Contract Law 1

Question 1

Questions to ask for Contract Law?

Answer 1

Has a contract been formed?
Is there anything that invalidates its formation?
What are its terms?
Has there been breach or discharge of the contract?
What are the remedies for breach?

Question 2

Elements of an Offer

Answer 2

1. Terms of the offer must be clear, certain and complete
2. Offer must be communicated to the other party
3. Offer must be written, spoken, or inferred from conduct
4. Offer must be intended

Question 3

What is an offer?

Answer 3

Clark: “a clear and unambiguous statement of the terms upon which the offeror is willing to contract should the person to whom the offer is addressed decide to accept.

Question 4

Cases for an Offer

Answer 4

Dooley v Egan – Offers often have an air of finality about them. A quote for the sale of a medical cabinet stated ‘for immediate acceptance only’ was a valid offer

Storer v Manchester City Council – an offer ‘empowers the person to whom it is addressed to create a contract by their acceptance.’ A mere statement of intention is not definite enough to be a valid offer.

Gibson v Manchester City Council – Gibson wished to purchase his council house. Council wrote to say it may be prepared to sell for 2k. Following election, the new party refused to sell the house. The letter was not an offer and was an indication of price

Question 5

Invitation to Treat

Answer 5

A statement made without intending to result in a contract. It is not an offer. It invites others to make offers.

1. Advertisements - generally invitation to treat
2. Display of Goods - generally invitation to treat
3. Auctions - Putting item up is an invitation to treat, bids is the offer.
4. Tenders - generally invitation to treat unless it says it will go to highest or lowest bidder

Question 6

Are Advertisements Invitations to Treat?

Answer 6

1. Partridge v Crittendon – A magazine advertised ‘Bramblefinch cocks and hens’ for sale. This was an invitation to treat so it was not against British law which banned the selling of wildlife. Generally, advertisements are invitations to treat.
2. Leonard v PepsiCo – A TV ad for Pepsi offered various prizes for ‘Pepsi points’ including a Harrier fighter jet’ for 7 million Pepsi points. Additional points could be purchased for 10 cents each after obtaining 15 Pepsi points. He mailed Pepsi stating he wanted the Harrier fighter jet for 15 Pepsi points and a cheque for 700k. Pepsi refused and he sued for specific performance. Wood J emphasised the general rule that an advertisement does not normally constitute an offer. The exception is where the offer is clear, definite, explicit and leaves nothing open for negotiation. The jet was not in the catalogue and was not intended seriously.
3. Carlill v Carbolic Smoke Ball Company – locus classicus on unilateral offers. Defendant placed an ad in a newspaper for the sale of a smoke ball which claimed to prevent influenza. They promised to pay 100 pounds to anyone who used the ball as directed and still contracted the flu. They deposited 1000 pounds in a nearby bank account to be used for the sole purpose of compensating such people. Therefore, this was an offer backed up by a distinct promise. Plaintiff was entitled to compensation.
4. Billings v Arnott – Defendant had an offer that they would pay a certain amount to any employee who joined the Defence Forces. The plaintiff accepted this offer but the defendant said someone else already accepted. This was a unilateral offer as it was offered to all employees, not just one.
5. Lefkowitz v Great Minneapolis Surplus Store – Defendant advertised a bargain for the first to come. They wanted to give it to a woman but a man came first. This was a unilateral offer because the words used gave it finality.

Question 7

Are Display of Goods Invitations to Treat?

Answer 7

1. Pharmaceutical Company of Great Britain v Boots Cash Chemist – At the time, it was against the law if a qualified chemist did not sell certain pharmaceutical products. Boots had stocked its shelves with such products. The display of goods in this manner merely amounted to an offer to treat. A qualified chemist would be present at the checkout till so it was allowed.
2. Minister for Industry and Commerce v Pimm – Irish Courts reiterated that merely displaying goods is an invitation to treat and not an offer.

Question 8

Are Auctions Invitations to Treat?

Answer 8

1. S 58(2) Sale of Goods Act 1893 states that an auction is complete when the hammer falls. Generally, Bids are offers that are accepted when the auction ends.
2. Harris v Nickerson – Auctioneer advertised furniture would be auctioned on a certain day. Harris sued for damages for loss of time when he travelled to the auction to find the furniture had been withdrawn for sale. This did not constitute an offer. Putting an item up is an invitation to treat, bids constitute the offer.
3. Tully v Irish Land Commission - Using the phrase ‘ without reserve’ makes it a unilateral offer. It means that the seller will not himself bid; and that the goods will be sold to the highest bidder.

Question 9

Are Tenders Invitations to Treat?

Answer 9

Friel writes that ‘Tenders are little more than written auctions.’
Spencer v Harding – Harding invited tenders to sell stock but refused to sell to the highest bidder who sued for breach of contract. Harding could refuse to sell as this was an invitation to treat, not an offer.
Harvela Investments v Royal Trust of Canada – Royal Trust of Canada promised to accept the highest bid for the sale of shares. One bidder inserted a referential clause that he would pay 101k more than the next highest bid. Court held that such clauses were void and they had to sell to the genuine highest bidder.
Howberry Lane v Telecom Eireann – In Ireland, such referential clauses are allowed only where the tender document expressly allows it. Here, Ireland allowed a referential bid which offered 15% more than the highest other bid.

Question 10

Are Quotations Invitations to Treat?

Answer 10

Harvey v Facey – Generally, quotations are invitations to treat. Plaintiff was looking for lowest price of Bumper Hall Pen and the defendant said it was £900 minimum that they would accept but then refused to sell for this price. This was just an invitation to treat.

Question 11

Are Lotteries Invitations to Treat?

Answer 11

Carroll v An Post National Lottery – lottery payslips constitute an offer by An Post. This offer may be accepted by a member of the public when filled out and given to an agent with cash.

Question 12

What are the ways to Terminate a Contract

Answer 12

1. Revocation
2. Rejection
3. Delay or Lapse of Time
4. Death

Question 13

Revocation of Offer

Answer 13

Dickinson v Dodds - an offer can be revoked at any time before it is accepted once there is sufficient communication of it. An offer to sell property needed to be accepted by 9am on Friday. The day before, the plaintiff heard from a third party that the property was sold. This was valid revocation even though the information came from a third party. Friel says it is a poor decision there is a ‘solid jurisprudential basis for requiring the revocation of the offer to come from the offeror to the offeree.’
Errington v Errington - Revocation of the offer wasn’t possible once they began performance. This was a family dispute over a house.
Byrne v Tienhoven - Revocation by post is only effective once the letter is received.

