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Summary Commercial Contracts - Commercial Law and Intellectual Property
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Condenses all the reading, lectures and SGS activities to about 30% the original volume. Clear, Concise and Organised.
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9. COMMERCIAL CONTRACTS3 Elements for any contract – any transaction that misses one = no contract
1. AGREEMENT
the parties must have reached, or be deemed to have reached, agreement
agreement = a clear offer from the offeror unconditionally accepted by the offeree.
May be made in any manner provided that the parties are in communication with each other
Terms of the agreement are established by looking at the intention of the parties
o Intention gathered from the express terms of the contract and, where necessary,
from the conduct of the parties
o Court concerned with what the reasonable man would say was the intention of the
parties having regard to all the circumstances = the objective test
Presumed intention may not be the same as the actual intention
OFFER
Must take the form of a promise or undertaking by the offeror to be contractually binding in
the event of unconditional acceptance
Upon acceptance – terms of offer become the terms of the contract
Offer must be –
o Clear
o Complete
o Certain
o Final
Must be distinguished from a mere invitation to treat i.e. more than the first step in
negotiations which may be the prelude to a firm offer
o E.g. advertisement of goods for sale / Display of goods for sale in shop window /
invitations to tender / auction sales
Counter-offer
When made, original offer deemed to have been rejected and cannot be subsequently
accepted
If, on receipt of offer, the offeree requests the offeror to inform him whether he would be
prepared to add a term to the offer it may = a request for further info – offer remains open
Where counter-offer is accepted then its terms become the terms of the contract
Termination of offer
Rejection – only takes effect once communicated to the offeror – offer loses legal effect
Revocation – offeror can revoke at any time before acceptance BUT once valid
acceptance made, he is bound by terms of the offer
o Only effective upon actual notice of it reaching the offeree
Lapse – offer becomes incapable of acceptance by passage of time / death of a party or by
non-fulfilment of conditions precedent
, ACCEPTANCE
Must be unqualified and correspond exactly with the terms of the offer
Court will examine comms between the parties to discover whether one party may be
deemed to have assented to all express + implied terms of a firm offer by the other party
o If assent is qualified in any way = NOT acceptance
E.g. goods offered at certain price but assent coupled with promise to pay =
NOT acceptance
Online invitation to treat – if an offer is made (by consumer), and there is a pricing error, the
seller can reject the offer
Methods of Acceptance
Acceptance must be communicated to the offeror – method of comms has a bearing on
when acceptance is deemed to have been made
POST – acceptance takes effect from the moment the letter of acceptance is properly
posted i.e. The Postal Rule
o Applies when delayed/lost in the post
o applies ONLY to letters of acceptance (revocation of offer must be received to be
effective)
Instantaneous Comms – actual communication is required
2. INTENTION & CAPACITY
the parties must have intended, or be deemed to have intended, to create legal relations
o no intention to be bound = no contract
they must also be capable of making a contract.
Test of intention is objective – courts seek to give effect to the intentions of the parties
whether express or presumed
o Commercial contracts = presumption that parties intend the agreement to be
legally binding
If a party wishes to assert this was not the case, the onus is on them to rebut
the presumption = heavy burden
Subject to contract = strong inference that parties do NOT intend to be bound until
execution of a formal contract
Acceptance subject to contract is not binding
o There is a difference between a tentative agreement (which is not binding) and a
provisional agreement (which may be binding)
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