TO: xx

FROM: yy

DATE: 23 August 2020

File: NL-145

SUBJECT: Analysis for legal cause of action against Mr Lucius Needful.

MEMORANDUM OF ADVICE

I. Purpose of Memorandum

The memorandum of advice [‘memorandum’] is prepared for Mr. Lucius Needful, father of our client
senior Mr. Needful, CEO of Needful Goods. The memorandum identifies whether an agreement is
formed involving Mr. Lucius Needful [‘Lucius’] regarding the sale of a rare Cenobite puzzle box
[‘box’] at Vendredi’s Antiques Shop [‘shop’]. The other parties included in this memorandum are
individually referred to as Ms. Jacquie Torrance [‘Jacquie’], Ms. Michelle Myers [‘Michelle’] and
Ms. Norma Bates [‘Norma’]. The memorandum includes legal analysis, assumptions of facts and
provisional conclusions and are subject to change, if additional information or clarification is received
from Lucius.

II. Summary of Memorandum

A. An agreement cannot be established between Lucius and Jacquie because Jacquie’s proposal to
buy the box could not be considered as an offer. Additionally, she did not give a consideration to
hold the box for a specified period.
B. An agreement cannot be established between Lucius and Michelle because:
(a) Lucius rejected Michelle’s initial offer; and
(b) Lucius’s counteroffer to Michelle did not receive her acceptance before the sale of the box to
another party.
C. An agreement is formed between Lucius and Norma with the sale of the box. Further information
is required to analyse other elements to establish a bilateral contract.

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 III. Statement of Facts

Lucius publicly advertised a box for sale at his shop window with a price tag of $1,500. On Monday
27 July 2020, Jacquie saw the box first and quickly expressed her interest in buying the box as she
stood outside his shop and shouted $1,000 with a pickup on Friday, 31 July 2020. Lucius being
partially deaf and ignorant of Jacquie’s statement only acknowledged her with eye contact and smile.
On Monday evening, Michelle saw the advertised box and offered Lucius $1,350 via a telephone
voicemail and provided her name and address as the only means to communicate back with her. After
listening to Michelle’s offer, Lucius responded by mailing his rejection to her offer. He proposed a
counteroffer for $1,400 with the request to drop by the shop if she was still interested. On Thursday,
30 July 2020, Norma approached Lucius and bought the box for the advertised price. On 31 July
2020, Michelle and Jacquie found out that the box was already sold to Norma. They are pursuing a
legal cause of action against Lucius for the breach of their presumed contract.

IV. Assumptions

1. Jacquie might have paid a deposit as ‘consideration’ 1 for the box to hold it from sale until Friday

and if Lucius had accepted it in silence, then this would create a separate contract termed

‘option’.2

2. On Thursday, Lucius did not change the advertised price of the box to $1,400 publicly and instead

offered it to Michelle exclusively. In this instance, Lucius’s conduct of offering the box to

Michelle solely would be considered as a counteroffer and not an invitation to treat. 3

3. There was no ‘expressed’ or ‘implied’ condition attached to Michelle’s offer for the box before its

acceptance by Lucius.4

4. Michelle and Jacquie have not contacted Lucius further before the sale of the box to Norma.

1
Currie v Misa (1875) LR 10 Ex 153, 162.
2
Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674.
3
Australian Woollen Mills Pty Lts v Commonwealth (1954) 92 CLR 424, 457.
4
Financings Ltd v Stimson [1962] 1 WLR 1184.

