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AGREEMENT Flashcards

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1
Q

WHAT WAS THE HISTORIC APPROACH TO ESTABLISHING ‘AGREEMENT’?

A

The court looked for consensus ad idem – a meeting of minds – between the parties.

This subjective approach was very difficult to implement.

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2
Q

WHAT WAS THE CURRENT APPROACH TO ESTABLISHING ‘AGREEMENT’?

A

The court now applies an objective test which was explained in Smith v Hughes [1871] (reaffirmed in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG [2010]).

It requires a judge to look for factual evidence to show that the parties intended to make an agreement, as viewed by a reasonable person looking at the things said and done by the parties involved.

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3
Q

WHAT IS THE FACTUAL INDICATOR AF AN AGREEMENT?

A

Offer and Acceptance

The courts generally focus on trying to find an offer from one party that is then accepted by the other party

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4
Q

WHO ARE THE TWO PARTIES TO AN ‘OFFER’?

A

Offeror - the party making the agreement
Offeree - the party accepting the offer

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5
Q

WHAT IS AN OFFER?

A

An expression of willingness to contract on certain terms on which the offeror is prepared to be legally bound following acceptance

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6
Q

WHAT DOES AN OFFER PROVIDE?

A

The terms the offeror proposes to contract on and the law requires that the offer must be sufficiently certain

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7
Q

WHEN MIGHT AN ENTIRE AGREEMENT FAIL?

A

If a purported offer contains a term which is central to the contract but is so uncertain that it cannot be properly interpreted or resolved - this happened in Scammell and Nephew Ltd v Ouston [1941]

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8
Q

WHAT MIGHT A JUDGE DO IF THE UNCERTAIN TERM IS UNIMPORTANT OR MEANINGLESS?

A

A judge might simply ignore it and enforce the rest of the agreement if the remainder makes commercial sense – this happened in Nicolene Ltd v Simmonds [1953]

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9
Q

WHAT IS A UNILATERAL CONTRACT?

A

A unilateral contract results from a unilateral offer, which occurs where the offeror says to the offeree ‘if you do something, then I promise to do something in return’

The offeree does not have to do what is requested, by if they do, they will receive a benefit and will be able to enforce the contract and claim the reward.

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10
Q

WHAT IS A BILATERAL CONTRACT?

A

A bilateral contract is one where both parties have obligations i.e ‘I will build your extension in exchange for your promise to pay me £1,000’.

Bilateral contracts are more common.

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11
Q

HOW CAN AN OFFER BE MADE?

A

Orally, in writing or by conduct as long as it indicated that the offeror is willing to be bound if their terms are accepted

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12
Q

WHAT MUST THE OFFEREE HAVE KNOWLEDGE OF?

A

The offer as a party cannot accept something they are not aware of.

This illustrates the rule that the offer must be successfully communicated to the offeree.

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13
Q

AS WELL AS AN INDIVIDUAL, WHO ELSE CAN AN OFFER BE MADE TO?

A

A group or to ‘all the world’

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14
Q

WHAT HAPPENED IN THE CASE OF CARLIL V CARBOLIC SMOKE BALL CO LTD [1893]?

A

The defendants were makers of a smoke ball which claimed could cure and prevent a number of illnesses and they promised a reward of £100 to anyone who used the smoke ball as directed and caught influenza. Mrs Carlil used the smoke ball as directed and developed influenza but the defendants refused to pay the reward claiming that there was no contract because it was impossible to have a contract with the whole world. This is how Bowen LJ dealt with this point in the Court of Appeal:

‘[An advertisement] is not a contract made with all the world… it is an offer made to all the world…’

Such an offer becomes a contract when someone performs the stipulation(s) outlined in the notice.

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15
Q

WHAT IS AN INVITATION TO TREAT?

A

Invitations to others to make an offer, or to open negotiations

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16
Q

WHEN CAN AN INVITATION TO TREAT BE MADE INTO A VALID AGREEMENT?

A

When an offer is made in response

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17
Q

WHAT ARE THE FIVE SITUATIONS ESTABLISHED AS USUALLY INVOLVING INVITATIONS TO TREAT?

