Co1 : Offer & Acceptance, Certainty & Intention to Create Legal Relations (rev notes) Flashcards
Four requirements for there to be a contract
- Offer
- Acceptance
- Certainty of terms
- Intention to Create Legal Relations
English law approach to contracts (from tutorial)
Like upholding contracts + Like to be ‘hands off’ / avoid interfering
=> hence strict requirements for a contract to be created / recognised as such: to avoid having to interfere with it afterwards
Offer (defº)
= expression by one party of willingness to enter into a contract on stated terms, provided the other party accepts them (McKendrick)
=> can be made orally, in writing or by conduct
Offer ≠invitation to treat
ITT = expression of willingness to enter into negociations , hoping those will lead to a contract
=> distinction = whether maker of the offer intended to be bound or not
=> Contrast Gibson v Manchester CC and Storer v Manchester CC
Two kinds of contracts
Unilateral contracts : acceptance = performance
≠
Bilateral contracts : acceptance separate from performance
O - PB cases (4)
- Display in a shop
- Advertisement
- Auctions
- Tenders
O - PB cases - key points
display in a shop is NOT an offer = PSGB v Boots (1952)
Advertisment is NOT an offer = *Partridge v Crittenden( (1968)
/!\ exception = Carlill - bcs unilateral contract ?
Auctions :
- if reserve price, offer = winning bid, acceptance = hammer coming down = British Car Auctions Ltd v Wright
- if no reserve price, offer = when thing is put up for sale, acceptance = winning bid = Barry v Davies
tenders
- invitation to tender = ITT = Harvela Investments
- Offer = the tender
- Acceptance = when the person asking for tenders chooses one
/!\ in some cases, invitation to tender = offer to consider bids (eg when specific condo to submit tender) => unilateral contract made binding on performance = oblº to accept highest tender & enter contract w/ highest bidder = Blackpool & Flyde Aero Club
O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº1
** display = ITT, offer made by customer when he presents goods at cash desk**
= general view of the courts, see eg Fisher v Bell or PSGB v Boots …
O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº2
Display = offer, accepted when goods are picked up
=> pb = purchaser bound as soon as picks up something, can’t change his mind (returning good to shelf would be breach of contract)
O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº3
Display = offer, accepted when purchaser brings goods to cash desk
[come back to ag against this view]
O - Pb Case #2 : advertisement - general rule
= advertisement (in newspaper) = invitation to treat
=> see eg *Patridge v Crittenden**
=> makes ‘business sense’ (Lord Parker) bcs otherwise, advertiser risks being bound to sell more goods that he owns
O - Pb Case #2 : advertisement - exceptions
where ad can be considered an offer: see Carlill v Carbolic Smoke Ball Co [1893] : court held that ad = an offer to the whole world, unilateral contract made with those who accept it on the faith of the adv
+ See also Bowermann v Association of British Travel Agents Ltd (1996) for modern application
O - Pb Case #3 : Auctions - general rule
General rule:
* Auctioneer (A) makes an invitation to treat by inviting bids to be made
* Offer made by bidder (B)
* Offer is accepted when A strikes w/ hammer
=> see British Car Auctions Ltd v Wright [1972]
O - Pb Case #3 : Auctions - auctions without reserve
A makes the offer (sale without reserve), accepted by highest bidder = Barry v Davies [2000]
/!\ In most auction sales: contract btw auctioneer & highest bidder = “collateral contract” (separate from contract for sale of goods made w/ O of goods) (see again Barry v Davies)
=> Barry = eg of courts reasoning backwards: decide C should have remedy, then “accommodate that conclusion within the offer and acceptance framework, even though the fit is somewhat uneasy” (McKendrick)
O - Pb Case #4: Tenders - general rule
Invitation to tender = invitation to treat, offer made by person who submits tender, accepted when inviter accepts a tender
O - Pb Case #4: Tenders - invitation to tender as an offer
