Contract Law Flashcards
Thornton v Shoe Lane Parking
an offer can be through notice or machine.
Gibson v Manchester
an offer must be in definite terms.
Bilateral Contract
Made by the offeror in return for a promise from the offeree.
Unilateral Contract
Made by the offeror in exchange for an act from the offeree with no obligation for the offeree to act.
Carlill v Carbolic Smoke Ball
a rewards poster can be a unilateral contract.
Patridge v Crittenden
advertisements are invitations to treat.
Fisher v Bell
goods in a window are invitations, and are not legally binding.
Boots Chemist
the purchaser is the offeror when presenting goods at a checkout.
British Car Auctions v Wright
lots at an auction are invitations to treat,
Harvey v Facey
requests for more information is not an offer, e.g. asking the price or ways to pay.
Taylor v Laird
offers must be communicated, the offeree must know it exists.
Stevenson v Mclean
an offer can have a specified time limit.
Rejection
An offer cannot be accepted after rejection.
Hyde v Wrench
a counter offer is rejection for the previous offer, the original is no longer valid.
Lapse of time
After the offer has expired, it doesn’t exist.
Ramsgate Hotel v Montefiore
acceptance must be in a reasonable time.
Death
If an offeree dies, the offer ends.
If an offeror dies the offer is open until the offeree learns of their death.
If it is for a service, it can’t be accepted if either dies.
Revocation
taking the offer back
Routledge
revocation can be any time prior to acceptance.
Byrne
rev must be communicated to be effective.
Dickinson v Dodds
revocation can be made by a reliable third party.
Brimnes
revocation is subject to usual business hours.
Acceptance
After acceptance, there is an agreement.
It must be positive, unequivocal and communicated.
Felthouse
acceptance cannot be by silence
Yates
when particular forms are required then, unless no other will suffice, it must be no less advantageous.
Postal Rules
Adams v Lindsell:
When the post is the usual way to communicate.
Letters must: be properly addressed and stamped with concrete proof of postage.
When fulfilled, acceptance has occurred after postage.
Enfores v Miles Far East
postal rules do not apply to instantaneous methods of communication.
Brinkibon v Stahag Stahl
instant communication takes effect when it is received, subject to business practices.
Carlill v Carbolic Smoke Ball Co - acceptance
acceptance can be by conduct.
Reveille v Anotech International
performance without written acceptance will be acceptance.
Intention to create legal relations
There must be intention to create legal relations to make a contract legally binding and enforceable.
domestic or social
Jones v Padayatton: no intent for legal relations.
Balfour v Balfour
Merritt v Merritt
no intent between those who are married; but there is if made after the divorce
Simpkins v Pays
Parker v Clarke
The circumstances will be assessed.
If one party has given up their security, there is intent to create legal relations.
business agreements
Esso v CCE: there is intent that can be rebutted.
McGowan v Radio Buxton
promotional offers have intent e.g. competitions
Kleinwort
intent can be rebutted when the contract is not clear enough to amount to a specific promise.
ambiguous circumstance
Sadler v Reynolds
halfway house: business and domestic
consideration
What is exchanged (loss/benefit) in a contract.
Rule 1
C need not be adequate but must be sufficient.
definitive and real, not be intangible
Chappell v Nestle
c must be acceptable, not equal.
White v Bluet
a promise not to do something is not good c.
Ward v Blytham
a promise to do something is good c.
Rule 2
Past consideration is not good consideration
Re McArdle
c must be present or future, not past.
Lampleigh
if a party promises payment, courts can enforce it.
Rule 3
c must move from the promise
Tweddle v Atkinson
3: must be party to the contract for c to move from them and for courts to enforce it.
Rule 4
performing an existing duty cannot be c for a new contract
Collins v Godfrey
rule 4 + Public duty, not enforceable if the duty already exists
Stilk v Myrick
not enforceable to pay employees extra if they are doing what is expected under an existing contract.
Hartley
going above and beyond an existing contract, when dangerous; employees entitled to extra pay.
Williams v Roffey
c is owed when it is already agreed and the d is benefitting, (allowing work to continue, be completed and avoiding the trouble/expense of engaging others to complete it).
Rule 5
c may be found where contractual duties are owed to a third party
Scotson v Pegg
you can make a claim against a third party
Rule 6
a promise to accept part payment of a pre-existing debt in place of the whole is not c
Pinnel 1602
can claim a remainder of the debt even if the part payment was agreed to clear it.
