Topic 3: Agreement between the parties

1 Understanding of what a contract is

2 Intention to enter an agreement

3 Agreement is an offer to go into a contract

4 Consideration is what you’re offering in a contract

 Topic 3: Agreement between the parties

Agreement (Two or more parties)

Offer and Acceptance

 Topic 3: Agreement between the parties

Agreement (Two or more parties)

Offer and Acceptance

Offer
Offeror Offeree
(Makes offer) (Accepts offer)
Acceptance
 Topic 3: Agreement between the parties

Agreement (Two or more parties)

Offer and Acceptance OR Conduct

Offer
Offeror Offeree
(Makes offer) (Accepts offer)
Acceptance
 Topic 3: Agreement between the parties

Agreement (Two or more parties)

Offer and Acceptance OR Conduct

Offer
Offeror Offeree
(Makes offer) (Accepts offer)
Acceptance
 Topic 3: Agreement between the parties

Rules relating
to offer

Intention Promise Communication

 Topic 3: Agreement between the parties

Rules relating
to offer

Intention Promise Communication

There must be
an intention or
willingness to be
bound
 Topic 3: Agreement between the parties

Rules relating
to offer

Intention Promise Communication

There must be There must be a

an intention or firm promise
willingness to be
bound
 Topic 3: Agreement between the parties

Rules relating
to offer

Intention Promise Communication

There must be There must be a There must be

an intention or firm promise communication of
willingness to be the offer
bound (In writing, orally
or by conduct)
 Topic 3: Agreement between the parties

Rules relating to an offer

Invitation to treat Agreement

This is an offer to Offer

consider offers
and cannot
create an
agreement
 Topic 3: Agreement between the parties

Rules relating to an offer

Auctions
Invitation to treat
Advertisements

Catalogues/Internet

Price lists

Goods in shop windows and shelves

 Topic 3: Agreement between the parties

Rules relating to an offer

Tenders

Tenders are not normally offers unless the tender states its
exact needs, as distinct from what it may only require.
 Topic 3: Agreement between the parties

Rules relating to an offer

Requests for info

A request for information is not a firm

promise and so is not an offer.
 Topic 3: Agreement between the parties

Rules relating to an offer

Communication

The offer must be communicated to the offeree/s

Acceptance must be communicated to the offeror

 Topic 3: Agreement between the parties

Rules relating to an offer

Options

To keep an option open for a specified time

(an option), it must be supported by
consideration.
 Topic 3: Agreement between the parties

Rules relating to an offer

Terms in the offer

Any terms contained in the offer must be

brought to the notice of the offeree. Any and
all conditions must be strictly followed.
 Topic 3: Agreement between the parties

Rules relating to acceptance

Reliance

Acceptance must be made in

reliance of the offer.
 Topic 3: Agreement between the parties

Rules relating to acceptance

Authority

Acceptance must be conveyed by someone

with authority.
 Topic 3: Agreement between the parties

Rules relating to acceptance

Cross-offers

Cross-Offers do not give rise to an

agreement.
 Topic 3: Agreement between the parties

Rules relating to acceptance

The Postal Rule

An offer by letter is not effective until received by
the offeree

Acceptance is effective as soon as it is posted

 Topic 3: Agreement between the parties

Rules relating to acceptance

Instantaneous
Where the communication of acceptance is
instantaneous, the contract is effective when the
acceptance is received
 Topic 3: Agreement between the parties

Rules relating to acceptance

Acceptance

Acceptance must be absolute and unconditional

or it may amount to a counter-offer
 Topic 3: Agreement between the parties

Rules relating to an offer

Termination Termination of an offer occurs when

• There is revocation
• There is rejection or counter-offer
• There’s been a lapse of time
• A death has occurred
• Or there’s a failure of conditions
Topic 1: Contracts

Pause point
Pause the video here.

You may want to research case studies on the

rules relating to offer and acceptance just
mentioned.

Case studies will help put these rules in

perspective.
 Topic 4: Consideration

Consideration

Exchange
Promisor Something of Promisee
value
 Topic 4: Consideration

Consideration

Formal Simple
contracts contracts

No need for consideration as Valuable consideration is required

the contract is valid because of for the ‘agreement’ to become a
its form –such as deeds contract
 Topic 4: Consideration

Consideration must………

must not be
passed
 Topic 4: Consideration

Consideration must………

must not be move from the

passed promisee
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the
need not be
passed promisee
adequate
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate

be possible of
performance
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate

be possible of be definite
performance
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate

be possible of be definite be legal

performance
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate

be referable to
be possible of be definite be legal the other
performance
party’s promise
 Topic 4: Consideration

Consideration must………

have value but

must not be move from the be sufficient
need not be
passed promisee
adequate

be referable to
be possible of be definite be legal the other
performance
party’s promise