Analyse the case of Redowood


Analayse the case study of Redowood Pty Ltd v Mongoose Pty Ltd, 2005.


Case: (Redowood Pty Ltd v Mongoose Pty Ltd, 2005)


Redowood Pty Limited
Mongoose Pty Limited

Court the matter was heard 


The procedural history of the case

Appeal from Supreme Court - Common Law Division.
Whether there was a contract for the sale and purchase of the 55 million rights
Whether ambiguity was present as to the terms of the acceptance of the second right
Whether, offeree R, met the requirements for valid acceptance.    


Appeal dismissed.

Opined by:

Bryson JA, Spigelman CJ

Concurring and Dissenting Judgements: 

Tobias JA pronounced dissenting judgments,
Spigelman CJ pronounced concurring judgments.  

Material Facts

M through public offer announced the purchase of all rights of a company A Ltd. The company secretary of R, completed and returned M's agent, the first rights acceptance form, and accepted M's offer. The binding contract came into existence. Few days letter, second rights acceptance forms were sent to M's agent for accepting the offer by M, with regards to an additional parcel of rights, but did not allocate the right number as against the Security Holder Reference Number, i.e., SRN. R contended valid acceptance, despite the wrong insertion. M contended nonexistence of contract.
Acceptance must relate to the terms of the offer, and if the offer is accepted in verbatim, then acceptance itself becomes ineffective.
The Court while deciding the case of (Redowood Pty Ltd v Mongoose Pty Ltd, 2005), faced with the very essentials for the formation of the contract. To form a contract, there must be an offer which moves from the offeror to the offeree, then that offer must be unequivocally accepted by the offeree, which in other words means that, whatever is the offer, it must be accepted in verbatim. So, any change in the offer cannot be made while accepting it. If any change is made or if any other offer is made, then it in itself extinguishes the previous offer, and after the extinguishment of the original offer, there can be no acceptance. In this instant fact of the case, the offeree, i.e., R while accepting the terms of the offer as produced by M, misdescribes it, so the Court considered what amounts to be the coinciding factor between the offer and the acceptance. In so doing the Court cited, (Carter v Hyde , 1923), where it was held that, in order to make the offer and the acceptance coincide with each other, the misdescription if any must be ab initio be treated as an error, which cannot in no way affect the basic understanding of the word acceptance and change it to something which is conditional or no acceptance. Since in that case of (Carter v Hyde , 1923), the misdescription was on the very thing which was actually on offer, so if the acceptance is misdescribed, but was actually identified, then it would be considered as valid acceptance, and hence the formation of a contract comes into existence. Although it is true that, the terms must be properly described so as to give the exact meaning and the sense to it, but, if there is some mistake, then the acceptance as a whole cannot be held to be a void acceptance.  The court again cited (Quadling v Robinson, 1976), to justify whether a purported acceptance in the form misdescription, can be treated and considered as a valid acceptance. The Court held reasonable recipient of the notice if it is misstated cannot in no way be treated as an unqualified acceptance, but if the erroneous understanding was prevalent and then the purported acceptance is made, in that circumstances, the document before the Court must be properly constructed, and then only it would be possible to decide, whether, acceptance becomes an absolute one. Again, while citing, (Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982), the Court held that in order to interpret a contract, the language must not be susceptible and must not have a dual meaning. So, the assistance in the individual cases must be borne out from the very surrounding circumstances of the individual case, since if the terms are unambiguous and do not have a dual meaning, then no question of interpreting those terms ever arises. So, if the facts or the circumstances so concerned with the individual cases are in itself notorious, then the rest can be very well presumed, and the interpretation will only be based on such presumptions.
In (Royal Botanic Gardens & Domain Trust v South Sydney City Council , 2002), the Court ignored the decision in Codelfa (Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982), and held that it is not necessary that in every case the evidence needs to be established from the prevailing circumstances as the case may be, but only when there is ambiguity in the terms and when there is dual meaning. But, Lord Wilberforce in (Prenn v Simmonds , 1971) held that, the interpretation of the terms only starts on the vagueness of the  terms, where a single word often have multiple meanings, thus it can be conceived that the decision in (Prenn v Simmonds , 1971) is being echoed after certain years in (Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982). 
In (Trawl Industries of Australia Pty Limited v Effem Foods Pty Limited , 1992), again (Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982) was highlighted, and the again the emphasis was laid on the very fact that, if the language of the contract is ambiguous then the extrinsic evidence ought to be taken into consideration, since, if a particular phrase or a particular word has a specific meaning, but is laid in the terms or in the contract in such a way that it seems to be ambiguous, then it becomes necessary to construct the meaning of that particular word, which is in dilemma and then only the proper meaning or the intended meaning of the parties can be identified and hence constructed. Again, Court while interpreting some letters before it, held in (Pacific Carriers Ltd v BNP Paribas , 2004), that a document must be deciphered based on the object of the activity so concerned, and hence it is emphasized and each one of them is aligned in such a way that, each and every term, must be identified by the Courts in line which would be reasonable as to the makers of it, i.e., the parties to the contract.

