Binding Agreements in Business Law
Business Law
“To create a binding agreement the acceptance must occur, and that ‘acceptance’ must be final and absolutely unconditional. This is clear under Australian Contract Law.”
As a legacy of being a British colony, Australian Law has been very much guided by legislation and case law from England for over two centuries. Even though a number of Acts were passed in the British Parliament gradually enabling the Australian States, and from 1901 the Commonwealth, to enact their own legislation, it wasn’t until the 1980’s when the Australia Act 1986 was passed through all Australian Parliaments that full law-making independence was given.1 Australian Contract Law had its foundations in the laws of contracts that also emerged in England, with many precedents being set via common law in and around the 1870’s and amended, refined or enhanced in the years since in both English and Australian courts.2
It is quite clear under Australian Contract Law that once a final and unconditional acceptance of an offer is made, a binding agreement exists between the parties. Negotiations may take place a number of times before a final agreement is reached and it is irrelevant as to who makes the final offer, as long as an unequivocal acceptance is made. However, it must be acknowledged that not all agreements are recognised as contracts and courts are often left with the task of deciding what is, or isn’t, an agreement or contract. Within the business environment reference is often made to the ‘mirror image’ rule which states that for an absolute and unequivocal acceptance to an offer to occur the acceptance must match the offer exactly…anything less can constitute a counter offer which voids the original offer.3
The process of entering into an agreement naturally begins with an offer. This can either be through an ‘invitation to treat’ (as in a display of goods in a store) or the presentation of a specific offer.4 The offer itself can be directed towards individuals,
“To create a binding agreement the acceptance must occur, and that ‘acceptance’ must be final and absolutely unconditional. This is clear under Australian Contract Law.”
As a legacy of being a British colony, Australian Law has been very much guided by legislation and case law from England for over two centuries. Even though a number of Acts were passed in the British Parliament gradually enabling the Australian States, and from 1901 the Commonwealth, to enact their own legislation, it wasn’t until the 1980’s when the Australia Act 1986 was passed through all Australian Parliaments that full law-making independence was given.1 Australian Contract Law had its foundations in the laws of contracts that also emerged in England, with many precedents being set via common law in and around the 1870’s and amended, refined or enhanced in the years since in both English and Australian courts.2
It is quite clear under Australian Contract Law that once a final and unconditional acceptance of an offer is made, a binding agreement exists between the parties. Negotiations may take place a number of times before a final agreement is reached and it is irrelevant as to who makes the final offer, as long as an unequivocal acceptance is made. However, it must be acknowledged that not all agreements are recognised as contracts and courts are often left with the task of deciding what is, or isn’t, an agreement or contract. Within the business environment reference is often made to the ‘mirror image’ rule which states that for an absolute and unequivocal acceptance to an offer to occur the acceptance must match the offer exactly…anything less can constitute a counter offer which voids the original offer.3
The process of entering into an agreement naturally begins with an offer. This can either be through an ‘invitation to treat’ (as in a display of goods in a store) or the presentation of a specific offer.4 The offer itself can be directed towards individuals,
Bibliography: Articles, Books, Reports Commonwealth of Australia, ‘A Guide to the Unfair Contract Terms Law’ (2010), Canberra Fitzroy Legal Service Inc., ‘The Law Handbook 2014’ (2014) Lindsay, Geoff, ‘The Common Law Tradition: Contract Law in an Age of Statutes’ (2012) UNSW Law Journal Parker, David and Gerald Box, ‘Business Law for Business Students’ (3rd ed. 2013) Case Law Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 Balfour v Balfour (1919) 2 KB 571 Boscolo v Department of Education, Employment and Workplace Relations (2009) 51 AATA 794 Brambles Holdings v Bathurst City Council (2001) NSWCA 61 Carlill v Carbolic Smoke Ball Company (1892) EWCA Civ 1 Elizabeth City Centre Pty Ltd v Corralyn Pty Ltd (1994) SASR 235 Master v Cameron (1954) 91 CLR 353 Meehan v Jones (1982) 149 CLR 571 Merritt v Merritt (1070) EWCA Civ 6 Prudhoe Corp Pty Ltd v Commissioner of State Revenue (Vic) (2005) 59 ATR 566 Reardon v Morley Ford Pty Ltd (1980) 49 FLR 401 Legislation