Question 14

Rejection of Offer

Answer 14

McDermott, ‘if the response to an offer is anything less than a clear and unequivocal acceptance of the exact terms then it will usually be deemed a counter-offer.’ A person cannot change their mind after rejection. Rejection can be express or implied words or conduct.
Hyde v Wrench - Defendant offered to sell property for 1k. Plaintiff offered 950 and defendant refused to sell, even for 1k. The 950 was the counter-offer. A counter-offer is rejection.
Stevenson, Jacques & Co v McLean – A telegram was sent in response to an offer asking whether delivery might take place over a period of months. This was deemed to be a mere request for information and not a rejection or counter-offer.

Question 15

Delay or Lapse of Time

Answer 15

When there is a specific deadline, the offer ends after this time.
Commane v Walsh – ‘reasonable time’ is decided on a case-by-case basis having regard to the USUAL CIRCUMSTANCES OF BUSINESS between the two parties

Question 16

Death

Answer 16

1. Friel writes ‘The effect of death on an offer is far from clear.’
2. Fisher J says If the offeror dies before acceptance, it depends on whether the deceased’s estate is capable of performance but notice of the death to the offeree constitutes revocation. An offer may end upon death since a valid act cannot be done in the name of a dead man.
3. Coulhart v Clementson - Notice of death to the offeree constituted revocation of the offer AND IN Re Whelan, a continuing guarantee was not automatically terminated by the death but ended when the offeree became aware of the death. Depends on contract’s nature.
4. Re Irvine - Father received an offer to buy land. Went some of the way towards acceptance, but died a few hours later. Before he died, he asked his son to post his acceptance to the buyer’s solicitor. Under the postal rule, acceptance by post takes place when the letter is posted, acceptance was not complete when the father died.

Question 17

Fact of Acceptance

Answer 17

Acceptance is a final, unconditional and certain indication of agreeing to the terms of the offer communicated to the offeror with the intention of accepting.
Parkrange Investments v Shandon Park Mills – a contract signed by the seller of property was not a valid acceptance as there was no intention of accepting. He only signed for tax purposes in case the sale did not go ahead. An express acceptance does not attempt to change the terms of the offer.

Question 18

Implied Acceptance

Answer 18

For unilateral offers, conduct is normally acceptance.
For bilateral contracts, conduct is acceptance IF STIPULATED IN CONTRACT
Brogden v Metropolitan Railway – Plaintiff had been delivering coal to Def for years before they decided to then write a contract. Def mailed a contract to Plaintiff who changed and sent it back signed. Def never signed nor communicated acceptance but continued to accept coal. This was held to be tacit acceptance of the changed terms.

Question 19

Can Silence be enough to Accept an Offer?

Answer 19

Generally, silence is not enough to accept an offer.
1. Felthouse v Bindley – Uncle wrote to his nephew offering to buy a horse for a certain amount. He ended the letter by stating: ‘If I hear no more about him I shall consider the horsemine at that price.’ Court held that mere silence by the offeree is not enough to impose a contract.
2. Russell & Baird v Hoban – Plaintiff posted a note of sale to Def offering to sell oatmeal. He indicated that if there was no response within three days, he would take this as acceptance and ship the oatmeal. This was not acceptance and ‘No man may impose such terms upon another.
3. Re Selectmove Ltd - silence is acceptance if both parties expressly agree silence will constitute acceptance.
4. Rust v Abbey Life Assurance - silence is acceptance is there is a legitimate expectation that silence will constitute acceptance because of past business dealings.

Question 20

Battle of the Forms

Answer 20

1. Butler Machine Tool Co - there was an offer to sell tools on a form with a price variation clause. The buyer placed an order on their own form without this clause. The seller did not object but returned the buyer’s form stating there was a contract on the seller’s terms with the clause included. Court said the contract was on the buyer’s terms. The buyer’s response was a counter-offer and the seller returning the form was acceptance. This has been criticised as Lord Denning ignored the principles of offer and acceptance and adopted a holistic approach. Note - if the seller had objected, it would have been a counter-offer and not acceptance. This is all called the Last shot doctrine - it is mainly in commercial doctrine with constantly changing terms
2. Chichester Joinery v Mowlem took a different approach - it was a similar situation but the Court said the contract was on the seller’s terms. The seller’s last response was the offer and the buyer accepting the shipment was acceptance. Even where forms don’t correspond, acceptance can be inferred from conduct.

Question 21

How to Effectively Communicate Acceptance?

Answer 21

If a method of acceptance is mentioned in the contract, it must be followed
1. Walker v Glass – Def offered to sell property for 400k stating that acceptance was to take place through a form attached to the letter delivered to his solicitor with a deposit before a certain time. Plaintiff signed the acceptance formed and called solicitor instead. This was not acceptance so seller could revoke the offer.
2. Entores Ltd v Miles Far East Corporation – Lord Denning approached this case differently and held that an offer is only accepted when the offeror learns of the acceptance. If the offeror is at fault, then acceptance is deemed to occur when it was communicated.
3. Brinkibon Ltd established that exceptions include agents with limited authority or when working outside normal business hours.
4. Mondial Shipping & Chartered BV noted that if sent outside business hours, it is deemed to be received the next business day.
5. The Brinmes – The acceptance arrived at the offeror’s machine between 5:30 and 6 but was not read until the next day. Since it arrived during working hours, it took effect on the day it arrived on the machine when it should have been read.

Question 22

Acceptance through Electronic Communications

Answer 22

S 20 and 21 of the Electronic Commerce Act 2000 regulated the acknowledgement of receipt of electronic communications.
S 21 (1) – Unless otherwise agreed, an email is sent when it enters the first information system outside the control of the originator.
S 21 (2) – If the receiver designates a certain address, the email is only deemed to be received when it enters that system.
S 21 (3) – If no receiving system is designated, then the email is deemed received when it comes to the attention of the addressee and is downloaded.
S 21 (5) – Unless otherwise agreed, the place of sending and receiving an email is the place of business of the sender and receiver respectively This does not solve whether or not the postal rule applies to electronic communications
Dickie argues that the postal rule should not be expanded to email. Cheshire prefers the telex rule for emails. Haigh has argued that email should be treated as received once downloaded or after a reasonable timeframe has passed when it should have been downloaded.

