CCs Contract Law SMUgger Notes (adapted from Cheechs notes)

2011

Offer and Acceptance

Contents
1. 2. d. 3. a. b. c. ii. iii. d. 4. a. b. c. d. e. f. 5. 6. a. f. Introduction .............................................................................................................................................................. 2 Offer .......................................................................................................................................................................... 2 [Carlill v Carbolic Smoke Ball Company (1893) 1 QB 256 (COA)] ........................................................................ 2 Offer v Invitation to Treat ........................................................................................................................................ 3 Advertisements .................................................................................................................................................... 3 Priced Goods on Display....................................................................................................................................... 3 Tenders ................................................................................................................................................................. 3 [Harvela Investments Ltd v Royal Trust Co of Canada Ltd (1986)] (Qualification of Rule) ............................ 3 [Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council] (Qualification of Rule) .......................... 3 Auctions ................................................................................................................................................................ 4 Termination of Offer ................................................................................................................................................ 4 Lapse of Time ........................................................................................................................................................ 4 Failure of a Condition Subject to which the Offer was made ............................................................................. 4 Death..................................................................................................................................................................... 5 Rejection / Counter Offer..................................................................................................................................... 5 Revocation (Bilateral Contract Offers) ................................................................................................................ 5 Revocation (Unilateral Contract Offers) .............................................................................................................. 6 Acceptance ............................................................................................................................................................... 7 Communication of Acceptance ................................................................................................................................ 7 General: Acceptance must be an external manifestation of assent ................................................................... 8 Postal Acceptance Rule ........................................................................................................................................ 8 viii. g. ii. 7. a. b. c. 13. b. [Brinkibon Ltd v Stahag Stahl (1983)] .......................................................................................................... 9

Acceptance by Silence .......................................................................................................................................... 9 [Felthouse v Bindley (1862)] (Silence is usually equivocal as to consent) ...................................................... 9

Acceptance when Ignorant of Offer ........................................................................................................................ 9 General: An offeree cannot accept an offer he is ignorant of ............................................................................. 9 [British Steel Corporation v Cleveland Bridge and Engineering Co Ltd (1984)] ............................................... 10 [Gibson v Manchester City Council (1979)] (Rejection of Butler) ..................................................................... 13 Long-term Relationships ..................................................................................................................................... 13 [Baird Textile Holdings Ltd v Marks and Spencer (2001)] ................................................................................. 13

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1. Introduction a. Types of Contracts i. Bilateral (Most Contracts) 1. Promise for a Promise 2. Outstanding Obligations on both sides ii. Unilateral 1. Promise for an act or performance; Act for a Promise 2. Made with intention to be bound 3. Outstanding obligation only on one side iii. Executed 1. Has been performed, ie. Executed eg. Buying a shop item paid for iv. Executory 1. Yet to be performed, e.g. Agreement to fix house 6 months later v. Contracts by Deed 1. Contracts made under seal (no need for consideration) vi. Simple/Parol Contracts 1. All else. Valid because of presence of consideration b. NB: i. Advertisements of unilateral contracts can be treated as offers. [Carlill v Carbolic Smoke Ball Company] Intention to be bound can be inferred from explicit details of advertisement 1. the intention to be bound could be ascertained from the alleged deposit with the bankers ii. Advertising of bilateral contracts are normally only invitations to treat: 1. Lack of sufficient Detail 2. Absence of requisite intention to be bound on advertisement 2. Offer a. An offer, capable of being converted into an agreement by acceptance, must consist of a definite promise to be bound provided that certain specified terms are accepted CFF i. Declaring his readiness to undertake an obligation upon certain conditions leaving to the offeree the option of acceptance or refusal. ii. Touchstone of Intention Intention to be bound b. An offer is an intimation of willingness by an offeror to enter into a legally binding contract. Its terms either expressly or impliedly must indicate that it is to become binding as soon as it has been accepted by the offeree Salleh Abas FJ [Preston Corporation Sdn Bhd v Edward Leong (1982] MLJ] c. Nature of an Offer i. Objective test of agreement. Instead of state of mind (subjective). Courts will look at what was said and done. Courts may infer whether Offer or Invitation to Treat from circumstances 1. Interpret the offer in terms of how offeree, as a reasonable person, would interpret offerror's intention, disregarding the offeror's actual intention of the meaning of his words altogether. [Smith v Hughes ] ii. Objective test much more certain 1. Offer can be made expressly or impliedly (by conduct) 2. Wording or language used is must be conclusive 3. Offer can be made to varying groups of people (or world at large [Carbolic]) d. [Carlill v Carbolic Smoke Ball Company (1893) 1 QB 256 (COA)] i. Issues: : Offer can be made to the world at large. Also, a unilateral contract can constitute an offer if there is sufficient detail, and an intention to be bound can be inferred from the circumstances ii. Facts: Defendants were proprietors of The Carbolic Smoke Ball. Advertisement offered to pay anyone 100 if they caught influenza after using smoke ball in specified manner for specified period. Defendants deposited 1,000 with bankers to show their sincerity. Plaintiff on faith of advert used smoke ball as required and caught flu, thus sued for the 100

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iv.

