What Is An Offer?

Hi all, I'm currently reading up on Business Law and I thought that it might be really interesting to share with you all some of my notes

This is the small portion of my notes on the "Formation of Contract - Offer"

Do read through if you are interested to find out what actually constitutes an offer. You will be surprised that some things that you said actually can be construed as an offer and that can be very dangerous because you might just be bound by it.

I will be posting more parts later on if you guys are interested.

Enjoy

Over the years the courts have had to work out what constitutes an offer. This is obviously of some importance because once you have made an offer you are immediately vulnerable to being bound by a contract because of someone else's action. As the famous American contract text book writer Corbin has noted, an offer confers a power on the offeree. It confers a power on another to bind you in contract.

Of course, you have some control over this power because you can withdraw an offer so long as it has not been accepted. We will look at this a little later. But so long as the offer continues, it merely has to be accepted by the other party to create a legally binding relationship.

As well as being the penultimate act leading to formation of contract, an offer also serves the purpose of stating the terms on which you are prepared to be bound.

Because an offer is so important, the courts have had to focus on what precisely constitutes an offer in various circumstances. We have already seen in the Gibson case that an offer must be definite, not tentative or qualified in some way. It is no good saying something like: "I might be prepared to sell my dog to you for $100." That is not an offer. Nor is it any good saying "I offer you this but I don't intend to be bound to anything if you accept." This was made clear by the judgment of Barwick CJ in the MacRobertson Miller Airline case.

So in any particular case it is necessary to examine what was said or written and see if it is capable in law of amounting to an offer. The basic test is: is it complete so that merely saying "I accept" is sufficient to constitute a contract? We will see later that the courts have struggled with the unavoidable fact that ordinary people, let alone lawyers, do not go around saying with great precision what they are offering nor do people say with great clarity "I accept". Instead, the likelihood is that one of the parties will be arguing that a contract was made arising out of a desultory or somewhat vague conversation or exchange of letters. The other party will be saying: "Huh! You thought we made a contract? You must be joking!" The courts have to sort this out and, in doing so, they apply the objective test: would a reasonable observer have concluded that an offer had been made?

Credits -law.anu.edu.au