Contract Formation P3 Flashcards
Includes formation, acceptance, consideration, privity of contract and intention to create legal relations
what is the definition of an offer
a statement of willingness to enter into a contract on stated terms, if they are accepted by the party or parties to whom they are addressed
who is the offeror
party of person making the offer
who is the offeree
party or person to whom the offer is made
what makes an agreement
an offer + acceptance = agreement
what are the key elements for contract formation
offer
acceptance
consideration
privity
intention to create legal relations
what is the mirror image rule
if an offer is exactly matched by the acceptance then the courts are satisfied there is an agreement
the wording of an offer must be ….
definitive in terms
which case showed that the wording of a contract must be definitive in terms as the wording wasnt precise enough to make a legally recognised offer
Gibson V Manchester city council (1979)
what are the two types of offer
bilateral
unilateral
what is a bilateral offer
requires both the offeror and offeree to do something. Both parties are obliged to do so
what is a unilateral offer
is an agreement to exchange for performance if the potential performer chooses to perform an act. No obligation to perform the act from the offerees side
what is an invitation to treat
an opportunity or an expression of willingness to enter into negotiation
are advertisements usually an invitation to treat or a unilateral offer
usually an invitation to treat but it can be a unilateral offer if terms are definitive and need to be fulfilled
what is the leading case for invitation to treat as it was an expression to show willingness to recieve potential offers
Partridge V Crittendon (1968)
which case involved a new medicine and the C was entitled to money as the unilateral offer means the offeree does not need to communicate intent to accept, it was possible to make an offer to the world and the depsoit demostrated intent to pay the money suggested in the add
Carlil V Carbolic smoke ball (1893)
what did Leftkowitz V Great Minneapolis Surplus store (1957) show
a binding obligation on the D arose from the specific language of the add. A performance has been promised in return for a performance which was recieved (if they only wanted female customers they should have stated)
what cases showed the display of goods being an invitation to treat
Pharmaceutical Society of GB V Boots (1953)
Fisher V Bell (1961)
how does goods at an auction work in terms of offers
invitation to treat when biding and acceptance when the hammer is hit
an auctioner does not make an offer - British car auction V Wright
a request for information is…
not an offer, it is an invitation to treat
what case shows a request for information is not an offer
Harvey V Facey (1893)
how do offers work in terms of machines
machine can make an offer
accaptance occurs when money is placed and ticket is given
contract cannot be subject to terms that are present after acceptance has been taken place
what did Thornton V shoe Lane Parking (1971) show
contracts cannot be subject to terms that are present after acceptance has taken place
how many ways are there to end an offer
6
what are the 6 ways to end an offer
revocation
rejection
counter-offer
lapse of time
death
acceptance
what is revocation of an offer
means to withdraw the offer (offeror)
when can an offer be revoked
anytime before the offeree accepts
which case showed that dispite the offeree not seeing the revocation, it was valid as it was given in the same notoriety as the original offer
Shuey V US (1875)
what did Byrne V Van Tienhoven (1880) show
the general rule of revocation is that it must be effectively communicated
D should have taken in to consideration how long postage would take and that it wasnt the usual form of communication for the offer (Telegram was sent back and was instant communication of that time)
what case showed that the mortgage payments were an ongoing act of acceptance, as long as they continued to pay then the offer couldnt be revoked
Errington V Errington (1952)
what did Dickinson V Dodds (1876) show
if offeree hears about the revocation from a reliable third party this will be considered effective communication
what is laspe of time as a way to end an offer
once the fixed duration of an offer to be accepted is expired then there is no longer an offer
when no fixed time is stated then the courts will conider a ‘reasonable time’ but this depend on the nature of the offer
which case showed that where there is no time set on an offer the courts will consider what is a reasonable time for that offer to last
Ramsgate Victoria Hotel V Motefiore (1866)
what is rejection as a way to end an offer
to say ‘no’ to the offerors offer
once an offer is rejected…
it cannot be accepted by the same person later on who rejected it
what is a counter-offer
offeree comes back with their own offer - switching the roles around of the parties
what did Hyde V Wrench (1840) show
a counter offer terminates the original offer
what did Stevenson V McLean (1880) show
there was a binding contract when c sent acceptance on monday. Cs request for more information was not a counter-offer
what is death of a party as a way to end an offer
if the offeree dies then offer ends
if offeror dies, offer can still continue untill the offeree learns of the death
if offer is to perform a personal service and offeror dies then the offer ends
which case is used for death of a party
Bradbury V Morgan (1862) - death of offeror did not prevent contract from going ahead
