NSWIEK son, ors cA septs of somo lawned tra poche et EP ketec Be “Cia fe Conrohen (904) 7 oy LR WL 2 he ee ea) rr $4 pas il emitting Seeing da rae wh bps aed nd wiles 28 Gorin on Ctra, Wok, 183,924 1B (5309 uk 0,on FORMATION OF CONTRACT subsidy scheme for manuficturens rather than an offer capable of acceptance by the plaintiff manufacturer. {ee not legitimate to interpret as an offer a statement of intention as to 1 fature coutte of action, not pur forward a an offer and not inviting Acceptance or rejection. Asi is the intention ofthe alleged offeror which 3 decisive, statement containing the word ‘offer’ may nonetheless indicate that the word ig being wed in it frequent colloquial sense of indicating merely ‘© willingness to commence negotetions.” ‘This 's especially true where a document is drawn up by laymen without professional assistance, though it would ceem that in doubtful cases there ‘wil be some tendency to interpret the word in the narcower tense in Which i is used inthis chapter In a number of cates a statement which its maker described as an ‘agreement? was held to be merely an offer as it was clear that there was no concluded agreement,™> and a statement which is expressed as an accepcance may yet be in the cicumatences clearly merely an offer (@) Offer and Invitation to Treat [208] Invitation to treat distinguished from offer. The question often arises as to whether a seller who has indicated a deice to sell certain goods bas made an offer which, on acceptance, is cxpable of binding the seller. Very often the seller wil be regarded as having mercly ised what ‘analy called an vt fo tea — 4 eq 9 aie to make offers or to engege in negotiations with sale in min« lee has only isnued an invitation to teat, @ reply to the invitation will at most be 13 gt oan pred nme of capac) hich ce ser hon he ‘option to accept or reject. (Of cours, the reply itelf wil not neceareily amount to an offer — it may itelf be merely an indication of willingness {to negotiate) The question of whether a statement is properly 10 be regarded as an offer depends on the interpretation easonably to be placed "upon itby one in the pesition of the Berson to whom it wes addreseed. In allcases the question tobe asked is whether the statement can be taken indicating an intention by the elleged offeror wo be bound, without further discussion or negotiation, on acceptance of the terms set out by the offeror. Rules have been developed by the courts as to some commonly recurving situations, but these roles simply indieste the normal inference { be drawn in such situations as to intension. Care must be taken otto apply them mechanically, fori is always possible that che Language aeed, or the surrounding cizcumstances (including previous discusion between 30 Mineo A-O (Te) (1936) 95 CLR 46. Sex sho Re Sender (1939 7 ABC 129 (cet yer te fap oe sito cep ab no me av Duo Manos (1914) 19 CLR 40 (gem yl oe cal tase Sper Hang (80) RS CP SE Sen Fone [943 Ak 1 Spars Hag (170) fio Plot 9442 ABR 487 ‘32 Posen» inn {9081 VLR 35 Bre Bo Gn ad UTI) 2 AN 2 Dern» Dod 1810)? GoD a 23 at Bal (1093) £9 VER 499 (Scent ting ae to puch” merely an fe ayn revi tee. Apo bi mente Scene le en Sv ees es sernenat ss f00 6 AGREEMENT ee) screen ene be pee inva paral factual situation, Te may alto be noted thet igs eerie ‘commonly recurring situations where the appropriate prima facie analysis ofthe facts in tems of oe and accepance nay vill ene dienes Sr esi etnies Spl coe tcheaecereen eee fe so nach eo contact situations which are a feature of hfe ia modes Gee, aan Tru eapistmin cn yr arene ee ceed ts eve ae Se nuesme femme raeen ane SOS Seayek sheds Were en Sentient ae aan mee Sepsis tees eat es conte reapers comma ceeaheccer teers emheraaee Soba ce oad Seeman Senden ni te Soa poiariesse een eer Eo Praline eee Bouenemmoret ened ELISpot anraay"enrcoe Sue recy ace eye men rare Siesta item uumeametrteeyeane one ee maceea meee Umareag Caevoimtece sara cageee mee Sas pore inate ange ay Shani ac Socue nice manveotecr cher Ipteru diplsttan mad aceon Seed ea os fol fhe i ge Gomi apna esr a i oi Sr oe ope Sh ee Gaceraaae maser ame See aly cer ale arate rare ethene aeeriafe ane remem 2 sete iain os Reiccreearrap Reclame srawcmemraen mien vena sear Gag Serdar oe EE te ct crtena 3 areas ra 0 Sai Fe can ees afro Seeseieel a ten a ageoae cate Brent 1995) 38 ALR 727 " Ko) vv fete 160k igen wren vomeanen SER ish UG gee te ety cominy oan aetna A ttl nen yeuee sri fa cepa eeteeemeret aca vane Le goe mere Sah pemn ry reds Spero a zpon FORMATION OF CONTRACT ‘There is certainly no rule that an advertitement ie never capable of tahing effect as an offer! Thus in Carll e Carblie Smoke Ball Go™ the defeadant advertised its medical preparation in ¢ number of newspapers and stated that “£100 reward will be paid by the Carbolic Smoke Ball ‘Company to any perton who contracts the increasing epidemic influenza ‘fer having used the ball... according to the printed directions upped with each ball, The plein, who caught influenza espe having, on reading the advertisement, used the smoke bail as directed, claimed payment of £100 and was held to be entitled to succeed. A number of saues, t which reference will be made later, were involved in this case, but the point relevant bere i thet the judges were unanimous in regarding the advertisement as aa offer, which was accepted by those members of the public who used the balls on the faith of the ‘advertisement and yet caught influenza, The advertisement was one for a ‘unilateral contract (@ promise in return for an act} and acceptance foccuzred by the plants conduct without any divect contact with the ‘defendant prior to her lodging bez claim for the sum of £100, The fact that the manure of the proposed wansaction involves no negotiation Dewween the parties no doubt explains why cases of advertisements offering rewards forthe remun of lost or stalea propery, oc for the supply Of information leading o the arrest or conviction of eriingle are almost Slvays treated by the courts ae amounting to offers. "The argument shat the advertisement in Carl's case was « mere vague pul, not eapable of giving rise to « contract was met by pointing to the Drecison with which the promise to pay the reward was made (despite the exuavagance of the claims made in regard to the elfictey of the preparation). The conclusive point was perhaps that the advertisement ‘went on to stare that 1,000 is deposited with the Alfance Bunk, shewing fr sincerity in the matter’, though it should not be assumed that the result would necessarily bive been different in the absence of this ftatement. The advertizement had to be read in its plain meening, 1s the public would understand it, and so regarded, it was held that it would be lnderstood by the public ar an ofer which war to be ected upon Similar, although the display of goods for sale will not normally be regarded a constituting an offer for sale, the display of an automate vending machine apparenty coatnutes an offer which is accepted by those customers who insert their money ina the machine," [209], Statement of price. ‘The question often arises as to whether « statement by a seller, made in aster to an inquiry, ofthe price at which 4 Bor Annzean expen se Resaunant (i) Cours, $2; Lefts © Gra Miao SuperS 96 NW 23689 (1957 sa [Inoa) Qh a Fors very rer cain of he backround 9 famous faa ace AWB Sonpon, “Quacker and Cann Law: The Case of te Cale ‘Sue ab (1005) 109 fo Soto 313 ‘2 Scebel 1H Trate Fi Lao Gort, he 991,913 Seog Wins Carne (1853) 5 (Carte ste voy Re Cote (1921) 40 CLR 227. Guery the mop a ‘em teen Dos Gat Norns Ray Ce (105) 1 & B85; 119 BE 701 ‘Stes mn i at he poenen fs ay ome mace fos er Espen by ny ening pare ae ender he pe a eh 45 STs Sho aut Parking id 9711 2 GB Jed 168 pe ed ening ML 2 AGREEMENT: von be or she ie prepared 0 ell goods amounts to an offer. The circumstances may indicate thet the seller is prepared to be bound withoat further ‘Regotatons, and tht such questions aa the time when the goods ace to be ‘Gclivered willbe setled by reference to teems which are implied by law in the abeence of express agreement. However, the more valuable the subject fmaveer of the tunsacton is and the more complex the contemplated ‘Gansaction, the less likely itis that an agreement on price without more teil be held to bind the parties. For example, in Howard Smith & Co Lad w eveta'® it was alleged that an sgrcement forthe sale of «stearship at a rice of £28,000 was to be found in a series of interttiona telegrams Eichenged between the parties. Gifith CJ commented: 'No doube e conract for ie purcse of a named akip fOr a lump sum Wweout ore may be t good and complete convact, But iis ghly Inpwobebie tht i would be made eles bo pares wece familar withthe ‘lee tater and wee a idem as 1 waat