LLB1120 LAW OF CONTRACT A
APPROACH TO QUESTION CHECKLIST
FORMATION – IS THERE A CONTRACT?
Conventional approach
Agreement – offer
1. Is there a willingness to be bound without further negotiations? (Gibson)
- Distinguished from supply of information/preliminary negotiations/mere puff
(Carlill)/invitation to treat (Boots Cash Chemists)/policy implementation
(Australian Woollen Mills
2. Does it propose an exchange?
- Need for quid pro quo – this for that
- Return promise – bilateral
- Completed performance of an act – unilateral
- Distinguished from statements of policy/conditional gifts
- Carlill v Carbolic smoke ball company
- Australian Woollen Mills
Agreement – termination of an offer
3. At the time of the purported acceptance, was the offer still open and available to be
accepted? OR
4. Has the offer ceased to be effective because it has:
(a) Been revoked;
- Has that revocation been communicated to the offeree (Dickinson v Dodds)
(b) Been rejected;
- Counter offer = rejection (Hyde v Wrench)
- Commercial posturing (Brambles) or mere inquiry (Stevenson Jacques) do not
= rejection
(c) Lapsed? (Machester Diocesan)
5. Was there an implied ancillary contract not to revoke? (Gibson)
6. Was there a binding option? (Goldsbrough Mort v Quinn)
Agreement – acceptance
7. Has there been an unqualified assent to the terms of the offer?
8. Nexus – is the acceptance of and in response to the offer? (R v Clarke)
9. Communication – has the acceptance been communicated to the offeror? Are there
any qualifications or exceptions to the general rule by way of:
, (a) Waiver;
(b) Prescribed mode of acceptance;
(c) Postal acceptance rule; (Henthorn v Fraser)
(d) Acceptance by conduct; (Empirnall)
(e) Electronic communications?
10. Correspondence – has there been an unequivocal statement, or form of conduct, by
the offeree, that indicates assent to the offer? (Butler Machine Tool)
If steps 1 through 8 are satisfied, then agreement has been reached.
Alternative approach to agreement
1. Where there is no identifiable offer and acceptance, when viewed as a whole and
objectively from the point of view of a reasonable person, do the dealings show a
concluded bargain?
If this is satisfied, then agreement has been reached.
Consideration
1. Is there a quid pro quo relationship between the offer and the consideration?
(Beaton v McDivitt)
2. Does the consideration move from the promisee? Note: the consideration need not
move to the promisor. (Coulls v Bagots)
3. Is the consideration sufficient or good in law?
- Is there a benefit to the promisor or a detriment to the promisee at the
promisor’s request? (Beaton v McDivitt)
- Note: the consideration need not be adequate (Chappel v Nestle)
4. Is the consideration illusory? Does the promisor retain an absolute discretion to
perform its promise? If so, this is not sufficient consideration. (Placer Development,
Dunton)
5. Is the consideration considered insufficient because it is:
(a) Illusory;
(b) Past; (Roscorla) (or is it executed? Note requirements in Pao On) or
(c) An existing duty? (Stilk v Myrick) Is there a way around the existing duty rule?
If steps 1, 2 and 3 are satisfied, then consideration is considered sufficient.
If the consideration falls under steps 4 or 5, then it is insufficient and a contract cannot be
formed. Continue with next steps anyway.
Intention to create legal relations
1. Since Ermogenous presumptions as to intention are not used. Intention is now
deemed objectively.
2. Having regard to all the circumstances, including subject matter of the agreement,
status of the parties to it, their relationship with one another and other surrounding
circumstances, does it appear that the parties have manifested an intention to
APPROACH TO QUESTION CHECKLIST
FORMATION – IS THERE A CONTRACT?
Conventional approach
Agreement – offer
1. Is there a willingness to be bound without further negotiations? (Gibson)
- Distinguished from supply of information/preliminary negotiations/mere puff
(Carlill)/invitation to treat (Boots Cash Chemists)/policy implementation
(Australian Woollen Mills
2. Does it propose an exchange?
- Need for quid pro quo – this for that
- Return promise – bilateral
- Completed performance of an act – unilateral
- Distinguished from statements of policy/conditional gifts
- Carlill v Carbolic smoke ball company
- Australian Woollen Mills
Agreement – termination of an offer
3. At the time of the purported acceptance, was the offer still open and available to be
accepted? OR
4. Has the offer ceased to be effective because it has:
(a) Been revoked;
- Has that revocation been communicated to the offeree (Dickinson v Dodds)
(b) Been rejected;
- Counter offer = rejection (Hyde v Wrench)
- Commercial posturing (Brambles) or mere inquiry (Stevenson Jacques) do not
= rejection
(c) Lapsed? (Machester Diocesan)
5. Was there an implied ancillary contract not to revoke? (Gibson)
6. Was there a binding option? (Goldsbrough Mort v Quinn)
Agreement – acceptance
7. Has there been an unqualified assent to the terms of the offer?
8. Nexus – is the acceptance of and in response to the offer? (R v Clarke)
9. Communication – has the acceptance been communicated to the offeror? Are there
any qualifications or exceptions to the general rule by way of:
, (a) Waiver;
(b) Prescribed mode of acceptance;
(c) Postal acceptance rule; (Henthorn v Fraser)
(d) Acceptance by conduct; (Empirnall)
(e) Electronic communications?
10. Correspondence – has there been an unequivocal statement, or form of conduct, by
the offeree, that indicates assent to the offer? (Butler Machine Tool)
If steps 1 through 8 are satisfied, then agreement has been reached.
Alternative approach to agreement
1. Where there is no identifiable offer and acceptance, when viewed as a whole and
objectively from the point of view of a reasonable person, do the dealings show a
concluded bargain?
If this is satisfied, then agreement has been reached.
Consideration
1. Is there a quid pro quo relationship between the offer and the consideration?
(Beaton v McDivitt)
2. Does the consideration move from the promisee? Note: the consideration need not
move to the promisor. (Coulls v Bagots)
3. Is the consideration sufficient or good in law?
- Is there a benefit to the promisor or a detriment to the promisee at the
promisor’s request? (Beaton v McDivitt)
- Note: the consideration need not be adequate (Chappel v Nestle)
4. Is the consideration illusory? Does the promisor retain an absolute discretion to
perform its promise? If so, this is not sufficient consideration. (Placer Development,
Dunton)
5. Is the consideration considered insufficient because it is:
(a) Illusory;
(b) Past; (Roscorla) (or is it executed? Note requirements in Pao On) or
(c) An existing duty? (Stilk v Myrick) Is there a way around the existing duty rule?
If steps 1, 2 and 3 are satisfied, then consideration is considered sufficient.
If the consideration falls under steps 4 or 5, then it is insufficient and a contract cannot be
formed. Continue with next steps anyway.
Intention to create legal relations
1. Since Ermogenous presumptions as to intention are not used. Intention is now
deemed objectively.
2. Having regard to all the circumstances, including subject matter of the agreement,
status of the parties to it, their relationship with one another and other surrounding
circumstances, does it appear that the parties have manifested an intention to
