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Public 1 and Contract > Contract Law - 1.1 - Intro to Contracts > Flashcards

Contract Law - 1.1 - Intro to Contracts Flashcards

1
Q

Requirements for a binding contract

A

1) Offer and acceptance
2) Intent to create legal relations
3) Consideration

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2
Q

Offer and Acceptance - simple terms

A

1) Clear and certain offer displaying intention to be bound
2) Unequivocal Acceptance

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3
Q

Storer v Manchester City Council [1974] 1 WLR 1403

A

“you do not look into the actual intent in a man’s mind. You look at what he said and did”
The law applies and objective test

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4
Q

What approach does a court take when determining whether a Contract exists

A

An objective approach by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances.

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5
Q

Requirements of a Valid Offer

A

1) Offer and Acceptance (= Clear and certain display of intention + unequivocal acceptance

2) Intention to create legal relations

3) Consideration

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6
Q

Key Case demonstrating why an offer must be Clear and Certain

A

Gibson v Manchester City Council [1979] 1 WLR 294

Facts:
- Council Sent a letter saying that the council “may be prepared to sell the house…“
- Council changed policy
- HoL found that there was no binding contract because the phrasing of _“may”_ was not sufficiently clear and certain.

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7
Q

Contrasting cases demonstrating “intention to be bound”

A

Gibson v Manchester City Council [1979] 1 WLR 294:
- ‘may be prepared to sell’
Storer v Manchester City Council [1974] 1 WLR 1403
- “ I will send you the agreement signed on behalf of the corporation in exchange’

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8
Q

Two types of contract

A
  • Unilateral Contract
  • Bilateral Contract
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9
Q

Bilateral Contract

A

Each party assumes an obligation to the other party by making a promise to do something, such as to sell an item to the other party in exchange for a payment.

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10
Q

Unilateral Contract

A
  • Less Common
  • One party makes an offer or proposal in terms which call for an act to be performed by one or more other parties. Only actual performance of the required act will constitute acceptance.
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11
Q

In the cases against Manchester City Council, which case was held to be a valid offer and why?

A

Storer v Manchester City Council [1974] 1 WLR 1403

Because it showed clear intention to be bound

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12
Q

An “invitation to treat”

A

A first step in negotiations which may or may not lead to a firm offer by
one of the parties.

An invitation to treat cannot be accepted to form a binding offer

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13
Q

Examples of Invitations to Treat

A

(a) Advertisements
(b) Display of goods for sale
(c) Invitations to tender
(d) Auction sales

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14
Q

Advertisements - Invitations to Treat

A

Statements inviting invitations to Treat

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15
Q

(Partridge v Crittenden [1968] 1 WLR 1204).

A

Adverts = statements inviting further invitation to treat

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16
Q

Advertisement - Exception to the Rule

A

The general rule concerning advertisements does not apply where the
advertisement amounts to a unilateral offer

Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256

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17
Q

Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256

A

Held to be a Unilateral Offer
Advert prescribed an act for acceptance + intention to be bound
Influenza
Deposit proved intention

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18
Q

Carlill makes clear there are two requirements for a Unilateral Offer, what are they?

A

(a) A prescribed act; and
(b) A clear intention to be bound.

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19
Q

Display of goods for sale

A

= An invitation to Treat
(Fisher v Bell [1961] 1 QB 394)
It would be problematic otherwise ie age limits and prescriptions

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20
Q

(Fisher v Bell [1961] 1 QB 394).

A
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21
Q

Pharmaceutical Society of GB v Boots Cash Chemists [1953] 1 QB 401

A

The display of the goods on the shelves were not an offer which was accepted when the customer selected the item; rather, the proper construction was that the customer made an offer to the cashier upon arriving at the till, which was accepted when payment was taken

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22
Q

Websites are a display of goods, therefore

A

an invitation to treat

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23
Q

Invitation to tender

A

A request for tenders is used where a party (usually a company or public body) wishes to purchase a major item or service.
Inviting parties to tender is, as a general rule, deemed an invitation to treat.

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24
Q

Spencer v Harding (1870) LR 5 CP 561

A

The action of inviting parties to tender is deemed an invitation to treat

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25
Q

When is a tender not an invitiation to treat?

