lawyer

In advising if a legally enforceable contract exists between Sam and David, I would first consider the requirements of forming a valid contract. Formation of a valid contract requires six pre-requisites all of which must exist in order for a valid contract to exist.

Intention to Create Legal Relations

From an objective perspective it can be seen that a reasonable person in Sam’s position would not have had the intention to create legal relations with David. Although this may have been undertaken as a business transaction during the initial contact, it was a social and private arrangement at the time the offer was made. It is also a legal presumption that agreements made in a social environment are not be legally binding[1]. The case of Dietrich v Dare (1980) 54 ALJR 388[2], further illustrates this presumption, where no intentions of a legally binding agreement could be determined.

Agreement- Offer and Acceptance

“An offer is an undertaking by the offeror made with the intention that it will bind the offeror as soon as it is accepted by the offeree”[3] It can be seen here that Sam had made the offer to David at the end of the phone conversation. The offer met the required rules as set out in Latimer[4] such as the offer being communicated directly to David as well as being made obvious that it was an offer and not an invitation to treat.

David had then accepted the offer the following week when he rang Sam to organise the internet connection. The acceptance of the offer met the rules of acceptance as set out in Latimer[5] including acceptance was made to an offer that is known to exist to both parties; acceptance was also unqualified as there were no further questions and furthermore the acceptance was of a legal nature. David accepted the offer via a telephone call which is a valid form of acceptance as Sam had not specified a particular method of acceptance, and this is how the offer was made.