Held: Advertisements are normally invitations to treat due to their lack of detail and intention to be bound. However, in the instant case, sufficient detail was present, and the intention to be bound could be ascertained from the alleged deposit with the bankers Bowen LJ It is an offer made to all the world; and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition 1. i.e. Offer can be made to the world at large, but contract only exists with those who accept the offer a. By performing the Contract (Unilateral) b. By communicating Acceptance (Bilateral)

3. Offer v Invitation to Treat a. Advertisements i. General: Advertisements are generally invitations to treat, mere attempt to induce offers (Contrast with Carbolic) ii. [Partridge v Crittenden (1968)] 1. Facts: Appellant ad in classifieds Bramblefinch cocks and hens, 25s each words offer for sale not used. Charged with offering for sale live wild birds contrary to Protection of Birds Act 1954. 2. Held: I think that when one is dealing with advertisements and circulars, unless they indeed come from manufacturers, there is business sense in their being construed as invitations to treat and not offers for sale Lord Parker b. Priced Goods on Display i. General: Per Lord Parker Display of an article with a price on its shop window is merely an invitation to treat [Fisher v Bell] ii. [Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)] 1. Facts: Defendants self-service shop. Selected goods were brought to counter. Registered pharmacist at counter restricted the sale of certain items. Under s18 UK Pharmacy and Poisons Act 1933, it was unlawful to sell unless under the supervision of registered pharmacist. Thus, question of when sale took place. 2. Held: Goddard J at first instance held that display of goods were only invitation to treat. CA upheld decision stating that it is an offer by the customer to buy, and there is no sale effected until the buyers offer to buy is accepted by the acceptance of the price iii. NB: Alternative Analysis (Put forth by Trietel concurred with by Phang): Goods displayed are an offer, but acceptance is only when goods are brought to cashier. 1. Nonetheless, courts have yet to decide on this law c. Tenders i. General: Invitations to tender are invitations to treat and not offers [Spencer v Harding] 1. Offers are made by each person who submits a tender in response to the invitation ii. [Harvela Investments Ltd v Royal Trust Co of Canada Ltd (1986)] (Qualification of Rule) 1. Facts: RTC held shares in a company in which there were two other shareholders, H and O. Either shareholder would get a majority stake if they got RTCs shares. H submitted a bid of $2175000; O submitted one at $2100000 or $101,000 more in excess of any other offer you may receive which is expressed as a fixed monetary amount, whichever is higher. RTC accepted Os bid at $2276000. 2. Held: (HOL) accepted that a referential bid such as that of O was inconsistent with an invitation for sealed bid tenders. Lord Diplock explained that the invitation for tenders had a dual function. a. Invitation to submit offers to enter into a bilateral contract for the sale of the shares. b. An offer of a unilateral contract by which RTC bound themselves to accept the highest fixed bid submitted. 3. NB: Sometimes the highest bid may not be the best bid (but in this case, RTC expressly undertook to accept the highest bid). Other factors such as credit worthiness or other factors mitigate. iii. [Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council] (Qualification of Rule) 1. Facts: Defendant council invited tenders from 7 companies to operate pleasure flights. Plaintiff club, currently operating the concession, was invited to tender. Invitation for tenders specified the form in

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which tenders were to be submitted sealed in an envelope without any name or mark, and stated that tenders received after 12 noon on 17 March would not be considered. The club submitted a tender 2. and put it directly in the letter box at 11 am on 17 March. Letter box not cleared. Clubs tender therefore recorded as late and not considered. Club claimed damages for breach of contract, arguing that the terms of the invitation implied an undertaking to consider all bids that conformed. 3. Held: (COA) Although the council had never agreed to accept the highest tender or indeed accept any tender at all, the COA held that it was implicit in the adoption of such a formal and elaborate tendering machinery that the council implicitly undertook to operate it according to its terms (to accept all conforming tenders). Plaintiffs entitled to damages. 4. It was in a limited sense an offer it was held to be an invitation to treat but there was an implied offer of a collateral unilateral contract to accept any offer from bidders who submitted conforming tenders. Bingham LJ d. Auctions i. General: Auctioneers request for bids is an invitation to treat; bidders make offers, and the contract is finalised when the Auctioneer accepts the highest offer. [Payne v Cave (1789)] 1. Sale of Goods Act concurs with this view sale complete only when hammer falls ii. Advertising of an Auction: iii. [Harris v Nickerson] 1. Facts: Plaintiff attempted to recover travelling expenses for going to venue of advertised auction which was cancelled 2. Held: Against Plaintiff the advertisement was but an attempt to make a mere declaration of intention to make a binding contract iv. Sale without Reserve v. [Warlow v Harrison] 1. Obiter: Plaintiff would have succeeded if he had brought a fresh action pleading that the auctioneer, by his advertisement, had implicitly pledged himself to sell to the highest bidder. (Offer to make a Collateral Contract) 2. NB: Unclear as to exact position of the law, but seems likely that if the sale was not conducted at all, he would not be liable. But if the sale was conducted, he would have to sell to the highest bidder. e. Quotes i. General: Quotations are not offers but invitations to treat if the material terms are not clearly stated. ii. [The Barranduna (1985)] 1. Held: Quotations of freight rates (by telex) was not an offer but an invitation to treat. Material terms not clearly stated, hence quote was too vague to amount to an offer 4. Termination of Offer a. Lapse of Time i. General Rule: An offer containing a specific time period for acceptance cannot be accepted on a later date; Where no time period is stated, an offer is normally deemed open only for a reasonable time ii. [Ramsgate Victoria Hotel Co v Montefiore (1866)] (Offer invalid - lapse of reasonable time) iii. Facts: Defendant applied in June for shares in Plaintiff Co. In November, Defendant was informed that shares were allotted, thus asked to pay up. Defendant refused and was sued. iv. Held: Court held that Defendants offer should have been accepted within a reasonable time, and the interval between June and November was excessive b. Failure of a Condition Subject to which the Offer was made i. General: An offer may be subject to certain conditions failing which there is no acceptance 1. The conditions may be implied as well as expressed ii. [Financing Ltd v Stimson (1962)] 1. Facts: Plaintiffs financed Defendants purchase of a car from dealer. Form stated that the contract was only binding on the Plaintiffs when they signed the agreement. Defendant not satisfied with car

