intro to contract Flashcards
what are the 4 requirements of a contract
- offer
- acceptance of that offer
- consideration
- intention to create legal relations
offeror
person making the offer
offeree
person to whom the offer is made
what is an offer
- statement of the terms by which the offeror is prepared to be bound
- all that is required from the offeree is an acceptance
why must an offer be certain
so that if it is accepted both parties know what they have agreed to
what is an invitation to treat
- an invitation to someone to make an offer
- leaves the person who issued the invitation able to decide whether or not to accept any subsequent offer
what can offers be accepted to form (ITT cannot)
a contract
how does an offer indicate that no further negotiations are needed
the offeror intends to be bound by an acceptance of his/her terms
an invitation to treat is a statement which shows willingness as to what?
enter into negotiations or is art of the continuing negotiation process
what will whether a statement is an offer/ITT depend on
the circumstances
which case illustrates that displays of goods in shop windows are ITT
fisher v bell
principle in fisher v bell
although the shop keeper was displaying a flick knife in his window with a price tag, the court decided that this amounted to an ITT and not an offer for sale
which case illustrates that goods on display in supermarkets and self service stores are ITT
PSGB V boots
PSGB v boots
display of some drugs would be illegal if it was an offer
which case illustrates that advertisements in magazines, catalogues, newspapers and online are ITT
partridge v crittenden
partridge v crittenden
an advert in a magazine to sell wild birds was an ITT and not an offer for sale
which case illustrates that auction sales are ITT
payne v cave
payne v cave
it was held that an auctioneer asking for bids was not making an offer, it was an invitation to treat. offer is made by the bidder and the auctioneer is free to accept/reject it
which case illustrates that responses to requests for info are ITT
Harvey v facey
Harvey v facey
fs response ‘lowest cash price for bumper hall pen £900’ was not an offer but merely a statement of the price and an invitation to treat. so when f refused to sell to h at that price he was not in breach of contract
if an offer is made to one person or a group of people, who can accept it?
only by that person or group
if an offer is made to the whole world eg for offer of a reward, who could it be accepted by
anyone who does what is set out in the reward poster
which case involves a reward advertisement
CARLILL V CARBOLIC SMOKE BALL CO
CARLILL V CARBOLIC SMOKE BALL CO
the court decided that because of the sum of money set aside, and the fact that the advert was clear to what conditions had to be fulfilled to be entitled to the £100, the advert was an offer to the whole world and c was entitled to the reward
what do vending machines and automatic ticket machines make
standing offers
thornton v shoe lane parking
an automatic machine which issued tickets on entry to a car park made a standing offer which was accepted by a motorist putting money into the machine
what can a person not accept in relation to offers
what he/she does not know about
what must an offer be to come into existence
communicated
when will an offer made in writing be communicated
when it is received and read by the offeree eg carlill
when will an offer made orally be communicated
when it is heard by the offeree
when will an offer made by conduct be communicated
when it is seen by the offeree
what is an acceptance
unconditional agreement to all the terms of the offer by words or conduct
what must be clear if the acceptance is by conduct
that the offeree did the required conduct with the intention of accepting the offer
who must an acceptance be by
the offeree
why cant another person who hears the offer being made try to accept it
the offer was not to them
when can anyone accept an offer
if it is an offer to the whole world (carlill)
how must an offer be accepted if the offeror sets out a specific way for the offer to be accepted
only that method will do
which case states that if the offeror sets out a specific way for the offer to be accepted, only that method will do
eliason v henshaw
eliason v henshaw
the court held that post wasn’t a valid acceptance as it had not been communicated by the manner specified by E
if there is no specified way of communicating the acceptance then which method will do
any, as long as its effective
if the offeree uses a phone to accept the offer and just as he says he accepts the signal is lost and the offeror doesn’t hear, is it an effective acceptance?
no
is mere rumour of acceptance enough?
no
who must the acceptance be communicated to usually
to the offeror or to someone whos acting on behalf of the offeror
is silence sufficient for accepting an offer?
