CONTRACTS BARE BONES RATIOS OFFER AND ACCEPTANCE

Offer and Invitations to treat Display of Goods is invitation to treat, presentation of item to cashier is offer to buy (Boots Cash Chemist) A unilateral contract is an act exchanged for a promise (Carlill) Objective Intention test What would the reasonable person have been led to believe? Consider: language (promise or invitation), capable of acceptance by a single person, precise or vague, nature of the relationship, nature of the industry.

Bids and Tenders Contract A (project Call for Bids Bids Invitation to Treat Offer to build

Contract B (tendering process) Offer to Bid Acceptance to be bound by terms

Selection of Bid

Acceptance of Offer

Unilateral v. Bilateral Contracts A Public promise, by means of advertisement, is an offer to every person who is willing to accept the terms and conditions of it. Acceptance is by the consumers actions resulting in a legally enforceable contract (Goldthorpe) Note should have been ad = invitation to treat, offer = Goldthorpes money, acceptance = ACCEPTANCE Counter Offer

A vendor initiating an invitation to bid must choose the form of the auction (fixed or referential); the only choice for the bidder is whether to participate or not (Harvela Investments) A tender in law is irrevocable if filed in conformity with the terms and conditions under which the call for tenders was made (KA) (Ron Engineering) Privilege clause does not allow acceptance of non-compliant bid. Have to accept a bid that is compliant with terms and conditions of tendering process. (MJB)

Counter offer kills original offer unless it is specifically renewed (Livingstone) Performance = acceptance of an offer of a unilateral contract (Carlill) Motivation for acceptance of an offer is irrelevant (Williams) Wherever possible find a bilateral contract presumption through instinct with obligation (Dawson) Silence alone does not constitute communication of acceptance (Felthouse) Circumstances permitting, silence can constitute communication of acceptance (St John Tug Boat)

Performance by Acceptance Acceptance by Silence or Conduct?

Unsolicited Goods and Services (Consumer Protection Act) Recipient of unsolicited goods has no legal obligation in respect to use and disposal (CPA 2002) Two exceptions; does not include personal property that consumer knows or ought to know is for someone else, or personal property supplied under contract for periodic supply w/o further solicitation. Limited to consumer transactions Internet transactions Seller must disclose certain information, make it available to buyer, or else cancellation rights arise (CPA 2002)

COMMUNICATION OF ACCEPTANCE Waiver of communication requirement Offerors right to communication of acceptance may be waived, unilateral contracts (Carlill) Mode of Communication General rule, the offeror is master of the offer and acceptance must comply with its terms (Eliason) Exception, Offeree may be able to accept through functional equivalent (Eliason obiter) Exception, when offerors conduct makes acceptance impossible (Carmicheal)

Time and Place of Acceptance PAR post office is common agent, acceptance at time and place of postage (Household Fire) PAR does not apply if notice is required for K to come into effect (Holwell Securities) Instantaneous communication (fax/telex) General rule, acceptance is made when and where it is received (Brinkibon) Electronic commerce Online membership terms and conditions are legally binding (Rudder) Electronic signatures are the functional equivalent written document signatures (ECA ss 4-6) Offer and acceptance can be expressed by clicking or touching icon (ECA s 19) Email Acceptance Rules (Need to know if e-mail address was provided) (Electronic Commerce Act) Something is sent when it leaves the control of the sender If recipient has given e-mail information is received when information enters system and is capable of being retrieved If recipient did not supply e-mail information not received until recipient becomes aware of it

Battle of the forms Battle of forms is acceptance to general offer/acceptance approach (Butler Machine) resolving battle of the forms o Traditional view o Last shot wins o First shot wins o All terms construed together (Denning in Butler Machine) Resolve battle for the forms by finding meeting of the minds (CAD) (Tywood Industries)

TERMINATION OF OFFER
Counter-Offer o Counter offer kills original offer, unless original offer is revived (Livingstone) Revocation o Offer to keep offer open is not enforceable, knowledge that offeror no longer intends to be bound is revocation. Knowledge has to come from a reliable source. (Dickinson v Dodds) o Revocation of offer does not take effect until notice received, PAR do not apply (Byrne) Revocation of Unilateral Offer o Within a unilateral contract there is an implied promise not to revoke once performance has commenced (collateral agreement allows for continued performance) (Errington & Woods) o General Rule death of offeror = death of offer (exception is Errington) Lapse of Time If not explicitly expressed, find the reasonable period for expiration by looking at the circumstances (Barrick)

Vagueness CERTAINTY OF TERMS Vague terms should be interpreted in light of contract, parties, and overall purpose as Anticipation of Formalization (binding contract before formalization?) reflected in the language (CAE Industries) There is no contract formed when there is no consensus on essential terms, or
evidence of willingness to be bound by the terms of the agreement (Bawitko) Agreements to Negotiate o Agreement to agree implies duty to negotiate in good faith (Empress Towers) o No duty to negotiate in good faith if there is no objective measure (Mannpar) An agreement to negotiate in good faith is unenforceable, there needs to be consensus on essential terms, or objective means by which terms may be determined (Wellington City Council) Process contract can be enforceable where contract provides specifics for negotiation process (Wellington City Council) Incomplete Terms (Key is detrimental reliance, courts will find a contract) General Rule; if essential terms are missing there is no legally enforceable agreement (May and Butcher) Can find missing terms implicitly by looking at parties rendering the agreement (Hillas) Presence of arbitration clause can save contract, can imply an essential terms like price (Foley)