A

When the invitation to tender expressly contains an undertaking to accept the highest or the lowest bid.

This is a Unilateral Contract

Harvela Investments Ltd v Royal Trust Co. of Canada (CI) Ltd [1985] Ch 103)

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26
Q

Harvela Investments Ltd v Royal Trust Co. of Canada (CI) Ltd [1985] Ch 103)

A
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27
Q

Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 it

A

LJ Bingham
Invitation to tender can give rise to binding contractual obligations to consider tenders when:

1) tenders were solicited from specific known parties
2) no absolute deadline for submission
3)party requesting tenders had laid down absolute and non-negotiable conditions for submission

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28
Q

Auction Sales

A

Auctioneer’s request for bids is an invitation to treat.

Acceptance of the bidder’s offer is indicated by the fall of the hammer.

(Payne v Cave (1789) 3 Durn & E 148).

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29
Q

(Payne v Cave (1789) 3 Durn & E 148).

A
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30
Q

s 57 of the Sale of Goods Act 1979

A

a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may
retract his bid

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31
Q

What are the two contracts involved in Auctions without reserve?

A

Bilateral contract: usual bid acceptance or rejection
Unilateral contract: promise to the highest bona fide bid

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32
Q

What happens in an auction without reserve if the goods are withdrawn from sale?

A
  • Compensation by damages
  • Not entitled to the goods, as this is dictated by the bilateral contract for sale

Approved by CA in Barry v Davies [2000] 1 WLR 1962.

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33
Q

Obiter dicta, in Warlow v Harrison (1859) 1 E & E 309.

A

If the sale of the item in question is expressed to be ‘without reserve’ the auctioneer may be sued for breach of contract if they refuse to sell to the highest bona fide bidder.

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34
Q

An invitation to treat

A
  • Is not an offer
  • Is the first step in negotiations
  • Cannot be accepted as a binding contract
  • Advertisements are invitations to treat, unless they relate to unilateral offers
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35
Q

Termination of an offer

A

An offer can come to an end by:
rejection,
lapse or
revocation.
Offer loses its legal effect and becomes **incapable of acceptance.

36
Q

Rejection

A

An offer is terminated by rejection.

A rejection does not take effect until it is actually communicated to the offeror as only then will the offeror know that they are free from the offer.

37
Q

Rejection and counter-offer

A

Where an offeree makes a counter-offer, the original offer is deemed to have been
rejected and cannot be subsequently accepted (Hyde v Wrench (1840) 3 Beav 334).

38
Q

Hyde v Wrench (1840) 3 Beav 334

A

A contract did not exist because the counter-offer operated as a rejection of the original offer. There was therefore no offer to accept.

39
Q

Standard Terms and Counter-Offer

A

Last shot fired wins

40
Q

Distinguishing a counter-offer from a RFI?

A

RFI =
- an offeree responds seeking clarification of the extent and terms of the offer,
- or to ascertain if the offeror would consent to changing ancillary aspects of the offer

Not a counter offer

Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346

41
Q

Stevenson, Jacques & Co. v McLean (1880) 5 QBD 346

A

No specific wording to indicate that it was a counter offer or rejection. This was in contrast to Hyde v Wrench. This meant that the offer made by the defendant was still valid and the second telegram by the complaint formed a binding contract.

42
Q

Lapse of an offer

A

An offer may lapse and thus become incapable of acceptance:
(a) By passage of time;
(b) By the death of one of the parties.

43
Q

Passage of time

A

An offer will lapse through passage of time in the following circumstances
(a) Where acceptance is not made within the period prescribed by the offeror;
(b) Where no period is prescribed and acceptance is not made within a reasonable time.

What is reasonable will depend on the circumstances of the case.

44
Q

Death of a party

A
  • if the offeree knows that the offeror has died, the offer will lapse;
  • if the offeree is unaware of the offeror’s death, it probably will not.
  • death of the offeree will cause the offer to lapse and so that the offer cannot be accepted after the offeree’s death by the offeree’s representatives.
45
Q

Revocation

A

The offeror may withdraw (ie revoke) their offer at any time before acceptance (Payne v Cave(1789) 3 Durn & E 148).
An offer cannot be revoked after acceptance.

46
Q

(Payne v Cave (1789) 3 Durn & E 148).

