how contracts are formed Flashcards
difference betweem unilateral and bilateral offers
bilateral = parties assume obligation to each other - promise to do something in return of a promise to do something
unilateral = one party makes offer for act to be performed by other party, promise to do something in return for an act
what constitutes as a valid offer?
treitel - ‘expression of willingness to contract on specified terms with the intention that it is to become legally binding as soon as its accepted by the person to whom it is addresed (the offeree)’ - must be clear, certain and unequivocal
carlill v carbolic smoke ball co
unilateral offer - promise smoke ball will cure ickness and promise to pay anyone who contracted infleunza but didnt as only stated in an advert and didnt actually mean it , not actually an offer
gibson v manchester CC
council wrote letter to tenant that they may be prepared to sell house at a certain price, tenant filled application and returned it but the council changed policy and didnt sell council houses anymore
HOLs held - no binding contract, “may be” = ITT not a promise
difference between offer and invitation to treat
ITT = first step in negotitations, not legally binding e.g. adverts, displays in shop windows and tenders
offer = offeror is prepared to become legally bound by accpetance by offeree
fischer v bell
flick knife displayed on shop window but question whether knife being offered for sale contrary to S.1(1) of the restriction of offensive weapons act 1919 as illegal
court held - ITT as shopkeeper has a right to not sell item
clifton v palumbo
transaction regarding large estate, P stated he is prepared to offer for 600,000 and buyer considered this as an offer
court held - offer is so huge that ti must have more terms - context of whats being offered is important too
withdrawal of a unilateral offer
errington v errington and woods: father told son and daughter IL they could live in house if pay mortgage, once father died the widow tried to evict DIL
acceptance of offer occurs after final mortgage payment but if oarty begins to perform needs reasonable amount of time to fulfill offer
pharmaceutical society of GB v boots
boots = self servicing shop, P contended that selling posions when custoemrs place item in baskets
CoA held - customer makes offer @ till which is accepted or rejected, policy reason that shopkeeper ensures appropriate customer is purchasing the item
what is will theory
free will = foundation of contracts
communication of accpetnace by words
must be communicated to the offeror, silence is generally not valid
felhouse v bindley - uncle F wanted to buy nephews race hourse, misunderstanding about price and uncle stated if dont hear back assume horse is his, nephew told auctioneer (B) not to sell but B mistakenly sold - uncle sued B
need to objectively identify an agreement cant just subjectively assume otherwise - acceptance not taken place by not communicating
acceptance by conduct
normal for unilateral offers
brogden v metropolitian railway - draft agreeent about coal, manager places draft in desk drawer - manager orders coal but then dispute arose as no contract, by sending coal = acceptance as expression of will = sending coal
mirror image rule + counter offer
offer and acceptance must mirror eachother
hyde v wrench - offer to sell farm for 1000, reply they would buy for 950 which was then refused - doesnt match so cannot be accepted
counter offer kills original offer and cannot be subsequently accepted
stevenson v jacques v mclean - asking for more info isnt a counter offer so original offer can still be accepted
what constitutes a valid acceptance
mirror terms of offer (hyde v wrench)
bilateral - must be comm. to offeror, silence generally not valid
can be commicated by 3rd party if auth. by offeree (powell v lee)
offer may stipulate oferee is to repsond using particular method of comm. or at specific time - where the offeree has failed to comply w/ stipulated method - invalid
instantaneous - must be comm/received (the entores)
must be received within office hours to be valid (the brimnes)
3 types of objectivity
detached ( outsider view - norm go for this compromise but not always good as may not understadn waht 2 parties want)
promisor
promisee
postal rule
acceptance = ASA goes through the post
adams v lindsell - L offered wool with acceptance to be posted, A incorrectly addressed the acceptance, took longer - L sold wool before letter received
revocation by post: once comm. to other party - diff. solution as diff. problem
instantaneous and non instantaneous messages
post = non- inst
phone = inst
parties = treated as if in each others presenceand no contract formed unless word of acceptance heard by offeror - receipt rule
what if instantaneous method used but acc comm not instantaneous
Denning LJ - e.g. phone or telex line goes dead
if offeree knows must repeat message to make sure its received
if offeror knows - must ask for message to be repeated
if nobody knows - no contract as no communication
agency and auctions
auctioneer (agent) acts on sellers behalf to sell something
harris v nickelson - advert by auction house that certain furniture to be sold but withdrawn - court held no offer hust possibility of auction
warlow v harrison - auction advertised as ‘w/out reserve’ (no min. price) but auctioneer allowed seller to bid on own goods - but owner idding = with reserve - court = unilateral offer only app. to ppl in room so call for potential damage = smaller
tenders
request for inds/ companies to make bids in relation to completion of work and for supply of goods
blackpool and hyde aero club v blackpool BC - held invitation to tender can give rise to obligation to consider tenders if plain within invitation and terms