no, a positive act is required
which case illustrates that silence is insufficient in acceptance of an offer
felthouse v bindley
felthouse v bindley
it was held that as B had not communicated acceptance of the offer, there was no contract
which is the rule on acceptance by modern methods of communication
acceptance is immediate as long as its communicated
entores v miles far east corporation
the court held that acceptance by telex machine was made when the telex was received
brinkibon v stahag
the court held that the acceptance took effect at the start of the next working day
exception to the rule that acceptance must be communicated involving which type of unilateral contracts
unilateral contract whereby one party promises to pay the other a reward if the other party does a certain act eg carlill
where it is clear that parties expect use of post to accept an offer, what does the postal rule maintain
acceptance takes place the moment the letter of acceptance is posted by the offeree: ADAMS
under which case is it illustrated that acceptance takes place the moment the letter of acceptance is posted by the offeree
adams v linsell
which case states that is doesn’t matter if the letter of acceptance is lost in the post
household fire insurance v grant
when can an offer be brought to an end
at any point before acceptance
how can an offer come to an end by rejection
- once refusal of an offer has been communicated to the offeror, the offer has ended
- offer cannot be accepted later if the offeree changes mind
when can an offer by withdrawn by the offeror
at any time before it has been accepted
when must the withdrawal/revocation of an offer be communicated to the offeree
whilst the offer is still open
which case demonstrates revocation
byrne v van tienhoven
byrne v van tienhoven
the court held that the revocation was on the 20th oct when the letter arrived
so the offer was still in existence on 11th oct when the claimants accepted it and there was a contract between the parties
what is a counter offer
a response introducing new terms, rather than accepting all the terms of the original offer
how can an offer come to an end if a counter offer is made by the offeree
counter offer will kill off the original offer so that it cannot be subsequently accepted by the offeree
which case relates to counter offers
hyde v wrench
hyde v wrench
it was held that there was no contract. all the terms of an offer must be accepted and an attempt to change any of them becomes a counter offer. Hs counter offer of £950 killed off ws original offer so it could not be accepted
when does an offer exist if the offeror sets a time limit for the acceptance of the offer
only exists during the set times
for how long will the offer remain open where no time limit is specified
for a reasonable amount of time
what is considered reasonable will depend on the circumstances
which case illustrates that offers can end by lapse of time
Ramsgate Victoria hotel v montefore
Ramsgate Victoria hotel v montefore
it was held that there was no contract. the offer had lapsed because an excessive amount of time had passed
how can an offer come to an end by a specified event
an offer which is stated to come to an end if a certain evnt occurs cannot be accepted after that event has actually taken place
how can an offer come to an end by death of the offeror
an offeree cannot accept an offer once he/she knows that the offeror has died
when can an offer still be accepted once a offeror has died
the offer may not end and can still be accepted if the offeree is ignorant of the death and it is a contract for the sale of goods
when can an offeree ignorant of the offerors death not accept an offer
if it is a contract for the performance of personal services
what is consideration
the element of exchange in a bargain
currie v misa
for there to be a contract, both parties must contribute something that is real and of some actual value to the agreement
executory consideration
exchange of promises by parties to do something in the future
what can either party do in the event of the other not doing what it has promised in executory consideration
sue the other
executed consideration
in unilateral contracts, where the offeror is under no obligation until the offeree performs his/her part of the agreement eg carlill
for there to be consideration, what must be given by both parties
something real, tangible and of some actual value- WHITE V BLUETT
WHITE V BLUETT
the promise made by the son was not offering anything of real value/substance to the bargain
consideration need not be?
adequate or match the ‘value’ put in by the other person- chappell and co v nestle co
CHAPPELL AND CO V NESTLE CO
it was held that the 3 wrappers were part of the consideration, even though on receipt the wrappers were thrown away
a person to whom a promise is made can only enforce the promise if he himself provides consideration for what?
that promise (consideration must move from the promisee)- TWEDDLE V ATKINSON
TWEDDLE V ATKINSON
the groom unsuccessfully sued the deceased’s estate for the money because consideration had not moved from the groom
when must consideration come
after the agreement, rather than being something that has already been done. it must not be past- RE MCARDLE
RE MCARDLE
there was no contract because the repairs had been done before the agreement was made
a basic requirement of a valid contract is that at the time the parties make their agreement they must intend it to be…
legally binding
what do the courts have to help them decide whether an agreement was intended to be legally binding
a rebuttable presumption for business/commercial agreements and a rebuttable presumption for social/domestic agreements
what do the courts start by presuming if the agreement is a business one
that the agreement was intended to be legally binding- ROSE FRANK CO V CROMPTON BROS
ROSE FRANK CO V CROMPTON BROS
it was held that the words ‘this agreement is not entered into as a formal/legal agreement and shall not be subject to legal jurisdiction in the law courts’ made it clear that the parties had not intended their agreement to be a legally binding contract
what did the courts hold that using the words ‘binding in honour only’ means
that the agreement is not intended to be legally binding
JONES V VERNON POOLS
JONES V VERNON POOLS
the courts held that such a statement on a football pools coupon meant that it was not legally binding
what is presumed where free gifts/prizes are promised
the parties intended to enter into a legally binding contract
why is it presumed that the parties intended to enter into a legally binding contract where free gifts or prizes are promised
because the purpose is generally to promote the commercial interests of the body offering the gift/prize
what do the courts start by presuming where the agreement is between family members
it was not intended to be legally binding- BALFOUR
BALFOUR
it was held that it was a purely domestic agreement and the parties, when the agreement was made, did not intend it to be a legally binding contract
when is the presumption that domestic agreements are not intended to create legal relations rebuttable
if one of the parties can show the agreement was intended to be legally binding then it will be a valid contract- MERRITT
MERRITT
the court held that when the agreement was made, the husband and wife were no longer living together, and that this, together with the written promises, meant that they must have intended the agreement to be legally binding. the agreement was made in a business context
when is the presumption that social agreements are not intended to create legal relations rebuttable?
