Contract Fr Flashcards
What is a contract
A legally enforceable agreement of the parties
What is the objective approach
To determine if there is an agreement courts will look at objective appearance of things rather than actual fact of agreement
Smith v Hughes - whether a reasonable man would consider there is a contract
What is freedom of contract
People should be allowed to create whatever agreements they wish without courts interference
Evaluate freedom of contract
Necessary for maximisation of wealth for benefit of all
Obtained by markets, need binding contracts to operate properly
Are contracts an expression of free will, does a consumer get to negotiate terms?
What is an offer
A statement by one party of a willingness to contract on stated terms if they are accepted by the party or parties to whom they are addressed
How can an offer be made
Oral
Written
Conduct
What are types of offers
Bilateral
Unilateral
What’s a bilateral offer
Made to a specific individual
Bowerman v ABTA
What’s a unilateral offer
Made to the general world
Carlill v Carbolic Smokeball Co
What’s an invitation to treat
An expression of willingness to enter into negotiations
Gibson v Manchester City council
Difference between offer and invitation to treat
Offer - intention to legally bound
Invitation - intention to negotiate
Case for objective approach
Smith v Hughes
Case for bilateral offer
Bowerman v ABTA
Case for unilateral offer
Carlill v Carbolic Smokeball and Co
Case for invitation to treat
Gibson v Manchester city council
Is a display of goods an offer or invitation to treat
Shop window & shelf on self service shop - invitation to treat Fisher v Bell
Is adverts offers
Ad in magazine is invitation to treat - Partridge v Crittenden
An offer if includes terms customer has acted on
Is a statement of price an offer
Invitation to treat
Harvey v facey
Are auctions offers
Inviting bids is in station to treat
Bids Is offer
BCA v Wright
What 4 things do you have to state are offer or not
Goods on display
Auction
Advert
Statement of price
How does an offer end
If the offeree withdraws it before it is accepted
Revocation
Dickinson v Dodds
What effects the duration of an offer
Revocation
Rejection
Counter offer
Lapse of time
Death
Describe revocation
Offer withdrawn before acceptance
Can be done via 3rd party
Must be communicated to the offered
Must be revoked by same method as original offer
Not when acceptance ongoing
Describe counter offer
Extinguishes the original offer
A request for further info is not a counter offer
Stevenson v McLean
Describe rejection
Ends the offer
Describe how death affects an offer
Death ends an offer unless it can be performed by another person and the offeree is unaware of the offerors death
Bradbury v Morgan
How does acceptance take place
1) Acceptance must be communicated to the offeree
2) terms of acceptance must exactly match the terms of the offer
3) agreement must be certain
Describe communication of accepting an offer
Offeror must receive acceptance before it’s effective
Silence will generally not amount Felthouse v Bindley
Acceptance can be through conduct
Brogden v Metropolitan Railway
What are the postal rules of an offer
Where it is agreed parties will use post as means of communication postal rules apply.
These state where a letter is properly addressed and stamped, acceptance takes place when the letter is put in the post box
Adams v Lindsell
Describe how terms of acceptance must Exacrly match terms of offer
If terms differ, this will amount to a counter offer and no contract will exist
Hyde v Wrench
Describe how the agreement must be certain in accepting an offer
When viewed objectively (reasonable person smith v Hughes)
Must be possible to determine exactly what the two parties have agreed to
Subdrook trading estate v Eggleton
What are tenders
Where someone invites others to make offers to do a job or provide goods or services
What is a single offer tender
1) statement made that work needed
2) tender invited
3) tenders submitted - offers
4) offers accepted or rejected
What are standing offer tenders
Where goods or work are needed on ongoing basis
Tenders invited
Tenders submitted - offers
Acceptance takes place when order is placed
Each time order takes place, separate contract formed
What is consideration
The bargain of a contract which is based on an exchange of promises.
Each party must be promiser and promisee. They must both receive a benefit and suffer a detriment - consideration
Consideration must be somethinf of value in the eyes of the law - Thomas v Thomas.
A one sided promise with no consideration = gift Ward v Byham
What are the 6 rules of consideration
Must not be past
Must be sufficient but need not be adequate
Must move from the promisee
An existing public duty will not amount to valid consideration
An existing contractual duty will not amount to valid consideration
Part payment of a debt is not valid consideration for a promise to forego the balance
What is meant by consideration must not be past
McArdle - past consideration is not valid
However may be valid where it was proceeded by a request
What is meant by consideration must be sufficient but need not be adequate
No requirements that consideration must be market value. Providing something is given in exchange
e.g £1 for a house
Would be valid
Courts not concerned if party made a good or bad bargain
Chappell v Nestle
What is meant by consideration must move from the promisee
If person other than promisee is to provide consideration, promisee can not enforce the agreement
Tweddle v Atkinson
What is meant by an existing public duty will not amount to valid consideration
Where a party had a public duty to act, this can not be used as consideration for a new promise
Collins v Godefrey
What is meant by an existing contractual duty will not amount to valid consideration
If a party has an existing contractual duty to do an act. This act can not be used as consideration for a new promise
Myrrick
Unless the party goes beyond their existing duty
What is meant by part payment of a debt - consideration
Part payment not valid to release debt in full
What is promissory estoppel
Where A promises something to B and B relies on that promise to his detriment, then A should be stopped from going back on his promise
Exception to the rule of part payment
What is intention to create legal relations
Requirements of intention to create legal relations aims to sift out cases which are not really appropriate for court action.
Not every agreement leads to a binding contract e.g agreeing to meet a friend at the pub - no legal requirement to do so
This is because the parties do not intend to create legal relations
This draws the line between social and domestic agreements to agreements made in a commercial context
Describe intention to create legal relations in social and domestic agreements
The law raises a presumption that parties do not intend to create legal relations
Balfour v Balfour
This may change if there is evidence of a written agreement, where the parties have separated, or where there is a 3rd party
Describe intention to create legal relations in commercial agreements
When an agreement is made in a commercial context, law raises a presumption that the parties do intend to create legal relations by the agreement
Esso petroleum v Commissioners of customs & Excise
This can be rebutted bu evidence to the contrary of
Binding in honour only clauses
The distinction between social and domestic agreements and commercial can be fine
What is privity of contract
The idea that only a person who is party to a contract can sue on it or be sued under it
A person who is not party to a contract cannot enforce rights under it even if he/she intended to benefit from it
As would be unfair to let them gain under a bargain when they have provided nothing in return
What is a term
A party can sue on a term for breach of contract
What is representation
A statement made to encourage the other party to enter into a contract
It is not part of the contract, but the other party may sue if it is found to be false
Known as misrepresentation
Party can sue for misrepresentation, but remedies are limited
What is a statement of opinion
Does not form part of a contract and is not a representation
Also true of mere puffs also known as trade puffs.
These are boasts and not intended to be taken seriously
Trade puff
Is not a term or a representation
Dimmock v Hallett
To decide whether a statement is a term or representation court looks at?
Parole evidence of rule
Relative expertise of the parties
Importance of the statement
Time
What are the parole evidence rules
Where the contract has been put into writing only the terms included in the written document are terms
Statements are representation
What are relative expertise
If representer has greater knowledge it is more likely to be a contractual term
If representee has greater knowledge, more likely to be representation
Oscar chess v Williams
What is the importance of the statement and reliance
Where the representee indicates to the representor the importance of the statement
Bannerman v White
What is timing
The longer the time lapse between making the statement and entering the contract the more likely it will be representation
Routledge v McKay