2
 V. Legal analysis of facts- Agreement

To determine if a contract exists between parties, its first element, termed agreement, which includes
offer and acceptance as its key components must be established. The agreement requires the offeror to
make an offer to which the offeree has an opportunity to accept or reject this offer and this decision of
accepting or rejecting the offer must be clearly communicated to the offeror. 5

The agreement between parties is discussed in detail below and categorised as A, B(a), B(b) and C:

A. Parties- Lucius v Jacquie

Offer

To determine if an offer was made, a reasonable person in the offeree’s position should understand if
an offer is made and by accepting this offer, a binding agreement is formed. This offer is then
determined objectively by examining the offeror’s external manifestation. 6

Applying the above principle to Jacquie’s [offeror] presumed offer for the box, her interest to buy the
box for $1,000 with a pickup on Friday was made by standing outside the shop and leaving
immediately. Lucius, being partially deaf, only made eye contact and smiled at her. Jacquie did not
take reasonable steps to ensure Lucius understood that she was interested in buying the box and had
asked him to hold it from sale until Friday. Jacquie’s statement, her outward manifestation of leaving
immediately and lack of ensuring whether Lucius understood her expression of interest for the box
which enabled him to choose between acceptance or rejection, cannot be established as an offer. 7

Acceptance

Acceptance requires consensus of the minds or wills between parties before a contract can exist. 8 The
offeree must also be conscious of the offer. 9 The facts state that Jacquie did not clearly communicate
an offer and hence acceptance cannot be established.

Assuming Jacquie had made an offer which ‘lapsed’ 10 on Friday, then Lucius conduct of eye contact
and smile alone cannot be construed as an acceptance to her offer. 11 For an agreement to be
5
Tallerman &Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93, 110.
6
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; Storer v Manchester City Council [1947] 1 WLR 1403.
7
Scammell v Ouston [1941] AC 251 and Hillas & Co. Ltd v Arcos Ltd [1932] All ER Rep 494; Gibson v Manchester City
Council [1979] 1 WLR 294.
8
R v Clarke (1927) 40 CLR 227 (Isaacs ACJ).
9
Ibid.
10
Bartolo v Hancock [2010] SASC 305, [16].
11
Felthouse v Bindley (1862) 11 CB (NS) 869, 875.

3
enforceable, acceptance must be unconditional and communicated to the offeror unless the variation
to this general rule has been made clear in the offer itself. 12

Assumptions

 Exception rule to acceptance

Assuming Jacquie made an offer that included a deposit and Lucius accepted this deposit in silence,
then his actions could be construed as acceptance by a reasonable bystander. 13 The other argument by
Jacquie would be, she considered Lucius’s smile as conduct for acceptance. However, this is a weak
argument as a reasonable person objectively would not consider mere smile as conduct for
acceptance.14

 Option

Assuming Jacquie’s expression of interest was an offer with a condition of holding the box until
Friday, this would require Jacquie [‘grantor’] to include a consideration, such as a deposit, to keep the
box till Friday.15 In this instance, a separate contract termed ‘option’ would be created which would
allow Lucius [‘option holder’] to choose his decision under the specified terms. 16 The facts indicate
that consideration was not promised to Lucius to hold the box until Friday. Accordingly, an option
cannot be established.

 Invitation to treat

The act of placing a box at the shop window by Lucius cannot be considered as an offer as it should
be considered as an invitation to treat where he is inviting the public to make an offer or enter into
negotiations.17If Lucius had accepted Jacquie’s offer of $1,000 and a transaction of sale had taken
place immediately at the checkout counter, this act could be considered as acceptance to Jacquie’s
offer which in turn creates an agreement. 18

12
Latec Finance v Knight [1969] 2 NSWR 79 (Jacobs J).
13
Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523.
14
Taylor v Johnson (1983) 151 CLR 422; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.
15
Currie v Misa (1875) LR 10 Ex 153, [162].
16
Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674.
17
Jeannie Paterson, Andrew Robertson and Arlen Duke, ‘Principles of Contract Law’ (Thomson Reuters, 4th ed, 2020) 58
[3.20]; Fisher v Bell [1961] 1 QB 394; Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256.
18
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) [1953] 1 QB 401.

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  Supply of Information

Jacquie’s statement, ‘surely you’d be happy to take $1000 for it’? indicates that Jacquie may not be
clear on the price, or she may have missed seeing the advertised price of $1,500 and is only enquiring
to find the cost of the box.19 This could be interpreted as a mere supply of information but is not
definitive as she did not stay to see Lucius’s response.