if one party can show the agreement was intended to be legally binding, it will be a valid contract- this will be so if money has changed hands
when is a party said to be in breach of contract
when it without lawful excuse fails to perform an obligation under a contract
what are the two types of breach
actual and anticipatory
when does an actual breach occur
where performance of the contract is due but one arty either fails to perform their side or performs it poorly
what do the remedies for actual breach of contract depend on
the nature of the term broken
what is a breach of warranty
a breach of a minor terms that doesnt go to the root of the contract and only gives rise to the claim for damages
which case illustrates breach of warranty
bettini v gye
bettini v gye
this was a breach of warranty so the employer was not entitled to end the contract
missing rehearsals didn’t go to root of contract, it was merely an inconvenience to the employer
b entitled to damages because contract was wrongfully brought to an end by g
what is a breach of condition
a breach of an important term, giving the innocent party right to end the agreement and claim damages
which case illustrates breach of condition
pousard v spiers
pousard v spiers
missing opening night was serious enough to be a breach of condition and s was entitled to end the contract
when does an anticipatory breach occur
where one party is due to perform their part of the contract in future and, before the date for performance, they make it clear by words or conduct that they will not be performing the contract
what two choices does the innocent party have in anticipatory breach
they can accept the anticipatory breach
they can choose to continue with the contract even though they know that the performance is not wanted by the other party
what can the innocent party do if they accept the anticipatory breach
immediately treat the contract as at an end and sue for damages
which case illustrates accepting anticipatory breach
HOCHESTER V DE LA TOUR
HOCHESTER V DE LA TOUR
h was entitled to sue the defendants straight away. he did not have to wait until the contract was due to be performed
what can the innocent party claim for if they choose to continue with the contract despite anticipatory breach
they can claim for loss caused after the other party breached the contract
which claim illustrates continuing with the contract despite anticipatory breach
WHITE AND CARTER V MCGREGOR
WHITE AND CARTER V MCGREGOR
it was held that w was entitled to full payment for 3 years of advertising as a debt
what could the parties try as an alternative to the civil courts in solving a claim for breach of contract
ADR which includes negotiation, mediation, conciliation and arbitration
why is negotiation often the most common method of resolving contract disputes
its completely private, least formal method of ADR
if lawyers aren’t used its also quickest and cheapest
what will be the only way to remedy breach of contract is the other party denies liability/refuses to use ADR
to start a court case
what will the court used depend on
the amount being claimed
where are cases started where the amount claimed is up to £100,000
county court
which courts can the claimant choose between where the amount claimed is over £100,000
county court of QBD of high court
which form must a claimant complete for either court
an N1 form and take it to the relevant court office
which fee has to be paid and what does it vary according to
a court fee for issuing the claim has to be paid
it varies according to how much the claim is for
where will the court send the N1 form and what opportunity are the recipients given
to the defendant
they are given the opportunity to admit the claim and pay damages/ defend the claim
what must the defendant send to the court if they choose to defend the claim
either an acknowledgement of service/ a defence to the court within 14 days of receiving the claim
if the defendant wishes to make a counterclaim against C what should it follow on from
the defence in the same document
once a claim is defended what will a judge in a relevant court do
allocate the case to the most suitable track/way of dealing with the case
what is completed by both parties to help the judge decide which track to allocate the case to
an allocation questionnaire
what kind of disputes does the small claims track hear
those under £10,000
who are small claims track disputes heard by
district judge in the county court
in what format are cases usually heard on the small claims track
-usually heard in private and informal
what part will the district judge play in small claims cases
- active part in proceedings
- asking questions and making sure both parties explain all their important points
why are lawyers often not used in small claims track cases
- use of lawyers discouraged
- public funding not available to pay for lawyers
- cost of using lawyers cannot be claimed from losing side
which cases use fast track
straightforward disputed £10,000-£25,000
who hears fast track cases
either district or circuit judge in county court- formal procedure
why does the court set down a strict timetable for pre trial matters in fast track cases
to prevent one/both sides from wasting time and running up unnecessary costs
what are fast track trials themselves limited to
one day
how are lawyers used in fast track
- they can only charge a certain amount
- legal aid may be available
which cases is the multi track for
claims over £25,000/ complex cases under amount
who are multi-track cases heard by
either in county court by circuit judge/high court by high court judge
from which point will the relevant judge ‘manage’ a multi-track case