Previous Authorities

The Court cited the cases as follows:
(Carter v Hyde , 1923)
(Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982)
(Pacific Carriers Ltd v BNP Paribas , 2004)
(Prenn v Simmonds , 1971)
(Quadling v Robinson, 1976)
(Royal Botanic Gardens & Domain Trust v South Sydney City Council , 2002)
(Trawl Industries of Australia Pty Limited v Effem Foods Pty Limited , 1992)

Critical Analysis

Formation of contract is predicated upon accordant intentions of parties who are literally getting in a contract, and within the present case, the very theme of the dealings and its business purpose were illustrious to each party and therefore the existence of their intentions was originally entitled to full rights and what it's that they meant are judged on the target based on their communications so, M's offer in respect of an area of those rights was accepted, or alternative relevant behaviour was made, beneath the circumstances, and each party were cognizant that what M was providing to get the remaining rights which were what R accepted as offered, therefore it is aforementioned that there were categorical communications. It had been additionally celebrated that the offer for getting the rights on the topic of the SRN was inserted into the second rights acceptance form, which was with validity accepted. This case doesn't involve complexities which regularly arise wherever written agreement intention is inferred supported by the behaviour of the parties, thus if (Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , 1982) is once more reviewed, there lies some ambiguity on that fifty- five million rights which were thought-about because the subject of the second rights acceptance form was signed by R and was faxed back. So, there lies enough instances within the present facts of the case that points that the parties have really expressed their communications, and therefore it takes the form of straightforward sort of a suggestion that contains indications of the accessible manner of acceptance which was deemed to have been followed, as was contended by R, by a conformist acceptance. If the uncertainty on the slight ambiguity within the terms is resolved by the mutual information of the parties involved and supported by the identity of the remaining rights and to the very fact that the previous one was totally different and had already been with validity accepted on an earlier date. So, it becomes necessary that the acceptance ought to correspond with the offer. Once parties are into negotiating a contract, offer and acceptance should exactly correspond, since a suggestion created by one party lapses if it's rejected by the opposite party, thus any departure from the offer can lead to the acknowledged acceptance being ineffective. A binding contract will solely be caused by acceptance that corresponds with the offer in totality and therefore becomes unconditional. The position is clear in reference to a counter offer; therefore, the acceptance should be unconditional. However, the rule may be a strict one and isn't restricted to material deviations from the terms of the offer, thus once a suggestion is rejected it's dead and can't be accepted unless it's revived by the providing party and notwithstanding it's worded as an acceptance. So, a contract needs to accord with the offer and acceptance and therefore if an acceptance that doesn't correspond to the offer can increase quantity commonly to a counter offer. Thus, in the absence of a transparent offer and an unconditional acceptance, there will be no contract. The acceptance of a suggestion for a promise should, correspond to the offer for each purpose, and should be unequivocal, and exploit nothing open for future negotiations, that basically means the language employed by the offeree should convey to a reasonable person within the same position of the benefactor, as a vivid call by the offeree, thus acceptance that leaves open to the adjustment of the value, leaves area to be more negotiated and therefore the ascertainment of the capability supporting the material term of the offer, should depict the intention of the offeree just to accept that, should be expressed on the very fact of acceptance. The underlying idea of the analysis of offer and acceptance is to stress the reciprocal nature of the link. Mirror image rule prohibits the offeree from frequently incorporating new terms to the offer and with reference to bilateral contracts wherever one party makes the offer, the opponent responds with an acceptance, therefore the alteration in terms of the offer by the acceptance voided the agreement and there will be no possibility that a contract can at all exists, therefore distinguishing the existence of a contract and its terms, and the principle of the Mirror image rule is to make sure the acceptance is final and completely unconditional so that the binding effect of the contract can be incorporated. So, a mere coincidence between the act needed and therefore the doing of that act does not spare the full responsibility, since, qualified acceptance is where the conditions are not accepted in verbatim, and thus the need of some mental component connecting the two parties arises. So, the contract is that agreement which is bound only by the terms, and therefore a suggestion on one set of terms will hardly be accepted by communication in numerous terms. Therefore, the acceptance should correspond to the offer.

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Carter v Hyde , (1923) 33 CLR 115 (1923).
Codelfa Constructions Pty Limited v State Rail Authority of New South Wales , (1982) 149 CLR 337 (1982).
Pacific Carriers Ltd v BNP Paribas , (2004) 78 ALJR 104 (2004).
Prenn v Simmonds , [1971] 1 WLR 1381 (1971).
Quadling v Robinson, (1976) 137 CLR 192 (1976).
Redowood Pty Ltd v Mongoose Pty Ltd, [2005] NSWCA 32 (NSWCA 2005). Retrieved from
Royal Botanic Gardens & Domain Trust v South Sydney City Council , (2002) 76 ALJR 436 (2002).
Trawl Industries of Australia Pty Limited v Effem Foods Pty Limited , (1992) 27 NSWLR 326 (1992)

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