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and returned it after a few days. Car subsequently stolen from dealers premises and recovered in bad condition. Next day, Plaintiffs in ignorance of these facts, signed agreement 2. Held: The agreement was an offer by the Defendant to make a contract with the Plaintiffs but was subject to the implied condition that the car remained in essentially the same state until the moment of acceptance. As this implied condition was broken before the purported acceptance by the Plaintiffs, no contract was formed 3. No acceptance where certain conditions to which offer is subjected is unfulfilled c. Death i. General: The offeree cannot accept the offer if he knows the offeror has died 1. NB: If nature of contract is independent of the offerors personal abilities and can be satisfied by his estate, the offeree can still accept in ignorance (until death is notified). ii. [Bradbury v Morgan (1862)] 1. Facts: Deceased acted as guarantor of credit extended by Plaintiffs. Plaintiffs unaware of his death, continued to extend credit. Debtor faulted and Plaintiffs tried to recover from deceaseds executors 2. Held: Contract was not terminated by the offerors death (due to ignorance) iii. NB: If an offeree dies, the offer is cannot be accepted by the offerees personal executors because its implied that the offers made personally to the offeree only. Contact is frustrated d. Rejection / Counter Offer i. General: The offeree must unreservedly assent to the exact terms proposed by the offeror. If, while purporting to accept the offer as a whole, he introduces a new term which the offeror has not had the chance of examining, he is merely making a counter-offer 1. The effect of a counter-offer is to destroy the original offer forever, and constitutes a new offer altogether ii. [Hyde v Wrench (1840)] (Counter-offer is a final rejection of original offer) 1. Facts: Defendant offered to sell estate to Plaintiff for 1,000. Plaintiff counter-offered at 950. Defendant rejected counter-offer. Plaintiff tried to accept original offer. 2. Held: No contracted existed because counter offer was a final rejection iii. The offeree can retain his power to accept the original offer if the courts finds: 1. That the original offerors rejection of the counter-offer includes a renewed offer on the original terms or 2. That the offerees response was not a counter-offer but merely a request for information or clarification about the availability of better terms. a. NB: A counter-offer is distinguished from a request for information where the original offer still stands. iv. [Stevenson v McLean (1880)] 1. Facts: Defendant offered to sell goods at 40s per ton. Plaintiff telegraphed back asking for Defendant to consider delivery over 2 months or longest possible time. Defendant did not reply and Plaintiffs sent another telegraph accepting offer. 2. Held: Court held that Plaintiffs 1st telegram was not a counter-offer, but merely a request for information and hence, they could accept the original offer. 3. Lesson: Offeree should be careful not to appear as if he is rejecting the original offer, so as to preserve (rather than destroy) his power to accept the original offer, as a fall-back position. e. Revocation (Bilateral Contract Offers) i. General: Offer can be revoked at any time before acceptance [Payne v Cave] 1. This is so even where the offeror has stated that the offer will be kept open for a specific period, unless the offeree buys this option by a separate contract. ii. NB: Revocation of an offer must be communicated to the offeree 1. A postal revocation is not effective on posting but only when it brought to the mind of the offeree, or when it would be reasonable to expect the offeror to acquire notice of it a. Henthorn v Fraser