 Discerning absence of offer and acceptance?

When offer and acceptance cannot be explicitly identified, relevant facts would be examined to see
whether there was any reciprocal promissory obligation that may have incurred. This would include
adopting mutual assent manifested by parties' conduct, inferred agreement and also considering if a
reasonable person would conclude a bargain?20 The facts observed from Jacquie’s initial statement,
Lucius’s disability and conduct and failure of proceeding transaction by Jacquie for the sale of the box
indicate that there was no distinct offer in the first place. Accordingly, no acceptance can be inferred.

B. Parties- Lucius and Michelle

The exchange of information between Lucius and Michelle occurs in two stages and is
detailed below:

(a) Michelle v Lucius

Offer

Michelle [offeror] saw the box advertised on the window and proposed an offer to purchase the box to
Lucius [offeree] for $1,350 using instantaneous communication via telephone. Michelle only left her
name and address on the voicemail as the only method for Lucius to communicate regarding his
acceptance or rejection of the offer. Based on the facts provided, there appears to be no ‘expressed or
implied’21 condition associated with Michelle’s offer regarding the state of the goods or any enquiry
of delivery of the box. Offer is established with Michelle’s clear communication.

Acceptance

After understanding Michelle’s offer, Lucius chooses to reject her offer and responds by writing a
letter to her as this was the only means to communicate with her. Lucius’s rejection of Michelle’s
offer is identified in his statement, ‘I appreciate your offer, but wouldn’t be able to part with it for

19
Harvey v Facey [1893] AC 552.
20
Brambles Holdings v Bathurst City Council [2001] NSWCA 61 (Heydon J).
21
Financings Ltd v Stimson [1962] 3 All ER 386; Financings Ltd v Stimson [1962] 1 WLR 1184.

5
$1,350’.22 These facts state that there is no agreement formed between Michelle and Lucius for her
initial offer.

Assumptions

 Postal Acceptance Rule

Postal acceptance rule indicates whether a contract is formed by identifying if acceptance was posted
via mail, even if the letter is lost. However, the facts presented to us suggest that Lucius had rejected
Michelle’s initial offer of $1,350 and had proposed a counteroffer via mail. Accordingly, the postal
acceptance rule does not apply to our facts as it only relates to acceptance. This rule only applies if
Lucius had accepted Michelle’s initial offer of $1,350 and communicated his acceptance to her via
mail.23

(b) Lucius v Michelle

Counteroffer

Assuming Lucius [offeror] had not changed the price tag of the box to $1,400 publicly and only
proposed the offer to sell to Michelle [offeree] for $1,400 by writing to her with a condition to drop
by the shop to communicate her acceptance of his offer. 24
Lucius’s action indicates a counteroffer
instead of an invitation to treat as the offer was only to her. 25 There was no other supply of
information such as delivery information or cost in the letter. 26

Acceptance

Lucius requested Michelle to stop by the shop if she accepted his offer. Since she failed to express her
acceptance before the sale of the box on Thursday, acceptance cannot be established. 27
These facts
suggest agreement has not been formed for the counteroffer.

22
Byrne & Co v Leon Van Tiehoven & Co (1880) LR S CPD 344.
23
Adams v Lindsell (1818) 106 ER 250; Henthon v Fraser [1892] 2 Ch 27; Tallerman & Co Pty Ltd v Nathan’s
Merchandise (Vic) Pty Ltd (1957) 98 CLR 93, 111-12 (Dixon CJ and Fullar J).
24
Hyde v Wrench (1840) 3 Beav 334.
25
See Ibid; Tinn v Hoffman & Co (1873) 29 LT 271; Stephenson Jacques & Co v McLean (1880) 5 QBD 346.
26
Harvey v Facey [1893] AC 552.
27
Felthouse v Bindley (1862) UK 11 CB (NS) 869; Latec Finance Pty Ltd v Knight [1969] NSWR 79.

