Intention and Offer

Course Disclaimer

  • Educational materials posted are not legal advice.

  • Professional advice should be sought for legal matters.

Contract Requirements: Intention and Offer

Basic Definition

  • Definition: A contract is a voluntary exchange of promises that creates obligations enforceable by a court.

  • Contracts can cover various matters, generally unrestricted, with exceptions.

  • Governed by common law and legislation (e.g., employment, real property, consumer protection).

5 Basic Elements of Contracts

1. Intention

  • Definition: Objective understanding that parties intend to be legally bound by agreement.

2. Consensus

  • Agreement: Parties understand and accept agreement terms, typically through offer-acceptance or implied consent.

3. Consideration

  • Each party commits to an action (doing or abstaining from doing something); emphasizes the mutual exchange.

4. Capacity

  • Parties must be legally capable of understanding and entering into agreements.

  • Restrictions: age, mental competence, bankruptcy.

5. Legality

  • Purpose and consideration of agreement must be legal, aligning with public policy.

Types of Contracts

Formal vs. Simple (Parol) Contracts

  • Formal: Written and sealed.

  • Simple (Parol): Not sealed; can be verbal or written.

Express vs. Implied Contracts

  • Express: Clearly stated (verbally or in writing).

  • Implied: Inferred from the parties' conduct (e.g., depositing coins in a vending machine).

Validity of Contracts

Valid vs. Void vs. Voidable Contracts

  • Valid: Legally binding.

  • Void: Not legally binding due to missing essential elements.

  • Voidable: Initially binding, but one party can terminate it.

Enforceability

Unenforceable vs. Illegal Contracts

  • Unenforceable: Won't be enforced due to failure to meet certain conditions (e.g., must be in writing).

  • Illegal: Void due to involving unlawful acts; courts typically won't restore original positions unless one party is innocent.

Types of Obligations

Bilateral vs. Unilateral Contracts

  • Bilateral: Both parties make promises and assume obligations.

  • Unilateral: Only one party makes a promise; the contract exists when the other party performs the request (e.g., rewarding for finding a lost dog).

Roles in Contracts

Offeror vs. Offeree

  • Offeror: The party making the offer.

  • Offeree: The party receiving the offer.

Intention in Contracts

Reasonable Person Test

  • Intention can be inferred that committing parties intended for legal rights and obligations to arise from their agreement.

Case Law: Osorio v. Cardona

  • Details the significance of invitation to meet terms and intention behind specific agreements, ultimately ruling Osorio is entitled to his share due to established intention.

Agreement on Lack of Intention

  • Must be explicitly stated if parties do not intend to be bound by a contract.

Intention in Specific Cases

Oswald v. Start Up SRL

  • Assessing intention through wording of agreements and pre/post-signature conduct.

Relationships Affecting Intention

  • Commercial relationships assume intent, whereas family/friends relationships do not unless otherwise proven.

Exaggerated Claims

Business Claims

  • Reasonable person standard to ascertain if claims made by businesses are binding; possible legal prohibitions against misleading claims.

Case Law: Carlill v. Carbolic Smoke Ball Company

  • Highlights how an advertisement offering reward for using a product had established intention despite company claiming marketing exaggeration.

Offer: Basic Definition

  • Defined as a promise from one party to the other contingent on acceptance.

Significant Terms of Offer

  • Must outline crucial terms including parties, transactions, pricing; courts may imply insignificant terms.

Legislation Impact

  • Example: Sale of Goods Act where terms may be implied.

Case Law: Verwoerd v. Verwoerd

Lack of Certainty

  • Absence of definitiveness regarding parties, land details, and obligations rendered agreement void.

Interim Agreements

  • Parties intend to be bound but formal contracts will follow.

Conditional Clauses

  • Contracts may contain terms that depend on future events, like financing conditions.

Invitations to Treat

  • Invitation to negotiate is not a binding offer.

Offers by Conduct

  • Offers can be indicated through actions instead of verbal or written communication.

Acceptance of Offers

  • Must be explicitly accepted by intended recipient, and cannot accept offers meant for others.

Exemption Clauses

  • Limitations on liability must be prominently displayed or specifically acknowledged at time of agreement.

Consumer Protection

  • Further restricts enforceability of exemption clauses.

Ending an Offer

Expiration and Revocation

  • Offers may indicate expiration dates; revocation can occur if directly communicated to offeree.

Rejection and Counteroffer

  • Counteroffers negate previous offers; specifics distinguish rejections from inquiries.

Other Ending Factors

  • Negotiated activities becoming illegal or goods being destroyed can also end offers.

Option Agreements

  • Special consideration provided to keep an offer open for acceptance for a specific duration.

Tenders Process

Tenders and Bids

  • Includes requesting tenders, receiving bids, and considerations related to acceptation under fairness principles.

Case Law: Triton Hardware Limited v. Torngat Regional Housing Association

  • Underscores fair treatment in tender processes, leading to suit over bid selection fairness.