eas intended tobe inde by {herare of he shigy and ie seems to me al ore improbable when one of Ihe putes had no acquelatance wid che subject martes hich was a & sunee of eevee shomand mise, Wasi ended to ince the appurel id fuuneore of the ahi which was 8 passenger ship, or no Was the Glelvery tobe immediate 6 deesred, anda when and whee was ito be (ade). Upan the able of ship eet mates must be provided for, ‘her expiealy oc by plication, In th cae there fa no expres provision, Sad the Chcumstances donot allord grounds for any cents ipiestion ‘A number of cases have involved contracts for the sele of land. Quite apart ftom the question of price, 2 large number of important questions fein eich ates: for cxamrle, wheter vacant possesion i 0 be given {G@ mater of particular imporance ifthe propery i enanced); whether ecumbeances such a8 existing mortgages are to be discharged prior 10 Conveyance of tes (in the case of land not under Torrens system til) the nature of the tile which the purchaser must accept; ane the time ‘within which the transaction is to be completed by transfer of ttle and payment of purchase price, These matters ate normally governed by quite Fengriy and detaled written contracts drawn wp by the partis’ legsl tadvises (oF in some States, and agents). Such « formal contract is not, however, eisentih, and provided that the parties have identified the subject matter and agreed on a price, the most informal agreement (Gisually called an ‘open contract) may be effective as a binding contract and the types of questions refered to above will be governed by terms Jmplisd in the absence of express agreement, by the Common law or by statuted® The mere fact, however, that pares to such transactions do rot ‘normally intend to be bound uatl a contract governing such matters has been entered into and that exe terms implied by law into open contracs (1907 scx 68 [7 APt6, Se ato Ray w Casein Col Co (1998) 19 LR RSW) Lome of we vi so! a be spl ve Tesh pera ne at sant promise ‘eupgly nie Snence of any sctrnc to aun bbe Cle Re Wee (1975) 48 Arts imped term ae gery Chapter 6 or # Seuion a open coma fre ‘Mi ob a Seam, La of Vout ad cao, 68 D8209) FORMATION OF CONTRACT are frequently considered as giving ineufiient protection to the parties (especially vendors) means chat the court vill look pariculasy carefully A the correspondence for some clear indication thar, despite the absence of agreement on details, « concluded contract was realy intended by the partes Tes teue that here canbe «concluded agreement forthe el of land which merely fue the partes the Wbject mater and the peice But vey ofan the abuence of any reference to maser which ene would nara expect fo be dhe subject of nepolatin hat been taken a8 sag indestion het no Aetnice conctuded epreemeat ha been Feachcd™ ‘Thus in Harvey o Facey a telegram stating ‘Lowest cash price for ‘Bumper Hall Pen £900" gent a reply toa celegram asking Will you sell us Bumper Hall Pen (a farm)? Telegraph lowest cash price’, was held not 10 be an offer. The mere siatement of the lowest price the vendor would Accept contained no implied promise ro sell at thet price. [210] Application for shares or debentures. A person applying, in Fesponse to © prospectus, for the issue wo him or ber of shares or debentures in a company is regarded as making an offer, which must be accepted by the company before any contract arises, The reason. the Drospectus fs regarded as an invitation to teat is that the directors ofthe Company are taken to reserve the right (indeed such « right is usually cexpreay stated) to reject applications i the event ofan oversubscription. But in appropriate ciccumsiances this may nor be the correct inference. ‘Thus in Re Moun Tomah Blue Metals Led 4 company ia financial Aificulties sent 2 circular to existing shareholders appealing for funds (ia respect of which debentures were to be itgued to secure the amount advanced) to enable the company to ratke an arrangement with creditors jn an attempt to avoid Iquidation proceedings. It was beld in these circumstances that the sending of the circular was an offer, which had ‘been accepred by those shareholders who had responded by sending ‘money to the company. [211] Auction sales, Its well etblished that an auctioneer who puts property up for sale isnot offering to sell bu i issuing a request for bid, ‘Bach bid made at the auction isan offer, and no contract is formed until ‘the auctioneer accepts the highest bid by ‘mocking down’ the goods and declaring them sold. It follows that unl acceptance any bid may be ‘withdrawn under the principle that an offer can be withdrawn at any time 19 Congo fe he ale o and mest geri be evieeced ie wring 1 be free: se chee 5. 50 Pano Aaon (979) 13 SASR 24 a 37 per By. 31 GST ASE Soh er Ade ni i x 8 Spe Soe ot {Con May Rea (97 4, Cpe Biplead Se Ment LPTs Conmoneanh (0979) 59 ALR 363: Cones gee Bey! Catan Ea Url ALERT ge ee fas an ir» forts we niet ‘robe conumed sano sre Senger, ey Famer Cony, 1308, ol 1 sa Moca ale, 0 SOREEMENT em riot to acceptance. This rule is mow codified in the sale of goods ‘egilation > “abo follows, ax was held in Harris» Nickerson thet an advertisement cof an auction stl i Simply a decleration of intention to hold the sale, not Sn offer binding the auctioneer to any prospective purchaser who clsims ation for expenses Wasted in travelling tothe sale only to find thet {he ane is cancelled, Some doubt exists, however, where an auction sale fated to be "without reserve, that is, where the property is to be old to the highest bidder and no right is reserved by the seller to withdraw the property i the bidding does not retch the minimum reserve price (set in Savance but not normally communicated to the bidders).°* Prima facie the above niles would indicate that che highest bidder has no recourse if the property it not knocked down to him or hes, despite the fact that the flare to do so would amount to a distegard by the auctioneer of the condition as to the sale being without reserve ‘Some tuthoriry does, however, suggest the contrary. tn Warlow © Harison” the plaintiff bid at un suction sale which was sdverdsed to be ‘without reserve. A higher Bid was made but the plans, cn being advised thatthe bidder was infact the owner, refused to bid further, whereupon the lot was knocked down tothe owner. The plaintiff sued the auctioneer ‘liming damages, arguing that the auctioneer was in breach of a duty ‘wed by him to the plsinuf. "This argument depended on a contract for the sale of the horse having aciven, but {twas held that asthe horse had ever been Knocked down to the plaintiff under the rule in Payne v Cave, ho contract of sale had ever arisen. However, the majoriy of the Court of Exchequer Chamber considered thatthe plait would have succeeded if hee ed lleged a separate contract whereby the auctioneer promised that the sale should be without reserve. On this easoning a contracts formed ‘between the auctioneer and tbe highest bona fide bidder. >> ‘A number of difficulties arise out ofthis decision, Tt has been doubted wether the highest bidder in such a situation supplies any consideration for the promise of the auctioneer. Moreover, the court eppesred (0 consider that the muctoneer i under no liability unless the muction is fctualy commenced and the conditions of ale breached, and this point 193 Payne Gane 179) 37H 8 100 02 3 REE SG Ga ATs Ws Slo ie 1925 5s NT Sa ‘aaa arse i Seo Gok a 1895 Ss Saf Geos 10 PR te Se eas lass Ves Gl O88, 3 WA Se Come ‘aap 3p sty son gee se Stn, Sowa Ome Lew ‘a nt Now Snes Be B79 5 Sere te ee das nt xr ee aig td i ot he eb Ure sr roca rei ny ong {Se a nye sed ule 6 Oe bye wwe prove of he ne dn ic nS Suds gn to te ems cin 0 ht ‘Stes ce pi nn eer spec aga kf ope OE fo et othe re grt cero oe ‘2 ash Vela ae, Soy ani va, 5 Roy he cor wl te whe er Reel ate a mines the be ity Se a edn e Mnpar» Wea G5) 941) OB ap eee vont {i031 30. Sa Hoe He Py Cal w Aa iio oe, a0pun FORMATION OF CONTRACT. was relied upon in Harris © Nickerson when it was held that a complete failure to hold an advertised suction gives 0 contractual claim to isappointed bidder. Te is dificult to see any ground of poliey why « ‘ntinction should be made berween the two cases. However, although ‘Warlaw © Harrison has boen eritiised thes never becn overruled and its reasoning wat in fact applied by the Vietorin Supreme Court in Ubrick » Laidlaw Tn that case the plaintiff and another bidder each made the ‘same bid but the auctioneer did not see the plantf's bid and knocked the ‘Property down so the other bidder. Despite a term in the conditions of fale governing the auction that in the event of » dispute between Durehasers the propery would be put up agua, the auctioneer refsed to reopen the matter. {< wat held chat the wuctioneer wat