A.2 Introduction to Contract Law Flashcards
Carlill v Carbolic Smoke Ball Co 1893
In unilateral contracts, performance means acceptance, it doesn’t have to be communicated to the offeror, and the offer cannot be revoked once performance has begun. How would an ordinary person reading the offer construe it? It must be stated and show that the offer was intended to create legal obligations.
Walford v Miles [1992] 2 AC 128 -
Duty to negotiate unenforceable. Cannot make a promise for an undetermined amount of time. If it had been a promise for a bound amount of time and had separate consideration, it would be enforceable. A duty to negotiate in good faith is as unworkable in practice as it is inherently inconsistent with the position of a negotiating party. It is here that the uncertainty lies. In my judgment, while negotiations are in existence either party is entitled to withdraw from these negotiations, at any time and for any reason. There can be thus no obligation to continue to negotiate until there is a ‘proper reason’ to withdraw. Accordingly, a bare agreement to negotiate has no legal content.’
Thornton v Shoe Lane Parking
It gives a good example of the rule that a clause cannot be incorporated after a contract has been concluded, without reasonable notice before. Also, it was held that an automatic ticket machine was an offer, rather than an invitation to treat. Lord Denning MR held that the more onerous the clause, the better notice of it needed to be given. Moreover, the contract was already concluded when the ticket came out of the machine, and so any condition on it could not be incorporated in the contract. The more onerous the clause, the better it needs to be shown. The issuance of the ticket was the contract, as the machine is always making an offer. When the ticket is issued with more clauses on it, it is modifying the contract post facto, which cannot be done. None of those cases has any application to a ticket which is issued by an automatic machine. The customer pays his money and gets a ticket. He cannot refuse it. He cannot get his money back. He may protest to the machine, even swear at it. But it will remain unmoved. He is committed beyond recall. He was committed at the very moment when he put his money into the machine. The contract was concluded at that time. It can be translated into offer and acceptance in this way: the offer is made when the proprietor of the machine holds it out as being ready to receive the money. The acceptance takes place when the customer puts his money into the slot. The terms of the offer are contained in the notice placed on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice before-hand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late. The contract has already been made: see Olley v Marlborough Court Ltd [1949] 1 KB 532. The ticket is no more than a voucher or receipt for the money that has been paid (as in the deckchair case, Chapelton v Barry Urban District Council [1940] 1 KB 532) on terms which have been offered and accepted before the ticket is issued. It is an instance of what I had in mind in J Spurling Ltd v Bradshaw [1956] 1 WLR 461, 466. In order to give sufficient notice, it would need to be printed in red ink with a red hand pointing to it - or something equally startling.
Partridge vs. Crittenden [1968]
Advertisements are usually an invitation to treat. in my judgment the law of the country is equally plain as it was in regard to articles in a shop window, namely that the insertion of an advertisement in the form adopted here under the title “Classified Advertisements” is simply an invitation to treat.
Grainger & Son v Gough
Sending a price list is inviting an offer.
Pharmaceutical Society of Great Britain v Boots Cash Chemists
Goods on offer with a price at a store - the offer is made by the customer at the till, taking the cash is acceptance by the store.
Lefkowitz v Great Minneapolis Surplus Sotre
Because it was to the first three potential customers, there was no unlimited availability, and it was construed as an offer rather than an invitation to treat
Harvey v Facey
defined the difference between an offer and supply of information. The Privy Council held that indication of lowest acceptable price does not constitute an offer to sell. Rather, it is considered an offer to treat.The contract must appear by the telegrams, whereas the appellants are obliged to contend that an acceptance of the first question is to be implied. Their Lordships are of opinion that the mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at that price to the persons making the inquiry. Their Lordships will therefore humbly advise Her Majesty that the judgment of the Supreme Court should be upheld. The appellants must pay to the respondents the costs of the appeal to the Supreme Court and of this appeal.
Harris v Nickerson (1873)
English law case concerning the requirements of offer and acceptance in the formation of a contract. The case established that an advertisement that goods will be put up for auction does not constitute an offer to any person that the goods will actually be put up, and that the advertiser is therefore free to withdraw the goods from the auction at any time prior to the auction.The court held unanimously that the advertisement did not constitute an offer, but rather was a mere declaration of intent. Blackburn, J. founded his judgment on public policy grounds, calling it a “startling proposition” that “any one who advertises a sale by publishing an advertisement is now responsible to everybody who attends the sale for his cab hire or travelling expenses”. Quain and Archibald, JJ. also drew public policy arguments, emphasizing that there existed no authority on which to base a decision that the Defendant is liable to indemnify all those who attended his auction. The court upheld the appeal.