A

Defendant made the highest bid for the plaintiff’s goods at an auction sale, but he withdrew his bid before the fall of the auctioneer’s hammer. It was held that the defendant was not bound to purchase the goods. His bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer signified acceptance by knocking down the hammer.

Note: The common law rule laid down in this case has now been codified in s57(2) Sale of Goods Act 1979.

47
Q

Communication of revocation

A

Revocation of an offer is effective only upon actual notice of it reaching the offeree.
not from the time of posting
(Byrne v Van Tienhoven (1880) 5 CPD 344).

48
Q

(Byrne v Van Tienhoven (1880) 5 CPD 344).

A

withdrawal of the offer was ineffective as a contract had been constructed between the parties on October 11 when the plaintiffs accepted the offer in the letter dated October 1. On this basis, it was held that an offer for the sale of goods cannot be withdrawn by simply posting a secondary letter which does not arrive until after the first letter had been responded to and accepted

49
Q

Indirect communication of revocation

A

Provided the offeror has shown, by words or conduct, a clear intention to revoke their offer and notice has reached the offeree, the revocation is effective.

Even by a third party

Dickinson v Dodds (1876) 2 Ch D 463).

50
Q

Dickinson v Dodds (1876) 2 Ch D 463).

A

The court stated that a communication by a friend or other party that an offer had been withdrawn was valid and would be treated as if it came from the person themselves.

51
Q

Revocation of a unilateral offer

A

It remains possible to revoke the
offer at any time prior to the completion of the required act (Great Northern Railway Company v Witham (1873)).

There is an exception

52
Q

Great Northern Railway Company v Witham (1873)

A

The Courts deem the contract to be created at the time the tender is accepted.
Performance of the contract will not take place until the tender is called upon to perform and supply the goods or services.
The tenderer however, may be allowed to give reasonable notice to withdraw their set prices, and thus withdraw their offer

53
Q

Exception to the revocation of a unilateral offer

A

where the offeree has partly performed the obligation and is willing and able to complete.

Errington v Errington & Woods [1952] 1 KB 290

54
Q

Errington v Errington & Woods [1952] 1 KB 290

A

In obiter, the father made an offer of unilateral contract could not be revoked after the couple started paying off the mortgage

55
Q

Communication of revocation in unilateral contracts made to the “whole world”

A

revocation will be effective if the offeror takes reasonable steps to bring the revocation to the attention of all those who may have read the offer.
eg Carlill v Carbolic Smoke Ball Co

56
Q

Four rules in relation to acceptance

A
  • Acceptance must be in response to the offer
  • Acceptance must be unqualified
  • May be necessary to follow a prescribed mode of acceptance
  • Acceptance must be communicated.
57
Q

Acceptance must be in response to the offer

A

Only the party to whom an offer is made (the offerees) can accept the offer. Unless the offer is made to the world at large

58
Q

Acceptance must be unqualified

A

Acceptance must be unqualified and correspond exactly with the terms of the offer.
This is sometimes called the “mirror image rule”.
Hyde v Wench (1840)

Courts will examine correspondence to see if parties have expressly or implied assented to all terms.

Assent qualified in any way does not take effect as acceptance.

59
Q

Hyde v Wrench (1840)

A
60
Q

Prescribed mode of acceptance

A

May be communicated in any manner. Unless the offeror has prescribed a manner - then only that will suffice.

61
Q

Manchester Dioceasan Council for Education v Commercial and General Investments

A

1970
Buckley J
Open to the offeror to prescribe a mode of acceptance “in terms that insisting that only acceptance in that mode shall be binding”.

62
Q

Tinn v Hoffman

A

1873
Unless the prescribed mode of acceptance is made mandatory, another mode of acceptance which is no less advantageous will bind them

63
Q

Acceptance must be communicated

A

General rule is that acceptance must be communicated to the offeror.
Acceptance occurs the moment it is communicated.

64
Q

Silence

A

The offeror may not stipulate that silence in the face of an offer amounts to acceptance.

65
Q

Third party communication by way of acceptance

A

It is possible if made with authority form the offerees. No contract will arise if the communication is made by way of 3rd party authority to the offeree.