PROMISES TO ACCEPT LESS Accord and Satisfaction A promise to pay less, on its own, is not valid consideration (Foakes v Beer) Williams v Roffey cannot apply wherever Foakes v Beer applies (Re Selectmove) Payment in portions by a different mode, post dated cheques, is sufficient consideration (Foot v Rawings) Promise to accept less is enforceable with financial institutions (Robichaud c. Caisse Popular) Statute Part performance of expressly accepted by the creditor in satisfaction or rendered in pursuance of an agreement for that purpose, w/o fresh consideration, shall be held to extinguish the obligation (Mercantile Law Amendment Act s.16) PRE-EXISTING LEGAL DUTY Public Duty Where there is a public duty, a promise to go beyond that duty is good consideration(Ward v Byham) Duty Owed to Third Party There is consideration when there is existing duty to a third party (Shadwell) A promise to perform an existing contractual obligation is good consideration when it is made to a person/entity not part of the original contract (Pau On v Lau Yiu Long) Duty Owed to Promisor Agreements stemming out of a pre-existing duty are void for lack of consideration (Stilk v Myrick) Additional promises, contract modification, must be supported by fresh consideration (Gilbert Steel) If there is a practical benefit on the promisee there is good consideration (Williams v Roffey) 1. A has entered into contract with B 2. Before A has completely performed, B has reason to doubt A will complete performance 3. B then promises A additional payment in order to ensure performance 4. As a result of giving his promise B obtains a practical benefit 5. Bs promise is not given as a result of economic duress 6. The benefit to B is consideration A contract modification unsupported by consideration is binding provided there is no economic duress (NavCanada) INTENTION TO CREATE LEGAL RELATIONS Agreements between spouses are presumed to not have intended to create K (Balfour v Balfour) Commercial actors have rebuttable presumption to intend to create legal relationships (Rose & Frank v JR Crompton) Letters of comfort are a Gentlemans agreement, nonbinding, and fall short of an intention to create legal relations (TD Bank v Leigh) Look at nature of the relationship and the agreement to determine whether there is intention to create legal relations (Fobasco v Cogan) ENFORCEMENT OF PROMISES Exchange and Bargain A naked voluntary promise cannot be converted into a binding legal contract by action of promissee without consent of the promissor. There is no consideration in a gratuitous promise (Dalhousie) A promise to subscribe to a charity is not enforceable due to lack of consideration (Brantford General) Where a promise is not expressly stated, the court will interpret whether the writing is imbued with some obligation. A promise can be implied by the circumstances (Wood v Lucy, Lady Duff Gordon) Past Consideration Past consideration is no consideration at all (Eastwood) Discharge of a moral duty is not valid consideration (Eastwood) There is valid consideration in a promise made in recognition of a benefit previously received. The promissor has to have requested the past benefit before though. (Lampleigh) Nature of Consideration Rules Governing consideration (Thomas v Thomas) 1. Consideration must be sufficient but need not be adequate 2. Consideration must move from the promissor (but not necessarily to the promisee) 3. Consideration is distinct from motive for promising 4. Discharge of a moral or honourable obligation is generally not sufficient consideration Bona Fide Compromises of Disputed Claims Forbearnace to sue, if there is a reasonable chance of success, is good consideration (Callisher)

PROMISSORY ESTOPPEL Implicit 5 step test for Promissory Estoppel 1. There must have been existing legal relationship 2. There must be a clear promise or representation 3. There must have been reliance 4. An action of the party to whom the representation was made to her or his detriment 5. The party to whom the representation was made must have acted equitably Where a promise is relied upon, revocation cannot commence where it would be inequitable (Hughes) PE stops someone from exerting strict legal rights under contract when they have made a promise they will not (High Trees) Equities The Nature of the Representation Cannot raise PE when actions are inequitable (D&C Builders) PE cannot be raised when there is not a promise to not enforce a strict legal right (Burrows v Subsurface) The Notice Waiver of strict legal rights can Reliance be terminated with reasonable Mere reliance is sufficient for waiver notice (Maritime Life) (PE) (WJ Alan v El Nasr) PE can be terminated with Reliance must create inequity to raise reasonable notice, ressonable PE (The Post Chaser) notice depends on circumstances (Intl Knitwear)

Sword or shield A promise cannot give rise to a cause of action in damages for the breach of such a promise, primarily for want of consideration (Combe v Combe) Equity may not permit the enforcement of waived rights (Petridis v Shabinsky)(PE wrongly used as sword) PE can be used as a blunt sword, as a pre-emptive action (Robichaud c. Caisse Populaire) PE can create a cause of action where unconscionable circumstances will ensue if the party is not stopped (Waltons) 6 elements of this broad application of PE: 1. Assumption by Plaintiff that legal relationship exists or will come into existence 2. The Defendants induced the plaintiff to adopt that assumption 3. Plaintiff acts on this assumption 4. Defendant knows plaintiff acted on this assumption 5. Plaintiff's action will incur detriment in light of the promise 6. Plaintiff failed to act or avoid detriment PE is a shield, not a sword; reliance on a promise + something more (M v. A)