Contract Law Formation Flashcards
What does Contract mean?
Must be able to explain what it is
A contract is a legally enforceable agreement between two or more legally distinct parties (Crossan, 2017).
Component parts of a contract
Contract = An offer + Acceptance (main parts)
A contract is Legally enforceable by the courts. It will ask the question of was a contract made? Was there an offer + acceptance?
The Scottish courts will not enforce (3 types of contracts)
Contracts that will not be enforced by the Scottish courts:
1) Social agreements – a breach = upset/disappointment (eg agreed to meet a friend and they’ve not turned up)
2) Domestic agreements – administrative tasks (eg sharing a house and someone agrees to do washing up & they don’t it cant legally be enforceable)
3) Agreements binding in honour alone (eg just agreeing to do something)
What happens with a Contract? (Bilateral)
A bilateral contract means there is a two-way flow
Party A: Good/services go from party A to B
Party B: They will pay party A cash consideration for the goods/services
- A contract needs acceptance
- Unilateral promise is binding as soon as offer made
- Acceptance does not need to be communicated
- Written evidence required
A contract must be bilateral it cant be a unilateral promise
What is a Unilateral Promise or Gratuitous Obligation?
This is a promise that flows one way. A promise is made for nothing in return.
Unilateral promise is binding as soon as offer made
A Not Bilateral contract in Scotland means?
A cash consideration (the price paid) is not essential in Scottish law.
An individual can make a promise and expect nothing in return.
In Scottish law, if a unilateral promise is made in writing even in some cases verbal then they are enforceable.
Requirements of Writing (Scotland) Act 1995
3 Contracts MUST be in writing to be enforceable.
1) All unilateral promises (excluding business) should be in writing. UNLESS it is made in a business context.
2) In fact all contracts involving land & buildings (heritable property) must be in writing (including unilateral promises)
3) All wills must also be in writing
These are called ‘significant actings’ under the Act
Component of a Contract
Offer (5 conditions)
1) Must be precise and definite
Carlill v. Carbolic Smokeball Co (1893)
2) Invitation to treat
3) Adverts
4) Special cases – vending machines
5) Counter-offer
Carlill v. Carbolic Smokeball Co (1893)
Offer: Must be precise & definite
Principal Established
A contract existed even though there was no written contract AND even though there was no express acceptance of the offer – merely complying with its terms was enough to form a contract.
What is an invitation to treat?
This means “lets do a trade” or “make me an offer”
When buying goods when is that offer made.
An invitation to treat is NOT an offer. It may eventually become an offer however it is not at the point in time when the invitation is made.
- Goods on a shelf are an invitation to treat.
- Advertisements are an invitation to treat.
- Display of goods for sale are an invitation to treat.
There has to be an interaction with another human before an offer is made. With the EXCEPTION of vending machines.
What happens with a Counter-Offer?
If a counter-offer is made this kills off the the original offer.
The original offer is no longer capable of acceptance.
When does an offer lapse?
- Express or implied revocation (offer is taken away)
- The offer is rejected (no longer exists)
- There is a counter offer (kills off original offer)
- Either party loses capacity (through mental wellbeing ie insanity or under influence of drugs/alcohol or death)
- A set time limit expires (context specific eg perishable goods)
- The offer has not been accepted within a reasonable time limit
- The offer is terminated if some condition is not satisfied
Offer lapse
Either party loses capacity
In Scotland, if a person makes an offer (offeror) and dies before the offer is accepted then the offer expires.
The situation is not the same in England. Shown in Dickinson v. Dodds (1876) case.