Question 23

The Postal Rule

Answer 23

1. Adams v Lindsell – Thecontract is formed when the letter was posted, not when it was received.
2. Kelly v Cruise Catering – Kelly was an employee on a cruise ship going from Mexico to Texas. Employment contract was sent from Oslo to Dublin. He signed and posted it in Dublin. Held acceptance complete when he posted it from Dublin.
3. Holwell Securities v Hughes - Exception to the Postal Rule where there is a Prescribed Method of Acceptance. Acceptance here required “notice in writing” within 6 months implying the letter must be received.

Question 24

Agreements Void for Uncertainty

Answer 24

Ambiguous Terms
Illusory Terms: Without any meaning/empty promises
Incomplete Agreements
Agreements to Negotiate

Question 25

Effect of AMBIGUOUS TERMS on a Contract

Answer 25

The courts attempt to discern the true intentions of the parties, but where terms are so ambiguous, a court may decide there was no agreement reached
1. Rooney v Byrne - Courts will try to enforce Commercial Agreements by adopting an objective approach
2. ESB v Newman - Newman agreed to discharge the accounts for electricity supplied to Mrs Waddington but had 4 premises. This term was only meant for one premise. The Court applied it to one premise.
3. Mackey v Wilde - theuse of ‘a few’ day tickets was too vague so the contract was void.
4. Black Country Housing Assoc v Shand - a term agreeing to set a ‘fair and reasonable price’ was enforceable as opposed to a situation where they intended to set a price in the future. Future price is too uncertain, and gives no indication.

Question 26

Effect of INCOMPLETE AGREEMENTS on a Contract

Answer 26

1. Tolan v Connacht Gold Co-op - a document prepared and signed at the end of a meeting between the plaintiff and a representative of the defendant was not a contract. It was just a note of what was discussed given the context because another meeting was set to agree on outstanding issues.
2. Triatic Ltd v Cork County Council - an agreement to continue negotiations was too uncertain to form part of the contract. Given the complexity of the contract, it was too hard to say when the parties would reach a formal agreement.
3. Guardian of Kells v Smith - an agreement to continue negotiations formed part of the contract because there was a deadline to conclude the negotiations here.

Question 27

What is Consideration and its Principles?

Answer 27

McDermott says consideration is “the mechanism common law uses to distinguish promises that are to be enforced from promises which are not to be enforced”.
The price paid for the promise.
The Rules of Consideration: It need not be adequate, but it must be sufficient. It must move from the Promisee (Privity)

Question 28

Consideration does not need to be Adeqaute

Answer 28

Chappell v Nestle Ltd - Nestle Ltd offered a record for sale to the public for 3 empty wrappers and 7 pence. The Court held that the wrappers formed part of the consideration as they had some tangible value even if they had no intrinsic value to the company. It was still good consideration.

Question 29

Consideration must be Sufficient

Answer 29

1. Collins v Godefroy - Godefroy promised to pay Collins 6 guineas if he gave evidence for him in Court but Collins was already subpoenaed and under a legal duty to attend Court. Therefore, attending court was not good consideration. Performance of Existing Public Duty is generally not good consideration unless it is something over and above that public duty.
2. Harris v Sheffield United Football Club - police could enter into a contract to guard football club in exchange for money because they were not under a legal duty to do it. The private match was on private premises so the police being there was a special service given the strain on already scarce police resources.
3. O’Neill v Murphy - Prayers are insufficient consideration. Builder did work on buildings in neighbouring parish in return for prayers being said in his name. This is Northern Ireland so we could take a different approach.
4. Stilk v Myrick - 2 sailors deserted their crew on their way to the Baltic. Captain couldn’t get replacements so promised to divide the wages of the deserters amongst the rest of the crew but never did. The sailors continuing the journey for extra money was not good consideration as they were already contractually obliged to do so.

Question 30

Is Paying Part of an Existing Debt Good Consideration?

Answer 30

1. Pinnel’s case - a promise by a creditor (person they owe money) to take a lesser sum from a debtor in full satisfaction of a larger debt is not binding. This promise is not good consideration. This decision protects creditors.
2. Foakes v Beer - Foakes owed Beer £2k + interest. Beer agreed that if Foakes paid £500 immediately and the balance in instalments, she wouldn’t sue. This was not a contract as the promise is not good consideration. Clark says this is a harsh and mechanical decision failing to meet commercial expectations and practice.
3. Williams v Roffey Bros and Nicholls Contractors Ltd – Confusing decision. Contractors hired William who was a carpenter to carry out refurbishment on a number of flats. Initial fee was 20k, but after a few months, Williams found himself in financial difficulty arguing that the initial fee was too low. He failed to supervise his workmen properly. Contractors agreed to pay a further 10k and the Court allowed this promise to be good consideration even though Williams was already under a contractual duty.
   - COA adopted a pragmatic approach. Although he was contracted to complete the work already, there was a real risk that it would not be finished without more money. Def also benefitted from getting the work done because of a penalty clause.
   - If A contracts with B to do work in return for payment and (ii) at some stage B has reason to doubt A will complete his obligations and (iii) B thereupon promised an additional payment and (iv) as a result of this further payment obviates a disbenefit and (v) B’s promise is not given as a result of economic duress then (vi) the promise is capable of being consideration and will be considered legally binding. Friel has expressed the hope that Williams will be confined to its own facts in future as this case is open to abuse.
4. Re Selectmove - rule in Pinnel’s case is not affected by Williams. Williams only applies to cases where work was done or goods were supplied, not for debts.

Question 31

Is Detriment Acceptable as Consideration?

Answer 31

Any detriment by the offeree is sufficient consideration.
Hamer v Sidway - Uncle offered nephew 5k not to drink, smoke or gamble until 21. Since the nephew gave up something he was legally entitled to do, this was good consideration.
O’Keeffe v Ryanair Holdings - O’Keeffe was the one-millionth passenger to fly with Ryanair so they awarded her free flights for life. Since she waived her legal right to anonymity and participated in media campaigns, this was good consideration.

