Law Of Contract Flashcards
What is a contract?
An agreement that is legally binding
What are the four stages of a contract?
An offer, an acceptance, consideration and intention to create legal relations
Who is the offeror?
The person making the offer
Who is the offeree?
The person to whom the offer is made
What is an offer?
A proposal of definite terms that is intended to result in a contract if the other party accepts it
What is an invitation to treat?
A statement to someone which shows a willingness to receive offers or which furthers the bargaining process
Which case demonstrates that displays in a shop window or on shelves are invitations to treat?
FISHER V BELL
Which case demonstrates that advertisements, brochures of products for sale and price lists are invitations to treat?
PARTRIDGE V CRITTENDEN
Which case demonstrates that requests for bids at an auction is an invitation to treat?
PAYNE V CAVE
Which case demonstrates that requests for further information and supplying further information are invitations to treat?
HARVEY V FACEY
Which case demonstrates that vending machines and ticket machines make standing offers?
THORNTON V SHOE LANE PARKING
When can a person not accept an offer?
If they don’t know about it
What must an offer be?
Communicated
When will an offer in writing be communicated?
When it is received and read by the offeree
When is an offer made verbally communicated?
When it is heard by the offeree
When is an offer made by conduct communicated?
When it is seen by the offeree
What is acceptance?
An unconditional agreement to all the terms of the offer by words or conduct
What does the case CARLILL V CARBOLIC SMOKE BALL CO say about acceptance?
If the acceptance is of a unilateral offer and by conduct, it must be clear that the offeree did the required act with knowledge and the intention of accepting the offer
What does the case ELIASON V HENSHAW say about acceptance?
When the offeror explicitly sets out a specific way that the offer must be accepted then only that method will do
What does the case FELTHOUSE V BINDLEY say?
Acceptance must be communicated to the offeror or someone acting on their behalf. The offeror cannot impose silence on the offeree as a method of acceptance
What does the case BRINKIBON V STAHAG STAHL day about acceptance?
In terms of modern methods of instantaneous communication, an acceptance is effective when received by the machine, unless it is out of office hours then acceptance is in effect when the offeree might reasonably expect it to be communicated to the offeror
What is the postal rule?
Acceptance takes place when the letter of acceptance is posted by the offeree, it doesn’t matter if it gets lost or delayed in the post and never actually reaches the offeror
Which case demonstrates the postal rule?
ADAMS V LINDSELL
What are the five ways an offer can come to an end?
Rejection, revocation, counter offer, lapse of time or death
What is rejection of an offer?
Once the refusal of an offer has been communicated to the offeror, the offer is at an end and can’t later be accepted if the offeree has a change of mind
What is revocation of an offer?
The offeror can withdraw the offer at any time before acceptance
What does the case BYRNE V VAN TIENHOVEN day about revocation of an offer?
The revocation must be communicated to the offeree and revocation after the time of acceptance is ineffective
What is a counter offer?
An offer ends of there is a counter offer, a response introducing new terms rather than accepting all the terms of the original offer
What does the case HYDE V WRENCH say about a counter offer?
A counter offer is itself an offer and a contract will result if the original offeror accepts
What does the case STEVENSON V MCLEAN say about a counter offer?
A request for further information is not a counter offer
What is lapse of time?
If the offeror has set a time limit for the acceptance then the offer only remains open for that amount of time
What does the case RAMSGATE VICTORIA HOTEL V MONTEFIORE day about lapse of time ?
When no time limit is specified then the offer remains open for a reasonable time. What is considered reasonable will depend on the circumstances. Offers for longer standing items remain open for much longer
What is consideration?
The price for which the promise of the other is bought
Which case goes with the definition of consideration:
DUNLOP V SELFRIDGE
What is executors consideration?
In bilateral contracts when consideration involves a promise by the parties to do something in the future
What is executed consideration?
In unilateral contracts when the offeror is under no obligation until the offeree performs their part of the agreement
What does the case WHITE V BLUETT say about consideration?
Consideration must be sufficient in that something of value has been given. Mere sentiment or a promise to give up a right which one does not possess is not sufficient consideration
What happened in WHITE V BLUETT?
A promise a son made to his father not to complain about the contents of his father’s will in return for cancelling a debt was not sufficient consideration as the son had no right to complain in the first place
What does the case CHAPPELL & CO V NESTLÉ & CO say about consideration?
Consideration must be sufficient, but it need not be adequate or match the value put in by the other party
What happened in CHAPPELL & CO V NESTLÉ & CO?
Nestlé had a special offer which involved people sending off three wrappers from their chocolate bars in return for a music record. It didn’t matter that they didn’t match in value
What does the case RE MCARDLE say about consideration?
There must not be past consideration. Consideration must be given in exchange for the promise at the time of the agreement, rather than being something that has already been done
What happened in RE MCARDLE?
Repairs were made to a house and the people who inherited the house were asked to pay towards the improvements
What does the case LAMPLEIGH V BRAITHWAITE say about consideration?
Past consideration may be valid where it was proceeded by a request
What happened in LAMPLEIGH V BRAITHWAITE?
B asked L to travel to the King to seek a pardon for him so he wouldn’t be executed. L did this and B promised to pay £100 but he didn’t
What does the case TWEDDLE V ATKINSON day about consideration?
