Formation of Contract

Question 1

For something to be an offer it contains sufficient key terms and no further negotiation is needed

Answer 1

Gibson v Manchester City Council 1979

Question 2

In distinguishing between an offer and ITT, must consider what the party intended the statement to be using an objective test

Answer 2

Harvey v Facey 1893
C asked D to telegraph the lowest price for property. D said £900, C replied and said he accepted offer - but not an offer - no intention to be bound.

Question 3

Offer vs Invitation to Treat:
Advertisement - ITT , Offer (unilateral and intention to be bound)

Display of Goods - TT

Auctions - ITT and Offer
No reserve price.

Tenders - ITT and Offer

Answer 3

Partridge v Crittenden - ITT
Carlill v Carbolic Smoke Ball - Offer

Pharmaceutical Society of GB v Boots Cash Chemists

British Car Auction Ltd v Wright - calling for bids = ITT, Each bid = Offer to be accepted by auctioneer.
Harris v Nickerson - no reserve price–> unilateral offer accepted by highest bidder

Spencer v Harding- call for tenders = ITT, submission of tenders = offer (clear terms and an intention)
Blackpool and Flyde Aero Club v Blackpool Borough Council - call for tenders = unilateral offer that all tenders would be considered.

Question 4

The Mirror Image Rule - counter offers kills original offer

Answer 4

Hyde v Wrench

Question 5

Distinguish between a counteroffer and a request for more info

Answer 5

Jacques & Co v McLean

Question 6

Identical cross offers do not constitute a binding contract (offeree must be aware of the offer)

Answer 6

Tinn v Hoffman

Question 7

Offeree doesn’t need to know the offer (unilateral contracts) - but here offeree became aware of the offer before info reached the offeror

Answer 7

Gibbons v Proctor

Question 8

Contact formed upon receipt of acceptance by the offeror (instantaneous communication)

Answer 8

Brinkibon Ltd v Stahag Stahl

Question 9

Not necessary for acceptance to have been read by offeror

Answer 9

The Brimnes 
(Note this is a case on termination but still relevant)

Question 10

Exceptions to communication rule (unilateral offers) - performance of act constitutes acceptance.

Answer 10

Carlill v Carbolic Smoke Ball

Question 11

Postal Rule

Answer 11

Adams v Lindsell

Question 12

Postal rule only applies to letters not instantaneous communications which is effective upon receipt (important for which jurisdiction contract was made in)

Answer 12

Entores v Miles Far East Corporation

Question 13

If acceptance by post is unreasonable, postal rule is not applied

Answer 13

Henthorn v Fraser (posting was reasonable here)

Question 14

Methods of Acceptance:
Conduct

Prescribed method of acceptance- this must be clear and explicit otherwise an equally valid method of acceptance will be enough.

Silence does not constitute acceptance

Acceptance of unilateral offer

Answer 14

Brodgen v Metropolitan Rly
(performance of contract constituted acceptance)

Manchester Diocesan Council for Education v Commercial and General Investments Ltd

Felthouse v Bindley

Carlill v Carbolic Smoke Ball

Question 15

Definition of consideration

Answer 15

Currie v Misa

Question 16

Consideration must be sufficient but need not be adequate

Answer 16

Thomas v Thomas

Question 17

Consideration must be the act (or omission) or promise requested by the promisor in return for his promise.

Answer 17

???? look this up in textbook

Question 18

Consideration must move from the promisee

Answer 18

Tweddle v Atkinson

Question 19

Types of Consideration:
Executed

Forbearance

Past

Existing Duty under law

Contractual duty to third party

Existing duty under same contract

Answer 19

Good

Cook v Wright - Good if it is a good claim/ promisee truly believes it to be
Wade v Simeon - Bad claim is not good consideration

Bad

Collins v Godfrey - Bad (no new benefit)

Shadwell v Shadwell - Good (due to duty to third party)

Bad - no new detriment or benefit (Stilk v Myrick)

Question 20

Legal ambiguities of Consideration
When there are fewer crew members, could it be argued there is in fact a new detriment due to larger workload?

consideration is provided if existing contractual duty provides a practical benefit to the promisor

Part payment of a debt cannot discharge entire debt as there is no new consideration

Practical benefit may be found as consideration when there is a promise of more money for existing duties but such a benefit is not present for part payment

Practical benefit can be obtained from part payment of a debt

Answer 20

Stilk v Myrick

Williams v Roffey

Foaks v Beer

RE Selectmove

MWB Business Exchange v Rock

Question 21

Every party must have the intention to be bound - commercial agreement not social

Answer 21

Baird Textile Holdings Ltd v Marks Spencer Plc

Question 22

Intention is judged objectively

Answer 22

Edmonds v Lawson

Question 23

Intention in social contacts:
Assumption due to family relationship of no contract - legal intention not explicitly stated

If a promisee relies on a promise to their detriment, a contract has been formed - obiter. Still social so no contract.

Some social agreements are binding - parties were not on good terms so court looked at their relationship and held it to be a contract

Answer 23

Balfour v Balfour

Jones v Padavatton

Merritt v Merritt

Question 24

Intention in Commercial contracts
Assumption that there is an intention to form contract also shown by deposit in bank

Collective agreements (between trade unions and management of company) not enforceable

Letters of comfort are not legally binding documents - refusal to act as a guarantor showed no intention to be legally bound

Letters of intent - not legally binding contract but it may become one if parties reach agreement to start work

Negative intention

Answer 24

Carlill v Carbolic Smoke Ball

Ford Motor Co Ltd v Amalgamated Union of Engineering

Kleinwort Benson Ltd v Malaysia Mining Corpn

RST v Muller

Rose & Frank Co v J.R. Crompton

Question 25

Withdrawal of a unilateral offer:
Not allowed to withdraw after parties commence performance

Withdrawal is allowed after beginning of performance

Answer 25

Errington v Errington

Luxor (Eastbourne) Ltd v Cooper

Question 26

The Battle of the Forms and Doctrine of Last Shot - contract concluded on the terms of the last party to communicate those terms before performance starts

Answer 26

Butler Machine Tool Co Ltd v Ex-Cell O Corp 1979