Question 32

The Rule Against Past Consideration

Answer 32

Consideration must have passed prior to the contract coming into effect and not after a completed offer and acceptance has been made. NB for “gifts” in exam or “promise to pay later”
1. Roscarla v Thomas - Thomas sold a horse to Roscaria for £30. After the sale was complete, Thomas claimed horse was ‘sound and free from vice’. Horse was actually vicious but the warranty was given after the contract was formed so it was not good consideration.
2. Provincial Bank of Ireland v O’Donnell - O’Donnell had a large overdraft and BOI worried about his ability to repay, so they requested his Wife sign an agreement providing security not only to the existing overdraft, but possible future monies. The wife signed but refused to pay when he defaulted. The overdraft was about past money so no consideration. The part about future money was too vague.
3. Law Society v O’Malley - O’Malley was given gifts from his wife’s family. He got in a road accident and sued for injury. He asked his solicitor to give an undertaking that any monies recovered would be paid to his wife’s family thinking there would be a settlement. The gifts from the family were past consideration before the undertaking and was not good.

Question 33

Exceptions to the Rule Against Past Consideration

Answer 33

Where the facts of a past service raises an implication at the time it was done that it was to be paid for
1. Lampleigh v Brathwait - Brathwait asked Lampleigh to get him a royal pardon. After he came with the pardon, Brathwait promised to pay £100. While the consideration had passed (obtaining the pardon), the promise was still enforceable. Brathwait asked for the pardon so it was implied that he would pay.
2. Pao On v Lau Yiu Long - Lau asked Pao not to sell some shares for 1 year. Pao promised not to and then Lau promised to indemnify Pao if the share price fell during the year. Lau then refused to pay. Such acts before a promise to do something is good consideration if:
- The act is done at the promisor’s request
- The parties understood the act was to be paid for either through payment or benefit
- The payment or benefit is legally enforceable, if it was promised in advance. Held all three were present here.

Question 34

Consideration must move from the Promisee (Privity)

Answer 34

Tweddle v Atkinson - Tweddle’s father and father-in-law promised each other they’d give money to him when married. Father-in-law died and Tweddle tried to enforce the promise. Since he did not give any consideration, it was not a contract.

Murphy v Bower - Plaintiffs made an agreement with a railway company to do construction on the railway. The railway company employed the defendant to supervise. When the defendant refused to certify the work, the plaintiff tried to sue him since they could not get paid without it but there was no contract between the plaintiff and defendant.

Cadbury Ireland v Kerry Co-Op - The exception to privity is equitable trusts when a trustee is holding property for a beneficiary. There must be intention to create a trust in favour of a beneficiary.

Question 35

Promissory Estoppel

Answer 35

1. An equitable remedy where there’s insufficient consideration and no legally binding promise
2. It is a shield and not a sword
3. There must be a pre-existing legal relationship, Unambiguous Representation, Reliance by the Promisee and unconscionability or unfairness
4. The remedy is a matter for the courts

Question 36

Promissory Estoppel: Pre-Existing Legal Relationship

Answer 36

Combe v Combe - Defendant promised his ex-wife £100 a year, but she gave no consideration. She sued for the money when he refused to pay. There was no pre-existing legal relationship and promissory estoppel is a defence, not a cause of action.

Question 37

Promissory Estoppel: Unambiguous Representation

Answer 37

1. Bennett Construction v Greene - Bennett Construction bought land from Greene with an outline of the planning permission. The plan showed planned installation of pipes running across the defendant’s property. Bennett looked for permission for the pipes before the contract was concluded and did not get it.
   After the contract was formed, the defendant objected to the pipe being installed.
   HELD: THERE WAS NO unambiguous representation through the site plan that there was permission to install the pipe since the defendant’s solicitor raised objections to the pipe and Bennett did not give permission.
2. Kelleher and Kelleher v O’Connor - Kelleher used a place as a restaurant when landlord complained that, under the lease, it was to be used only as a “shop” but the definition of “shop” in the lease included a restaurant. ESTOPPEL WAS ALLOWED because even if shop did not include restaurant in the lease, the landlord allowed it over a long period without complaint.

Question 38

Estoppel: Reliance by the Promisee

Answer 38

Daly v Minister for Marine - Daly got a letter from the Department of Marine wrongly stating he was eligible under a fisheries scheme. A representation was made, but there was no evidence of reliance so estoppel couldn’t be raised.

Question 39

Promissory Estoppel: unconscionability/unfairness must exist

Answer 39

1.D&C Builders v Rees - D&C was threatened that if he didn’t accept a lesser payment in full satisfaction of the debt, Rees would not pay anything. Rees’s threat was made knowing D&C’s bad financial position, so D&C were not estopped from bringing a claim for the rest of the money after promising not to since Rees acted inequitable.
2. Revenue Commissioners v Moroney - Dad agreed with sons to transfer licensed premises to them to avoid estate duty. The deed of transfer said they would buy it for £16k, but it was never intended they would pay this.Dad never acted like he would look for this money so the sons signed the deed. After he died, Revenue wanted the money but Revenue was estopped from getting it since the sons acted on the dad’s representation.
3. Zurich Bank v McConnon - Zurich bank sought repayment of a loan after they allowed and extended a standstill period and revised payment plan. This was not unconscionable and a fair request.

Question 40

Promissory Estoppel as a Shield and not a Sword

Answer 40

1. Property Limited v High Trees - High Trees leased property then sublet it. When the war broke out, many tenants could not pay rent and they asked the landlord to accept half rent. Landlord accepted without consideration. After the war, people were renting again and the landlord wanted to increase rent again. Landlord sued. He was allowed to do this since the cause of the reduced rent ended. He could not seek back payment of the reduced rent because he would be estopped from going back on his word.
2. Waltons Stores Ltd v Maher (AUSTRALIA) - The parties were negotiating the lease for land. The plan was the plaintiff would demolish the building on the land and build a new one according to the defendant’s specifications. They are to sign the contract and the plaintiff started demolishing the building but the defendant started delaying the signing because of 2nd thoughts knowing the building was being demolished. The defendant did not sign the contract and the Australian courts allowed the plaintiff to sue using promissory estoppel.
3. Re JR, a Ward of Court - Man represented to woman she would be entitled to stay in the house for the rest of her life and left everything in his will to her so she left her house to stay with him. Irish Court allowed her to sue on promissory estoppel as she acted to her detriment in reliance on the representation. This was promissory estoppel creating proprietary rights as a SWORD not a shield!
4. Association of GPs Ltd v Minister for Health - reasserted the restriction of estoppel being a shield not a sword.
5. Daly v Minister for Marine - Appeared to allow estoppel as a sword so Irish law is unclear on this matter.
6. Clark states estoppel should be flexible because it is is to avoid inequitable and unfair consequences that may arise from the non-observance of promises that are meant to be binding and acted upon.

