[Law101-Private Law] Continuation of first element of Contracts and start of the second element [Series 1 - Part 2]
Hi Fellow Steemians
Welcome back to another part of the Private Law series. Last time we gave an introduction into what Private Law was about and got into the first element when making a contract, Agreement. Under Agreement section, there are another 2 parts which are divided into Offer and Acceptance. We talked about the elements of an offer and so I'll go into the second part, Acceptance, and then into the second element of contracts in this post.
Acceptance
Communication to the offeror of an unqualified, unconditional assent to the terms of the offer, either expressly or implied.
Here, I'll first go into what a unilateral contract and a bilateral contract is:
- Unilateral = party undertakes to do or refrain from doing something if the other party does or refrains from doing so (there is no obligation on the other party to do or refrain from doing anything) eg. offers of reward
- Bilateral = each party undertakes to do or to refrain from doing something. Mutual promises.
Acceptance in the case of unilateral and bilateral contracts are different:
- If unilateral contract - Notice of performance is notice of acceptance
- If bilateral contract - The acceptance must correspond with an offer
There are also several rules that must be met:
- Must be communicated by the offeree
- Must be made in response to an offer
- Act done in ignorance of the offer cannot be accepted
- Must be made while offer is still in force
- Must correspond with the offer
- Acceptance must correspond with the offer. If the offeree attempts to vary the terms or add additional terms, this amounts to a counter offer
- If a counter offer is made then that will override the previous offer and there will be a completely new offer instead.
- May be express or implied from conduct
Next I'll go into the communication aspect of acceptance
General rule is that offeree must communicate acceptance of offer to offeror, and agreement not complete until such communication is affected
- This notification is required because it establishes minds of two parties have come together and formed a consensus
However, special rules can apply depending on method of communicating the acceptance to the offeror - dispense with the need for actual communication
- Method of acceptance is specifically stipulated
- Offeror may stipulate how acceptance should occur. Eg. can accept by performing the terms of the offer --> requirement for communication acceptance is impliedly waived
- Treat doing an act as effective acceptance - unilateral contracts
- Note: Silence does not generally constitute acceptance. However, in certain scenarios, it can be. For example: If you have been paid for a building contract and you have accepted the money then you are seen to have accepted the offer unless you say so otherwise.
- Acceptance can be inferred from conduct
- Postal exception rule
- PAR is an exception to general rule that a contract is formed when offeree's acceptance is communicated to offeror.
- It operates only when the post was contemplated by the parties as a possible way of communicating acceptance of the offer:
- A contract is formed once the letter is posted (when and where)
- It does not matter if letter takes longer than usual to reach offeror, or is completely lost in the post.
- Offeror bears this risk
- Once letter of acceptance is posted, it is also too late to withdraw his/her offer
- Exceptions
- Intention: For the rule to apply, acceptance by post MUST have been contemplated by the parties. It may be excluded by the offeror either expressly or impliedly.
- Revocation: rule only applies to acceptance - i.e. cannot use for revocation of OFFER
- Postal rule can be negated by requiring actual communication instead of constructive (postal) communication
- Instantaneous communication: The rule does not apply to means of instantaneous communication such as telex, telephone or facsimile transmission
- Telegrams have been treated as ordinary mail.
Rejection of an offer:
- Offers terminate upon rejection and cannot be accepted.
- A request for information about an offer is not a contract.
Thats the end of the first element of Contracts - Agreement.
Consideration
The second element of Contracts is Consideration and this is the section regarding what you are willing to provide in the agreement. The law sees consideration as valuable and it can be said to be the agreed price of the promise. There are 2 aspects:
- Promisee must incur a detriment or confer a benefit on the promisor (benefit/detriment requirement)
- Either confer benefit on promisor or must incur legal detriment - sense of giving something up or undertaking an obligation
- Consideration given in return for a promise will constitute both benefit to promisor/detriment to promisee
- Mutual promises = good consideration
- Benefit/detriment must be given in return for the promise (bargain requirement)
- Act relied on as consideration, must be performed as the agreed price of the promise
Both of these requirements must be met.
I'll end this post here and in the next post I'll go more deeply into each of the requirements for Consideration! It can be a bit complex for the next part so I'll try to simplify things as much as I can.
If you have any suggestions for improvement or questions comment below!