66
Q

The postal rule

A

An arbitary rule - places burden on the offeror.
- Applies even if the letter is delayed
- Does not apply if it was not contemplated that post would be used
- Does not apply to letters revoking offers

67
Q

The Postal Rule - Key Case

A

Adams v Lindsell 1818
Laid down the postal rule
An exception to the rule that acceptance must be communicated to the offeror.
Held that where post is deemed to be proper, acceptance takes place from the moment it is properly posted (letter box/official)

68
Q

Applies even in the even that acceptance is delayed or lost in the post

A

Household Fire and Carriage Accident Insurance Co v Grant
1879

69
Q

Does not apply if it was not contemplated that post would be used

A

Henthorn v Fraser 1892
Only applies if reasonable in all circumstances to have used post.

70
Q

Does not apply to letters revoking offers

A

Byrne v Van Tienhoven
1880

71
Q

When does the postal rule apply

A

Y - if acceptance is delayed by post
N - not contemplated that post would be used
N - revocation of offers
N- Letters incorrectly addressed
N - Disapplied by the offeror

72
Q

Ousting the postal rule

A

Offeror can address the imbalance of the postal rule
ie they can oust the posta; rule
Holwell Securities v Hughes 1974

73
Q

Howell Securities v Hughes 1974

A

Courts held that when an offer stipulated “notice in writing” - it is implied that acceptance is on receipt, ousting the postal rule.

74
Q

Should postal rule apply equally to instaneous communications

A

Occurs on receipt of the email server.
If acceptance is sent and not received due to an error by offeree or an unknow error - acceptance does not apply.
If acceptance is not received due to fault of offeror it is deemed to be accepted.

75
Q

Entores v Miles Far East Corporation

A

1955
Acceptance on receipt
Denning LJ - person sending message ought to know whether message received.

76
Q

High Court ruling on email postal rule

A

Thomas v BPE Solicitors
Blair J
Postal rule is not effective when sent, but when received by email server

77
Q

Instantaneous communication inside ordinary working hours

A

The Brimnes 1975
If sent in ordinary working hours it is effective of receipt.
Office hours will depend on particular context of communications

78
Q

Instantaneous communication outside ordinary working hours

A

Mondial Shipping and Chartering BC v Astarte Shipping Ltd [1995]

Message sent at 23:41 on Friday was held that not received until Mondau 5th December

79
Q

Communication in unilateral contracts

A

Communication of acceptance is waived in unilateral contracts
Eg Carllil and Carbolic Smoke Ball
An act may be enough for acceptance

80
Q

Summary of acceptance

A
  • Only offeree can accept
  • Must be unqualified and mirror acceptance ie same terms
  • if a mode of acceptance is prescribed, unless clearly mandatory then an alternative mode can be used if not disadvantageous to offeror
  • Acceptance from communication; except Postal Rule
  • Silence does not constitute acceptance even if offeror indicates it will.
  • Third party can communicate acceptance if authorised.
81
Q

A mode of acceptance is prescribed, is it compulsory?

A
  • if a mode of acceptance is prescribed, unless clearly mandatory then an alternative mode can be used if not disadvantageous to offeror
82
Q

Certainty

A

A binding contract requires all material terms to be certain and complete. Only and agreement which is sufficiently certain can be enforced by a court

83
Q

Determining certainty

A

Objective Test
Have the parties agreed all the terms they considered to be a precondition to creating legal relations.
If incomplete/uncertain - may not be enforceable

RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Company KG

84
Q

RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Company KG

A

Where a contract is negotiated “subject to contract” and work begins before the final contract is executed, it depends on the circumstances whether the parties had waived the subject to contract term. In the instance case, the unequivocal conduct of the parties led to the conclusion that they had made a binding agreement to waive the “subject to contract” provision.

85
Q

Scammell v Ouston

A

1941
An agreement on “hire purchase terms” was too uncertain to be enforced. Court considered there were too many different terms this agreement was to vague to be an enforceable contract.

Courts will not enforce an agreement if it is too vague, reflecting the intentions of the parties.

86
Q

Hillas v Arcos

A

1932
Agreement to buy “timber of a fair specification” was enforceable. Court considered the words could be given reasonable meaning (in light of the parties previous dealings) and the agreement was binding.

87
Q
A

Public 1 and Contract (24 decks)

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