Question 41

Promissory Estoppel’s Remedy is a Matter for the Court

Answer 41

Re JR, a Ward of Court - Promissory estoppel is the court’s discretion and not a right. Man represented to woman she would be entitled to stay in the house for the rest of her life and left everything in his will to her so she left her house to stay with him. She used promissory estoppel and she was entitled to stay in the house for free as long as she wished but it was more suitable to sell the house and buy a smaller, more suitable one from the proceeds for her so that is what happened.

Question 42

Promissory Estoppel Suspends Rights but doesn’t Extinguish Them

Answer 42

1. High Trees - The Landlord’s right to obtain full rent was only suspended for the duration of the war. After, he was entitled to reclaim the full rent.
2. Kenny v Kelly - A student got a place in UCD and wanted to defer for a year. UCD told her they’d grant the deferral if she paid the fees and took the deferral. UCD could not go back on its word.
3. Association of GPs v Minister for Health - As it merely suspends rights, the person making the representation can withdraw the representation by serving the other party with sufficient notice.

Question 43

Proprietary Estoppel

Answer 43

1. THERE MUST BE ASSURANCE, RELIANCE AND DETRIMENT!!!
2. Proprietary estoppel can (1) be a cause of action and (2) no pre-existing legal relationship needs to exist between the parties.
3. Cullen v Cullen - Cullen told his wife he would transfer property to her so her and the son built a portable house on the land. He was estopped from getting an injunction to make them stop. Where a person acts to their detriment based on a representation that they will acquire an interest in property, the person may be able to acquire that interest by way of proprietary estoppel.
4. Thorner v Major - Thorned worked on his cousin’s farm for many years without pay believing he would get the farm when his cousin died. There was no explicit promise or assurance given but the cousin encouraged Thorner’s belief and Thorner did not get to pursue other opportunities in life. The cousin’s conduct over the years led to Thorner reasonably believing he would inherit the farm. There was assurance, reliance and detriment.
5. Gillett v Holt - Couple worked for Holt devotedly for most of their lives based on assurances from Holt that they would get his farm when he died. CA focused on Gillett’s detrimental reliance as the key consideration. Detriment does not need to be financial, just substantial.

Question 44

Relationship Between Consideration and Estoppel

Answer 44

1. Doctrine of consideration is a feature of common law that distinguishes moral agreements from those which are legally enforceable.
2. Estoppel enforces a promise unsupported by Consideration. To ensure consideration is not over-thrown, the courts of equity will only recognise estoppel under certain conditions: can’t be a cause of action and it only suspends rights.
3. Estoppel requires a pre-existing legal relationship also (consideration does not).
4. Consideration is the more dominant of the two and estoppel is limited to specific instances where it is necessary for equity to intervene.

Question 45

Legitimate Expectation

Answer 45

Legitimate Expectation: Where a person relies on a statement/past practices of a public body. It is limited to the public body’s regulatory/public functions, not commercial ones:
Triatic Ltd v Cork County Council - an agreement to continue negotiations was too uncertain to form part of the contract. Property developers brought a legitimate expectations case for the costs incurred. This was rejected because there’s an ordinary commercial risk inherent in negotiations.
Daly v Minister for the Marine - Daly got a letter from the Department wrongly stating he was eligible under a fisheries scheme. He sued based on legitimate expectations and promissory estoppel. Court stated you need detrimental reliance with promissory estoppel but there was none here. Detrimental reliance is what makes it different from legitimate expectations.

Question 46

Intention to Create Legal Relations (Family Context)

Answer 46

1. Edmonds v Lawson Objective Test - Would the ordinary reasonable man have believed there was an intention?
2. Jones v Padavatton - There is a presumption that DOMESTIC FAMILY TRANSACTIONS are not intended to be legally binding. They tend to just be family arrangements. This can be rebutted.
3. Leahy v Rawson - Relationship between Leahy and non-marital partner’s brother was not close enough for the presumption. Court limited the presumption, holding it only applies to parent and child and spouse relationships. The less formal the relationship and the more the agreement goes above and beyond the ordinary boundaries of a short personal relationship, the more likely it is that the court will apply a contract law analysis to the situation.
4. Zevevic v Russian Orthodox Christ Cathedral - The courts have tended to view religious arrangements as not being intended to create legal relations. Spiritual matters are not regarded as being subject to the law of contract.

Question 47

Intention to Create Legal Relations (Commercial Context)

Answer 47

1. Cadbury Ireland v Kerry Co-op - Presumed that the parties intended to create a legally binding COMMERCIAL agreement since the transaction was most likely an “arm’s length transaction” between parties. This can be rebutted.
2. Esso Petroleum - Esso offered football tokens to anyone who bought 4 gallons of their petrol. This was legally enforceable since the “whole transaction took place in business relations setting”.
3. Rose & Frank Co v Crompton - The exception to the presumption is honour clauses. A clause that is binding as a matter of honour, not of law.
4. AC Controls Ltd v BBC - Letters of intent may give rise to a binding contract if the words, objectively, give rise to that conclusion. It may be necessary to consider the factual background.
5. Goulding Chemicals v Bolger - Collective agreements are valid if incorporated into individual employment contracts.
6. Industrial Relations Act 1946 provides a method of enforcing the terms of certain collective agreements. The terms can be registered and enforced by the Labour Court