A
  • Advertisements
  • Auctions
  • Requests for tenders
  • Displays of goods for sale
  • Mere statements of price
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18
Q

WHAT IS AN ADVERTISEMENT?

A

Advertisements are generally considered to be invitations to treat, with the potential purchaser making the offer to buy.

The practical significance of this general principle if that it ensures that the seller retains the choice as to whether to sell the item to the prospective buyer.

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19
Q

WHAT IS AN ADVERTISEMENT FOR A BILATERAL CONTRACT VIEWED AS?

A

An invitation to treat (as in Partridge v Crittenden [1968])

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20
Q

WHAT IS AN ADVERTISEMENT FOR A UNILATERAL CONTRACT VIEWED AS?

A

An offer (as in Carlil v Carbolic Smoke Ball Co Ltd [1893])

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21
Q

WHAT IS THE GENERAL RULE IN RESPECT OF AUCTIONS?

A

At an auction with a reserve, the holding of the auction and the request for bids for the item by the auctioneer is an invitation to treat. The bidder responds by making an offer to buy, which the auctioneer accepts by bringing the hammer down.

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22
Q

WHAT ARE THE RULES IN RESPECT OF ITEMS AUCTIONED WITHOUT A RESERVE?

A

The rules were outlined in Warlow v Harrison [1859] – the auctioneer is making an offer to sell, and the highest bidder accepts that offer.

This is because the phrase ‘without reserve’ means that the auctioneer makes a promise to sell the item to the person who places the highest bid.

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23
Q

WHAT IS TENDERING?

A

Tendering is where a person submits a bid or quotation in the hope of securing a contract as a result of that bid

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24
Q

WHAT ARE THE RULES IN RESPECT OF TENDERING?

A

The rules were set out in Spencer v Harding [1870] which provided that sending out a request for tenders is usually an invitation to treat.

The firms which respond to that request and make a tender are making offers, from which the original requester is then free to decide which to accept.

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25
Q

HOW DO THE COURTS DECIDE WHAT IS AN INVITATION TO TREAT OR AN OFFER IN RESPECT OF TENDERING?

A

The courts will carefully analyse the wording used by the party inviting the tenders.

If the wording of the request promises to accept a tender which meets specified requirements, then the request might constitute a valid offer – Harvela Investments Ltd v Royal Trust Co of Canada [1986]

26
Q

WHAT HAVE THE COURTS MADE CLEAR IN RESPECT OF ‘DISPLAYS OF GOODS FOR SALE’?

A

That they amount to an invitation to treat.

27
Q

WHAT DID PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMISTS [1953] HOLD IN RESPECT OF DISPLAYS ON SUPERMARKET SHELVES?

A

By placing the goods on the shelves, the shop was not making an offer to sell but an invitation to treat. The customer then makes an offer to buy when they present the items at the checkout and the agreement is completed when the money changes hands.

This rule allows us to change our minds when we are shopping and return items to the shelf if they are no longer desired.

28
Q

WHAT ARE ‘MERE STATEMENTS OF PRICE’ REGARDED AS?

A

They not usually regarded as offers.

29
Q

WHAT ARE THE FOUR MAIN CIRCUMSTANCES IN WHICH AN OFFER WILL END?

A
  • The offeror withdraws the offer – known as revocation
  • It is rejected by the offeree – this often takes place via counteroffer
  • It has remained open for too long – known as lapse of time
  • It is accepted
30
Q

WHAT DOES ‘REVOCATION’ MEAN?

A

The offeror withdraws their offer

31
Q

WHAT IS THE RULE IN TERMS OF ‘REVOCATION OF AN OFFER’ IN RESPECT OF BILATERAL OFFERS?

A

The offeror is generally able to revoke at any point prior to acceptance (illustrated in Payne v Cave [1789])

32
Q

WHY IS IDENTIFYING WHEN SUCCESSFUL COMMUNICATION OF REVOCATION OCCURS CRUCIAL?

