LAW5002 · Principles of Contract Law A
Offer & Agreement
Offer & Agreement is Week 1 of Monash University LAW5002 Principles of Contract Law A and the gateway to everything that follows: a contract needs agreement, and agreement is built from an offer that is accepted, tested objectively by what a reasonable person would understand. This topic drills the line between an offer and a mere invitation to treat, how unilateral offers work, and the ways an offer is terminated or revoked before it can be accepted. Because it falls in the assignment's Week 1–5 scope and all topics are examinable in the final, it is worth locking down cold and arguing in IRAC form.
What this chapter covers
- 011. What counts as an offer — a willingness to be bound on stated terms, needing only acceptance, judged objectively (Gibson v Manchester City Council)
- 022. Offer vs invitation to treat — goods on display and most advertisements invite offers rather than make them (Pharmaceutical Society v Boots)
- 033. Unilateral offers to the world — a precise promise + prescribed act + intent to be bound, accepted by performance (Carlill v Carbolic Smoke Ball Co)
- 044. Online and auction/tender proposals — interactive-site proposals as invitations to make offers (Electronic Transactions (Victoria) Act 2000 (Vic) s 14B); bids as offers
- 055. Revocation — effective only when communicated, even indirectly, before acceptance (Goldsbrough Mort v Quinn; Dickinson v Dodds)
- 066. Options and unilateral offers mid-performance — no automatic bar on revocation once performance starts (Mobil Oil Australia v Wellcome International)
- 077. Rejection and counter-offer vs a mere inquiry — new terms kill the offer, a question does not (Stevenson, Jaques & Co v McLean)
- 088. Lapse of time, death of a party, and failure of a condition as ways an offer ends (Fong v Cilli; Financings v Stimson)
- 099. Structuring the analysis as IRAC and naming the authority for every rule the way the problem-question marking rewards
Offer, invitation to treat, and revocation — a kayak sale
- +1Issue: for each communication, is it an offer (a willingness to be bound needing only acceptance) or an invitation to treat, applying the objective test of what a reasonable person would understand (Gibson v Manchester City Council)?
- +1.5(a) The kayak on the lawn with a "$400" sign is goods displayed with a price, which is an invitation to treat, not an offer; the customer makes the offer and Marcus may accept or refuse (Pharmaceutical Society v Boots). No offer by Marcus here.
- +1.5(b) The text to Tom is to an identified offeree, with a defined price ($300) and a deadline (5pm). Objectively it shows willingness to be bound on stated terms and needs only Tom's acceptance, so it is an offer capable of acceptance until 5pm.
- +1.5(c) The offer in (b) may be revoked at any time before acceptance, provided the revocation is communicated (Goldsbrough Mort v Quinn). Marcus's 2pm text communicates that he has sold to his cousin; learning of a sale to another party revokes the offer (Dickinson v Dodds).
- +0.5Conclusion: (a) is only an invitation to treat; (b) is a genuine offer, but it was validly revoked in (c) before Tom accepted, so no contract was formed with Tom.
Key terms
- Offer
- An expression of willingness to be bound on stated terms, needing only acceptance to form a contract; judged objectively by what a reasonable recipient would understand (Gibson v Manchester City Council).
- Invitation to treat
- A step before an offer — an invitation to negotiate or to make offers. Goods on display and most advertisements are invitations to treat, so the customer, not the seller, makes the offer (Pharmaceutical Society v Boots).
- Unilateral offer
- An offer promising something in return for a specified act rather than a return promise; it can be made to the world and is accepted by performing the act, without advance communication of acceptance (Carlill v Carbolic Smoke Ball Co).
- Objective test
- Agreement is assessed by what a reasonable person in the other party's position would understand from the words or conduct, not by a party's secret intention.
- Revocation
- The withdrawal of an offer. Effective only when communicated to the offeree — including indirectly — and only before acceptance (Goldsbrough Mort v Quinn; Dickinson v Dodds).
- Counter-offer
- A response that proposes new terms; it rejects and destroys the original offer. A mere inquiry that proposes no new terms does not (Stevenson, Jaques & Co v McLean).
- Option
- A promise to keep an offer open that is itself supported by consideration; unlike an ordinary offer, it cannot be revoked during its term (Goldsbrough Mort v Quinn).
- Lapse of offer
- An offer ends at its stated deadline, or after a reasonable time if none is stated; it also ends on the death of a party or the failure of a condition attached to it (Fong v Cilli; Financings v Stimson).
Offer & Agreement FAQ
Is a price tag or an advertisement an offer I can just accept?
Usually not. Goods displayed with a price, and most advertisements and catalogues, are invitations to treat — an invitation for you to make the offer, which the seller can then accept or refuse (Pharmaceutical Society v Boots; Gibson v Manchester City Council). The main exception is a genuine unilateral offer, like the reward in Carlill v Carbolic Smoke Ball Co, where a precise promise, a prescribed act and clear intent to be bound turned an advertisement into an offer accepted by performance.
Can an offer be withdrawn after it has been made?
Yes — an offer can be revoked at any time before acceptance, but the revocation must be communicated to the offeree (Goldsbrough Mort v Quinn). Communication can be indirect: if you learn from a reliable source that the offeror has sold elsewhere, the offer is revoked (Dickinson v Dodds). Two qualifications: an option supported by consideration cannot be revoked during its term, and for a unilateral offer there is no automatic rule that it cannot be revoked once performance has begun (Mobil Oil Australia v Wellcome International).
Can AI help me with Offer & Agreement in LAW5002?
Yes, as a study aid. An AI tutor like Sia can explain the objective test step by step, contrast an offer with an invitation to treat, and walk you through worked IRAC problems so you understand why an answer is right — it will not write your assignment or sit your exam for you, and cannot promise a mark or a pass. Note that the most recent past exam was open book but did not permit generative AI in the exam room, so use AI to build understanding beforehand and confirm the current rules on Moodle.
Studying with AI? Sia — free AI law tutor works through LAW5002 step by step.
Exam move
Treat Offer & Agreement as a labelling-plus-timing skill. First lock the offer/invitation-to-treat line cold, in both directions, with one authority pinned to each rule (Boots for displays, Gibson for the objective test, Carlill for unilateral offers). Then learn the five ways an offer ends — revocation, rejection/counter-offer, lapse, death, and failure of a condition — because most Week 1 problems turn on whether an open offer still existed at the moment of purported acceptance. Practise by taking a short fact scenario, labelling every communication offer or invitation to treat, then running each through IRAC and naming the case or section for every step, since the problem-question marking rewards identifying the source of each principle and arguing both sides before you conclude.