under @ ‘contractual obligation to eny bona fide disputant co put the property up again [212] Tenders. Companies desiring to purchase bulk supplies of ood (often to be delivered in instalments) over a lengthy period of tie ‘ll often advertise requesting tenders from potential suppliers. Contracts for the caring uC of building or engineering works are also very frequently entered into in this way, as ace many contracts with government bodies, Tendering may also be selected as the means by ‘which a vendor isto sell goods. The person calling for tenders will usually {ive instructions (called the specifications) as tothe forma which the tender JB to take and as co the matters 10 be covered by the tender. ‘The specifications canbe very lengthy documents and, especially in the ‘practice of many government authorities, may contain detailed standard ferms of contract to be agreed to by the tenderer. Persons wishing to fender are normally required to tubmit eealed tenders, which are. not ‘opened until afer the time for lodging of tenders has passed. Tt is wel fatabished that, even though the firm of the tender and its detailed ‘conditians may have been drawn up by the person calling for tenders that person docs not in 20 doing normally make any offer co prospective tenderers. Bach tendeser has made an offer, which the offeree may then fccept of reject, and the offeree & under no obligation to accept any tender. "Thus, in Medel © Mayor ee of Bendigo « raunicipal council called for tener for the loan tothe council of money, to be secured by the issue of debentures, and sated that tenders of the highest premium would have preference and debentures might be allored proporsonately 1 tenderers bf even rates. [twas held tat the plaintiff had no cause of action when his fender was nor accepted, even though tbe amount tendered for by others ft rates higher than or equal to that offered by dhe plaintiff did not equal the toral amotnt for which tenders were invited. In Meudel’s ease there ‘vas language in the prospectus for the loan which pointed to the Couneil 59 Sec te excana oie fn 1952 68 LOR 236 477 (1953) 68 LOR, Go Heat) VER aber of 46 Udon Ln» Der (LOT 1 BPR 454. fo {Mth » adn he cous sho tered he argument that the gueston of ons Ses st be fly deed by the nactoee Ie wncathaw fr he scons Da 8 ‘Teese trp ce Gran © we (1900) 30 NSWLA (Bq) 206; chan ‘ate peel 2 a BR 59. (i908) Se Vi 38 AGREEMENT: ae) reserving & right to refuse fo accept any tender, and this right is usually ‘prely reserved when tenders are invited. Ir would seem, however, that {fis not strictly necessary for this right to be reserved. Ths, in Sporer 0 Hording? tenders were invited for the purchase of goods and it was held that, although nothing had been said on the point in the document calling {pr tenders the seller was not bound to sell co the person submitting the heat tender. It was suggested in Spencer v Harding tht in the event of the person advertising for tenders promising to accept the most favourable {eniden the advertisement could be regarded as an offer which had been Tocepted by the highet (in the cate of ste) or lowest (ia the cate of the apply of goods or performing of services) renderer. ‘Until very recently the point appeared not ro have arisen for decision, tno doubt becwute of the almost sevacable practice of expressly reserving the night not to aceept any tendes, but a similar result could perhaps be ‘cached by sology with the cas on auctions without reserve discussed in the previous paragraph, In fact the process of enrering into x contract by ‘way of competitive tender is very similer 1o making a sale by way of uct, and it would be dificult to dirtingush the two cases in pincipe. On the somewhat unusual fuets of Harecla Inoesments Lid © Royal Trast Company af Canada (CD) Lid where two parties were invited to make sealed competitive bids for shares on certain terms and it was stated that the seller bound themselves to accepr the highest bd, it wes recently held that the seller was bound tothe highest bidder. [BIB] Sclfeservice stores. It has for long been assumed, following the principles discussed above, thatthe display of goods in a shop does not [Emount fo an offer by the shopkeeper to sell, but merely to an invitation to ‘reat. It was not, however, unt the decision in Pharmaceutical Soceey of (Great Britain v Boots Cask Chemists (Souther) Lut that i was decided thar the rule was the sime where goods were displayed in such a manner fs to require customers to select for Uhemsclves the items which chey Wwihed to purchase, ‘The defendants were charged with « breach of Tegislation requiring. the sale of certain proprietary medicines 10 be flected by or under the supervision of a regutered pharmacist. ‘Supervision was provided at the cashier's desk to which customers were ‘required to take iter which they withed to purchase. Tt was held thatthe ‘doplay of goods in thie manner amounted only to an invitation to turtomers £0 make am offer to uy, and that as such an offer was accepted _ tthe cashier's desk no infingement had occurred. “The ceatoning applied by the court inthe Boots case has, however, been criticted.%" The major reason the court was not prepared to hold thet an ‘offer was made to customers was that it assumed that in that event che 2 G70 LR 5cP 561 ‘8 Tae wewappenro be tad he mppet of Bowen Le Gl v Crd Sate Bail Geta) PGB 356 ee (4 1946) 1 AC 20. Se so Beye Fle fee Ghd Zt w Bact Bama Come {iol ds et a Bhng, de a Uno CR 4 ToL thea Sth, 109599 BAB ct Manse C980) LOE Ti COBH) ane Sey 191 pp Bd Manos er 3pu FORMATION OF CONTRACT: offer would be accepted when the customer selected an item fom the Shelves and tac the eastomer would technically bein breach of contrac if he oF ake later deeded to buy 4 aubatate fem ce not fo Duy at all? However, ifthe shoplecper ere infact tobe regarded as making an ofr, the saat natural Inference would surely be tht te eumomer had not Sally indiated an intention to buy (and dos to accept the off) unl the less was preseyted athe cashier's desk (or, posubl, unt ke was acrualy paid fon" Despite such erldeims, the mule thet it the ‘Sistomer who makes an offer in' elfeervice store appears now to be well ‘Stablshed, and uy pechaps be jstifed on the bass that inthe wbnence fof very clear indication of eamtray intention the shopkeeper should not be assured to have relinquished the right To refuse © sel co eoxOme ‘whom he o dhe consideed undesrabi,o 9 liit te numberof tems in Short supply which he or she is prepazed to sell to each customer. The bore anaes does however, serve to strate the dificlies which may tise in commonplace situations ia detennining wbo should be regarded {5 offeror and who a offeres [214] Meaning of ‘offer’ in statutory offences. Pharmaceutics! Sosisy of Great Britain o Booxs Cash Chemis (Southern) Led® shows that ‘he cantactal principles of ofer and secapeance may be thought to have practical signifcance in situations involving no action for breech of Sontrac. A number of Engish cases have been concerned with dhe ‘caring tobe given tothe word offer inthe context of eatutory offences prohibiting a person from offering goods foe tale in certain cecumtances, And in those cass ic has been held Ua pasiament must be assumed 0 thave uso the word in technical contractual meaning, rather tha ints ‘roader colloquial sense. Consequently thas been held that such states were not infinged where goods were daplayed for sale in = shop window,” or adverised in'& newipsper," or offered for sale by an Snedoneer.