Contract Formation Evaluation Flashcards
Offer Evaluation Paragraph - counter Offer
Offers can come to an end through rejection/counter offerthis is fair because if the offeree makes a counter offer, it sounds as if they do not agree to the terms of the original offer and would only buy the item on the new terms they suggest. Therefore it should be fine for the offeror to sell the item for the original terms to someone else as seen in the case of Hyde v Wrench where the defendant offered to sell a farm to the claimant for £1,000. The claimant in reply offered £950 which the defendant refused. The claimant then sought to accept the original offer of £1,000. The defendant refused to sell to the claimant and the claimant brought an action for specific performance it was decided that there was no contract. Where a counter offer is made this destroys the original offer so that it is no longer open to the offeree to accept. However, it is not always clear from the wording if the court will see the offeree’s response as a counter offer or just negotiation. If it is seen as just negotiation, the offer stayed open and the offeree could still accept it as in Stevenson v McLean. This causes the offeror to be in breach of contract if they have sold the item to someone else, believing the offeree to have rejected it.
Offer Evaluation Paragraph - Statement of Offer
To be an offer the statement must be definite and certain, as result the invitation to treat are not offers because invitations to treat are sufficiently definite or certain They are just invitations to others to make an offer. This allows seller to refuse the sale of any goods if it is had been labelled as something else as seen in Fisher V Bell where the display of the knife in the window was an invitation to treat so the knife had not been offered for sale. He was therefore not guilty of the offence. However, this is a legal point which is not well understood by the public. The use of terms like a special offer make it seem like offer this can create confusion within the party. As a result, this create that is uncertainty and has led to confusion and unfair decisions for the public
Offer Evaluation paragraph - Invitation to treat (Adverts)
Adverts are usually an invitation to treat as seen in partridge v Crittenden where Crittenden placed an advertisement stating Bramblefinch cocks, bramblefinch hens, 25s [£1.25] each’. He was prosecuted for ‘offering for sale a wild bird under the Protection of Birds Act 1954. He was not guilty as the advertisement was not an offer but an invitation to treat. Any offer leading to a contract would be made by the person responding to the advertisement. But an advert is a unaliteral offer if it states exactly what someone must do to accept and if someone has to perform the required act to accept. As seen in the case of Carlill v Carbolic Smoke Ball Co. This was fair because the company was trying to exploit the public’s fears about influenza at that time and convince them that a medicine was effective by dishonestly promising money that they never meant to pay, if a remedy didn’t work. However, whether an advert is a unilateral offer or an Invitation to treat depends entirely on the wording and this may not be clear eg. Is a ‘buy one get one free’ a UO or an ITT? It also caused problems re revocation – can a unilateral offer be revoked if someone has already started to accept? This is seen in the case of Errington v Errington where Under normal contract principles an offer may be revoked at any time before acceptance takes place, however, with unilateral contracts acceptance takes place only on full performance
Offer Evaluation paragraph- revocation
Offers can also come to an end through revocation even if the offeror has promised to keep the offer open for a certain time, provided the offeree gave nothing in exchange for this promise.as a result this is fair because it supports freedom of contract and because no consideration has been given. The offeror is free to sell or not sell until consideration has been exchanged and a binding contract exists as seen in the case of Routledge v Grant where the offeror stated that he would leave the offer of purchasing a lease on his property open for six weeks. However, when the offer was revoked before the end of the six weeks, the court ruled that there was no contract to breach However, this can be criticised as allowing promises to be broken and causing uncertainty for offerees who believed they had time to consider the offer and did not need to hurry to accept.
Intention Evaluation -social/domestic agreements
It is sometimes difficult to tell the difference between a commercial business agreement and a domestic social agreement. This is because there can be elements of both a social/domestic agreement and business agreement when examining if there is an intention to create lead relations. This was seen in blue v Ashley. Although it was a business agreement as it was conducted in a pub which is considered a social setting, it was decided that there was no legally binding contract as there was no intention. This led to an unfair ruling for Mr.Blue.however it allows room for interpretation for a judge to decide objectively and decided whether it was reasonable to presume the intention. As seen in Jones v vernons pool, there was no intent to create a legal contract. This was because there was clause stating that is binding in honour only. However, as the third party was not there at the time of agreement so can never really be sure what was agreed between both parties as seen in Balfour v Balfour where, He promised her an income of £30 per month. Later the marriage failed, and she petitioned for divorce and claimed her £30 per month, it was decided that there was no legal intention. As such as the basis of a such a decision can have severe financial consequences for the losing party. This highlights how intention may vary depending on the circumstances in which the agreement was made. as seen in the case of Jones v padvatton, it was deemed that it was no contract as they were in a good point in their relationship at the time of the agreement. Additionally highlights how intention can be unfair for those as it was deemed reasonable by the judge.
intention paragraph- the need for reform
The rules regarding intention require reform this is because feminists have argued that the requirement of intention to create legal relations as seen in Balfour v Balfour, the decision in this case is still applied today it is very outdated and feminists believe that the precedent from this cases reinforces the stereotype of the woman in the home contributing nothing of any economic value. Additionally, it did not take into account the fact that during that time woman are financial dependent on men, this highlights how there is uncertainty in the law regarding the presumption surrounding social domestic agreements. however, the rules on intention have evolved in order for decisions regarding intention to be fairer as seen in Wilson v Burnett allow to account for more modern circumstances.