A

The offeree must be informed of the revocation and, until they know that the offer has been revoked, they remain free to accept the offer

33
Q

WHEN IS REVOCATION VALID?

A

Revocation is valid when it is actually received, not when it is put in the post – this is illustrated by Byrne v Van Tienhoven [1880]

34
Q

WHAT POINT IS THE CASE OF DICKINSON V DODDS [1876] THE LEADING CASE ON?

A

Revocation being effective if the offeree hears that the offer is withdrawn via someone else provided that this is a reliable third party

35
Q

HOW WILL THE OFFEROR REVOKE THE FIRST OFFER BY IMPLICATION?

A

By making a second, separate offer before the first has been accepted.

This will happen if the offeror communicated a significantly different second offer which is clearly intended to revoke the first offer

36
Q

WHAT IS THE RULE IN TERMS OF ‘REVOCATION OF AN OFFER’ IN RESPECT OF UNILATERAL OFFERS?

A

Errington v Errington and Woods [1952] seems to indicate that the revocation of a unilateral offer cannot take place once the offeree begins the act of acceptance and they must be given the chance to complete the performance

37
Q

WHAT IS ‘REJECTION OF AN OFFER’?

A

To reject an offer is to end it.

The offeree cannot go back on their rejection once they have given it.

38
Q

WHAT HAPPENS WHEN THE OFFEREE ANSWERS THE OFFER WITH A COUNTEROFFER?

A

This counts as a rejection and ends the original offer.

A counteroffer reverses the positions of the respective parties so that the original offeree becomes the new offeror and vice versa

39
Q

WHAT DID HYDE V WRENCH [1840] DEMONSTRATE IN RESPECT OF COUNTEROFFERS?

A

This case demonstrates what happens when a response to an offer changes a term (or terms) of the original offer.

The same principle applies when the offeree responds by trying to add terms to the original sale – Jones v Daniel [1894].

40
Q

WHAT IS ‘BATTLE OF THE FORMS’?

A

Where commercial parties enter into lengthy negotiations and compromises which results in the both parties trying to impose their own terms on the other

41
Q

WHAT DID BUTLER MACHINE TOOL CO V EX-CELL-O CORPORATION (ENGLAND) LTD [1979] HOLD IN RESPECT OF ‘BATLE OF THE FORMS’?

A

The general rule is that the last party to send it terms ‘wins’, as each redraft constitutes a new offer which counters the preceding one

42
Q

WHAT IS MEANT BY ‘LAPSE OF TIME’?

A

If an offer is said to be open for a specific period, it ends when that period expires

43
Q

IF NO TIME IS SPECIFIED, WHEN WILL AN OFFER END?

A

After a ‘reasonable time’

What is a reasonable time for an offer to stay open will be decided by the court on the facts of the case and will include consideration of the nature of the subject matter

44
Q

WHAT IS ‘ACCEPTANCE’?

A

The final and unqualified assent to all the terms of the offer, and there is no agreement until the offer has been accepted

45
Q

WHAT HAPPENS ONCE ACCEPTANCE HAS BEEN VALIDLY MADE?

A

The parties will be in a binding contractual relationship

46
Q

HOW CAN ACCEPTANCE BE EXPRESSED?

A

Orally, in writing or be inferred by conduct

47
Q

WHAT IS THE ‘MIRROR IMAGE’ RULE IN RESPECT OF ACCEPTANCE?

A

Acceptance must correspond exactly with the terms of the offer and be both final and unconditional

48
Q

WHAT IS ‘ACCEPTANCE ‘SUBJECT TO CONTRACT’’?

A

A form of conditional acceptance meaning that the person accepts but only on the condition that a formal binding contract can be agreed later.

The conditional acceptance does not initially bind either party

49
Q

WHAT IS THE GENERAL RULE IN RESPECT OF THE COMMUNICATION OF ACCEPTANCE?

A

Acceptance must be communicated to the other party; the offeree must let the offeror know that they have decided to accept

50
Q

WHAT DID FELTHOUSE V BINDLEY [1862] HOLD IN RESPECT OF SILENCE AS A PURPORTED ACCEPTANCE?