what is acceptance as a final way to end an offer
the offeree effectively communicated their conditional agreement to all terms of the offer
what is the general rule for acceptance
must be effectively communicated
which case showed that silence cannot amount to acceptance
Felthouse V Bindley (1863)
which case established the general rule of acceptance
Entores V Miles Far East Corp (1955)
which case supports Entores in the fact that instantaneous communication is effective communication
Brinkibon V Stahag Stahl (1982)
acceptance can also be inferred via…
conduct
which case shows acceptance can also be inferred via conduct and why
Brogden V Metropolitan Rail Co (1877)
both parites clearly accepted the contract by continuing to recieve (and pay for coal). their conduct amounted to acceptance
acceptance must be given…
in exchange for the offer
which case showed that motive was irrelevant and the simply fact the C gave the information as asked in the offer meant she was entitled to the money
Williams V Carwardine (1833)
what did R V Clarke (1927) show
someone cannot accept an offer without the knowledge of the offer in the first place. Forgetting it had been made is as though he didnt know about it in the first place so could not claim the reward afterward
what is the key exception to the general rule of acceptance
Postal rule
what is the postal rule
it will only be a binding contract as soon as the letter is properly stamped, addressed and posted, even if it never arrives
the offeree must have proof of postage and it only applies if post is the expected means of communication
which case established the postal rule
Adams V Lindsell (1818)
what does the case of Household Fire Insurance V Grant (1879) support and give a breif explanation of the facts
it supports the postal rule established by Adams V Lindsell (1818)
D offered to buy shares from C, C accepted via letter sent in post which never arrived. C went bankrupt and sued D for failure to pay for shares
which case stated the definition of posted was ‘a letter is posted when it is correctly addressed and stamped and posted or passed to a person authorised to recieve mail - post man collected the mail
The London and Northern Bank (1900)
which case showed that if a method of accceptance is stated by one party to assist the other then this can be ignored with their agreement
Yates Building V Pulleyn (1975)
what is the battle of the forms and which case established it
when 2 businesses are negotiating the terms of a contract and each party wants to use its own terms and conditions. it is often the party who fired the ‘last shot’ that is the last party to put forward their terms and conditions that were not explicitly rejected by the other party
Butler Machine Tool V Ex-Cell-O-Corp established this^
In modern law the general rule still stands but what other 2 things are involved
the oferor is aware of accpetance
must also consider intention of the party and sound business practice
which case established the idea that in modern law the issue must be resolved in reference to the intention of the parties and sound business practice
Thomas V BPE Solicitors (2010)
what is the definition of consideration
some right, interest, profit or benefit accuring to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other
It is the exchange of something of the value of something else of value (exchange of promises)
must be a benefit and a detriment
which case established the long definiton of consideration
Currie V Misa (1874)
what is a promise called without consideration
a bare promise
what are the two types of consideration
executory
executed
what is executory consideration
both sides of party still have to carry out their promise
what is executed consideration
when one or both parties have fulfilled their promise
how many rules are there for conisderation
5
what are the five rules for consideration
must not be in the past
move form the promisor to the promisee
must not be vague
must be sufficient but need not be adequate
cannot be performance of an existing duty
what does past considertaion mean
consideration has no value when it has already been done at the time the agreement was made
which case is used for past consideration
Re McArdle (1951)
which case shows that if the promisers request had an implied understanding that the task should be paid for
Lampleigh V Braithwait (1615)
what is ‘must move from the promisor to the promisee
parties involved must be ones to pay consideration
cannot have a third partywho has not provided consideration
should be between two parties
which case shows must move from promisor to promisee and claim failured as he was a third party as the considation did not move from him
Tweddle V Atkinson
what is ‘must not be vague’ as a rule of considation
must be of legal value such as tangible and identifiable
consideration from the parties must not be too vague
what case showed that considation must not be too vague as the agreement not to bore his father was too vague
White V Bluett (1853)
what is ‘ must be sufficient need not be adequate’ as a rule of considation
idea of adequacy is that parties to the contract themselves agree that the value of things being exchanged is acceptable
Has to be something of monetary value but does not need to be equivalent
sufficient consideration must be real
what did Thomas V Thomas (1842) show and give a breif explaination of the facts
consideration does not need to be adequate (or equivalent) it must be sufficient