Intention Paragraph-Rebuttal in commerial/business arrangements
The rebuttal in business/commercial agreements are fair because companies should be able to guard against being contractually bound with clear statements /clauses where necessary and where they want to be clear there is no legal intent with allow freedom to contract. This can be seen the case of Edwards v skyways. This is because there was a clear clause in contract the ex-gratia, thus they had to pay the ex-gratia, however but this can be unclear to the weaker party, this is because they don’t understand the impact of the contract on them as seen in Jones v Vernon’s pool where it was established that there was no intention to create legal relations as it was binding in honour only. This highlights how the rule of intention creates uncertainty within the law and it creates unfair decisions for parties.
Consideration paragraph - past consideration
Judges have decided that certain things have no value as consideration such as pre-existing duties or past consideration. The latter is when payment is offered after something has already been done as in Re McArdle where the defendants promised money to the claimant after he had completed work on their mother’s house but then refused to pay. This rule can be seen as fair because it prevents the risk of floodgates. Many dubious claims could arise if people were allowed to sue for rewards they had been promised after doing something voluntarily. A contract is a bargain not a gift. However, the rule can work unfairly in some situations so judges have created exceptions and this could be seen as a way of justifying their preferred outcome. For example it was decided in Lampleigh that D’s later promise to pay C for riding to Scotland to fetch a King’s pardon did have value as consideration. This seems fair as D had asked C to make the journey and it is unlikely that C would have done it without any expectation of reward. However this exception made the law unclear as it became difficult for future judges to decide when there is/is not an implied promise
Consideration Paragraph- Sufficient Consideration
Judges have decided that Consideration must be sufficient (have some value) but does not need to be adequate (equal to what the other party gives). On the one hand this rule respects freedom of contract as it is not the role of a judge to interfere with what the parties agreed, however bad the bargain may appear. However it can lead to some apparently ridiculous rulings where something of no real worth to the parties, such as sweet wrappers in Chapel, are held to have value, or minimal sums such as £1 for a year’s rent in Thomas.
Consideration Paragraph-emotional promises
Another issue which arises is whether emotional promises have any value as consideration.Judges’ decisions show inconsistency on this issue and may show their preferred outcomes rather than any genuine difference in legal principles. For example in White, a son’s promise to stop complaining was held to have no value so no contract existed, whereas in Ward a mother’s promise to love the child and keep her happy was accepted as sufficient. Such conflicting outcomes lead to confusion and uncertainty, making it difficult for lawyers to advise their clients.
Privity Paragraph- Third party benefits
This was unfair when a third party was supposed to benefit from the contract but had no right to sue when the contract was breached. For example in Beswick v Beswick, one term of the contract agreed between the uncle and nephew was that the nephew would pay a weekly pension to Mrs Beswick if Mr Beswick died first. When the nephew stopped payments to his aunt, she was unable to sue. Similarly in Tweddle V Atkinson, the groom was unable to sue because the contract was between his father and his father in law even though the whole purpose of the contract was for his benefit.
Privity paragraph - various exceptions
Due to the harshness of this rule, the courts developed various exceptions. For example in Jackson it was decided that the party to a holiday contract could claim damages on behalf of family members as well as himself. Also if an agent was used to make a contract then the principal would still have the right to sue because they really are a party to the contract rather than the agent. An exception was allowed in the case of restrictive covenants on property, so for example in Tulk v Moxhay, the promise not to build on Leicester Square could be enforced against the current owner even though he had not been a party to the original contract. Alternative claims are also possible in Negligence such as in Donoghue v Stevenson where the claimant was not a party to the contract for the purchase of ginger beer but was allowed to sue the manufacturer due to a duty of care being established. Although all these exceptions protected some claimants from the harshness of the Privity rule, they caused the problem of making the law complex and uncertain. Each exception covered specific situations but there was no general principle that a third party could sue if they were intended to benefit (as in Beswick).
privity paragraph-judges flexible
Another problem with the exceptions is that some of them depended on judges being very creative with the law. For example in Shanklin Pier v Detel Products, the actual contract was between the claimant and the painters but the court was prepared to invent a fictional collateral contract between C and the defendant who had supplied the paint to the painters. This was on the basis that the paint manufacturer had promised C that the paint would last 7 years and in exchange C had instructed the painters to use that paint. Such creativity makes the law complex and uncertain and gives rise to the criticism that judges are doing too much law making which is not their constitutional role and is un democratic.
privity paragraphs - problems of privity
These judicial exceptions also caused problems as they acted retrospectively, to the facts of a contract made in the past, when the parties had no idea that a third party would be given rights at a later date in the court case. It is unlikely that Horizon holidays would have realised at the time of the holiday booking that they would be liable to pay damages to family members as well as the person who booked the holiday and yet they were ordered to do so when the case came to court. In this respect the Contracts (Rights of Third Parties) Act is an improvement because it acts prospectively - to the future. The Act was very well publicised before it came into effect and only applied to contracts made after that date. Therefore contracting parties would have been aware and certain as to when third parties will or will not have rights under the contract they are making.