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2. Business necessity and convenience require some overt act from which intention to revoke might be inferred iii. [Byrne v Van Tienhoven (1880)] (Revocation only effective when communicated to offeree) 1. Facts: Defendants posted letter revoking offer to sell goods. Plaintiffs telegraphed acceptance before revocation letter reached. 2. Held: Revocation letter was inoperative until the date it reached the Plaintiffs and contract was formed in the meantime iv. Revocation need not be communicated by the offeror himself provided that it is reasonable for the offeree to believe the source v. [Dickinson v Dodds (1876)] (Revocation not by offeror himself) 1. Facts: Defendant made offer to sell house to Plaintiff and promised to keep offer open for specific period. Plaintiff subsequently heard from 3rd party that Defendant had sold house to another person. Plaintiff handed a formal letter to Defendant purporting to accept offer just before lapse of time period 2. Held: Plaintiff before attempting to accept offer, knew that Defendant would no longer sell the house to him as plainly and clearly as if [the Defendant] had told him in so many words. The Defendant had validly withdrawn the offer and Plaintiffs acceptance was therefore too late. f. Revocation (Unilateral Contract Offers) i. General: Acceptance of the offer is performance of the required act. Therefore, acceptance is only complete when act is completely performed. [Great Northern Rly Co v Witham(1873)] ii. Thus application of the ordinary rules of revocation suggests that an offeree may revoke his offer at any time before completion of the act iii. Once offeree has commenced performed, unilateral offer is irrevocable. iv. However, this solution is felt to be too harsh, and methods of evasion have been developed: 1. 2 separate offers are inherent in the offerors statements: Firstly, an express offer to pay on the performance of the act, and Secondly, an implied offer not to revoke if the offeree begins his task within a reasonable time. a. On this assumption, the beginning of the task not only constitutes the acceptance of the implied offer, but also supplies the consideration which the law requires for its validity, as for that of every contract not under seal. If the offeror attempts thereafter to revoke, he may be sued for the breach of this secondary promise. 2. In England, it has been suggested that a distinction could be drawn between the acceptance of the offer, and the consideration necessary to support it. The latter, no doubt, is the completion of the act, and until this takes place, the offeror need not pay any money. The former may be assumed as soon as the offeree has made an unequivocal beginning of the performance requested, and proof of this fact makes revocation impossible. v. Quaere : When performance of the required act takes some time, can the offeror revoke his offer after an offeree has embarked on the performance? vi. [Luxor (Eastbourne) Ltd v Cooper (1941)] (Revocation allowed) 1. Facts: Owner promised agent 10,000 if he sold the land for 175,000. 2. Held: (HOL) In the circumstances of the case, it would not be proper to imply an undertaking by the owner not to revoke his offer once performance had begun. 3. NB: Implies that given the proper circumstances, revocation of a unilateral offer may not be allowed after performance has begun. (Though this was not such a case) vii. [Errington v Errington and Woods (1952)] (Revocation not allowed) 1. Facts: Father told son and daughter-in-law that if they paid the weekly installments, he would give them the house after the payment was complete. They duly did so 2. Held: As long as they were paying the installments, the fathers promise was irrevocable viii. NB: How to resolve the two cases? Court could then view Unilateral Contracts as consisting of 2 Contracts: 1. Main Unilateral Contract

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ix.

x. xi.

2. Collateral contract not to revoke the offer after a reasonable embarkation of performance has been undertaken by the offeree. [Daulia Ltd v Four Milbank Nominess Ltd (1978)] 1. CA stated (strictly obiter) that once the offeree had embarked on performance, it was too late for the offeror to revoke his offer Locally, [Dickson Trading (S) Pte Ltd v Transmarco Ltd (1989)] Chan SK JC (as he was then) 1. Position in Daulia (1978) was endorsed locally, but also obiter dictum NB: Alternative solution: invoke Quantum Merit or Promissory Estoppel (albeit not as sword)

5. Acceptance a. Defined: Acceptance is a final and unqualified expression of assent to the terms of an offer (Trietel) b. Valid acceptance must: i. Correspond with the offer ii. Be given in response to the offer (there must be nexus between the acceptance and the offer) iii. Be made by an appropriate method iv. Be communicated to the offer 1. Fixes the time of contract formation, crystallising the terms and making withdrawal impossible c. Forms of Acceptance: i. Bilateral Contracts Making the Required Promise ii. Unilateral Contract Doing the required Act d. Acceptance must be Unconditional and Unqualified [See Above: Counter-Offer] i. Acceptance must be final and clear ii. A conditional assent to an offer does not constitute acceptance (eg. Advice of 3rd party) e. [Nicolene Ltd v Simmonds (1953)] (Acceptance must be final and clear BUT) i. Facts: Plaintiffs wrote to Defendant offering to buy a large quantity of goods. Defendant wrote back accepting this offer, stating that I assume we are in agreement that the usual conditions of acceptance apply. Plaintiff acknowledged this letter without reference to the usual conditions of acceptance and sued when the Defendant failed to deliver the goods. Defendant argued that since there was no explicit agreement on the conditions of acceptance, no contract was formed. ii. Held: Since there were actually no usual conditions of acceptance, the words were meaningless and should be ignored. Judgment for Plaintiffs f. Acceptance must be on same terms as offer (ie. No counter-offers or conditional accents) g. [Winn v Bull (1877)] i. Held: Document embodying the phrase subject to preparation and approval of formal contract or other such expression is merely a conditional accent and not a binding contract h. BUT [Branca v Cobarro (1947)] (Ultimately a question of construction) i. Facts: Terms of contract were agreed upon a written document which was declared to be a provisional agreement until a fully legalised agreement, drawn up by a solicitor and embodying all the conditions herewith stated, is signed. ii. The word provisional implied that the parties had intended the contract to be binding from the outset, though this would be subsequently replaced by a formal contract. It is a question of construction in every case whether the parties intended to contract immediately or not. i. NB: Acceptance may be retrospective i. General: If a contract was intended from the outset (and actions in the contract have been taken) contract can be accepted retrospectively. ii. [Trollope and Colls Ltd v Atomic Power Constructions Ltd(1962)] 1. Obiter: (Megaw J) where assumption that a contract would ultimately be agreed on lines known to both parties contract will apply retrospectively 2. cF. Consideration (Past) 6. Communication of Acceptance