Taylor v Laird (1856)
The offer will be effective only on communication of the offer ot the offeree. If the offer is contained in a letter which is posted, the offer is effective only when the letter is received.
Re Clarke (1927) HCA 47 -
There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing it or forgetting it after hearing it.
Williams v Carwardine (1833) 5 C & P 566 -
A reward had been offered, and the claimant was aware of the offer when instructing the police, although their motive was not the money. The motive was irrelevant, as she was aware of the offer at time of acceptance and was entitled to the money.
Brogden v Metropolitan Railway Company (1876–77) L.R. 2 App. Cas. 666
English contract law case, which established that a contract can be accepted by the conduct of the parties.An acceptance in one’s own mind is not enough, but as soon as we make an external act that is verifiable by other people, the contract is binding. though the parties may have gone no farther than an offer on the one side, saying, Here is the draft,—(for that I think is really what this case comes to,)—and the draft so offered by the one side is approved by the other, everything being agreed to except the name of the arbitrator, which the one side has filled in and the other has not yet assented to, if both parties have acted upon that draft and treated it as binding, they will be bound by it. If the parties have by their conduct said, that they act upon the draft which has been approved of by Mr. Brogden, and which if not quite approved of by the railway company, has been exceedingly near it, if they indicate by their conduct that they accept it, the contract is binding
Hyde v Wrench (1840) 3 Beav 334
The legal effect of a counter-offer is to destroy the original offer.
Stevenson v McLean (1880) 5 QBD 346 -
A request for information during negotiation doesn’t destroy the offer.
Felthouse v Bindley (1863) 1 New Rep 401 -
Silence is not sufficient acceptance. The offeree must communicate acceptance to the offeror for a a contract to be concluded.
Quernerduaine v Cole (1883) 32 WR 185 -
If an offer is made by telegram, post acceptance may not be sufficient. The medium of the offer may instruct the rapidity of answer expected.
Tinn v Hoffmann & Co (1873) 29 LT 271 -
The precise method prescribed by an offer need not be accepted as long as it is as expeditive.
Holwell Securities Ltd v Hughes (1974) 1 All ER 161 -
If the offer not only prescribes a particular method of acceptance, but insists on it, it must be followed. Can also waive the postal rule if decidely named.
Entores Ltd v Miles Far East Corporation 1955 2 QB 327 -
Between people in each others’ presence, the response must be heard by the offeror in order to be binding. Applies to the telephone as well. In instantaneous communications acceptance is complete and a contract is concluded only when the acceptance is received by the offeror and the place of acceptance is where the acceptance is received.
Adams v Lindsell (1818) -
Postal acceptance is given at the moment of posting the letter. An exception to the rule that acceptance must be received before the contract is complete.
Household Fire Insurance Co v Grant (1879) LR 4 Ex D 216
A signed acceptance was lost in the mail. The offer was deemed to have been accepted since the post office can be seen as the offeror’s agent. This means that the contract is concluded as soon as the letter is posted. This can be foregone by the offeror as per Holwell v Hughes.
Reynolds v Atherton (1921) 125 LT 690 -
DEATH OF OFFEREE. The death of the offeree cancels the offer. As the offer has been made solely to an individual, it cannot be accepted by anyone else.
Re Whelan (1897) 1 IR 575 -
DEATH OF OFFEROR. If the offeree knows about the offeror’s death before accepting, the offer is destroyed.
Bradbury v Morgan (1862) 1 HC 249 -
DEATH OF OFFEROR. Exception to Re Whelan. Acceptance in ignorance of the offeror’s death is valid. It is important to know whether the estate can fulfill the obligations created by the deceased.
Payne v Cave (1789) 3 Term 148 -
REVOCATION OF OFFER. An offer that is revoked is destroyed. It must be revoked before acceptance.
Routledge v Grant (1828) 4 Bing 653 -
TIME LAPSE OF OFFER. Revocation is valid even if an offer was said to be left open for a certain period of time.
Mountford v Scott (1975) 1 All ER 198 -
TIME LAPSE OF OFFER. Exception to Routledge v Grant. An offer made for a certain time for which considertion was given will not be able to be revoked within that time period, unlike in Routledge 1828.