A person to whom a promise is made can only enforce the promise of he himself provides consideration for that promise
What happened in TWEDDLE V ATKINSON?
A bride’s father agreed with the groom’s father that he would pay £200 to the groom but the bride’s father died so the groom was not paid. The consideration had not moved from the groom so he was unsuccessful
What does the case COLLINS V GODEFROY say about consideration?
Performing an existing duty cannot be consideration for a new promise where the duty is imposed by law
What happened in COLLINS V GODEFROY?
C was a police officer and under a court order to give evidence at a trial. D promised to pay him to attend however the promise wasn’t enforceable as he was under a duty to attend anyway
What does the case STILK V MYRICK say about consideration?
Performing an existing duty cannot be consideration for a new promise where the duty has arisen under an existing contract
What happened in STILK V MYRICK?
Two members of a ship’s crew deserted and the captain promised the remaining crew the two men’s wages if they got the ship safely home however the sailors were already bound by their contract to sail back safely
What does the case HARTLEY V PONSBURY say about an exception to the rule about existing obligations as consideration?
If a party does something extra than what was required in the original agreement then that may be new consideration in return for a new promise
What happened in HARTLEY V PONSBURY?
19 members of a ship’s crew remained after desertions and were promised extra wages as the voyage was much more dangerous and they had to do extra work to get back safely
What does the case PAO ON V LAU YIU LONG day about the exception to the rule about existing obligations being consideration?
The performance of an existing contractual duty owed to a third party may be consideration for a promise
What does the case WILLIAMS V ROFFEY BROS say about the exception to the rule of existing obligations being consideration?
Where the party making the promise to pay more receives an extra benefit from the other party’s agreement to complete what he was already bound to do under an existing contract it may be consideration
What happened in WILLIAMS V ROFFEY?
W was doing carpentry work but ran into financial difficulties so RB promised to pay him extra to finish the work on time
What does PINNEL’S CASE say about consideration?
A promise to accept part payment of an existing debt in place of the whole debt cannot be enforced as there is no consideration for the promise
What are the two exceptions to the principle in PINNEL’S CASE?
Accord and satisfaction and promissory estoppel
What is accord and satisfaction?
An agreement to solve a claim in which the parties to a contract agree on new terms which may be less stringent than the ones in the original contract
What is the doctrine of promissory estoppel?
One party to an existing contract agrees to accept part payment of an existing debt and the other party relies on that promise, the promisor cannot go back on the promise as he is estopped
Which case demonstrates the doctrine of promissory estoppel?
CENTRAL LONDON PROPERTY TRUST V HIGH TREES HOUSE
What happened in CENTRAL LONDON PROPERTY TRUST V HIGH TREES HOUSE?
D leased a block of flats before the war. During the war he lowered the rent. After the war he wanted to raise the rent back up again and claimed for the rent that would’ve been owed during the years it was reduced. He could raise the rent however he couldn’t claim the money as there was no consideration and D had relied on the promise
What is the doctrine of privity?
A person who is not a party to the contract can neither sue nor be sued
What does the case DUNLOP V SELFRIDGE say about the doctrine of privity?
A party not providing consideration is not part of the mutual exchange which is central to the enforceability of agreements
What does the case TWEDDLE V ATKINSON say about the doctrine of privity?
If a benefit is bestowed from such a contract onto a third party then the rule may seem unfair
What does the CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 allow?
Parties to a contract to grant enforceable rights to third parties
What does S.1(1)(a) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 state?
The contract must expressly state that the third party is to have a right to enforce the term
What does S.1(1)(b) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 state?
The third party must be expressly identifies in the contract and the term was intended to confer a benefit on that third party
What does S.1(3) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 state?
The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description
What is intention to create legal relations?
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 are the two types of agreements which the courts use to determine intention to create legal relations?
Commercial agreements and social/domestic agreements
What will the courts start with if it is a commercial agreement?
Start by presuming that the agreement was intended to be legally binding
Which case demonstrates that the courts will presume commercial agreements were intended to be legally binding?
ROSE & FRANK CO V CROMPTON BROS
What does the case JONES V VERNON say about commercial agreements?
The courts have held that using the words ‘binding in honour only’ means that the agreement is not intended to be legally binding
What does the case KLEINWORT BENSON LTD V MALAYSIA MINING CORPORATION say about commercial agreements?
A so called comfort letter which appears to amount to a guarantee that a business will be helped to meet its liabilities is not an actual guarantee and will not give rise to legal obligations
What does the case MCGOWAN V RADIO BUXTON say?
Where free gifts or prizes are promised it is presumed that the parties intended to enter a legally binding contract because the general purpose is to promote the commercial interests of the body offering the gift or prize
What does the case BALFOUR V BALFOUR day about social and domestic agreements?
Where the agreement is between family members the courts start by presuming that it was not intended to be legally binding
What does the case MERRITT V MERRITT say about social and domestic agreements?
The presumption that domestic agreements are not intended to create legal relations is rebuttable so if one of the parties can show the agreement was intended to be legally binding then it will be a valid contract. Certainty of terms and subject matter are important
What does the case SIMPKINS V PAYS say about social and domestic agreements?
The presumption that social agreements between those who aren’t related aren’t intended to create legal relations is rebuttable so if one of the parties can show the agreement intended to be legally binding then it will be a valid contract. This will be so if money has changed hands