Question 48

Types of Contracts that must be in Writing

Answer 48

Section 2 of Statute of Frauds (Ireland) Act 1965 - Contracts to pay the debts of another, Marriage, Contracts that will not be performed within a year. The writing must have come into existence before the action seeking to enforce it has started.
They must be in writing, memorandum or note signed the party it is against
1. Section 51 Land and Conveyancing Law Reform Act - Land must be in writing and signed. This does not affect the law on part performance. Paying a deposit is not necessarily an essential term.
2. Godley v Power - Memorandums must contain the 3 Ps (parties, property and price) and the essential terms. If it can’t be proven that they reached an oral agreement on all of the other essential terms, then the agreement is void for uncertainty.
3. Guardian Builders Ltd v Kelly - parties were identifiable even though only the first name was used and there was an error in one’s name

Question 49

Essential Terms in a Contract

Answer 49

1. Stinson v Owens - If evidence shows the parties intended additional provisions to be essential terms that were not included, the contract could be void for uncertainty. Subjective test of what did the parties intend?
2. Supermacs Ireland & McDonagh v Katesan Ltd - Supermacs claimed there was an enforceable agreement to buy 6 fast-food restaurants but Katesan said it should be rejected since there was no concluded agreement on the question of a deposit. HELD that a memo only needs to contain essential terms and deposit payments are not essential terms.
3. Casey v Irish Intercontinental Bank - Memos must contain the signature of the person charged and headed paper is sufficient. Here, the phrase “Subject to Contract” was only introduced after an oral agreement concluding the contract of sale was completed. So, the Court held that there was already a contract. Note SUBJECT TO CONTRACT can be used to deny an agreement was concluded and say that an oral agreement is not enforceable.
4. Kelly v Ross - Two or more docs may make a memo, but the signed document must make sufficient reference to all other docs.
   E-signature is fine under the Electronic Commerce Act 2000.

Question 50

Gazumping

Answer 50

Using the term SUBJECT TO CONTRACT can facilitate gazumping. It allows the seller, who’s still not bound by the contract while it’s subject to contract, that receives a higher offer to go back and demand more.

Question 51

Equitable Doctrine of Part Performance

Answer 51

Requirement for contract in writing will be sidestepped where there’s evidence of part-performance to prevent unconscionable behaviour by the defendant.
Errington v Errington - Revocation of the offer wasn’t possible once they began performance. This was a family dispute over a house. Part performance was equated to acceptance of the offer.
Law Reform Commission (1999): In Ireland it has been accepted the payment of a booking deposit before completing a formal contract is not an act of part-performance.
Mackie v Wilde - an agreement to issue ‘a few’ day tickets was too vague so the contract was void. Set out the requirements to claim part-performance:
1. A concluded oral contract/agreement
2. That the plaintiff acted on to show intention of performing the contract
3. The defendant induced the acts or stood by them while they were being performed
4. It would be unconscionable to allow the defendant rely on the Statute of Frauds to prevent performance.
Silver Wraith v Siuicre Eireann - the onus of proof is on the party seeking to rely on the acts of part performance on the balance of probability. Where a term that benefits the plaintiff is missing, they can waive that term and sue to enforce the remainder of the contract.

Question 52

Capacity to Contract

Answer 52

Capacity to Contract governed by common law rules and various statutory interventions, which can conflict.
The Age of Majority Act 1985 - a minor is a person under 18 unless they marry
At common law the age of majority was 21.
S.2 Infants Relief Act 1874: Certain contracts are deemed void ab initio, including contracts for repayment of money lent or for goods supplied. Only certain contracts with minors are valid: (1) Necessaries (2) Beneficial Contracts of service.
Other contracts are voidable at the option of the minor. Those contracts can be enforced by a minor but not against them. When they confirm a contract at 18, the contract can still not be enforced against them.

Question 53

Necessaries

Answer 53

Necessaries: items which are essential for a minor
Section 2 of the Sale of Goods Act 1893 - where necessary goods have been supplied to an infant, he is bound to pay a REASONABLE price for them.
1. Skrine v Gordon - A horse for stag hunting is not a necessary
2. Ryder v. Wombell - Jewelled cufflinks are not a necessity
3. Nash v. Inman - 11 fancy waistcoats are not necessary where the minor has sufficient clothing already
4. First Charter Financial Bank v. Musclow - A vehicle for work or domestic purposes may be necessary
5. Soon v. Wilson - Books for a student are necessaries
6. Helps v Clayton - Legal advice for a minor may be a necessary.
Services are not covered by section 2 but may be necessaries under the common law.
7. Chapple v. Cooper - funeral expenses of a spouse were held to be necessaries. “Things necessary are those without which an individual cannot reasonably exist… place, food, raiment, lodging and the like.”

SkRyNaFirst SoonHelpsChappell

Question 54

Beneficial Contracts of Service

Answer 54

1. Beneficial contracts of service may be enforced against a minor. Allow minors to enforce apprenticeships etc. as they are beneficial to the minor.
2. Doyle v. White City Stadium - minor agreed to boxing under British rules of the sport was bound by them as they were to his advantage.
3. De Francesco v Barnum - If a minor enters into a contract with an agent, its terms will be mutually enforceable if it is fair to the minor. A minor entered into contract to be taught how to dance on stage with many restrictions like she could not marry. Teacher did not have to pay her unless he got shows for her which were not much. Unenforceable contract.
4. Chaplin v. Leslie Frewin (Publishers) Ltd - where onerous terms are balanced by benefits, such as royalties paid, it will be upheld.
5. Section 2 of the Infants Relief Act 1874 - All other contracts, besides contracts to purchase unnecessary goods or receive a loan are enforceable by the minor, but not against him. If a minor confirms a contract when they reach 18, it still cannot be enforced against them.

Question 55

Law Reform Recommendations for Capacity to Contract

Answer 55

1. Contracts should be enforceable by the minor and unenforceable by the other party
2. The concept of necessaries to be abolished
3. Both parties should be entitled to seek restitutionary relief from the court where appropriate
4. The court to have the power to discharge parties from further liability under the contract where appropriate looking at the nature of the contract, age and maturity of the minor, bargain ing position, reasonableness of bargain, benefits of contract.

Question 56

How have the Rule on Privity been Relaxed?

Answer 56

1. Married Women’s Property Act and Married Women’s Status Act - The privity rule doesn’t apply to contracts of life insurance and endowment policies. Where a contract is made for the benefit of a spouse or child and they’re specifically name in the contract, they may rely on the terms despite not being party.
2. Road Traffic Act - 3rd party injured in road accident can claim from wrongdoer’s insurance
3. SOGSOS Act - 3rd party can sue manufacturer regarding unroadworthiness of car (may have injuries).
4. Tort also relaxes the rules on privity Tort also relaxes the rules on privity (Donohue v Stevenson)

Question 57

What are the different types of Terms?