from the moment it is allocated to the multi-track route
why is there case management conference for multi-track cases
to check everything is proceeding to plan
what is encouraged in multi-track cases
ADR
why are timetables fixed and directions given in multi-track
to ensure that any trial proceeds quickly and efficiently
is legal aid available for multi-track
may be
who is the burding of proving the case on for multi-track cases
the claimant
what does the claimant have to prove to win the case
that there was a contract and that is should be enforced/that there was a breach of contract
what is the standard of proof and what does this mean
balance of probabilities- judge decided who is most likely to be right
what does the claimants counsel (barrister) do at first if the case reaches trial
opens the case and calls evidence- claimant may give evidence if he/she wishes
what is each witness’ statement entered as if the case reaches trial
their evidence in chief
who may witnesses be orally cross-examined by and why
by the defendant and re-examined by the claimants counsel to resolve any ambiguity
what does the counsel for the claimant put forward after the witness’ have been cross-examined
any arguments on points of law
how does a defending counsel then call evidence (after claimaints evidence has been delivered)
in the same way
puts forward any arguments on points of law
counsel for claimant may reply
what must the judge decide when both counsels have spoken
if the claim has been proved or not
what will the judge decide if the claimant wins
how much to award the claimant for the breach of contract/ whether another remedy should be awarded
what is the aim of awarding damages
to place the claimant in the same position as if the contract had not been broken. the court is compensating the claimant for their loss- aim is not to punish the defendant
what must the breach of contract be for loss to be claimed
it must be a cause of loss to the claimant, but it doesn’t have to be the only cause
will the defendant still be liable for the loss if it arises partly from breach and partly from intervening events
provided that the chain of causation isn’t broken
which case illustrates that breach doesn’t have to be the only cause of loss of claimant
STANSBIE V TROMAN
STANSBIE V TROMAN
it was held that the decorator was liable for the loss of property as it had resulted from his failure to comply with his contractual duty to secure the house on leaving
didn’t matter that the thief was also a cause of the loss- chain of causation not broken by intervention of a third party
which loss does the law not allow a claim for
loss which is considered to be too remote a consequence of the breach
which case illustrates that loss which is considered to be too remote a consequence of the breach is not allowed for by the law
Hadley v baxendale
Hadley v baxendale
it was held that as B didn’t know the mill couldn’t operate without the new shaft, the loss of profit was too remote and couldn’t be claimed for
what did the case of Hadley v baxendale decide
damages should be awarded for loss which
- arose naturally from the breach
- was in reasonable contemplation of both parties when the contract was made
why did the court hold in HADLEY V BAXENDALE that the loss of profit wouldn’t have arisen naturally from the breach
most mills would’ve had a spare shaft
loss of profit not in reasonable contemplation of both parties- mill owner didn’t tell d that quick delivery was necessary
what is mitigation of loss
the innocent party must take reasonable steps to minimise his/her loss
example of mitigating loss
BRITISH WESTINGHOUSE V UNDERGROUND ELECTRICK RAILWAYS CO
BRITISH WESTINGHOUSE V UNDERGROUND ELECTRIC RAILWAYS CO
it was held that UER did not have to buy the substitute turbines, but since this had been done the financial advantages gained had to be taken into account. UER not entitled to damages
what should an innocent party do in anticipatory breach if they have chosen to affirm the contract
should take reasonable steps to mitigate their loss in two sections
how must the innocent party do in anticipatory breach where performance of the contract requires cooperation and is clearly not going to happen, do to mitigate their loss
they must make an effort to find a replacement and the defendant can be sued for loss of profits
which other situation (than performance) must an innocent party in anticipatory breach mitigate their loss?
where greater cost would be incurred by the claimant from continuing with the contract than cancelling it
which case illustrates that the claimant must mitigate their losses where greater cost would be incurred with continuing the contract than cancelling it
THE ALASKAN TRADER
the Alaskan trader
it was held that the owners should have mitigated their loss by accepting the anticipatory breach and suing for damages
when does the exception to the rule that consideration must not be past occur
when one party has asked the other to act and although payment is not specifically mentioned at the time, it is implied that the service will be paid for
when will the courts enforce the promise when one party has asked the other to act and it is implied that itll be paid for
if the other party later promises payment for what has just been done at his request
which case illustrates the exception to the rule that consideration must not be passed
lampleigh v braithwaite
lampleigh v braithwaite
L entitled to money even though he had already got the pardon for b when the promise was made. this was because he acted at bs request and both parties would have contemplated a payment when the request was made