- Harvela Investments : tender = offer of unilateral contract to sell the shares to highest bidder
- Blackpool and Clyde Aero Club : 2 contract analysis : invitation to tender = offer of unilateral contract / oblºto consider any tender which conforms w/ requirement in the invitation (accepted by submitting a conforming tender)
pb = uncertainty as to the types of sitº where courts will construe invitation to tender as offer of unilateral contract (and so impose duty to consider)
O - automatic ticket machines
Lord Denning in Thornton v Shoe Lane Parking Ltd : automatic ticket machine (+ sign w/ prices) making an offer, accepted by motorist driving far enough into car park that machine issued a ticket
Acceptance - 2 requirements for acceptance to be valid
To be valid acceptance must
- Match the offer
- Be communicated to / brought to the attention of the offeror (/!\ exception of the postal rule)
Acceptance - definition (K)
= “unqualified expression of assent to the terms proposed by the offeror”
=> can be either by words or conduct (see eg Carlill v Carbolic Smokeball
Acceptance - must match the offer
acceptance which is in fact proposing new terms = counter offer => kills off the original offer, and must be accepted in turn
=> see Hyde v Wench [1840]
Acceptance - communication - general rule
= acceptance must be communicated / brought to the attention of the offeror
=> see Denning LJ in Entores v Miles Far East Corp :
- no acceptance if oral acceptance drowned by passing aircraft / telephone line goes dead (acceptor has means of knowing offeror might not have heard)
- ≠if acceptance clear and audible but offeror still fails to hear / understand : contract concluded unless offeror makes it clear he hasn’t heard
Acceptance - communication - instantaneous communications - general rule
Acceptance takes effect at the moment it is received by the offeror and at whatever place the offeror happens to be at that moment = Brinkibon Ltd v Stahag Stahl
Acceptance - communication - instantaneous communications - pb
What constitutes receipt of acceptance : having access to it or actually opening it ?
=> [?] case : acceptance takes place when reasonable offeror would access the message of acceptance
Acceptance - communication - postal rule
acceptance takes place when letter of acceptance is posted by the offeree = Adams v Lindsell [1818]
Acceptance in ignorance of offer
Possible to accept (unilateral) offer which one is unaware of (by conduct) -> entitled to reward / what was on offer once becomes aware = Gibbons v Proctor
≠bilateral contract : problematic for unwitting acceptor to become bound without knowing it (contract based on consent, which is absent here)
Acceptance through silence
acceptance cannot generally be implied from mere silence = Felthouse v Bindley
=> offeror can’t impose his offer on offeree by saying that he will be bound unless he expressly rejects the offer
/!\ exception = The Hannah Blumenthal : HL held that a contract to abandon a reference to arbitration could be concluded by the silence of both parties (K)
Prescribed methods of acceptance
General rule = offeror is not bound unless specific terms / method are complied with BUT must make it clear he will be bound only if specific terms are complied with
=> if not, he is bound by acceptance made ‘in any form which is no less advantageous to him than the form which he prescribed’ (Manchester Diocesan Council for Education v Commercial and General Investments Ltd)
A - Pb Case #1: Battle of the form
= where unclear on whose terms contract should be
Traditional approach = ‘mirror analysis’ (O&A) / last shot fired wins = Butler Machines v Ex-Cello Corp
BUT can be displaced in certain circumstances (eg long term relº / conduct of the parties) = Tekdata v Amphenol
/!\ difficult to do so, need to show clear course of dealing
A - Pb Case #2 : Unilateral Contracts - distinction from bilateral contracts
Imp of a contract being unilateral rather than bilateral: can be accepted by fully performing requested act, without need of advance notification of acceptance => see Carlill v Carbolic Smokeball
A - Pb Case #2 : Unilateral Contracts - when does acceptance become effective / binding ?