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a. General: Acceptance must be an external manifestation of assent i. If offeror stipulated a mode of acceptance, then that mode or a faster one should be used ii. If offeror has stipulated that only one mode is applicable, then the offeree must use it iii. If no particular mode is prescribed, then it depends upon the nature of the offer and the circumstances in which it is made. b. Acceptance can be either express or implied - acceptance can be communicated indirectly by conduct c. [Brogden v Metropolitan Railway Co (1877)] (Acceptance by conduct) i. Facts: Brogden had long supplied Defendants with coal without a formal agreement. Defendants sent draft agreement to Brogden who signed it and returned it. Defendants agent left it on his desk and did nothing further to execute the contract. Both parties thereafter conducted business in accordance with the contract until a dispute arose and Brogden denied that any binding contract existed. ii. Held: A contract could be implied in this situation, and came into existence either when the company ordered its 1st load of coal from Brogden upon these terms or at least when Brogden supplied it. iii. NB: Contract has to be accepted in its entirety. In this case, return of draft form constituted no acceptance since new term had been added, which required consideration by the company as a new (counter) offer d. Offeror has right of waivering the need for communication of acceptance. Such a waiver can be express or implied. i. eg. Unilateral contracts. In [Carlill v Carbolic Smoke Ball Company (1893) 1 QB 256 (CA, England)], Bowen LJ said In the advertisement cases it seems to me to follow as an inference to be drawn from the transaction itself that a person is not to notify his acceptance of the offer before he performs the condition e. Exceptions to rule of acceptance having to be brought to notice of offeror: i. Unilateral Contracts (as above) ii. Acceptance inferred from Conduct (as above) iii. Postal Acceptance f. Postal Acceptance Rule i. General: An acceptance by post takes effect when it is posted ii. Limitation of the Rule: 1. Not applicable if wrongly addressed by offerees own fault 2. Only applies to communication of acceptance 3. Only applies to non-instantaneous acceptance (eg. letters and telegrams) iii. NB: Rule is only applied where no particular mode of communication is prescribed by the offeror. Thus, being the creature of expediency, it must yield to any manifest inconvenience or absurdity, having regard to all the circumstances of the case iv. [Adams v Lindsell (1818)] 1. Facts: Plaintiffs accepted offer by post as stipulated by the Defendants. Defendants sold goods to 3rd party after Plaintiffs posted acceptance but before they received it 2. Held: Contract was formed when acceptance was posted v. Locally, [Lee Seng Heng v Guardian Assurance Co Ltd (1932)] 1. Held: The postal acceptance rule applied in the termination of insurance policy vi. NB : The general rule applies to instantaneous communications, eg. discussions where both parties are in physical contact, phone, telex, fax, etc vii. [Entores v Miles Far East Corporation (1955)] (Acceptance incomplete till received by offeror) 1. Facts: Plaintiffs in London sent offer by telex to Defendants agents in Amsterdam. Agents accepted offer by telex. Plaintiffs subsequently alleged that Defendants had broken contract and attempted to serve a writ. Defendants claimed that contract was formed through acceptance in Amsterdam and therefore writ could not be served 2. Held: Telex operated like a discussion in physical contact or by phone, hence the general rule that there was no binding contract until acceptance was received applied. Since acceptance was received in London, writ could be served.