uncertainty and incompleteness
scammell and nephew LTD v Ouston - O agreed to buy lorry, handed in a part payment and rest of price was to be decided ‘on hire purchase terms’ - didnt know meaning of terms
court held no contract as incomplete and not their job to fill in gaps, must be explicit
pre- contractual agremeents / agreements to negotiate
‘subject to contract’ - parties are still negotiating and have not yet reached a final binding agreement
CRS GT LTD v Mclaren Automotive LTD - prties = greement which envisaged a formal contract to be agreed in due course - CRS began work on racing car based on original agreement but no contract as subject t contract - still negotiating
lock in v lock out
lock in - we negotiate until we get a deal - not poss. in english contract law
lock out - courts dont like ti but for certain period of time will negotiate with only one party and nobody else - creates stability
legal intentions
parties must have intention to create legal relations
balfour v balfour - MR and MRS B came england from ceylon, where husband had been posted, husbands leve expired and went back but wife stayed , promised to pay wife £30 monthly but didnt
rebuttable assumption that a domestic agreement will lack leal intent - courts didnt want to get involved
commercial agreements - reputable assumption that commercial greements are intended to create legal relations - esso v custom and excise
consideration definition
moral obligation of a promise - only justified in reliance of a promise if acc done something for it before that then no justificagion for promise
a promise to act is good consideration, the act or promise of the promisor equates to the price the promisees promise was bought for
something of value exchanged between the parties
can benefit one party or detriment the other either can be present but only one need exist - currie v mira - must be moving from promisee but need not move to the promisor
conditional gifts - receieve something upon a certain event happening
consideration must be sufficent but need not be adequate
sufficient = real, tangible, have some value
thomas v thomas - husband died and wanted wife to get house in return for £1 rent weekly - sufficient enough
consideration need not be for the actual value of the promise
chappell v nestle - nestle = competition if collected enough records from chocolat wrappers could get acc record - wrappers dont match value of record but still suffient enough
what is executory and executed consideration
executory - where parties make promises to each other to perform something in the future after contract has been formed e.g. sales and delivery contract
executed - where at time of formation of contract, consideration has already been performed (unilateral)
consideration must not be past
consideration for a promise must be given prior to the act - must be given in response to the promise of the other party
something of value
white v bluett - son owed father moneu via promissory note (debt) - promised to discahrge son from debt if stopped complaining - court = no as stopping complaining not consideration for value of money- son never had right to coplain to father so giving up the right tou dont have has no value in law
public duty
glassbrook v glamorgan CC - mining strike - colliery owner asked polcie to provide him with a garrison for protection - but didnt pay police as argued its their public duty - court held no as provided more officers than they should have
duty to 3rd party
the eurymendon - contract between consignors (a) and carriers (b) - exempted liability for the carriers and employees and contract between B and stevedoers (c)
damage to cargo during unloading but no contract between A and C - Q= can you create contract
court held = yes as consideration is the same between B and C - valid
duty under same contract
performance of an existing duty is not good consideration for a new promise
stilk v myrick - 2 crew members deserted ship and captain divided their wages with remaining crew and promise for more money if get ship back - didnt pay them
court held - had duty to get ship back regardless so no consideration and no extra money
hartley v ponsonby - same as before but took on more tasks - consideration valid as taking on more work
part payment of debt
part payment of debt wont provide good consideration
foakes v beer - F owed B money - agreed installments then B claimed interest on ‘late’ payments - was consideration for later payments?
courts = no
rock advertising v MWB busines exchange
exception to the past consideration rule
pao on v lau yiu long
1. act must have been done at promisors request
2. parties must have understood that the act was to be rewarded either by payment/conferment of some other benefit.
3. Payment/benefit, must have been legally enforceable if it had been promised in advance.
promissory estoppel
you cannot go back on promise -
central london property trust v high trees ltd - high trees block of flats = tenant with 99 yr lease, during war tenany = trouble subletting flats so reduced price by 1/2 - after war tried to increase rent - allowed
must have pre - existing relations:
combe v combe: after divorce Mr promised Mrs money but then refused to pay - Mrs didnt go to divorce courts, after 6 months Mrs brought action for money - arg. estopped from going back on promise but no pre- existing contract so no promissort estoppel
shield not a sword:
D and C builders v Rees - R offered builders after work part payment for their debt or nothing - accepted then claimed the rest
propriety estoppel
regards property
thorner v major - worked on land and wanted to inherit farm - owner died and because destroyed will in fit of rage, son couldnt inheret farm - enforced promise seperate of inheritance and got full farm
