Lapse of Offers Due to Changed Circumstances: A Contract Conversation

Abstract:     
It is trite law that a change of circumstances between the making of an offer to enter into a contract and a purported acceptance of that offer may render the offer incapable of acceptance so that no contract is in fact formed. The juristic basis of this legal postulate, however, is far from clear and uncontroversial. A rare opportunity for a senior court of an Anglo-Commonwealth legal system to clarify the position was presented to the New Zealand Supreme Court recently in Dysart Timbers Ltd v Nielsen. Unfortunately, the clarification was not forthcoming. In this article, which is written in the style of a conversation between a law student and his or her contract professor, the authors attempt to expose the court’s failure to expound the applicable legal approach in a coordinated, principled and unambiguous way. All the court needed to ask was: in terms of its purported assumption of legal contractual obligation, what would the appellant’s offer, read as a whole against the relevant background, reasonably have been understood by the respondent offeree to mean?

Number of Pages in PDF File: 26

Keywords: contract formation, offer, lapse, change of circumstances

JEL Classification: K12

Accepted Paper Series