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[Brinkibon Ltd v Stahag Stahl (1983)] 1. Facts: Essentially the same as in Entoress case above, except that offer was made by telex from Vienna and accepted by telex from London to Vienna. 2. Held: Decision in Entoress case reaffirmed, holding that contract was made in Vienna ix. NB: Decision was confined to transmissions to the offices of the parties and sent during ordinary office hours. Other variants left for future decision. x. Singapore Electronic Transactions Act (1998) 1. Refer to Statute (in particular Section 14 + 15) g. Acceptance by Silence i. General: Silence is too vague and ambiguous to amount to acceptance 1. An offeror may not arbitrarily impose contractual liability upon an offeree merely by stating that silence deems consent ii. [Felthouse v Bindley (1862)] (Silence is usually equivocal as to consent) 1. Facts: Plaintiff wrote to nephew offering to buy horse for certain price stating that If I hear no more about him, I consider the horse mine at that price. Nephew told Defendant auctioneer that horse was not to be sold. Auctioneer inadvertently sold horse. Plaintiff sued him in conversion. 2. Held: Plaintiff had no right to impose silence as a condition of acceptance. 3. NB: The decision is not without its detractors because a. Nephew had accepted by conduct in telling auctioneer not to sell the horse. (Implied Acceptance) b. Offerors can waive notice of acceptance and the Plaintiff had done so c. An offeree is not silent just because he had failed to inform the offeror. iii. [Re Selectmore Ltd (1995)] 1. Obiter: Although there was need to discuss the issue of silence (because the agent who was the, offeree in this case, had no authority to conclude the contract on behalf of his principal), it was noted that the contract would have been found because the offeree had undertaken that he would communicate if he did not wish to contract. 7. Acceptance when Ignorant of Offer a. General: An offeree cannot accept an offer he is ignorant of b. [R v Clarke (1927), High Court Australia] i. Facts: Reward offered by government for information to capture 2 criminals. Clarke saw reward notice but forgot about it when he gave the information some time later ii. Held: There cannot be assent without knowledge of the offer, and ignorance of the offer is the same thing, whether it is due to never hearing of it or forgetting it after hearing Higgins J c. If claimant had knowledge but was not motivated by the knowledge, it would be irrelevant d. *Williams v Carwardine(1833), Kings Bench+ i. Facts: Facts similar to above but plaintiff had supplied information with knowledge of the reward, but moved rather by remorse for her own misconduct ii. Held: Motive was irrelevant provided that the act was done with knowledge of the reward. e. Cross Offers (Controversial) i. General: Cross-Offers do not equate to acceptance. ii. Hence, identical offers between 2 parties will not result in a contract. Offer and Acceptance must be in reference to each other iii. [Tinn v Hoffmann & Co (1873), Court of Exchequer Chambers] 1. Held: 5 against 2 held that on the facts of the case, no contract was formed. Of the majority 5, 2 judges proceeded on the grounds that the letters in question were not identical offers. The remaining 3 judges held that cross-offers could never amount to a contract. Blackburn J said the promise or offer being made on each side in ignorance of the promise or offer made on the other side, neither of them can be construed as an acceptance of the other"

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iv.

2. NB: Stands alone in English Common Law and the reasoning is diluted by the dissent. The judgments also reflected the contemporary preoccupation with consensus. Criticisms by Academics (CFF and Phang Concurs) 1. Certainly true that the act of neither party is in direct relation to that of the other, in that strict requirements of offer and acceptance are unsatisfied 2. However, in contrast with situations as in R v Clarke, each party does in truth contemplate legal relations upon an identical basis, and each is prepared to offer his own promise as consideration for the promise of the other 3. There is not merely a coincidence of acts, but also a unanimity of minds

8. Requirement of Certainty and Completeness a. General: Before contract can be said to have come into existence, essential terms of the contract must be both existent and clear. b. [British Steel Corporation v Cleveland Bridge and Engineering Co Ltd (1984)] i. Facts: Cleveland had been engaged as sub-contractors on a contract to build a bank in Saudi Arabia. The defendants were to fabricate the steelwork. The bank was of an unusual design, being suspended within a steel lattice-work frame. There were requirements for nodes at the centre of the lattice-work. Apparently no one in the UK had made such nodes before but the plaintiffs had experience of constructing similar nodes. The defendants approached the BSC with a view to engaging them to make the nodes. ii. Cleveland sent a letter of intent to BSC. This stated their intention to place an order for the nodes at prices which had been quoted in an earlier telex from BSC. It proposed that the order be on Clevelands standard terms, which would have placed unlimited liability on BSC for consequential loss in the event of delay. BSC made it clear that they were unwilling to contract on such terms. Nevertheless, they went ahead with the construction of the nodes and by 28 Dec 1979, all but one of the nodes had been delivered, due to a national steel strike. iii. Plaintiffs sued for the value of the nodes and Cleveland counterclaimed for damages for late delivery. iv. Held: Lord Goff said that there was no contract since it was clear that the parties had never agreed on such important questions as progress payments and liability for late delivery. Hence, no damages for late delivery since no contract to deliver. v. However, BSC were entitled to payment on a quantum meruit basis since they had done the work at the defendants request and the defendants had accepted it. c. If there appears to be agreement on all essential matters, either on the face of the documents or by praying in aid commercial practice or the previous course of dealing between the parties, the court will ignore a subsidiary and meaningless addendum. [Nicolene v Simmonds(1953)] d. Nonetheless, Courts will not enforce a contract containing bad terms and conditions which lead to uncertainty and incompleteness. i. where there is no particular trade in question and no familiar business practice to clothe the skeleton of the agreement, the task of spelling out a common intention from meagre words may prove too speculative for courts to undertake e. [Scammell v Ouston (1941)] i. Issue: Courts will not enforce a contract containing bad terms and conditions which lead to uncertainty and incompleteness.) ii. Facts: Ouston gave a written order to purchase a type of van from the appellants stating that this was subject to hire-purchase terms over a period of 2 years. The order was accepted but the hire-purchase terms were never worked out. The appellants refused to provide the van and Ouston sued for damages for non-delivery. It appeared in evidence that there was a wide variety of hire-purchase agreements and nothing to indicate which the parties favoured iii. Held: Their Lordships stated that where there is an ascertainable and determinate intention to contract, the Courts would give effect to such agreements. However, in the instant case, the ambiguity and unintelligibility of the words used coupled with the difference in interpretation of the contract

