Agreement/ Consideration Flashcards
What are the five features of an agreement in order for it to be a valid contract?
Offer Acceptance Intention to create legal relations Consideration Certainty
Define contract
Contracts are voluntary obligations undertaken by two or more parties which is supported by consideration
What is Treitels definition of an offer
An offer is an expression of willingness to contract on specified terms, with the intention to become legally binding as soon as it is accepted by the person whom the offer is addressed to
What is the case of Carlill v Carbolic Smokeball Company 1892
Carbolic smoke ball company placed an advertisement offering to pay up to £100 for anybody who contracted influenza after using their smoke ball 3 times daily for 2 weeks. Ms Carlill used it mid-November to 17th Jan and suffered influenza.
Who are the three judges who opined on the Carlill case and what did each conclude?
Lindley - not a mere puff as they deposited £1000 to a bank, acceptance was the performance of the acts and consideration is the fact the defendant gets an advantage
Bowen - dismisses the need for a time restraint or that the contract is too vague
Smith - agreed with the above
In the Carlill case, what type of contract did Finlay and Terrell allege had been made and why did they argue no binding contract had been made?
An insurance policy or wager, acceptance had not been properly communicated and the wording of the advertisement was too vague
What are three features of a valid offer?
Must be addressed to the addressee
Must have intentions to create legal relations
Be certain
What is the case of Gibson v Manchester City Council 1979 and how does this oppose to Storer v Manchester City Council 1974?
Mr Gibson wanted to buy his rented council house in alignment with the Conservative party policy. He wrote to the local authority and they responded with a form and said if he was to fill the form out they may sell him the house. The authority changed to labour who refused to sell. The HOL decided that due to the word ‘may’ there was a lack of certainty.
The same scenario occurred in Storer but due to wording being certain, a contract had been formed.
What is a case which supports that adverts are not offers?
Partridge v Crittenden 1968
Protection of Birds Act 1959 prevented the sale of wild birds. There was an advert selling Bramblefinches. Judge Parker held that it was an invitation to treat and not an offer as it does not make sense for adverts to be offers in the business world.
What is an invitation to treat?
An invitation to negotiate an offer
What is the case of Pharmaceutical Society v Boots 1953?
It was an offence for drugs to be sold without the supervision of an assistant. The defendant made a self-serve store and the Pharmaceuticals society argued displaying the goods was an offer which was accepted by picking up the product. Somerville concluded it is not until the consumer picks the products up that an offer is made which is accepted by the cashier selling the product under the supervision of an assistant.
What is the case of Fisher v Bell 1961
The defendant had a flick knife on show in his shop window. The Restriction of Offensive Weapons Act 1959 restricted the sale of flick knives. The court held that a display of goods is not an offer.
R v Clarke?
Clarke gave important information about a murder in order to clear his name. Two police officers were killed and the government offered a reward to anyone who brought information and lead to a conviction. As Clarke did not know about the offer at the time, acceptance can not have occurred as he did not have the intention to create a legal relationship.
Hyde v Wrench
Wrench had some land, Hyde wanted to buy some land. Wrench said he would sell his land for 1000, Hyde proposed 750. When Hyde finally agreed to 1000, Wrench decided he no longer wanted to sell it to him as he didn’t like his conduct. Hyde took Wrench to court where it was held that because he counter-offered Wrench’s proposal, the initial offer was no longer standing so no valid contract had been made
What is the general rule of acceptance?
Acceptance is only in place once communicated to the offeror
What are the exceptions to the rule of acceptance?
Postal rule - when the letter is posted not received
Telephones do not follow the postal rule
Emails are when they land in the inbox not when they are read
Barry v Davies 2000
Barry went to an auction to buy an engine tuning machine which were to be sold for 14,000 if bought normally. The auction was without reserve but Davies refused to sell when the highest offer was £200. Davies later sold them for 750 each. It was held that Davies was in breach of contract as it was held without reserve
How can an offer be communicated
In writing
Orally
By conduct
When does an offer cease to exist
Only when it is terminated
How can an offer be terminated
Counter offer Revoking an offer before acceptance Death Delays Non fulfilment of a condition
What is a unilateral contract
The offeror promising to provide benefit when a certain act is completed - a one way promise
What is a bilateral contract
Both parties make promises
Adams v Lindsell 1818
Lindsell made an offer for wool, Adams accepted but by the time the letter was received the wool had already been sold. Due to the postal rule, Lindsell was in breach of contract
Entores v Miles 1955
Entores made an offer to a Dutch company through Teltex, a form of instantaneous communication, and it was accepted. Miles did not fulfil its contractual obligations. The court ruled that regular postal rule does not apply to instantaneous communication.
Does a bad deal count as consideration
The consideration has to have some value but does not need adequate value. Chappell & Co v Nestle 1960 - just 3 wrappers was enough consideration despite the other party obtaining copyright royalties
Is past consideration enough?
No, something done in the past cannot be used as consideration
Exception to past consideration
Lampleigh v Braithwaite 1615 - unspoken understanding that payment of some kind would be made
Can an existing duty amount to consideration
No, an existing obligation cannot be moved along to another contract. stilk v myrick 1806, 2 men left so stilk promised to pay additional money to the remaining 8 to finish the job but did not pay. Their existing duties were under the initial contract
Exception to existing obligations?
Williams v Roffey Bros 1991 - Williams backed out as they couldn’t afford, roffey bros would have to pay a penalty if they did not achieve the deadline, roffey agreed to pay extra. Williams adopted new work styles therefore roffey had extra benefit so contractual duty changed therefore had to pay
Part payment of a debt does not end liability for the full amount, provide a case
Pinnel’s case; despite early part payment, not consideration