* Such ‘cases aze_veluable in affording gukdance on the ‘ntractual principles relevant in certain eypicalscusions (de more 50 Tang fates are rarely the subject of Judical decison Deca of th taliktinood of contractual claims wbich usually involve. quite. an nouns of mone beng ligated o,f ligated, reported). Nonetieles i {s very doubeut wheter as a matter of policy such technically” i desirable, for the result would seem wo be to thwart the leglatve Invention and co result in legislation becoming neces complicated ss emendments are made to overcome the eet of such decison 7 Ti reseing yas pecans oot suily acer fr the dec french of he ‘mente of the Cout of Appeal reed wit he tet of Lard Coded C) ne Inmncr who red (11992) QB 95 a0) ha cee conta wee fred wen th tier alee gl om ese hele wos onthe BC, ae ‘hes mu unr the person fhe pana on Fara dcaion of seme Apercas ccs supe € aml see Scenes 2, Fen of Cour 1968, Val pp 386-8 9 Csr an a 10 Pater Bel (196i) 1 08 398 171 Podge Cee 1960) 2.AL HR 172 Br Cat Ans Lav Wg 1972) 1 LR 1318, 73 See Note (1961) 1 Ad UR 221s} C Sey, Law Concept in he Crt Law? (ioray3i cag a a” AGREEMENT vs) “Tue courts in Australia seem prepared to reed such pases a “ter for ele in theit ordinary sense, unles e technical meaning is clearly equised, hd itis unlikely, sherefore, chat the English cases referred 10 would be {allowed in Austrelia. Thus, in Goodwin's of Newtoamn Pry Led v Gury" ie twas held that in che context of legislation designed to regulate retail hopping hours the word ‘offe? must be cesd in he manner in which its hed in evenyday use and in Aurney-Geveral (NSW) v Mutual Home oon Fur of Astral Led” ic was held thatthe word, when eppcaring ia Jegslation regulating advertisements offering to sell shares in a company, fms be read in 8 noa-contractual sense as including invitations to teat. [245] Invitations to treat and bait advertising. The face that che Difering of goods for sele is interpreted as being merely an invitation t0 ‘Geat means that consamers will normally have no contractual protection sere a retailer has engaged in the practice which has become known 25, "aie adverdsing’. This expression refers to die practice of advertising goods ut atractie bazgain prices, being goods which the advertise: does fot in fact intend to sell more than soinizal quantities, i at all. Often the essential purpose of the advertiser is to persuade customers (0 purchase other more expensive (and, to the seller, more profitable) items. fn some cases the customer will be told that te advertised item is not tvalable at all, whereas in other cases that item may be mde available to the persistent but only after considerable effore, usually involving strong, Sisparagement of the ‘bai, has been expended ia en attempr to ‘switch? the customer to « more expensive ites. "The Trede Practica: At 1974 (Cth), following widespread criticism of ‘this eling technique, now provides in's 56 that corporation” shall not, jn trade or commerce, advertise for supply at # specified price goods of service i there are reatonsble grounds, of which the corporation i aware, ‘or eugh reasonably to be aware, for believing thatthe corporation will not be abe to offer for supply tose goods or services at that price for a period that and in quannities that are, reasoneble heving regard to the nature fof the market in which the corporation carries on Business and the nature (Of he advertisement. Even if this cannot be shown, an offence is ‘committed by the advertisers if hey do not in fact supply, unless they ‘offer 10 supply (end, ifthe ofler is accepted, do in fact supply) the advered goods ot services, or equivalent aktematives, within a sonable time. Thus a retailer advertising ‘special’ forsale tay well be in breach of s 56 i only limited quantities are available and the position has not been made dear in the advertisement. An infringement of 56 is criminal offence and 2 heavy maximum penalty may be imposed, ‘Sestion 56 docs not of ielf alter the contractual principles discussed 24 (i959 sasn 295. 15 [ign] 2 NSW La, lowed in Aomay-Or (NSU) Aven Bed Tr od [Ust4] | NSWLR 16, Sv ao Par Po a Paar of Caper 1976) WAR. {o,f Renn» Ary Ferd Py Led IOR) 33 ALE det on 36 of Trae archer 1994 (CO), nos flawed a Wace eb (1989) 38 ALE TS. 76 Auge sein cpr to apy eny taco by e coronene ef of ‘tthe Inds reas dein ht weeprue ade apt be cog inthe ‘stone wer he Comments pie power to cna the ans ‘tre the ey asus ine coe ner atte we ie Wila ACT SE No. aa1 FORMATION OF CONTRACT sbove, but 4 person suffering lest as # result of a contravention of s 56 hnow hat a statutory right to damages under & 82 of the Trade Practices ‘Aac Tos, a person incurting expense in traveling to en advertised sale ‘might now be able to recover damages under § 82, even though there swobid be no contractual claim to recover such damages.” All States have deo enacted legislation dealing with bait advertising,” (@) Offers to Unascertained Persons [216], Offer to public at large. An offer it normally addressed to a specific identified person or persons. However, an offer may be made t0 the public at lager It wat at one time thought thet 10 regard documents uct as adverdsemence offering rewards as being contractus! offers was Somehow legally impossible ar amounting to regarding the advertisement ava ‘contract wits the whole world’. The thought seems to have been that ho speciicofferees were identied, the advertisement could not take tect au an offer but could at most amount to an invitation to treat that {S, an invitation ta the public to come forward and make offers 10 the ‘advertiser, The fallacy of this view wes well stated by Bowen Lj in Carl » Carbolic Smoke Ball Go2® 1 was alc sad thatthe contac ie made with all the word — that swith rerody and tht you cannot eantrat wich everybody. I nots contact ‘ade oid ll the wonkd Test an afer made fo al te world td why ‘hotld nt an offer be msde wal dhe world which ft ripen ito a contact {wih auybody who comes forward and performs the condone is an offer { become lable fo any one who, befre tis rerscted, pecforms the ‘Doalion, ae, slough the offre mae othe Wor the contract sade ‘wih hat ime portion of the public who come forward and pero the ‘condition of the fit af she advertiemens. Although itis convenient ro refer to an offer made to a large group of ‘unascertained persons as an ‘offer to the work’, the exact scope of the foffer depends, of coune, on the language used. Thus an offer may be restricted (0 certain classes of perion, or it may be expressed in general terms but subject to the exclusion of a specific category of persons! In Wesoinster Buses Py Led © Cale ic was ergued that the principle chat tn ofler may be made to unatcerined persons was restricted to the 17 Fo deca on +96 36 Rann Mary Fd Py Ld (990) 38 ALR 417, Waar BSS SCRE Bt an Fb) # FC {ise 8K 2 13 Ha Neto (1825) LR 8 QB 286 Gee 211). 8 ACT: Fr Ting A992, 215 NSW: Fa aang Zev 198h, 331; NT: Garr (Afi ond Fae Tig At 190,» 3; Qs Ha Thing et 398,» 4, SA a Sere 1087, « 65, Ra Towing Ae 199,229: Mit Far Pra At 183, 5 1, WA: Far rag e987 «19 sy [59011 QB 25a ack Toe a a ti ese were tet ut (208) 1 fenton Girt €” Cr Lat [1997] NEL 3206 edeemert sig eed of Re cum of sap tater dted to sown the ents of Soe ses) 2 Goto 91. WN @NSW) 222, flowed i OU Bumps Poy Ld Wien {loro} Uh bs See an Wane vfgr abs) 9 SCR GUS) Gp) Je at ett, WW" On one Fratng Canng Gu Las Bon (1912) 1 Tas LR 3 Capon thre Sneed proviind dete cf company atone be fea hel b= ‘Ser oe Gtnoany aren femedy, Bal Bis Py Law Sar (1971) WAR 137 36 AGAREMENT rs) ‘advertisement? cases, Helsham J held, howeves, shat the principle is of (ERSr'Speration, 20 that an fer to “A ar his nominee’ i effective and sey be accepted by the nominee once appointed, even though the Tommince’s Mendy was not ascertainable at dhe time when the offer was sade. (©) Necessity for Communication of Offer [217] Offer ineffective until communicated. It's frequently sated {far en offer is ineffective unl eis communicated to the offerec. Thuy for exarnple, Kay LJ stated in Henshom o Fraer® chat ‘en offer to sells ‘oshing unt i is actully received. Ic might be asked whether such a rule Sinveny praca sgaiane, ues refers to the cule dhe the Ferfonnance of an act in ignotance of en offer cannot amount t0 SEerptance even though the act performed happens to full precisely the Conditions lid down inthe offer. In such a ease ix can hardly be sui that fhe parties have come to any agreement. Hoxeever, the rule does have furter significance, for a person may hear ffom a third source that fodhee intends to make an offer to him or her. It would seem that even though A may express an intention to make an offer t9 B, no power of ecepiuace fo created in B unl such time, if ever, as A’s offer ‘Smmunicated to B by A or by someone acting with A's author. The ‘Sacral inference in sch 4 situation would be thac until such time as such ‘Communication has cccurted, A has not finally decided to be exposed to the potentis! lability which would arise once the offer becomes effective ‘Thur in Bans v Wiiams™ ic was held that « decision of te Minister for Public Instruction approving the purchase of certain goods was not an offer espuble of acceptance when it was communicated without authority by the Under Secretary ofthe Minister's Department. 