Foakes v Beer
part payment cannot satisfy a debt
exception to rule 6
accord and satisfaction - part payment can be accepted where there is an agreement to accept something other than money or a smaller sum at an earlier date.
Privity of contract
only those who are parties to a contract can be bound by it and benefit from it.
Dunlop v Selfridge
cannot take action against a contract if you are not privy to it
Privity and Consideration
The rule of privity can be seen as based on the rule that consideration must move from the promise as in Tweddle v Atkinson.
Jackson
rule 3 would prevent all members to receive damages, only the one who signed the contract.
The Contract (Rights of Third Parties) Act 1999
A third party may enforce a contract against parties if:
- They are named
- The contract expressly says they can enforce it
- They confer the benefits of the contract terms
Exception 1: Agency
If an agent is authorised to make a contract on behalf of another (principal).
the principal is bound by the contact despite not making it.
The principal and agent are treated as the same person.
Exception 2: collateral contracts
Shanklin v Detel: The court may be able to avoid the strict rule of privity by finding a second contract alongside the main agreement
Exception 3: Restrictive Covenants
An agreement between landowners where one party will restrict the use of its land in some way for the benefit of another’s land.
Tulk v Moxhay: the covenant runs with the land.
Condition:
central to the contract, a breach may allow repudiation.
Poussard
Warranty
a minor term
Bettini v Gye: the breach of a warranty will allow a claim, but not repudiation.
Innominate
not a condition or a warranty, whether it is will depend on the consequences of a breach.
HK Fir Shipping v Kawasaki
- Importance
Couchman v Hill: where the statement is important, it is seen as a term.
- Special Knowledge
Oscar Chess v Williams: private seller with the wrong fact = not a term.
Dick Bentley v Harold Smith Motors: car dealer lying = term, more than a statement.
- Time Lag:
a contract made later to the statement, it will not become part of the contract.
Routledge v Mackay: where there is a time lag seen as unimportant it is not a term.
- Written Contracts
Routledge v Mackay: the court presumes everything wanted to be included as a term will be in the contract.
Business Efficacy and the Officious Bystander Test
Two parts:
- Is the term necessary to make the contract effective?
- If the parties had thought of it, would a term suggested to them be agreed to have obviously been in the contract?
Business Efficacy
The Moorcock
it is implied for property to be kept safe upon an agreement and it makes sense for business for it to be kept safe.
Officious bystander
Shirlaw: gives us the test
Hollier v Rambler Motors
the failure to sign a document does not stop the contract from being legally binding.
Shell UK
a term is not implied if the parties would not agree to it.
Egan v Static Control Components
genuinely implied terms are what the reasonable person would have understood to be the intention of both parties.
Marks & Spencer plc v BNP
the courts must consider the reasonable person in the position of the parties at the time.
Hutton v Warren/Hilas v Acros
Custom or conduct of the parties can imply a term.
S9 The Consumer Rights Act 2015
Applies to contracts and notices between a consumer and a trader.
Satisfactory quality: e.g. description, price or other consideration, fitness for purpose, durability, appearance and finish, safety.
Questions to consider whether the clause is part of a contract:
Whether the agreement was signed
Whether any notice with the term in it is incorporated in the contract
Whether the term is incorporated due to previous dealings (custom)
Signed
L’Estrange v Graucon: bound by a written agreement no matter if you read it or not.
Curtis v Chemical Cleaning
If a clause is queried prior to signing with verbal assurance the exclusion clause may be constructed according to the verbal statement.
Notice with the Term in it is Incorporated
Incorporation can only happen if at the time the contract was made the unsigned document was brought to the attention of the person. Any attempt to introduce new terms after acceptance will fail unless a new contract is developed.
Olley v Marlborough Hotel
Terms need to be made clear before signing.
Thompson v London, Midland and Scottish Railway
The company must take sufficient steps to make customers aware of the terms and conditions.
Prior Dealings/Custom
Holliver v Ramblar Motors: terms may be incorporated by custom if they are regular and consistent.
McCutcheon
it must be consistent
The effect on third parties
If the requirements are established, a third party can rely on an exclusion clause.
The Contra Proferentem Rule
To remove doubt
Transocean Drilling UK: the rule is to be used where the term is both one-sided and ambiguous.
Interfoto Picture Library
Where it is onerous, the party seeking to rely on it must have taken reasonable steps to bring it to attention.