6
 C. Parties- Lucius v Norma

Offer

There were no claims for the box either by Michelle or Jacquie until Friday, 31 July 2020 which
indicates the availability of the box on Thursday as an invitation to treat. Assuming Norma clearly
communicated her interest in purchasing the box for the advertised price of $1,500 indicates an offer
is established.

Acceptance
The act of accepting $1,500 by Lucius at the counter can be considered as the acceptance of Norma’s
offer.28 Hence acceptance is established.

Unilateral or Bilateral contract?

If the box was lost and Lucius advertised a reward of $1,500 to the finder, and if Norma found that
box and gave to him, only then a unilateral contract is established. 29 The facts provided did not
indicate an unilateral contract and suggests that the offer and acceptance was clearly communicated
between Norma and Lucius hence creating an agreement for a bilateral contract. 30

VI. Provisional Conclusion

A. Jacquie’s proposal to purchase the box for $1,000 with a condition to pick it on Friday without
clear communication to Lucius, negates her proposal as an offer. Lucius’s conduct of remaining
silent without clarifying her statement further reinforces that offer was not communicated hence
an agreement is not formed. The assumption made for option should be discussed in detail with
Lucius in your next meeting. If he confirms the acceptance of this assumption for option, this may
create an agreement between Lucius and Jacquie. 31
B. (a). Lucius rejected Michelle’s initial offer of $1,350 for purchasing the box. Hence agreement
has not been formed for Michelle’s initial offer.

(b). Lucius’s counteroffer to Michelle to sell the box for $1,400 did not receive acceptance from
her before the sale of the box to Norma.

C. An agreement can be established between Norma and Lucius for a bilateral contract.

28
Brinkibon Ltd v Stahag Stahl Und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34.
29
Australian Woollen Mills Pty Lts v Commonwealth (1954) 92 CLR 424, 456-7; Carlill v Carbolic Smoke Ball Co [1893] 1
QB 256.
30
R v Clarke (1927) 40 CLR 227, 233-9, 243 (Isaacs ACJ).
31
Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523.

7
 BIBLIOGRAPHY

A. Books
Paterson, Jeannie, Andrew Robertson and Arlen, Duke ‘Principles of Contract Law’ (Thomson
Reuters, 4th ed, 2020)
B. Cases

Adams v Lindsell (1818) 106 ER 250

Australian Woollen Mills Pty Lts v Commonwealth (1954) 92 CLR 424, 457
Bartolo v Hancock [2010] SASC 305
Brambles Holdings v Bathurst City Council [2001] NSWCA 61
Brinkibon Ltd v Stahag Stahl Und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34
Byrne & Co v Leon Van Tiehoven & Co (1880) LR S CPD 344
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Currie v Misa (1875) LR 10 Ex 153, 162
Empirnall Holdings v Machon Paull (1988) 14 NSWLR 523
Felthouse v Bindley (1862) 11 CB (NS) 869, 875
Financings Ltd v Stimson [1962] 1 WLR 1184
Financings Ltd v Stimson [1962] 3 All ER 386
Fisher v Bell [1961] 1 QB 394
Gibson v Manchester City Council [1979] 1 WLR 294
Goldsbrough, Mort & Co Ltd v Quinn (1910) 10 CLR 674
Harvey v Facey [1893] AC 552
Henthon v Fraser [1892] 2 Ch 27
Hyde v Wrench (1840) 3 Beav 334
Latec Finance v Knight [1969] 2 NSWR 79
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) [1953] 1 QB 401
R v Clarke (1927) 40 CLR 227
Scammell v Ouston [1941] AC 251 and Hillas & Co. Ltd v Arcos Ltd [1932] All ER Rep 494
Stephenson Jacques & Co v McLean (1880) 5 QBD 346
Storer v Manchester City Council [1947] 1 WLR 1403
Tallerman &Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93, 110
Taylor v Johnson (1983) 151 CLR 422

8
Tinn v Hoffman & Co (1873) 29 LT 271
Toll Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165