A

Silence cannot ordinarily amount to a valid acceptance and the offeror cannot stipulate that silence is valid acceptance

51
Q

HOW SHOULD ACCEPTANCE BE COMMUNICATED TO THE OFFEROR?

A

Ordinarily, the offeree may communicate their acceptance by any method so long as the acceptance is received.

However, if the offeror provides that only a particular method of accepting will suffice, then the offeree probably has to fulfil the requirement in order to provide a valid acceptance

52
Q

WHAT IS THE FINAL REQUIREMENT IN RESPECT OF ACCEPTANCE?

A

Acceptance must be communicated by someone authorised to accept

53
Q

WHAT IS THE KEY AUTHORITY FOR WAIVING THE NEED TO COMMUNICATE ACCEPTANCE?

A

Carlil v Carbolic Smoke Ball Co Ltd [1893]

54
Q

WHAT ARE THE THREE ACCEPTED SITUATIONS WHERE WAIVING THE NEED TO COMMUNICATE ACCEPTANCE COMMONLY OCCURS?

A
  • Acceptance by conduct
  • Acceptance of unilateral offers
  • Acceptance by post
55
Q

WHAT IS ACCEPTANCE BY CONDUCT?

A

Sometimes a party does not formally respond to an offer with words but instead begins to act in accordance with the terms proposed by the offeror.

Where the offeror also acts in accordance with their own suggested obligations, the courts are likely to hold that, viewed objectively, the offeree accepted the offer

56
Q

HOW IS ACCEPTANCE COMPLETED IN UNILATERAL CONTRACTS?

A

Acceptance is completed by performing the requested action rather than in words.

Once these actions are fully performed, the offeree needs to notify the offeror that performance has taken place

57
Q

IN RESPECT OF ACCEPTANCE BY POST, WHEN IS THE CONTRACT GENERALLY CONSIDERED TO HAVE BEEN MADE?

A

The contract is generally considered to have been made as soon as the letter is posted, even if it is delayed or never reaches the other party

58
Q

WHAT IS THE PURPOSE OF THE ‘POSTAL RULE’ THAT WAS ESTABLISHED IN ADAMS V LINDSELL [1818] AND APPLIED IN HOUSEHOLD FIRE INSURANCE V GRANT [1879]?

A

The purpose of the rule, is to create certainty in a situation in which one of the parties is at a disadvantage – the courts decided to favour the offeree

59
Q

WHAT ARE THE FOUR EXCEPTIONS TO THE POSTAL RULE THAT GREATLY REDUCES ITS INCONVENIENCE?

A
  1. It applies only when the letter is correctly stamped and addressed
  2. The parties can exclude the rule; either by express provision or by implication (Holwell Securities Ltd v Hughes [1974])
  3. It applies only when it is reasonable to use the post
  4. The rule should not be applied if it would ‘leave to manifest inconvenience and absurdity’ (Holwell Securities Ltd v Hughes [1974])
60
Q

WHEN IS THE POSTAL RULE PARTICULARLY ILLOGICAL?

A

Where the offer is accepted via post but that acceptance is then subsequently withdrawn via a quicker method and before the offeror has received the postal acceptance

61
Q

WHAT DID BRINKIBON LTD V STAHAG STAHL UND STAHLWARENHANDELSGESELLSCHAFT MBH [1982] HOLD IN RESPECT OF ACCEPTANCE BY MODERN METHODS OF COMMUNICATION?

A

Lord Wilberforce provided that, ordinarily, an acceptance sent to a commercial party during office hours will be valid as soon as it is received rather than when it is actually read.

Where a message is sent outside of office hours, it was suggested that it will have effect at the time when the sender could reasonably expect it to be read

62
Q

WHAT IS THE RELEVANT LEGISLATION IN RESPECT OF CONTRACTS BEING FORMED ELECTRONICALLY?

A

Electronic Commerce (EC Directive) Regulations 2002

Reg 11 states that the contract is formed when the customer is able to access the acknowledgement of receipt sent from the supplier/seller

CONTRACT LAW (7 decks)

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