4 Step Process to Contract Law
Question a)
Step One
The principle of law is that for a valid contract to be formed there must be an agreement reached by both parties.
Step Two
There are three main elements for the formation of a legally binding contract, intention, agreement and consideration. The requirement that requires discussion here is the existence of an agreement by the parties to enter into a legally binding contract.
An agreement means a consensus on at least those essential terms needed for a workable transaction. The process of reaching an agreement is generally analysed as involving an offer and acceptance. Where the offer is a clear indication of the terms upon which a person is prepared to be bound, and an acceptance is assenting to, agreeing, or receiving the terms offered.
The requirements of an ‘offer’ must be promissory, such as in Placer Development Ltd v Cth (1969) 121 CLR 353 where what the government had said was not a legally enforceable promise, but had appeared to be one. It must be sufficiently complete, and intended to result in a contract if accepted.
The requirements of an ‘acceptance’ to exist must be in the same terms of the offer. It cannot still be subject to a condition, such as where it was clear that Cameron had not intended to be bound until a formal contract was prepared and signed, Masters v Cameron (1954) 91 CLR 353. An acceptance must be made while the offer is still in existence. It must be made by a person whom the offer was addressed. If the offer is intended to be made to any person that learns of it then any such person can accept the offer on the stated terms. Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256, where Carlill had read an advertisement offering a reward to anyone who caught influenza after buying the company’s smoke ball. Carlill bought the ball and caught influenza, since the offer was made to ‘the world at large’ it is capable to be accepted by anyone who learns of it, including Carlill. An acceptance must be made in
Step One
The principle of law is that for a valid contract to be formed there must be an agreement reached by both parties.
Step Two
There are three main elements for the formation of a legally binding contract, intention, agreement and consideration. The requirement that requires discussion here is the existence of an agreement by the parties to enter into a legally binding contract.
An agreement means a consensus on at least those essential terms needed for a workable transaction. The process of reaching an agreement is generally analysed as involving an offer and acceptance. Where the offer is a clear indication of the terms upon which a person is prepared to be bound, and an acceptance is assenting to, agreeing, or receiving the terms offered.
The requirements of an ‘offer’ must be promissory, such as in Placer Development Ltd v Cth (1969) 121 CLR 353 where what the government had said was not a legally enforceable promise, but had appeared to be one. It must be sufficiently complete, and intended to result in a contract if accepted.
The requirements of an ‘acceptance’ to exist must be in the same terms of the offer. It cannot still be subject to a condition, such as where it was clear that Cameron had not intended to be bound until a formal contract was prepared and signed, Masters v Cameron (1954) 91 CLR 353. An acceptance must be made while the offer is still in existence. It must be made by a person whom the offer was addressed. If the offer is intended to be made to any person that learns of it then any such person can accept the offer on the stated terms. Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256, where Carlill had read an advertisement offering a reward to anyone who caught influenza after buying the company’s smoke ball. Carlill bought the ball and caught influenza, since the offer was made to ‘the world at large’ it is capable to be accepted by anyone who learns of it, including Carlill. An acceptance must be made in