wish for wife to live in the same house after husband died but it wasnt in the will. Wish still went ahead wife paying 1 pound a year but then they tried to evict her
which case supports Thomas V Thomas with the ratio stating that even if the contract asked to just supply the wrappers, it was sufficient consideration eventhough they were only of normal value
Chappel V Nestle Co (1960)
what is ‘performace of an existing duty’ as a rule of consideration
if someone already has a legal duty to do something that cannot be consideration, examples include:
imposed under a duty to act, existing contracts with promises and repayments pf debt
if a party goes above and beyond contracts = consideration
which case showed that the crew were doing little more than thier existing contractual duties in covering for absent crewmen. They had provided no consideration for the captains promise
Stilk V Myrick (1809)
which case opposes Stilk V Myrick (1809) as they were sailing ‘dangerously shorthanded’ which is more than their existing contractural duties
Hartley V Ponsonby (1857)
which case showed that performing an existing duty cannot be consideration for a new promise and involved a police officer to testify and was paid to do so
Collins V Godefroy (1831)
what did Glasbrook Bros V Glamorgan County Council (1925) show
police had provided more officers to the area of miners stikes and had gone above and beyond their original obligation
which case showed that keeping a child happy was above and beyond her legal requirements as a mother
Ward V Byham (1956)
what did Williams V Roffery Bros show
the builder offering more money and in return carpenters were helping them to avoid a penalty therefore could claim for the extra money that was offered
what is privity of contract
only a person who is party to the contract can sue or be sued under it
which case outlined privity of contract and how
Donoughue V Stevenson - unable to claim as had no privity of contract with the cafe
what is the definiton of a third party
someone who is not party to the agreement, and has not provided consideration for it but has an interest in its performance
what is the doctrine (general rule) of privity
a third party to a contract cannot sue nor be sued
explain how only dew had privity of contract with selfridge in the case of Dunlop Pneumatic Tyres V Selfridge (1915)
Dunlop made the contract with Dew with terms that they must not resell below a certain price. They stuck to their word and sold to selfridge claiming the same clause but selfridge sold as less. Dunlop have a contract with Dew but only Dew have a contract with Selfridge
which case showed that he groom was merely a third party. Even though the contract was to benefit the Bride & Groom, under the traditional rules of privity – they have no rights under contract law.
Tweddle V Atkinson
what is the exception to the doctrine of privity
Contract (The Rights of Third Parties) Act 1999
what is the Contract (The Rights of Third Parties) Act 1999
act allows parties to take advantage of benefit given to them by conduct which they are not party too. Allows them to sue if the third party had a benefit and this was effected
which case started the idea of the Third Parties Act 1999 as Lord Denning said that Mr C had bought the holiday for benefit of whole family and should therefore be compensated for their losses as well as his own
Jackson V Horizon Holidays (1975)
what is the only problem with The Third Parties Act 1999
can still ineffective if exclusion clause expressly excludes it in contract
what are the two types of situation involved in intention to create legal relations
social/ domestic situations
business/ commercial situations
what is the social/ domestic situations
presumption exists of parties not intending to be legally bound
presumption can be rebutted by evidence that parties was series in intention to be legally bound
what is the business/ commerical situations
any agreement make in a commerical context is opposite to social/ domestic
can be rebutted but very strong evidence willbe required for rit to succeed
what did Weeks V Tybold (1605) show
that it was a mere puff and in the context was no intention to be legally bound
(only wanted to get his daughted married)
which case showed that there was a social/ domestic agreement with both parties so it was not legally binding
Balfour V Balfour (1919)
which case opposes Balfour with similar fact bit there was evidence to rebutt was successful due to the agreemtent being in writing
Merritt V Merritt (1970)
what did Simpkins V Pays (1955) show
the exchange of money is evidence that to create legal relations in social/ domestic case. It rebuts the presumption of no legal intent
(grandmother and grnadaughter entering into a competition and exchanged money)
what did Parker V Clarke (1960) show
that selling home and giving up their security was evidence to rebut the presumption of no legal intent in social/ domestic situations
which case shows that an exclusion clause rebuts the presumption of legal intent in business/ commerical situations
Jones V Vernon Swimming Pools Ltd (1983)
which case shows that business/ commerical agreements reaise a strong presumption of legal intent and involved a airline pilot and wanted a one off payment by company but said company ran into financial difficulty and failed to pay
Edwards V Skyways Ltd (1964)
which case showed there was no evidence to rebut the presumption off legal intent and therefore, because it was a business/commerical situation the contract was binding
McGowen V Radio Buxton (2010)
