Australian contract law - summary November 15, 1994
A contract is an agreement between two or more parties that is legally enforceable. Each party aquires rights and duties in respect of the subject matter of the agreement. Contracts may be prepared under seal (eg. a will, power of attorney etc), or exist simply as a written or oral agreement.
For a contract to be formed there must be an intention to create legal relations, an agreement between the parties, and consideration shown by the parties. If either of these are missing, the contract is invalid.
Intent to create legal relations:
domestic agreements are assumed to be made without the intention of creating legal relations.
commercial agreements are assumed to be made with the intention of creating legal relations.
advertising is assumed not to be seeking to create legal relations, except where a reasonable person would assume otherwise.
For an agreement to be reached there must be both offer and acceptance.
Rules of offer:
an offer may be made verbally, in writing or by conduct.
an offer must be distinguished from an invitation to treat or info provided in the course of negotiation.
an offer may be made to a particular person, a class of people or to the world at large.
an offer must be communicated specifically to the intended recipients.
an offer may be revoked at any time prior to acceptance.
An invitation to treat is "hey, check this out" .. an ad, circular, vending machine, tender, displayed goods. An invitation to the consumer to come and make an offer. Non-directed, non-specific, non-personal.
Rules of termination of an offer:
once an offer has been accepted, it expires.
rejection may be outright refusal or a counter-offer.
once an offer has been rejected it may not be revived.
if a time limit was prescribed for the offer, once the time limit expires, the offer expires.
if a time limit was not prescribed for the offer, the offer expires after a "reasonable time".
if the offeror expires, the offer expires.
the offer may be withdrawn if this fact is made known to the offeree prior to acceptance.
a request for information is not a counter-offer, and the original offer stands.
if a condition forming part of the offer is not fulfilled, the offer expires (conditional assent).
Rules of acceptance:
acceptance must be unqualified and in the exact terms of the offer.
only those targeted by an offer may accept it.
acceptance can only be made in reliance of the offer; the offeree cannot accept an offer unknown to them.
acceptance must be communicated, except where expressly or impliedly waived by the offeror.
if the method of communication is prescribed, this must be complied with
if the method of communication is suggested, the method must be the same or better
if the method of communication is unspecified, the same method as the offer should be used.
agreement is reached (and the contract formed) when the acceptance is received by the offeror; an exception to this is the postal acceptance rule, which says that agreement is reached when the acceptance is sent by the offeree.
Privity is the legal relationship that exists between the parties in a contract. Only parties privty to a contract incur rights and liabilities, thus only a party privy to the contract may sue on it. Other parties may be affected by the contract but without privity they have no case.