how contracts are formed

Question 1

difference betweem unilateral and bilateral offers

Answer 1

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

Question 2

what constitutes as a valid offer?

Answer 2

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

Question 3

carlill v carbolic smoke ball co

Answer 3

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

Question 4

gibson v manchester CC

Answer 4

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

Question 5

difference between offer and invitation to treat

Answer 5

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

Question 6

fischer v bell

Answer 6

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

Question 7

clifton v palumbo

Answer 7

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

Question 8

withdrawal of a unilateral offer

Answer 8

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

Question 9

pharmaceutical society of GB v boots

Answer 9

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

Question 10

what is will theory

Answer 10

free will = foundation of contracts

Question 11

communication of accpetnace by words

Answer 11

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

Question 12

acceptance by conduct

Answer 12

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

Question 13

mirror image rule + counter offer

Answer 13

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

Question 14

what constitutes a valid acceptance

Answer 14

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)

Question 15

3 types of objectivity

Answer 15

detached ( outsider view - norm go for this compromise but not always good as may not understadn waht 2 parties want)
promisor
promisee

Question 16

postal rule

Answer 16

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

Question 17

instantaneous and non instantaneous messages

Answer 17

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

Question 18

what if instantaneous method used but acc comm not instantaneous

Answer 18

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

Question 19

agency and auctions

Answer 19

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

Question 20

tenders

Answer 20

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

Question 21

uncertainty and incompleteness

Answer 21

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

Question 22

pre- contractual agremeents / agreements to negotiate

Answer 22

‘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

Question 23

lock in v lock out

Answer 23

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

Question 24

legal intentions

Answer 24

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

Question 25

consideration definition

Answer 25

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

Question 26

consideration must be sufficent but need not be adequate

Answer 26

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

Question 27

what is executory and executed consideration

Answer 27

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)

Question 28

consideration must not be past

Answer 28

consideration for a promise must be given prior to the act - must be given in response to the promise of the other party

Question 29

something of value

Answer 29

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

Question 30

public duty

Answer 30

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

Question 31

duty to 3rd party

Answer 31

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

Question 32

duty under same contract

Answer 32

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

Question 33

part payment of debt

Answer 33

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

Question 34

exception to the past consideration rule

Answer 34

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.

Question 35

promissory estoppel

Answer 35

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

Question 36

propriety estoppel

Answer 36

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