general rule = generally, full performance required before offeror is bound, BUT as soon as offeree starts performing offeror is bound not to prevent completion
= Goff LJ in Daulia Ltd v Four Millbank Nominees Ltd
Certainty - terms required for there to be certainty (3)
- Price
- ID of the thing
- Quantity
/!\ possible to have contract without a price = mk price implied
Certainty - explanation / approach of the courts (3)
to be valid, contract needs to be sufficiently certain for the courts to be able to enforce it – as K puts it, “it is for the parties, not the courts, to make the contract”, court’s job just interpreting it
BUT has to be “tempered” in business / commercial contracts bcs “business people wish to avoid rigid agreement which give them no room to manoeuvre in a fluctuating economy” (K quoted)
“the courts are generally reluctant to conclude no contract has been concluded where the parties have acted on the assumption that a contract has been entered” see Percy Trentham Ltd v Archital Luxfer Ltd
Certainty - vagueness pb
courts will strive to preserve bargain = interpretation tools to try and clarify (eg trade area custom, giving reasonable meaning, severing a meaningless clause…)
see eg Scammell v Dicker [2005]
Certainty - incompleteness pb (def)
= when the parties have failed to reach an agreement on one particular issue (eg May and Butcher v R [1934], Hillas v Arcos [1932])
Certainty - incompleteness pb - solutions (4)
- s8(2) of the Sale of Goods Act 1979 = where price of goods for sale not ‘determined’ by the contract, ‘the buyer must pay a reasonable price’
- sometimes, parties have agreed criteria by which an incomplete matter can be resolved (eg Hillas v Arcos)
- Contract itself “may provide the machinery to resolve the dispute between the parties” – but machinery might fail
- Court has power to narrow broad discretionary pwr (not to be used dishonestly / unreasonably etc)
ITCLR - Family & social cases (rule + 3 authorities)
Presumption against ITCLR in family and social context
Balfour v Balfour = presumption against ITCLR in context of marriage (ag for maintenance of wife living away for health reasons)
Jones v Padavatton = presumption against ITCLR in family context (mother promising house to daughter studying for the bar)
Blue v Ashley = presumption against ITCLR for statements made in social context using vague lgg, in anger or in jest
ITCLR - why no presumption in family context ?
Practical reasons
- Evidence (diff to provide in family context)
- A lot of litigation = floodgates (ag relied on in Balfour, reiterated by Lady Hale in Radmacher v Granatino)
Philosophical reasons
- Don’t want the state interfering too much in the indiv life and small agreements they make => indiv autonomy and privacy ag
- Don’t like legal coercion in the family unit
- If promise legally enforceable, X less likely to make the promise
=> Dori Kimel : Promise = based on trust (rather deep personal feeling, not the domain of the law)
+ performance more meaningful personally if performed on promise (as opposed to contract) => promises = powerful tools morally in terms of trust and rewarding trust + building relationships
ITCLR - commercial cases - (2 rules)
Presumption in favour of ITCLR in business cases = Esso Petroleum v Customs & Excise
/!\ Whether there is ITCLR is to be inferred objectively = based on the expectations of reasonable honest businessmen = RTS Flexible Systems Ltd v Molkerei Alois Muller
ITCLR - commercial cases - subject to contract clauses
‘subject to contract’ clause does not necessarily mean that no ITCLR / nothing binding : possible to waiver it by conduct indicating intention to be bound (eg substantial performance) as long as essential terms are agreed
= RTS Flexible Systems Ltd v Molkerei Alois Muller
ITCLR - commercial cases - comfort letters
Statement of fact as to intention or policy in a comfort letter generally not legally binding = Kleinwort Benson Ltd v Malaysia Mining Corp
=> Statement of fact abt what policy is at a given time ≠ promise that such a policy will continue in the future / promise relating to future conduct – no ITCLR in the former so not binding
ITCLR - employment / trade unions
Trade Union and Labour Relations (Consolidation) Act 1992, s 179(1) : collective ag conclusively presumed not to have been intended to be a legally enforceable contract UNLESS it is in writing AND contains a provision which states that the parties intend it to be legally enforceable