Byrne & Co v Van Tienhoven & Co 1880 -
REVOCATION OF OFFER. The offeror must communicate the revocation to the offeree before acceptance is made - Revocation must be RECEIVED. Postal revocation, unlike postal acceptance, must be received before it takes effect.
Dickinson v Dodds (1876) 2 Ch D 463 -
REVOCATION OF OFFER. Revocation does not have to be communicated personally, a reliable third party is sufficient.
Shuey v United States (185) 92 US 73 -
REVOCATION OF UNILATERAL OFFER. Unilateral offers can be revoked if they are withdrawn in the same channel as they were published, whether or not the offeree has been made aware of it.
Luxor (Eastbourne) Ltd v Cooper (1941) AC 108 -
REVOCATION OF UNILATERAL OFFER.Unilateral offers can be withdrawn at any time until performance of the prescribed event.
Errington v Errington and Woods (1952) -
REVOCATION OF UNILATERAL OFFER. A unilateral contract cannot be withdrawn as long as the offeree keeps performing the required act.
Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Exch 109 -
TIME LAPSE OF OFFER. If no time period is specified, an offer expires after a reasonable time.
Financings Ltd v Stimson (1962) All ER 386-
PRECONDTION NO LONGER EXISTS. An offer is destroyed when one of the pre-conditions of a contract are no longer met (the thing to be sold is damaged, for instance.)
Countess of Dunmore v Alexander (1830) 9 Sh 190 -
REVOCATION OF ACCEPTANCE. It may be possible to revoke acceptance if the revocation reaches the offeror at the same time as acceptance. Very dubious Scottish case. Wenkeim v Arndt and A to Z Bazaars v Minister of Agriculture seem to deny this.
May and Butcher Ltd v The King [1934] 2 KB 17 -
An agreement to agree is not a contract, the terms must have certainty. There was no agreement between the parties. A contract for the sale of the tents had never in fact been concluded. This was because a fundamental term of the agreement that was necessary for the sale to be completed had not been agreed. As such, there could not be a contract. Whilst s8 Sale of Goods Act 1893 provided that a price could be fixed in the future, s9 Sale of Goods Act 1893 also provided that if that price could not be fixed by a third party, then no agreement could be made. No third party could set the price for the tents, and the court could not imply a price into the agreement. Therefore, no agreement had been made. The agreement between the claimants and defendant therefore was simply an agreement to agree, and not enforceable.
WINN V BULL: 1877 7 Ch D 29
When the contract says it is dependent on a formal contract, that will apply, it will not be enforceable until the contract is fully agreed. By an agreement in writing, the defendant agreed with the plaintiff to take a lease of a house. The other details were included, but the agreement was ‘subject to the preparation and approval of a formal contract’. The plaintiff sought specific performance.Held: The words ‘subject to the preparation and approval of a formal contract’ in a document prevented the document from being held to be a final agreement of which specific performance could be enforced. Sir George Jessel MR said: ‘It comes, therefore, to this, that where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says; it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract it becomes a question of construction, whether the parties intended that the terms agreed on should merely be put into form, or whether they should be subject to a new agreement the terms of which are not expressed in detail’
Hillas and Co v Arcos Ltd (1932) 147 LT 503 -
PREVIOUS COURSE OF DEALINGS between the parties can clarify uncertain terms. CUSTOM can also clarify, here they were both familiar with the timber industry. Where the courts can interpret an agreement to keep it upheld, being able to interpret the uncertain terms, it will do so for commercial agreements, as they are generally taken to be undertaken with the intention to be legally bound. There was a valid and enforceable agreement that allowed Hillas to purchase 100,000 staves of wood for at a reduced rate. This was more than a mere ‘agreement to agree’ because the only thing necessary for the agreement to be brought into existence was for the buyers to decide to exercise their option to purchase the wood. Whilst the price had yet to be agreed, this was only because it naturally fluctuated as a commodity depending on market conditions. Where the issue was in the balance, as here, it was held that the court should try to interpret the words of the agreement in such a way as to preserve the subject matter of the agreement rather than destroying it, and contracts made between merchants in this way should be upheld where the court can interpret the terms in order to do so.
