Co1 : Offer & Acceptance, Certainty & Intention to Create Legal Relations (rev notes)

Question 1

Four requirements for there to be a contract

Answer 1

1. Offer
2. Acceptance
3. Certainty of terms
4. Intention to Create Legal Relations

Question 2

English law approach to contracts (from tutorial)

Answer 2

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

Question 3

Offer (defº)

Answer 3

= 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

Question 4

Offer ≠invitation to treat

Answer 4

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

Question 5

Two kinds of contracts

Answer 5

Unilateral contracts : acceptance = performance
≠
Bilateral contracts : acceptance separate from performance

Question 6

O - PB cases (4)

Answer 6

• Display in a shop
• Advertisement
• Auctions
• Tenders

Question 7

O - PB cases - key points

Answer 7

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

Question 8

O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº1

Answer 8

** 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 …

Question 9

O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº2

Answer 9

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)

Question 10

O - Pb Case #1 : display of goods for sale - 3 possible approaches - nº3

Answer 10

Display = offer, accepted when purchaser brings goods to cash desk

[come back to ag against this view]

Question 11

O - Pb Case #2 : advertisement - general rule

Answer 11

= 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

Question 12

O - Pb Case #2 : advertisement - exceptions

Answer 12

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

Question 13

O - Pb Case #3 : Auctions - general rule

Answer 13

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]

Question 14

O - Pb Case #3 : Auctions - auctions without reserve

Answer 14

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)

Question 15

O - Pb Case #4: Tenders - general rule

Answer 15

Invitation to tender = invitation to treat, offer made by person who submits tender, accepted when inviter accepts a tender

Question 16

O - Pb Case #4: Tenders - invitation to tender as an offer

Answer 16

• 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)

Question 17

O - automatic ticket machines

Answer 17

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

Question 18

Acceptance - 2 requirements for acceptance to be valid

Answer 18

To be valid acceptance must
- Match the offer
- Be communicated to / brought to the attention of the offeror (/!\ exception of the postal rule)

Question 19

Acceptance - definition (K)

Answer 19

= “unqualified expression of assent to the terms proposed by the offeror”

=> can be either by words or conduct (see eg Carlill v Carbolic Smokeball

Question 20

Acceptance - must match the offer

Answer 20

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]

Question 21

Acceptance - communication - general rule

Answer 21

= 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

Question 22

Acceptance - communication - instantaneous communications - general rule

Answer 22

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

Question 23

Acceptance - communication - instantaneous communications - pb

Answer 23

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

Question 24

Acceptance - communication - postal rule

Answer 24

acceptance takes place when letter of acceptance is posted by the offeree = Adams v Lindsell [1818]

Question 25

Acceptance in ignorance of offer

Answer 25

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)

Question 26

Acceptance through silence

Answer 26

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)

Question 27

Prescribed methods of acceptance

Answer 27

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)

Question 28

A - Pb Case #1: Battle of the form

Answer 28

= 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

Question 29

A - Pb Case #2 : Unilateral Contracts - distinction from bilateral contracts

Answer 29

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

Question 30

A - Pb Case #2 : Unilateral Contracts - when does acceptance become effective / binding ?

Answer 30

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

Question 31

Certainty - terms required for there to be certainty (3)

Answer 31

• Price
• ID of the thing
• Quantity

/!\ possible to have contract without a price = mk price implied

Question 32

Certainty - explanation / approach of the courts (3)

Answer 32

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

Question 33

Certainty - vagueness pb

Answer 33

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]

Question 34

Certainty - incompleteness pb (def)

Answer 34

= when the parties have failed to reach an agreement on one particular issue (eg May and Butcher v R [1934], Hillas v Arcos [1932])

Question 35

Certainty - incompleteness pb - solutions (4)

Answer 35

• 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)

Question 36

ITCLR - Family & social cases (rule + 3 authorities)

Answer 36

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

Question 37

ITCLR - why no presumption in family context ?

Answer 37

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

Question 38

ITCLR - commercial cases - (2 rules)

Answer 38

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

Question 39

ITCLR - commercial cases - subject to contract clauses

Answer 39

‘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

Question 40

ITCLR - commercial cases - comfort letters

Answer 40

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

Question 41

ITCLR - employment / trade unions

Answer 41

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