3 Acceptance (a) What Amounts to Acceptance [218) Necessity for acceptance, Where an offer has been made, 0 ‘ontrack binding the partice will raule when, and only when, the offeree bas clearly accepted the offer. Normally acceptance is not effective unt i has been communicated to the offeror, and this requirement will be considered later. Our concern here is with the kind of declaration of ‘consent fo the contract proposed by the offeror which must be made in ‘rder to constitute an effective acceptance. Tn the majority of eases the 1 uy. 9. ae Coss ya Lar a 1 Sea. 5 Cap Conthom (1) & Car & P 15 173 ER 406 Capron wd pay of ‘aon wun Gyro nerd a bearmg ef C nor umn to C nth any fapeatr hid mrt bun oe). tg (in) TH SR QWOW) DMD. See abo Poa » Za (108) 99 LT 206 (re the Sewuostedconmanicrtn ws, fr tenor ch te ace et ened 30 ‘cipner rsher na ano fe reacang b, bowers, ely spalabl © ‘Snshouted conentaton sf an oft Wika» Ses Cop (031) 39 TET 208 {resoains oy cel nad norte be an af, ar 90 od that Pubcon ne ‘Seeahy Ce v Cpr 1907] UR at 10%, 06, 08-9 per Onin a”ma FORMATION OP CONTRACT consent will be expressed but, as we have seen,)7 dhat consent will sometimes be implied from. the conduct rather than the express words of the acceptor. There must be a clear indication of consent 10 the terms proposed. [219] Acceptance must correspond with offer. The offer and Avoeptance must precisely correspond; that which has been proposed by the offeror must be accepted in tote, ne more and no less. Any departure ‘rom the offer will result in the purported acceptance being inefective. Such a purported acceptance is mot without signifeance as it will ‘normaly, even though worded as an acceprance, amount to a new offer (Gescribed ap a "counter-offer) which, if accepted by the original offeror {row the affere in respect of the counteroffer), wil result in a contract (Of course, if the counteroffer itself is not accepted, neler party is ‘bound, [220] Acceptance must be unequivocal. Acceptence mist be ‘unequivocal in that nothing further i Tet to be negotiated between the pparues and the language used must be much as would clearly convey Ldefnite decison by the offeree to be bound by the terms of the offer. ‘Whether this hes been i fact dane involves interpreting the language used by the offeree. Even ifthe offeree docs not say in 0 many words ‘accept ‘your offer i i suficient if he or she clearly indicates that he or sbe it treating the offer as accepted, for example, by informing the offeror thet he or she has taken steps to perform by ordering goods or materials which he or he must acquire in order to perform his or her part of the bergain.®? ‘Where one sates that one ‘desires or ‘intends? to accept an offer, the contest may be such a5 to indicate that one has definitely bound oneself ‘rather than merely suiting an intention to do so at seme future time," On the oller band, where a telegram which prima facie indicates an intention to accept states that a Teter will be gent containing details of the offeree's ppottion, the inference is likely to be drawn that the telegram is not Intended to be a binding acceptance” [221] Offers presenting alternatives. Although acceptance must comespond exaclly with the offer itis important to remember that an offer may in fact present several alernatves tothe offeee. Thus, where an ‘offer is made forthe sale of« specified number of shares in a company, purported acceptance in respect of part only will be ineffective, though tach an aceaptaner would be valid ifthe offer were to sell shose shares or 87 Seo 208. Sex eg Boom Deshi Ios Le © Quamsen Recs Oona Hood (198) 1 0 tly oa (181) LR 9 CP 158; Bell» Tipit No 2) 1957) 96 CLR 1 $2 Spacers Para La Goan (940) 18 SH RSW) 102 0 trie Tacs ey Lite fl 194 66 WN CAST) 1015 Imrwid Licking Cig (Pap Lato Pty loa! Py (1988) 60 WN Ce) (NSW) 683. ‘9: Mio Sh (1805) 22 Ch D 640, Daa » Thos 3) (957) 96 CLR 195 ‘203: Spy So Lely Coven’ fr Mtn Hae (1999) BER 9147 a 9148, Trains Py ado per (909)1 QU RD va Bovina Svs (9) 1 AL) 288: Lue Conran Co ey Lal M Thar Sia ‘ro (1965 VR AL C/ Lat» Haron (TE) 45 ALI 12 38 AGREEMENT ray such lesser number as the purchaver might wich. Similay, ifthe owner Sflind writes to a person offering inthe alterative ro sell o fase the land fon certain terms, a reply agreeing to purchase i clearly valid sccepuance™ [222], Additional or different terms. Pechapt the commonest ‘Brunton where a purporced acceptance is ineffective and operates merely fs counteroffer is where it proposes one or more terms which are in didon to, ovat any rate different in some respects from, thore contained in the offer 10 which it refers. A purported acceptance which agrees ta the ‘erin general terms but which socks to qualify the scope of some of the detailed provisions contained in ic is at most a counteroffer.» Thus an ‘offer for the purchase of lend is not rendered binding by an ‘acceptance’ ‘which contains terms not contained in che offer; and this ill be so even it the terms (for example, @ cequiement that the purchaser pay « deposi) fare normally agreed to in that type of transaction. ** On the othet hand, 2 eczptance would no doubt be effective it did not depart from the terms ff the offer but simply see out expresly what would be implied by lar in the abseace of express agreement ‘Dificuly fequendy arises where an offerce who is alleged 10 have sccepted cose to describe in his or her own word the effec ofthe offer, fox in such cases it will often be arguable thet the words used by the offree would in fact produce a different effect in substance from those (ved inthe offer. The problem was well daveibed by Gibbs Jin remerka ‘waieh although made in the context of x purported exercise ofan option, ie of general applistion noe always easy co determine whether the purported exercise of an ‘option sould be wivecsiood as atepting co vary te tera ofthe option ot needing ro steep ts teuus shows modification, nonnthatendng tbat ‘Beyimay have been mtdeecrbed, or eotwihtandiag thatthe grantee of ‘option my have ingisted that he atende to peronm the eontact ia A Janet for which die terms of the otto do not provide. I mast of course {Eepend pon the proper conmracion af the document by whieh the runes Dutpors to exer tn option whether amounts to an abyolte sad Unqualified acceptance ofthe rights and ies condtcnally created by the onion. ‘The question is always whether or not the sratement alleged to have been an acceptance is properly o be interpreted as an unqualified Acceptance of the ole. Tris possible that a reference to an additional term should be read as-a proposal for the modificadon of the agreement, but 93 sctey Sete (1900) 7 WALR 475 Oro Col Co Lt Pa Dato Som Ca Ge taoaa renee Mra 9 an (HP) 1 VLR (2) 87 See sho Gog © Modine 196 95 Seg Ho Kr (825) 2 Son & S 0h 571318, Tr Gio (1862) {SCH euSN) aha; hon» tn (1903) 9 C1 awd» eae (1924) YER, Canto w fon (1935) QSR 39 18 Cain 187 12 SALN 3 one Da [99412 Co 32 3F Quang» Roto (197) 187 CLR 19 a 201. See tho Coat! © Promic ‘ron Ce ry at (082) 99 CLR 20 ar v Pipa a (1950) 8 CL Wir 204-6 208-11; Gtben J MeGanl (a) Py Lad» Pit Cv ba (1950 59 SR (QU 125 Prada dns Co Ea lh Minden Py ad (087) NSW BT »ian FORMATION OF CONTRACT thatthe maker ofthe statement intends 9 be immediately bound whether br not the modification is agreed to by the other par, Thus, for exampl in 7 B Rogers Lid > Hary Less 124% dSzectors of the plintf! defendant companies agreed upon & contract ofa year’s duration and at the same time agreed that a proposal for an option forthe renewal ofthe contract be submitted to the plains she director conducting. che ‘negatiations on behalf of the plaintiff having no authority :o agree to hat fapect of the defendant company's proposals. It was held that in the CGzcumstances the parties intended wo be immediately bound by the initial contract, irrespective of whether the option propossl were accepted ® In ‘rher cases an acceptance will be effective even though accompanied by 2 request for some indulgence as to the manner in which the obligations lunder the contact are a be performed. Thus, for example, a request by & buyer that delivery should be made on a certain date wil nr, even though the offer does not refer to such date, prevent the ecceptance being ‘flctve fie is clear thatthe seceptance ix not made conditional upon the seller agrecing to that dat.'0° ‘The above discussion must not, however, be allowed to obscure the fact that an acceptance conditanal upon the offerr’s agreement to any ‘ratiation ffom the terme of the offer wil be ineffective. In Norland (Ailing Lid» Dennis Foran Meters Led a telegram purporting to accept {an offer for the sale ofan aeroplane required delivery to be made within 50 days. Ae the offer roid nothing concoming the date of delivery, the scler would have been obliged to diver within. a reasonable time.) “Tiny daye war notin the ctcumstances ofthis case synonymous with « reasonable time, and the buyer’ requicement of delivery within that petiod prevented hie telegram taking effect az an acceptance, even though the parties did not consider the date of delivery o be important. In other ‘words, any variation in the ellect of the offer (and not, as seems Sometimes to be sasumed, only a material or important variation) prevents fa contract being formed, It is obterwise where the variation is solely in favour of the offeror. In Ex parte Fealey'® the defendant pluced an ardet for insertion of a half inch adverssemenr inthe plaintiff's newspaper. ‘The ‘lsintif accepted by inserting a one inch advertisement. As the rate for fone inch was che same at for half en foch ix was held that the defendant ‘vas liable fo dhe cost of the advertisement!" 