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CCs Contract Law SMUgger Notes (adapted from Cheechs notes)

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(should the House find one) between the parties results in the uncommon situation where the Courts cannot justly determine the existence of a contract. iv. NB: In this case, not only were the lacunae themselves serious, there was also nothing in the previous dealings of the parties, or in accepted business practice which might help to supply them. Vital questions had originally been left unanswered, and no subsequent negotiations ever settled them. In these circumstances, the judges could not invent a contract which parties had been too idle to make for themselves. f. If both parties have been willingly operating an incomplete or vague contract, Courts will give effect to the contract with reasonable interpretations. [The Barranduna (1985)] g. Where parties have reserved major questions such as price for future decisions, it is prudent to provide machinery to deal with situations of disagreement. i. Thus, incomplete contracts can be saved if the contract contains the machinery or criterion to conclude the open terms. In Brown v Gould (1972) Ch 53, no machinery was present but a criterion existed. Court stipulated the machinery to be used h. Law Liberalised in [Sudbrook Trading Estate v Eggleton (1982)] i. Facts: Lessee had an option to purchase a freehold. The price was to be fixed by 2 valuers, one appointed by the lessee and lessor each. If they were unable to agree, they were to appoint an umpire. When lessee attempted to exercise option, lessor refused to appoint a valuer and argued that the option was ineffective for uncertainty. ii. Held: The provision held that the provision for fixing the price by valuers was decisive in indicating that the price was to be a reasonable market assessment. The option agreement was therefore a valid contract but with defective machinery and if necessary, the Courts could provide their own machinery. 9. Artificiality of the Offer and Acceptance Rules a. Artificiality in Analysis i. Modern contracts are difficult to analyse in terms of offer and acceptance ii. Facts can be analysed in different ways giving rise to different results, eg. [Pharmaceutical Society v Boots Cash Chemists (1953)] and the following 2 cases b. [Chapelton v Barry UDC (1940)] i. Facts: Plaintiff wished to hire deck chairs on Defendant councils beach. Sign stated price and duration of hire plus a notice to obtain a ticket from the chair attendant and retain it. Plaintiff hired 2 chairs and was provided with tickets which he put away without reading. Injured when a chair he sat on broke. Council relied on exclusion clause printed on ticket ii. Held: Ticket would not be reasonably construed as anything more than a receipt. The notice on the beach constituted an offer which was accepted when the plaintiff took the chair. As the contract was made then, the exclusion clause on the ticket came too late iii. NB: An alternative offer and acceptance analysis could be that the display of the deck chairs was an invitation to treat. Taking of a chair was an offer and acceptance was constituted when the ticket was sold. This would, inter alia, result in the conditions on the ticket forming part of the contract. c. [Thornton v Shoe Lane Parking (1971)] i. Facts: Defendants operated an automatic carpark. Plaintiff saw sign outside stating charges and that all cars were parked at the owners risk. Plaintiff took ticket from machine noticing that the time was stamped but drove in without reading ticket. Ticket stated that it was issued subject to conditions displayed on the premises. One of these conditions on the notice in the carpark claimed to exclude liability for personal injuries. Plaintiff never saw these conditions nor thought to look for them and was injured when returning to collect his car. Defendant proprietors pleaded the exclusion terms on the notice. ii. Held: The contract was made before the ticket was issued, and as such, its conditions or any of the notice in the carpark came too late. Also, that the exclusion of liability for personal injuries was a very unusual condition which required sufficient notice, not given in the instant case. Lord Denning said the

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CCs Contract Law SMUgger Notes (adapted from Cheechs notes)