The Unfair Contract Terms Act 1977
Protection against clauses in non-consumer contracts.
There are certain exclusion/limitation clauses that are invalidated by the act, making them unenforceable
UCTA77 s2(1)
can’t exclude liability for death/injury by negligence,
UCTA77 s2(2)
loss/damage: can’t exclude liability for negligence except in situations where it is reasonable to do so,
UCTA77 s6(1)
Cannot exclude liability for breach of consumer laws.
Test of Reasonableness: UCTA77 S11(5) + Warren v Trueprint:
the party who inserts and relies on it, must show it is reasonable in the circumstance.
UCTA77 S11(1) + Smith v Bush
knowledge – the term is reasonable in the light of what was known to the parties at that time.
UCTA77 S11(2)
Involving breach of implied conditions
Watford Electronics
Is reasonable when there is equal bargaining power and the clause was subject to negotiation.
Consumer Rights Act 2015
Includes:
‘fairness’ s62(4): unfair = significant imbalance.
s68(1): must be ‘transparent’
s31(1)(a)-(k): ‘grey list’ of potentially unfair clauses.
s31(1)(a)-(k) CRA15
No exclusion for: s9 satisfactory quality, s10 fit for purpose s11 to be as described s51 reasonable price and more.
Economic Duress
When someone enters into a contract as the result of financial threats, the contract should not be valid
Universe Tankships v ITWF:
requirements for economic duress.
There was compulsion or lack of choice for the v.
Pressure must be illegitimate,
It was a significant cause of making the contract.
Pao On v Lau Yiu Long:
4 factors to determine whether the pressure is illegitimate:
- Protest from the victim,
- Alternative?
- Independent advice?
- Steps to avoid the contract after entering into it.
CTN Cash v Gallagher
duress is not available when the action threatened was lawful.
Progress Bulk Carriers
Pressure can be illegitimate pressure when lawful threats are made in unusual cases.
Five conditions of economic duress:
Pressure was exerted
Pressure was illegitimate
Pressure had induced the c to enter the contract
C had no choice but to enter the contract
C protested at the time or shortly after it was made
North Ocean Shipping v Hyundai
An increase in price and ultimatum over a contract can be pressure.
Continuing payment without protest will affirm the contract and the claim will fail.
Atlas Express v Kafco
Signing a contract that will help the business whilst also having no choice.
There are 4 requirements for a misrepresentation:
- False statement
- Of material fact
- Made by a party to the contract
- Induces the party to enter into the contract
1: False Statement.
The statement must not be true or accurate.
Fletcher v Krell
silence cannot be a misrepresentation
With v O’Flanagan
there is an obligation to disclose a change of situation if a statement becomes false due to this change.
Exceptions:
Half-truths - Dimmock v Hallet.
Non-disclosure of required info - Lambert v Co-op Insurance.
When there is a relationship built on trust - Tate v Williamson.
Spice Girls v Aprilla
a representation can be through actions/conduct, a false statement can be made by the circumstance.
2: Material Fact
The misrepresentation must be of a material fact that would have led a reasonable person to make the contract and influence their mind.
Bisset v Wilkinson
genuine belief the opinion was correct so is not a misrepresentation.
Edington v Fitzmaurice
must be a statement of fact, not just future intention.
3: Made by a Party to the Contract
A person is not liable for statements made by others unless they are an agent.
4: Induces the Other to Entering into the Contract
Must lead to the party making the contract.
Attwood v Small
they must rely on the statement rather than their own judgement or information from elsewhere.
Redgrave v Hurd
it does not matter if the party could have found the truth by taking reasonable steps or if it was unreasonable to rely on the statement.
CRA15 s12(2)
Any info from a trader is a term and should be correct even when there is a later change s12(3)
Innocent misrepresentation
The Misrepresentation Act 1967 (MA67) defines innocent misrepresentation as one which is “genuinely held on reasonable grounds”.
Negligent misrepresentation
MA67: no special relationship but a statement is made without reasonable grounds.
Hedley Byrne v Hellery:
Negligent: there is a duty in relation to professional advice, they must take reasonable care to be accurate
Fraudulent misrepresentation
Derry v Peek: a fraudulent misrepresentation is made by a representor who knows the statement is untrue or was reckless as to its truth.
Discharge by breach
- Poussard – actual breach by breaking a condition
- Bettini – no breach of warranty
- Hochester de la Tour – anticipatory breach