Foley v Classique Coaches Ltd (1943) 2 KB 1-
Once performance has begun, courts will usually enforce the contract. They had been performing under the agreement for years and were intended to be bound by the agreement. Furthermore, they had included an arbitration clause. The agreement was not void for uncertainty simply because the price for the fuel had not been mentioned in the agreement. Classique had performed their agreement for several years, and this obligation could not simply be repudiated. Where the parties had acted as though an agreement had been created and performed their obligations in this way, there was instead an implied term that the price of the fuel to be purchased under the agreement was to be reasonable. Furthermore, if agreement could not be reached on what was a reasonable or fair price, the agreement contained an arbitration clause specifically designed to resolve disputes of this nature. Classique coaches were therefore in breach of contract by failing to purchase fuel from Foley, as required by the agreement.
Nicolene Ltd v Simmonds [1953] 1 QB 543 -
AMBIGUITY, REMOVING MINOR UNCERTAIN TERMS. The ambiguity or vagueness must apply to a significant term of the contract in order to be unenforceable. In this particular case, the “usual conditions” was a meaningless phrase, but did not stop the entire contract from being enforceable. The contract did not fail for uncertainty or vagueness. The phrase ‘usual conditions of acceptance’ was a meaningless phrase because there were no usual conditions of acceptance but could be severed from the rest of the agreement. The essential terms of the agreement itself were identifiable and could be upheld by the court. In situations like this the courts should try and give effect to the parties’ intentions and the terms of the agreement are to be upheld if they can be found and given effect to. For a contract to fail for uncertainty the meaningless or vague phrase must relate to a significant aspect of the agreement itself, without which there could not be a proper agreement that could be upheld by the courts.
Sudbrook Trading Estate Ltd v Eggleton (1893) 1 AC 444
VAGUENESS - COURTS CAN CLARIFY VAGUE TERMS by relying on the principle of REASONABLENESS. There was a dispute regarding an option to purchase a leased property, but there was a clause stipulating a mechanism for valuing the property in cases the parties didn’t agree. The seller refused to nominate one, whereby the court nominated its own valuor to solve the lack of valuor, the contract was upheld.
Balfour v Balfour [1919] 2 KB 571
It held that there is a rebuttable presumption against an intention to create a legally enforceable agreement when the agreement is domestic in nature. There was no intention of the parties to be legally bound by the “contract” and so it is not legally enforceable.
Merritt v Merritt [1970] 2 All ER 760; [1970] 1 WLR 1211
is different because the couple was estranged at the time they made the “contract” and were expecting to be legally bound, unlike in Balfour.
Jones v Padavatton [1968] EWCA Civ 4
The decision demonstrates how domestic agreements, such as in between a mother and daughter, are presumed not to be legally binding unless there is clear intention. The Court held that there was no binding contract. Although there would have been a contract if it was not the domestic parties related, there was insufficient evidence to rebut the presumption against domestic arrangements. Also, the Court of Appeal stated that the agreement would last until the daughter had passed her Bar finals; yet 5 years had elapsed and she had still not passed them, therefore the contract had elapsed.
Parker v Clark [1960] 1 WLR 286
reliance and creation of legal relations in a social type of agreement. Devlin J held that the Clarks were liable for damages to the Parkers given that the Parkers had relied to their detriment on the assurance of the Clarks that they would have a place to stay. The contract was enforceable as it was a binding offer and the Parkers relied on the promise. “I cannot believe… that the defendant really thought the law would leave him at liberty, if he so chose, to tell the [claimants] when they arrived that he had changed his mind, that they could take their furniture away, and that he was indifferent whether they found anywhere else to live or not.”
Jones v Vernon’s Pools Ltd (1938) 2 All ER 626
Although there is a presumption that commercial parties intend to create legal relations, that can be removed by such words as “binding in honour only.”
Kleinwort Benson (KB) v Malaysia Mining Corporation BHD (MMC BHD) [1989] 1 WLR 379 -
the letter of comfort had no effect, it was simply company policy, which was apt to change from time to time. Further, they refused to sign the guarantee, showing they were not intending to be legally bound.
Currie v Misa (1975) LR 10 Exch 153
Consideration is defined as a benefit acquired by one party or a detriment suffered by the other. Consideration is essential in English Law, unlike law systems based on Roman Law, which frames a contract as a bargain. We must get something in exchange for something. A definition by Pollock: “An act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable. If there is no consideration, then it’s not a contract, but a gratuitous promise, and English law does not generally impose a contractual obligation on those.