98 (1907) 7 SR (NSH 427. 132 So ake Tamer Emp 6 Ce Pry Ll Can [1922] VLR, 498; oa Gumarine Be Late Comte (0st tt, Por Suy Ca Py Lad Genel Eager & ‘Aaa Py Cat (999) 87 ALR, 0 eg Bn (184h) 1 HL 3a; ER 605, Se uo Gite w enumont (184 De ‘Ga Sn 307 05 BR 1121 Coats Leta 1956) SR G8 267, Simgsen » hs irri G0 Sp ofa Comer Mah a (99 101 Got He Stes. {2 ee [4h 13 cee 1 Li @xSW) 282 108 Hower ugh @ aol in 2 utr the specie perfomance af « somaet ‘entra ons einer i ia ie [31]) oy i sme cus be ale © itive ats peed on nly fete pals henlt Sut nace the wei, "i prc crn ep bce equine ere we eta arene feed bet par: Bas s Aan (WAH) VLR ” AGREEMENT, py [223] Acceptance of tenders, We have sleeedy referred 10 the fractice of companies desting to purchase bulk supplies of goods over a Enngtiy period of time, or to have building or engincering work carried fous to contract by way of calling for tenders. We have seen! that petsons submitting fenders wil be regarded as making an offer, which the Perron requesting tenders then free vo accept ar react. Many difficulties [ecu ia practice ab to the precise effect of an ‘acceptance’ ofa tender. If, Gh interpretation of the spesifiestions and tender it appears that the Uceepior definitely agresing co purchase, for example, specified ‘quantities of goods, there is no problem and both parties are bound Flowever, what at fist sight appenre to be a definite agreement may on Clover examination tum ‘out to be merely what & generally called a ‘Granding offer, For extmple, ja Cuental Ammunition Co Rei the plaintiff promised to supply the gvernment with emmunition on certain ems for n period of seven years, When the government subsequently purchased emeevunition from enother supplier, the plaintif sued alleging & breach of contract. There was no express promise i the egreement which had been signed thet the government would purchase fr the plaintf all, the ammunition i reqited, The court refused in the circumstances ofthe tase to imply such a promise, wid the result dha despite the ‘acceptance? of she plaints promise there was no binding contract. The plant's promise amounted t0 1 sanding offer, such that « contact was formed heh time a specific order was placed in accordance with its tenms. There ‘eas, however, no obligation on the government ro place any order andy ‘moreover, although bound by any orders previously placed, the plamtft Soule have withdrawn his offer at any Une, despite his promise to keep i fpen for seven years. In this respect a standing offer is as freely revocable ss any other offer? (Often, however, the language used and the circumstances of the case will indicate that the person accepting the tender, while not bound 10 take fny stated quantity of what is being offered, does agres vo tke all of his or her requirements, whatever they may turh out to be, of the goods or services offered. Tn that cae the acceptor is bound to take his or her actual requirements fra the successful tenderer and will be liable in breach of ‘cantar upon dealing elsewhere. As a corollary, the tendere i likewise ‘bound to supply in socordance with the othe’ requirements.® Thu, for ‘example, in Mine » Murejpal Counc! of Sydney! the plaintiff agreed to do all the mechanical repeirs required to the defendant's electrical plant far a petiod of 12 montbs at specified rates of peyment. Although it was 103 eet. 108 (160) 2 Lm cust 338, 10 Can Neher Rate Cov ha (IR) LR 9 CP 16; Kay w Caledon Got Ge ‘Giae) GUSW) fy cle Landon G&A Conmane (1918) BT 1B 67 Ie © St # ter dee (968 Wa Re (92) 132 CL 1 Adi» Meio Co of Spy (1912 14 CLA 34 Jae Pi La (193) 94 CLR Sedan J Rack Son iy La Sunes Ck & Cary Ste (149) 46 CLR Fit, Ast sanction fr oh oguemenrcomrac se [St]. See sale Mion re Regier adhe Ou one (907) 2 Geo sh so in 14 CL 54ro) FORMATION OF CONTRACT. impossible to say at the date of contract precisely what work would in the ‘event require so be performed, the obligations of the partes were Suiicicntly dearly defined and shere were indications in the writen agreement that both parties regarded themselves as bound for the period fof 12 months, In there egcumstances the High Court of Australia held that there should be implied a promise by the defendant to employ the plafaif to the exclusion of other persons to do those repairs. ‘The Aefendant therefore was bound to employ dhe plaintif, the plaintf’s ‘promire being more than simply a standing offer, 'A supplier of goods ray well, a a matter of commercial convenience and efficiency, supply to regular customer a price list indicating the prices at which the supplier is prepared, for o stated period of time, to Supply commonly ordered goods. Unless there is an agreement by the Customer co order either a minimam quandry or the ectual equicements for the customers own business, che arrangement amounts only 10 a Standing offer. The distinction between a standing offer and a contract binding both partis in clear enough in principle, but in practice ean give fise to very dificult problems of interpretation in ascertaining the true intention of the parte. [224] The battle of the forms. “The increasing use of standard forms fn business dealings gives rise to problem which is well described by ‘Amecican commentators a5 “the bate of the fons!" Where, for ‘extanple, the purchase of goods is contemplate, the buyer and seller may ‘each uae in the process of negotiation their own printed forms seting out ‘he terms on which they propove to deal. As each perty’s form will be ‘drated in a manner designed to protect its own interest the forms wil simost inevitably be in confit on tore point, and this fact may prodace ‘ute unespected result, Thus in Buclr Machine Too! Co Led o Bx-cel-O Corp (England) Led" a seller quoted a price for certain machinery subject tw the eclier’s own conditions (which included a clause enabling the seller ‘to vary the price of the machinery in certain circumstances), ‘The buyer subsequently requested the mupply of Ube machinery, using its own order form containing its own terms. The seller acknowledged this onder on & form of acknowledgment of order supplied by the buyer. When the seller later claimed ta be entitled to an increased peyment in teliance on its price variation clave, i was held that as the buyer's order form contained no Such clause, that order was not an acceptance but 2 counter-offer, which hhad been accepted hy the seer The seller was therefore bound by the buyer's terms, Whece in such cases the seller docs nor acknowledge the Dayer’s counteroffer, it may well be held wo bave been accepted by conduct If te goods fa question are later infact supplied. in other cases where a dispute ariace before the eller supplies the goods itamay be held that, contrary to what wil usually be the clear assumpdon Of the parties, no contract at all exis." This result can in some 110 Ses og Puller & kanery Aan Cora La St 190: 9 396-027 1 lob ew toh, See sho OTM La» Hyon (1981) 9 any Rep 28 112 See Re eh Sar as Py Lo (1971) QW 18 113 ena Weil 2H] VLR 9 Fume Rene Go Py Ld Cam 92] ER {SE Cope Utorret Py Ed 9 Cate [1987] UR 8 2 AGREENENT: wy situations be particularly harsh, especially when the parties have agreed! oa sil essentials snd the variations between the competing sets of conditions fre relatively minoc. Consequently in some oversees jrisditions a purported ecceptance which contains terms which are different from those Ih the offer is effective as an acceptance if those new terms do not materially aker the terms of the offer, the new terms are treated #8 ‘proposals for additions to the contract which the offeror wil be deemed fo Ihave aged to if they are not expressly objected to. Te seems clear that uch an approach + inconsistent with the principles of formation of ‘Conti’ epplied by the Australian courte" though ite adoption would prevent a party being able to escape from a contract on the bass of a Finor vacation berween the forms employed by the parties." Ir would in practice, however, often be extremely dificult to distinguish between new fenne which were only ‘minor and those which 'materly altered" the ferme of the orginal fe, (© Who May Accopr? [225] Offer may be accepted only by offeree. An offer may be accepted only by the person or persons to whom iti addressed,” Ths ‘fan oferis mace by A to B, and B purports to accept on behalf of herself land C, no contract results td Bs aetion is infact not an acceptance bat ‘Feounter offer" In most eases it willbe clear enough who is entitled to ‘accept but where dou arses the offer must be carefully construed 10 ascertain who fs entitled to accept!!? Thus where two directors of a ‘company offered, in a circular addressed to shareholders, to sell theit shares in the company, t was necessary to construe the terms of the offer to ascertain whether the offer could be accepted only by the shareholders ting 48 « group, or whether ir was open to acceptance by any individual shareholder." 