Contract Law for Business Managers: Contract Parties and Terms

Contract Law for Business Managers: Contract Parties and Terms

 

By LearnCorp Training Pty Ltd

 

The parties to the contract are those individuals, groups, companies or organisations who enter into an agreement. The parties need to be an organisation or a natural person of a sane mind and of a legal age.

 

The parties to a contract must accept the contract and this means they must both provide an unconditional assent to the terms and conditions of the contract.

 

Acceptance must:

 

1. Be communicated
2. Be in response to an offer
3. Be in writing or oral; express or implied from conduct
4. Be made while the offer is still in force

 

The issue of the parties communicating acceptance is significant. In Northern Territory of Australia v Skywest Airlines Pty Ltd (1987) (NT), the court confirmed that an agent of the offeree may communicate acceptance if duly authorised, or it was reasaonable to assume authorisation existed.

 

Silence by one or more parties does not constitute acceptance. In Felthouse v Bindley (1862) (CCP), Felthouse cabled his nephew “I will buy your horse for 13 pounds and if I hear no more I will consider it mine”. The nephew never replied and some time later the horse was sold at auction. Felthouse sued the auctioneer (Bindley) for the tort of conversion. The court held there was no contract between the plaintiff and his nephew and therefore no conversion took place.

 

In the context of acceptance by the parties, the sale of inertia goods is prohibited. This is the sending of unsolicited goods to someone accompanied by a statement that if the goods are not returned within a specified time the recipient will be taken to have agreed to buy them.

 

 

 

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