• Held: That while there is a significant difference between objective and subjective approaches, there is little difference in practice The subjective approach is couple with the principle of estoppel, where a person conducts themselves as a reasonable person would believe that they were assenting to the terms of the contract.

Estoppel prevents the denial of the existence of a contract CASE: Smith v Hughes

• Held: If whatever a mans intention may be, he so conducts

himself that a reasonable man would believe that he is assenting

to the terms proposed by the other party, and the other party upon

that belief enters into a contract with him, the man thus conducting

himself would be equally bound as if he had intended to the others

terms

(12)

Communication of Acceptance

The General Rule: Only in effect if the acceptance has been communicated to the offeror

CASE: Carlill v Carbolic Smoke Ball Co

• Held: The judge suggested that notification of acceptance is

required because this established that the minds of the two parties have come together and formed a consensus. The contract is formed when the offerees acceptance is received by the offeror

CASE: Latec Finance Pty Ltd v Knight

• Held: Acceptance was noted on the document but was not

communicated to Knight. In obiter, NSWCA stated that ordinarily a contract is not made until acceptance of an offer was

communicated

• An offeror, however, may expressly or implicitly disperse with the need for actual communication and can do so in two ways:

1. Offeror might agree to treat the doing of an act as an effective acceptance. Unilateral; contracts are always accepted by the doing of an act

2. The offeror may treat the despatch of an acceptance by a particular method as effective, whether or not the acceptance is received by the offeror

The Postal Rule

• Exception to the general rule

• When acceptance is expected to be sent by post, the acceptance

is effective as soon as it is posted. This was held in Henthorn V

Fraser

(13)

• Where the postal rule does apply, it has the effect that a contract is made when the acceptance is posted, even if it is received some time later or is lost in the post. Household Fire and Carriage Accident Co Ltd v Grant

Methods of Acceptance

If an offer prescribes a certain method of acceptance only that method will be considered effective acceptance. George Hudson Holdings Ltd v Rudder

Unilateral contracts – doing the act is the acceptance by communicating it becomes the binding contract

Silence as Acceptance

Cannot be forced on the offeree by stipulating silence as the prescribed method of acceptance

CASE: Felthouse v Bindley

• Held: No contract between the uncle and nephew had been formed because the nephew had not communicated his acceptance *Horse Case*

Acceptance Inferred from Conduct

In some cases, courts will accept that an agreement has been formed even if the offeree has not effectively communicated their acceptance CASE: Empirnall Holdings Pty Ltd v Machon Powell Partners Pty Ltd

• Held: Teven though a contract was never signed, architects

continued to work and they continued to send progress payments.

1. NSWCA accepted Felthouse V Bindley was not relevant as

(14)

2. By sending progress payments, via conduct a contract was formed

A Meeting of the Minds

Many of the cares on the offer of acceptance is the idea that a contract is formed only when there is a meeting of the minds

Consensus Ad Idem between parties CASE: Dickinson V Dodds

• Held: Existence of the same mind between the two parties is essential in point of law to the making of an agreement

• Whether an actual consensus exists turns onto whether a subjective or objective approach

Agreement without offer and acceptance

A manifestation of mutual assent may be made even though the moment of formation cannot be determined

CASE: Brambles Holdings Ltd V Bathurst City Council

• Held: Parties may drift into a contractual agreement over time CASE: Husain v O&S Holdings (Vic) Pty Ltd

CASE: Branir Pty Ltd v Owston Nominees

• Held: ‘’The essential question in such cases is whether the parties

conduct, including what was said and not said and including the

evident commercial aims and expectations of the parties, reveals

an understanding or agreement, or as sometimes expressed, a

manifestation of mutual assent, which bespeaks an intention to be

legally bound to the essential elements of a contract”

(15)

• Held: Where no offer and acceptance can be identified, it is

relevant to ask whether and agreement can be inferred, whether

mutual assent has been manifested and whether a reasonable

person in the position of each of the parties would think there was

a concluded bargain

(16)

Consideration

Consideration is the second element of formation. The doctrine of consideration requires that something must be given in return for a promise in order to make it binding. It could be money for a good or service, or an exchange of a thing for a promise.

1. A promise must incur a detriment to confer a benefit of the promisor (Benefit/Detriment Requirement)

2. The benefit or detriment must

3. be given in return for the promise (Bargain Requirement)

Benefit/Detriment Requirement

- Needs to be detriment to the promise or a benefit to the promisor.

CASE: Currie v Misa

• Held: A valuable consideration in the sense of law may consist in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.

- The person to whom the promise is made must either confer a benefit on the promisor or must incur a legal detriment in the sense of giving something up or undertaking in an obligation. Mutual promises as good consideration for one another

The Bargain Requirement

Benefit conferred on the promisor or the detriment suffered by the

promise must be given in return for the promise. Act must be performed

as the agreed price of the promise

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