114 eee Unf Games Cols US), 207. Sx sho Ure Noa Comeion ow Si emia fe Gi), A een 115 Sead eMC (084) VLR 9, spying Finer «Bind (1862) 11 {ligpeen (42 BR 1057 le 229). te Beg ond Reg Cow Ard (11) ERS tit ea. For he vlew thea exceton rain whve 2 cota nde {ket canning consul xeon cat sce Macfaeran ier ie Sera Cone f See Tan (EAD (1972) 138 CLR 129m 137-9 pe Sipe} Oo ‘Sette | we fathr M Powe, “ecepnne by Stee ine Law {Sommae? 197 9 ABLE 36, ‘uate th cy rea 4 an a «ma crain ht he oninn arcu copula ad one way enced dunn ego wold hve hes ‘Beet Spry ve ou an Nay, Ca ant Mao aa 117 on» ikonen (4922) 127 LT 10. Oe ar GP) 9 V8 es Sa 190 28 a Teme a (911) 19 CLR I Cf a» Win (9091 Ga Renee [Scie were fre sg a ge tvdosed pas ts wos psy oon 119 Cours ia (163) 35 CLI, 129 Paty «Fekete 1505) SAL 19 e61 FORMATION OF conTRACT (©) Communication of Acceptance 1226] Acceptance effective on conuaunication. An acceptance is (generully effective to conclude contract any when the fact of acceprance 4 communicated the offeror. Unul such vime the offeror ig free t0 ‘withdraw the offer. Ie normally only when the offeror knows thar the ‘Proposal has been accepted that we ean say thatthe parses have reached hgrecment. Thus fis, for example, well established that a person who rakes an offer to a company ro purchase shares in that company may Withdraw that offer before being notified of the company’s acceptance, and this is yo even though the company may infact already have allotted Shares to the offeror in the company’s share regiscr." On the otber band, i is not necessary that a formal notice of allotment be given, and knowledge of the allotment mney be inferred from the conduct of the partes, for example, by the company sending to the applicant notice of ¢ fall ig respect of money due for the thazes or by the applicant paricipating ina mecting of shareholders. An offeror may. have lauthorised an agent t0 receive notieation of acceptance on the offeror’s ‘behalf and in auch a case notice to the agent ie treated ae the equivalent ‘of notice tothe offeror personally the offeror is aot, however, bound ifthe agent has authority merely to transmit the notification rather than to ‘eotive i onthe offeror’ behalf! ‘Moreover, unless there are special circumstances indicating that actual ‘communication is not necessary, the very fect that an offeree, though heving decided to accept, has not yet informed the other party of that decision wil usually imply that the offeree has not yet finally made commitment. Accordingly the offree will not be bound even though the decision to accept has been conveyed to the offeror by someone acting ‘without authority 10 do 90. [227] Offeror may dispense with need for communication, The requirement thet acceptance is ineffective und] notified to the offeror i ‘one insisted on primagiy in the interes of the offeror, and accordingly the need for notiiation may be dispensed with by the offeror. Thus the ‘offeror may, expresly o: by implication, specify that acceptance is to be ‘communicated ina particular manner, in which case an acceplance communicated ia that manner will be effective whether or not the communication is actually reccived by the offeror," This reasoning is one 1 Re Natial Sing Bn Ascii (20 Cat (BE) LR 43 Re PH Rig Cola ioea Sasi, 120 fe nia Lge Der Beary Ca Led (1086) 12 VLR 446; Malthouse ih ‘Sos Coenrsct at C029) SAGR 97 Be H Rig Co Ll (1034) SASH T3H Be ifm Spe Hed ad 1999] VER 27. Ba ce Pre Moc Union Chg 8, Gnfvoma tna) s9chR 13, 13 Ber Oe (1892) 19 LA (NSW) B47 124 Ganay »Chind Soe f Buch (1874) 5 AIR 59 Gein fcmpormon nat an ‘cepanee iho ‘comuntanoay Pea Ler (1908) 98 LT (MS) 208 {Sasuoored communiatee af" deson of govriag tay school tot a0 ‘npn See aos Bonk» Wain (1912) 12 SR OSU 2 Wane Bal ap {Goan 35 tur 209 12s Le aes Py al eh 1069) 2 NSWWR 79 81; Aaa Mind Cop La Bona NSW U988) SL ALK 81 “ { AGREEMENT pay of the bases for the rule wherehy a pested acceptance will often be Geetive on posting rather than on delivery 12° Tn many ceees an offer will be interpreted s contemplating that acceptance may take the form of performance of an act rather than ofthe tmaking of a counter promise, and in such 4 case the offeror will beheld to fave dispensed withthe necessity of comnmunicatin of acceptance. Tt was fp thi Dass that it was held in Carll » Carbole Smoke Bal! Co that a {nntract was made as coon as the plaintiff had performed the condizion set fut it the offer contained in the company’s advertitement of it preparation." Likewise, ifa person wishing to buy goods from a disant feller wotes ordering the goods end indicates thatthe sell, if wishing ro fccept the offer, should prompuly ship the goods without fist replying, the fontract is mede as soon as the goods are shipped.!™ Where itis not ‘vious from the Thess that commupieation of acceptance is not required, the offer must clealy indicate an intention to this effect ithe normal rule ‘eto be displaced. [228] Method of acceptance preseribed by offeror. ‘The slferor ay prescribe the manner in which acceptance ie to be made, and if the offeror has insisted upon this es the prescribed method of acceptance, a purported acceptance is any other manner isnot an efecive acceptance Ete offeror creates the power of ecceptance; and he has full control aver the charietar and extent of the power that he creates." Thus, for feample, i has been held thatthe fact that the offeror has made the offer by telegram is an implied indicetion that a prompt reply is expected and that conseguently an ucteptance sent by ordinary mail will be Inelfective."* loweves, in most cases an offeror in indicating that acceptance may te ‘made ina particular manner will not be taken to have insisted that that is the exclusive meshod of acceptance. In such cases any alternative method of acceptance which is as prompt as, ahd no less advantageous 10 the fferor than, the prescribed method will sufice.” Therefore an offer requesting a reply “by retum of post’ will normally be regarded as indicating merely e requirement of @ prompt reply rather than as Sipulaing that acceptance must be by Ietcr and no other means, Consequently « reply by telegram or by some other means, received 9 Se 30h 38 ib B86. oo. {2h Coney comet of scxpance asl aot ied by an fer ot 4 ‘alle conace shoul, hwcrer be remeber pratt rnc oer ot hcl nse fate cant wera sf 129 Bogus itcepean any Co (497) 2 App Goa O9 Near ame GR Ne Cd ee a roi) BR 9; Meyer Co on 6°95) QM 3. Sto Bp Puy 97) 18 im oa a on 190 ane Frc ty a Rig 1965 2 NSWR 1B Gon an Comma, Yl B09, 1be Geen Cab 8) 8 WR 1S 133 Fi aa & Go 99) 2 LU 1; Baw Os 1992 19 LR OVS 247% Ue Tch Py tate (48) 86 WR SWF DT Storch Da CS Sma © Gel nes at 9701 WLR 24; Gro Micon ang le Fedde 13) 198 CLR 38; Yous Duin Co fa v8 Y Pon Sor (YOR) Lad {oe} RO es Sp hy Lat an Py ad 7 PASWER 7 “sony FORMATION OF CoNTRACT. later than estes by post would normally reach its destination, would” ‘comply with the terms ofthe offer ™ If an offeror withes the prescribed fnettod of acceptance to be the only method permissible, this intention ust be made quite clear, Buti this is done, the direction is effective and Jey purported sceeptance which does not comply is at best a counter- ‘offte which the orginal offer is then fee either to acceptor reject. [229] Silence as acceptance. Although there & curiously litle Suthorty on the point, itis accepted that an ofleror cannot compel an bffeee 10 take postive steps to relect an offer by the device of stating that tunes tis Rear co the contrary tbe offer will be assumed to have been ‘tecepted, Tin such a case the offeree decides not co accept, and therefore ‘imply ignores the offer, there will be no acceptance and hence no contract. Thus, in Faltkawe » Binaley' an uncle wrote to his nephew proposing to buy the latter's horse and said “if T hear no more about him, Teonsider the horse mine at £30/15/0". The nephew did aot reply, and it vas held dt ts. clear that che uncle had 0 right to impote upon the hephew a stle of his horse for £30/15/0 unless he chose to comply with the condition of writing to repudiate the offer. Ie is by no means cleat, however jst how far this principle may be takea, There would seem to be rho feason in principle why partes ehould got be bound where they have previously dealt with each other and established an arrangement whereby En offer lt taken to have been agreed to ifnot promptly rejecced. ‘Such an arrangement had been made in the Victorian case of Boyd © Heda sphere the plaintiff, rerchant in China, had for