Answer 57

1. Conditions: where the remedy for breach is to end the contract and sue for damages or affirm the contract and sue for damages. It is treated as a more serious breach.
2. Warranties: where the remedy for breach is to sue for damages only. Less serious breach.
3. Innominate Term: A term that isn’t ‘labelled’ as a condition or a warranty.
4. Mere Representations: NOT ACTUALLY A contractual term but actionable for misrepresentation.
5. Sales Puff: Not a contractual term nor legally actionable.

Question 58

Test for Warranty vs Condition?

Answer 58

1. Hong Kong Fir Shipping Co v Kawasaki - Concerned a seaworthiness term in a shipping contract. The shipping was delayed by 5 months from technical problems. Kawasaki argued this breached a CONDITION of the contract. Question was is it a condition? TEST IS WHETHER THE EVENT DEPRIVES THE PARTY SUBSTANTIALLY OF THE WHOLE BENEFIT OF THE CONTRACT. Courts looked at effects of breach. A hole in the ship would be serious (condition) and absence of a life jacket would be minor (warranty). Here, it was a warranty and damages was an appropriate remedy.
2. West Park Investments Ltd v LeisureWORLD - a reduction in car park spaces could not justify the defendant’s total non-payment of rent. They still received a substantial benefit from the contract so they had to pay rent and could just sue for damages (warranty).

Question 59

Test for Term vs Mere Representation?

Answer 59

1. Oscar Chess v Williams - Defendant sold his car to a dealer. He inferred the car’s age from a forged log book. The statement as to age was mere representation. It was a sale from a regular person to an expert so he should have known. Objective test of ‘if an intelligent bystander would reasonably infer a warranty was intended’.
   McDermott identified 5 factors as relevant when determining if a statement is a warranty or a representation:
   Timing of the statement: the closer to the completion of the contract, the more likely a term
   Writing: If contract is finally written later and the statement is excluded, more likely a representation
   Special Skill: If person making statement has a special skill, more likely a term
   Importance of Statement: More important it is to completion of the contract, more likely a term
2. Dick Bentley v Harold Smith Motors - Dealer sold a car to a private person and a statement as to the mileage by the dealer was a warranty. It was an expert selling to a regular.
3. Schawel v Reade - 4 weeks before conclusion of contract, the seller represented the horse was perfectly sound for stud purposes. Seller had special skill regarding horses so it was a warranty. If there’s an indication from the maker that the statement can be relied on and need not be verified, then it’s an indication the statement is a warranty.

Question 60

Parol Evidence Rule

Answer 60

1. Bank of Australasia v Palmer - RULE - Parol testimony cannot be given to contradict, vary, add or subtract from the terms of a written contract or from terms where the parties deliberately agreed to record any part of the contract.
2. Clayton Love v B&I Transport - There was a written contract that B&I would transport frozen scampi from Dublin to Liverpool. Clayton Love called to clarify that it had to be transported at frozen temp. This was not done and the scampi spoiled. SC allowed oral evidence of phone call that supplemented the instructions in the written contract
3. Revenue Commissioners v Moroney - A father transferred a licensed premise to his sons to avoid estatewriting theyhad to pay 16k. He made it clear that they would not actually have to pay the money.Allowed oral evidence to show the document which appeared to be a contract was actually a gift. This explained the circumstances surrounding the agreement. It can also explain the subject matter.
4. Macklin v Greacan & Company - Parol Evidence is allowed if the equitable remedy of rectifying a document is sought to correct a mistake

Question 61

Terms Implied as a Matter of Fact (Tests)

Answer 61

Courts use 3 tests:
1. Officious Bystander Test
2. Business Efficacy Test
3. The Custom and Practice Test

Question 62

Officious Bystander Test

Answer 62

1. Shirlaw v Southern Foundries - Where terms are so obvious that ifan officious bystanderwereto suggest it, both parties would be like ‘oh, of course!’, it is deemed implied as a matter of fact.
2. Tradax Ireland v Irish Grain Board - Tradax agreed to buy barley from Irish Grain Board. After some shipments, Irish Grain Board repudiated the contract claiming an implied term was that Tradax had to furnish a letter of credit. The Court rejected this as there was not enough evidence of evidence of joint intention. The courts try to identify the parties’ presumed intentions and courts try not to say what should have been done.
3. Carna Foods Ltd v Eagle Star Insurance - Irish SC stated an implied term can be implied into a contract ONLY if it gives effect to the true intentions of the parties in a contract that are affected by the term. It will not be implied if it conflicts with any express terms.
4. Flynn v Breccia - Officious Bystander test requires the court to be satisfied of TWO things:
   That reasonable people in the parties’ position would all agree to the term being implied AND
   would without doubt have accepted the term proposed by the officious bystander.

Question 63

Business Efficacy Test

Answer 63

1. The Moorcock TEST - The parties agreed the Plaintiff’s ship (The Moorcock) could dock at the defendant’s wharf but the ship was damaged by a ridge of seabed near the wharf was too shallow. To give business efficacy to the transaction, it was implied the jetty was safe to dock at. TEST - The law implies a term with the object of giving the transaction such efficacy as both parties must have intended it should have.
2. Sweeney v Duggan - Employee of quarrying company injured at work. Quarry became bankrupt so couldn’t satisfy damages. Sweeney sued the managing director and sole shareholder instead but breaching their duty of care of making sure the company got employment liability insurance or warn employees they didn’t have it. He claimed the insurance was implied as the work is dangerous. Court rejected this because the contract worked effectively without it. The courts will not imply a term simply because it’s reasonable or would make better sense.

Question 64

The Custom and Practice Test

Answer 64

1. O’Reilly v Irish Press - Where contracts are made in a particular industry, terms may be implied to give effect to the custom and practice of that industry. It must be shown it is so notorious, well known and acquiesced that in the absence of agreement in writing, it is to be taken as one of the terms of the contract. This implied term cannot contradict express terms in the contract.
2. O’Connail v Gaelic Echo - A term was implied into a journalist’s employment contract that he’d receive holiday pay on the basis of evidence that holiday pay for journalists was customary in Dublin.

