03_Offer - Contracts 01 Offer PART III OFFER I A...

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Contracts 01 – Offer P ART III O FFER I I NTRODUCTION A Contextualisation The law distinguishes between enforceable and unenforceable promises by reference to a series of formal requirements: 1 Agreement The parties must reach an agreement by way of offer and acceptance 2 Consideration Each party must provide consideration in return for the obligations 3 Intention The parties must have the intention to create legal relations 4 Certainty The agreement must be complete and certain Contractual agreement exists where an offer made by one party is accepted by the other party. The contract comes into existence when acceptance of an offer has been communicated to the offeror. Prior to formation, either party is free to withdraw from negotiations because no contractual obligations have yet been imposed. Questions of fact are very important in the determination of contractual obligations. It has been suggested that the technical requirements for contract formation are artificial and cannot always be satisfactorily applied to everyday transactions (eg, MacRobertson ). Exam note: explain outcomes of cases and note inconsistencies by reference to factual similarities/differences. B Definitions 1 Offer Definition: an offer is a statement of the terms upon which an offeror is prepared to be contractually bound. The offeror must indicate their willingness to be bound immediately upon acceptance. This willingness is determined objectively, according to outward manifestations of intention (ie, the offeror’s conduct). In determining intention, conduct is assessed from the perspective of the reasonable person in the position of the offeree. The existence of an offer is a question of fact determined on a case by case basis. It may be express (written or spoken) or implied (from the offeror’s conduct). In either case, the conduct alleged to amount to an offer must be promissory in nature. © Jaani Riordan 2004 Page 1 of 12 http://www.jaani.net/
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Contracts 01 – Offer Australian Woollen Mills v Commonwealth: Facts In 1946, the Commonwealth introduced a scheme whereby wool purchased by manufacturers for local use was subsidised by the government AWM purchased large quantities of wool over the next two years In June 1948 the government discontinued the subsidy scheme Because AWM’s wool stocks were so high, it required AWM to repay some of the money it had received AWM claimed this breached a unilateral contract between it and the government Issue Did the Commonwealth’s conduct amount to an offer to be contractually bound? Reasoning AWM claimed that the announcement of the subsidy scheme by the Commonwealth constituted a contractual offer to pay the subsidy in return for AWM purchasing wool for domestic consumption o Each purchase of wool was said to constitute a unilateral contract o The purchase of wool was said to constitute acceptance of the offer and valid consideration The alleged promise must be made in return for the act performed
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03_Offer - Contracts 01 Offer PART III OFFER I A...

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