Tweddle v Atkinson (1861) 1 B & S 393
The promissee must give consideration to buy the promisor’s promise
Rascorla v Thomas (1842) 3 QB 234
Past consideration is generally insufficient consideration
Lampleigh v Brathwait (1615) Hob 105
Past consideration can be considered sufficient consideration when a past transaction can be considered part of the present transaction.
Pao On v Lau Yiu Long (1980) AC 614
Here a past promise was considered good considertation because it was made as a contingency to a new ask by the defendant - not to sell the shares within a given time. There are circumstance that can give rise to an implication to pay some money or confer another benefit on the promisee: 1. the promisor requested the promisee to carry out the act constituting the past consideration. 2. both parties understood that the promissor intended to pay the promisee for their services (and was not a favour). 3. the payment is legally enforceable.
Thomas v Thomas (1842) 2 QB 851
GBP 1 per year for rent was considered adequate consideration. In general, consideration need not be “sufficient,” the court doesn’t measure the consideration, but that it exists.
Chappell & Co Ltd v Nestle Co Ltd (1960) AC 87
Chocolate wrappers are adequate consideration
Collins v Godefroy (1831) 1 B & Ad 950
Consideration need not be adequate, but it must be sufficient (it must have some value). If the promisee performs a legal duty and nothing more, then this is not sufficient consideration to buy the promissor’s promise
Glasbrook Brothers Ltd v Glamorgan County Council (1925) AC 270
In contrast to Collins v Godefroy, if the legal duty is exceeded, then it can be onsidered consideration (i.e. they do more than what is required by the law.)
Stilk v Myrick (1809) 2 Camp 317
If the promisee merely fulfills an existing contractual duty to the promisor, and nothing more, they do not provide consideration to buy the promisor’s promise
Hartley v Ponsonby (1857) 7 El & Bl 872
In contrast to Stilk v Myrick, if the promisee exceeds their contractual duty, this is sufficient consideration.
Williams v Roffey Bros
If by fulfilling an existing contractual obligation, a party is giving a benefit to the the other party, it can be considered consideration (the additional considertion is in for example finishing the work that it wasn’t clear they would be able to). An important exception to this rule is whereby the promise is not given as a result of economic duress or fraud. Consideration in such cases can come from not breaching other contracts, avoiding penalties for delay, and avoiding the expense of engaging other other people where the original promisor cannot fulfill his obligations.
The Eurymedon - New Zealand Shipping Co Ltd. v AM Satterthwaite
Fulfilling an existing contractual obligation to a 3rd party can be considered sufficient consideration in the contract between two other parties. The unloader relied on the exception clause in the carrier’s contract with the shipper to unburden himself from liability. The shipper claimed he had not provided consideration (by carrying the goods) since he was already obliged to do so by his own contract with the carrier. The court found it was sufficient consideration.
Pinnel’s case (1774) ER Rep 612
payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfcation for the whole, because it there is no possibility that a lesser sum can be a satisfaction for a greater sum. Allowing a smaller part of a debt to be paid instead of the whole thing is not a binding promise as there is no consideration for that promise. One may allow a part-payment today and still go back for the whole sum. There are exceptions: 1. A smaller sum at an earlier date at the creditor’s request. 2. Part payment at a different place (C.f. Vanbergen - at the debtor’s request, not consideration. 3. Something other than money and the creditor accepts (because this could be more beneficial to him, and hence consideration.) A different manner of payment of the same amount is not consideration (c.f. D&C Builders)
Foakes v Beer (1884) 9 App Cas 605
Reaffirms Pinnel. A lesser sum cannot stand as consideration for a larger sum unless there is new consideration that creates a new contract.
Vanbergen v St Edmunds Properties Ltd (1933) 2 KB 223
Change in location at the debtor’s convenience is not consideration
Hirachand Punamchand v Temple (1911) 2 KB 330
Part payment to the creditor from a third party can be consideration.
Hughes v Metropolitcan Railway Co (1877) 2 App Cas 439
First case of PE. This was temporary estoppel as the parties had begun negotiations, meaning the landlord was giving the tenant his words that he would not be strictly sticking to the six months they had to repair. It appears to me that both parties by entering upon the negotiation which they entered upon, made it an inequitable thing that the exact period of six months dating from the month of October should afterwards be measured out as against the Respondents as the period during which the repairs must be executed.