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offer is made when the proprietor of the machine holds it out as being ready to receive the money. The acceptance takes place when the customer puts his money into the slot. iii. NB: An alternative analysis could be that the machine was an invitation to treat. Activating the machine constituted an offer while the dispensed ticket was a counter-offer and acceptance of the counter-offer is constituted by driving into the carpark. iv. Yet another analysis could be that the machine was an invitation to treat and the dispensed ticket was an offer while acceptance was constituted by parking the car, reading the conditions and walking away d. Difficult to Reconcile 10. Constructing Contracts a. While a contract is ultimately based upon the assumption of agreement, the courts cannot peer into the minds of parties and must be content with external phenomena. Thus, the existence of a contract, in many cases, is inferred only from conduct. b. In the interests of justice, Courts sometimes have to infer a contract where one does not immediately seem to exist i. This normally occurs where the parties in question have mutual contracts with a 3rd party c. NB: An offer and acceptance analysis is not useful in such situations d. Collateral Contracts i. There may be a contract, the consideration for which is the making of some other contract (i.e. if you contract with me for contract A, I will give you 100) ii. It is collateral to the main contract, yet each has its independent existence, and they do not differ in respect of their having the full character and status of a contract. iii. Its purpose usually is to enforce a promise given prior to the main contract, and but for which this main contract would not have been made iv. It is often, though not always, rather a preliminary than a collateral contract e. [Clarke v Dunraven (1897)] i. Facts: Defendants yacht hit and sank Plaintiffs yacht at start of race. Both parties had agreed in a letter to follow the rules of the Club which included an obligation to pay all damages caused by fouling. Defendant argued that he had no contract with the Plaintiff and was only liable under statute to pay 8 per ton. ii. Held: By entering into a contract with the Club, they had formed a contract with each other when they entered their yachts for the race or when they actually sailed in it. The competitors had accepted the rules as binding upon each other f. [Shanklin Pier Ltd v Detel Products Ltd (1951)] i. Facts: Plaintiffs contracted with X and Co to repair and repaint pier. Defendants induced Plaintiffs to instruct X and Co to use Defendants manufactured paint. Paint caused damage and Plaintiffs sued. Defendants argued that their only contract was with the X and Co and not the Plaintiffs ii. Held: In addition to the contract for the sale of the paint, a collateral contract existed between the Plaintiffs and Defendants by which in return for the Plaintiffs specifying that the Defendants paint be used, the Defendants guaranteed its suitability 11. Battle of the Forms a. Contract between 2 parties using their own standard forms which contain different conditions giving rise to disputes and the issue of which standard form is the contract based on b. [Butler Machine Tool Co v Ex-Cell-O-Corp (1979)] i. Facts: Buyers ordered sellers machine tools with delivery in 10 months. Both offer and order were on sellers and buyers standard forms respectively. Sellers form contained price variation clause. Buyers form had a tear-off slip which sellers filled in and returned. At delivery, Sellers attempted to increase price in accordance with their form

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CCs Contract Law SMUgger Notes (adapted from Cheechs notes) ii.

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Held: Contract was on Buyers terms since the return of the Buyers acknowledgment slip amounted to an acceptance of the Buyers counter-offer. 2 of the Judges felt the answer lay in applying the traditional rules of offer and counter-offer. iii. Lord Denning MR dissented stating that the Court should look to see if the parties thought they had consented and if so to look at the documents as a whole to discover the content of the agreement. (Prefered by academics) iv. NB: Decision unsatisfactorily turned entirely on Sellers tactical error in returning the acknowledgment slip. Majority decision reflected the last shot fired rule. c. [Gibson v Manchester City Council (1979)] (Rejection of Butler) i. Facts: City Council invited Plaintiff to buy council house asking him to make a formal application which he did. Before the exchange of contracts, new Council took over and reversed policy of selling the houses. Plaintiff claimed that a binding contract already existed ii. Held: Court of Appeal gave judgment for Plaintiffs on 3 grounds 1. There was no need to look for a strict offer and acceptance 2. The case involved a policy decision by a Council and not a conventional contract between private individuals 3. Plaintiff relied on Councils policy remaining unchanged, and had made improvements to the house iii. Held: House of Lords reversed the decision, rejecting the factual basis of the 3rd ground of the CAs reasoning and stated that the Treasurers letter to the Plaintiff was only an invitation to treat, and hence the Plaintiffs application was an offer not acceptance. d. Phang posits that the Singaporean position probably would support the traditional approach that no contract would be formed by the counter-offers. [e.g. Monvia Motorship Corp v Keppel Shipyard (Pte) Ltd] [PacAsian Service Pte Ltd v Westburne International Drilling Ltd (1986)] 12. Inchoate Contracts (CFF 85-91) a. Parties do not move at once from total non-agreement to complete agreement i. Agreeing on differing matters in turn 13. Long-term Relationships a. Many contractually binding transactions, but it is debatable whether there is a binding overarching contract b. [Baird Textile Holdings Ltd v Marks and Spencer (2001)] i. Facts: Baird was a principal supplier to M&S for some 30 years. Very substantial orders were placed, predominantly twice a year for the summer and winter seasons. Orders gave rise to contracts but nothing had ever been written down about the long-term position. In October 1999, the M&S told Baird that the relationship would come to an end at the end of the current production season without any previous notice. Baird claimed they were entitled to reasonable notice and that notice would be three years. ii. M&S moved to strike out on the ground that Baird claim had no reasonable prospect of success. This meant that the allegations in Bairds statement of claim had to be assumed to be true but it also meant that if the notion were successful there would be no disclosure of M&S papers. iii. Held: CA held that there was no contract as Baird gave evidence that it was M&S policy to manage the relationship with the suppliers without putting anything in writing.

-------------------------------------------------------------------------------------------------------------------------------------(Not in Syllabus, but for info sake!) To establish the presence of a collateral contract, Plaintiffs must show that : (Kluang Wood Products Sdn Bhd v Hong Leong Finance Bhd)

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CCs Contract Law SMUgger Notes (adapted from Cheechs notes)

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There must be a representation which was intended by the Defendants to be relied upon. The representation induced signing of the contract. The representation itself must amount to a warranty, collateral to the main contract, and existing side by side with it. --------------------------------------------------------------------------------------------------------------------------------------

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