Question 65

Terms Implied by Law

Answer 65

1. Meskell v CIE - Meskell refused to join a trade union and was sacked. The Court held that CIE could not use their contractual right to UNDERMINE Meskells’constitutional right to freedom of association. CONSTITUTION takes precedence over all other sources of Irish law and will be implied where necessary.
2. Carna Foods Ltd v Eagle Star Insurance - For a term to be implied into a contract, it must be necessary and the contract must be of a defined type. Defined type contracts include sale of goods, hire purchase, landlord and tenant, sale of lands, etc.
3. Liverpool City Co v Irwin - Tenant lived on the 9th floor of an apartment where the staircase was overflowed and the lifts and rubbish shoots were broken so they stopped paying rent. They sued when they were evicted. Tenant argued you cannot live on the 9th floor without a working lift or clear staircase and it is implied they would be working. Courts implied this term under common law after looking at the unequal bargaining power to make the one-sided contract bilateral.
4. Implied Terms under Statute - SOGSOS 1980, Employment Equality Act, Terms of Employment (Info) Act

Question 66

The Construction of Contractual Terms

Answer 66

1. Marathon Petroleum v Bord Gais - PLAIN MEANING RULE - The courts use an objective test to ascertain the parties’ intentions. If a term is clear, the courts can’t go beyond the literal meaning of the words to interpret the contract so they will not look at extrinsic evidence.
2. LAC Minerals v Chevron - Irish court applied Prenn v Simmonds FACTUAL MATRIX RULE to an agreement with a pre-emption clause. Words are interpreted in a way that’s not divorced from the surrounding circumstances of the contract. One clause said the offer was for 55 days, another was 60. Courts used outside evidence of intentions to discover which terms to use.
3. Emo Oil Ltd v Sun Alliance and London Insurance Company - Irish SC approved principles of interpretation in Investors Compensation Scheme v WBBS. (1) Interpretation is ascertaining the meaning the document would convey to a reasonable person. The background is important and the law excludes previous negotiations of parties and declarations of subjective intent from evidence. Courts will look at what the parties using the words against its background reasonably meant. We look at “natural and ordinary meaning” but it could still be a linguistic mistake.
4. Law Society of Ireland v Motor Insurers’ Bureau of Ireland - in interpreting one clause in a contract, the court should consider the agreement as a whole.

Question 67

Test for Exemption Clauses

Answer 67

1. Roche v Cork and Blackrock - Roche put a bag in a cloakroom with £10 in it and got a ticket with no T&Cs. There was no exemption clause so they had to pay the £10.
2. Leonard v Great Northern Railway - Great Northern Railway sent turkeys sent by rail. There was a clause to exclude liability if anything went missing with 3 days of notifying the carrier. The notification came after the time limit but the clause worked.
   For an exclusion clause to be enforceable, it must satisfy four tests:
   - The clause must be incorporated into the contract
   - The clause should be worded to cover the breach
   - The clause cannot be affected by any Consumer Protection Legislation
   - The exclusion clause must deal with the events that have taken place

Question 68

Incorporating Exemption Clauses into Contracts

Answer 68

Parker v South Eastern Railway - 1. For an Exemption Clause to be incorporated where there’s no signature, reasonable steps must have been taken to bring the clause to the attention of the aggrieved party BEFORE the agreement is complete. 2. The document with the clause must be contractual in nature. 3. The more onerous the exemption clause, the greater the DUTY to POINT it out. If the person did not know, the clause does not apply unless it was reasonable. 4. Exemption clauses may be incorporated as a result of past dealings.

L’Estrange v Graucob - L’Etrange signed a document to buy a cigarette machine but it excluded liability for express or implied warranties. The machine was faulty and they argued they did not read the terms. Once you sign a document, you are bound by the terms regardless of whether you read them or not. E-signatures are okay (Electronic Commerce Act 2000).

Interfoto Picture Library v Stilletto- IP ran a photo library. IP sent photos to Stiletto for inspection to pick his favourites. The package of photos contained a document stating if any photos were kept longer than 14 days, a fee will be charged. He was not bound by this. Since this measure is particularly onerous, IP must take greater measures to bring it to the attention of the other party.

Spurling v Bradshaw - Bradshaw left barrels of orange juice with Spurling under a contract. It got destroyed and Bradshaw refused to pay him. The parties had previous dealings involving receipts with disclaimers which he never bothered to read. Spurling could assume Bradshaw agreed to the terms because of past business dealings.

Question 69

Giving Notice for Exemption Clauses

Answer 69

Early v Great Southern Railway - Passengers on a train with cheaper tickets were referred to the company’s special conditions that such passengers could not sue for injuries. Early had a cheaper ticket and got injured. Despite the fact there were no copies of the T&Cs available at the place where Early boarded the train, the judge held that the company took reasonable steps to bring them to his attention.
James Elliott Construction v Irish Asphalt Ltd - a delivery docket can be a contractual document, but here, it wasn’t. Although it was signed, it did not contain the T&Cs. They were available on request. The clause was not brought to the plaintiff’s attention but was on credit notes read by accounts department staff. Held that the notice was unreasonable and should have gone to someone at an appropriate level of the company.

Question 70

Timing of the Exemption Clause

Answer 70

Olley v Marlborough Court Ltd - Defendant let room to plaintiff for a week. Plaintiff paid in advance. A notice on the wall excluded liability for losses unless items were kept in the manager’s safe. the notice was not binding on him as it was put in the room after the contract was completed already.
Thornton v Shoe Lane Parking - A ticket from a ticket machine was subject to T&Cs displayed on the premises. A sign said ‘parking at owner’s risk’. A car was damaged. For automatic machines, the contract is made when money goes in. The terms came after the conclusion of the contract when Thornton entered the car park. He was not bound by it.

Question 71

Contra-Proferentem Rule

Answer 71

If an Exemption Clause is open to several meanings, the court must interpret it against the party relying on it.
1. Andrews v Singer - an exemption clause covered all conditions, warranties and liabilities implied by common law, statute or otherwise. Held that since it did not mention express terms, it was not covered.
2. Wallis, Son and Wells - an exemption clause excluded all warranties but there was a breach of condition. The court interpreted warranty narrowly so seller was liable for breach of condition.