some time been contigning shipments ‘of tea 10 the defendant, a Melbourne ‘merchant, sho subsequent soi the tea in Melbourne of behalf of them otk. The plaintiff had, before shipping: the consignment in. dispute, Cabled the Gefendant details of the cost of the tea and, relying on « previous arrangement bewween them, took the defendant's failure to reply Eevan acceptance of his proposal. The Fall Court of the Victorian Supreme Court held thatthe arrangement relied upon by the plaintiff had in fact not been complied with a¢ i had previously been altered 20 as to fapply only when further parculars (such as the quantity obtainable end ‘eight costs) were supplied by the plaintiff. The court seems, however, ‘leary co have assumed (as had been held by the tal judge) that had the then existing atrangement been complied with the defendant would have been bound: 154 Ten © Hof © Go (1879) 29 LT 291, 1 woul be otbeewe if the errs ipetaion Sac be end a ply motiried by a dee to ecewe ae wees renee of scepaner to avid te ek tbls scaring the ‘fovea Mf cama te wr ner eth Te a tas Gite falcon ch iy La © Di Clb Ld (959) 98 SR (NSW) 122; Bonen ‘Sen i fy td Ce 14) CARA. Bi rot Alms Donon Coal © Coot Gomelbsanen Lad (1970) PLR 28 26 1 ea) 1h CB (8) B60 08 ER 10D. Set ae npn Holi Poy Lid» Mashon ‘nl Posner Lt (1900) 4 NSWLR 523. See generally CY Niley eon ‘indy Re Vo (1979) 93 MLR sy M Powel Accepts by Stencen the Gece (107) SABLA 20. Se ho [1] 1a7 The (Ae) feos, ae ER 097 = 140. 13a lett) 9 9LR GB) sel Seto Bupa tiny Py Lal» Macho Pag Poser into) 14 SSR 25 Re Sse La (1995) | WLRCAT, frre eremnnmereain seen nee AGREEMENT: my While it is clear shat, at any rate in the absence of any previous arrangement between the partie, silence us such will not bind an offeree, ir would seem that the performance by the offeree of some act clearly indicating an intention ro accept would suflice to bind bim or her. Te it ‘peneally assumed that, apart from the effect of recent statutory provisions ‘hich are discussed below, where a seller without previous request sends fgoois {0 ¢ porton accompanied by a etetement that the recipient will be Errumed to bave agreed to buy if he or she does not retum them, the feeipient will be bound ifthe goods are ued, or dealt with, in such « wey Ext indicate an intention to buy (as, for example, by making agit of the goods to a fend)! Normaly at last, mere silence and inactivity are Eoivocall® but here the recipient hat done more than simply remain ‘lent (which does rot in itself indicnte a decision one way or the other) nd has done something from which an intention tO accept may ‘easonably be inferred! Tt i true that an acceptance has not been ‘Communicated to the offeror, but the offeror has clearly indicated that such nowfeaion is nox expecied and we have already seen that in any ‘cases an offeror wil be taken to bave dispensed wit the necessity of ‘communicating accepeance. This dificult t9 reconcile such an approach with Fldhouse © Bindiey!* discussed above, where it was beld that no contract had been made, even though the nephew bad tated to an auctioneer, whom he had employed to sell a number of horses, thet the herse in question was not to be fvctioned as it hed already been old to his uncle. In Palhowse v Bindley the offeree wo the seller and the action ofthe eelier in thus dealing with his own propery may have been regarded as cquivocal,"® but otherwise the decision seems dificlt to support. Further, if an offeree remains ‘slegt beeaute intending to accept t would seem harsh ifthe offeree were lunable to enforee die contract even though heving done precisely what stat sequested by the offeror, In such a situation the Amesican law would 130 See appt or view may he baie rm Weck » Banka 183) 3 C&P 225, 0S O60. See so Retnement (24) Conor $e, Sg Fon Goma 198, Vat pp 1090-1108 ao Seeded Harn Tips Ea Vk de Bs Dove Nang $A 1988] 2 ATER 7965 Un oS is atin Cs eas Ft a It Rep ft See enpina olny Lad w Moco Palomas Py Ll (988) 4 NSWLE 523 12 Tre acon wae troup by the ane gin the asmoeer,he e eeue atf aad ten vl by wie of ach proper nhc a ped ‘Su oe he socraner's avenge ining he heme pry cote ie tet of cern Kesha] oe are wth the dein, conser tate el ‘nie ave been trent the out he rn Deven the we od 11s Gi iad Pe La of Gr 2 191g 0, On he nad Se waas Tacs Py Ll uy (lous) 68 WN QS) LOL Cle sega et “ory Dy nc tha Sve tend be 9 commrsarin of aspen 2) ithe the fir sept te vert et wes wa gfe foe setae: Samond & rian Pcp of he Le of Counc 1983, 82 See ft a 0 TB Onion tet 268 18, ”ay FORMATION oF CONTRACT sobably permit the offeree to enforce the contrac" and i is sugested that tere no reason the same ne should noc be flowed by Auealan oust So fong asthe slferce isnot preuciesd by becoming bound ‘when remining lem with no intetian of sccepting, the fees Sdaquatelyprowested and there no need fora igi insistence that sence inthe face ofa fe mont lage be without contractual ect. The pace (eaown at inert sling) of ending cme gocds to 4 person, accompanied by a watement thatthe goods are not sumed within e stated period the recpiem wil be taken to have agreed to uy them, as at times been very comton (especally in regard to rlaey ‘all tems, much as ok an records which may ens be seat by ow). ‘The precce b obectonable on a momber of counts People migit often be confined at to ther legs prion and tay pay for te good In the tistaken belle that they are bound to do so, Meow, although tt ‘lear hatte recipient under no eal obligation ogo ote rouble ad fapense of reusing the goods, doi so mayen be the ony effective way of eaaurng that annoying. demands for payment are not made. Govsequenty the legislature has stepped in wo provide that in acy ‘Sreumarences the mating of demand for payment for vnsalisted good ipev oes Hk a rove at wi then de octet the goods within a exrtna pelo of time the goods become the property often tenes The dea of legato re ego the spe’ of in work, but the pomible relevance of the inert cling Ieglaon should always be bore in mind when the problems discussed inthis pergrph are Beng coosderd. (@ The Postal Acceptance Rule [230] Acceptance effective om posting, Pethepr the main exception {an exception of considerable imporanes in commercial dealings) fo the Principle that acceptance is not escive unl communicated othe fiero occurs in eat where the poxtahscouptance rte spp. ny wich cases the accepanee ix elective immediately # eopeny pre-paid and Screed Tener i post Tins contact forme posting even though the offeror i hen lanoran of tat fae ed tven though the ee {5 delved in tensa, or may e lor inthe por and therefore neve Uiuimatly lve. It cael to realise however, that is by no tncans in all exes were ncceptance Ss made by pont ht acepmane il te ective on pouing. 145 ee Retna 20 Cora, $69 ad Stig ed Fenn ef mmc, 198, ee Eg op «Amen 0 tee fo mcd at hemp cnca Ba te eccaeed ay Of Oe ‘rene See as Feud Cop nd aan Ship Cop he sa) 1957] Sibu kep 1.1 per hoa, 147 Bibs ads Pers Sth Cb, ACT: Poi Te At, 1992, 82630, ‘ss Hay Ng Ae ta sn NS Coton Ais Onda eg 190,835 i ag da 9, 5-98, SA Fe Pg a 1 oan Gord Gl ee oa a he ‘ie den Woonona sees rey ee “ r prom oren.nenecnmens cert AGREEMENT [231] When rule applies. In she leading ctte which finally established the rule in England it was emphasised that its application wes eed te enses in which by reason of general usage, or ofthe relations between the parties ro any particular transactions, or ofthe tenme in which the ofee ‘ade, che acceptance of such offer by a leter through the post is expresely fo impliedly auihorised’"8 few years later the notion of the vale epending on some form of ‘authorisation’ of the use of the post was citcised in Henthora o Fraser." where the principle was reformelated by Lord Herschel! as follows: Inserts me as somewhat ecto speak of he person to whom the offer 1s made as having the implied authery of the ier pony to tend hi acceptance by post. He needs 50 avthorky to ‘ranma the aceepaaice ‘hrowgh any pacular chanel, he may select what means he peste the post ofc no leat than any ether. ‘The only eee ofthe supposed anory [Eto make the acceptance complete ro roan oa is peste east o bviously be imple only when the tunel conades tint es ese tehich his result ought w be eeaches should prefer to sate the rue se ‘Where the cicumstances uce such that it-muat bave been within the concempiton of the paren sat, acording to the ordinary tages of ‘anind, the pest might be vsed ‘a menos of communicating te acceptance of af offer the deceptance I complete a soon ni poe Homa v Fracr shows that although the postal acceptance re will normlly arte where the offer was itself mace By pov, this is by no mene ccuentil. In that case the plaintiff called at the ofice of a Som (ihe

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