lecture two Flashcards
Definition of a Contract
📝 “An agreement between two or more persons (the parties) having the capacity to make it, in the form demanded by law, to perform, on one side or both, acts which are not trifling, impossible or illegal.”
📖 MacQueen & Thomson, para 1.10
Agreement & Consensus in Idem
A contract requires agreement on essential terms
This agreement = Consensus in idem (a meeting of minds)
Assessed objectively: Would a reasonable person conclude agreement was reached?
📖 Muirhead & Turnbull v Dickson (1905) 7 F. 686
📝 “Commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say [or do].” — Lord President Dunedin, at 694
objective agreement requirement
Agreement must be clear and unambiguous
If one party offers one type of contract and another accepts a different type, no contract exists
📖 Mathieson Gee Ltd. v Quigley 1952 S.C. (H.L.) 38
📝 “The respondent offered one sort of contract and the appellant accepted another kind of contract.” — Lord Normand, at 41
essential terms of a contract
Parties must agree on essential (or material) terms
Depends on the type of contract:
Sale of goods: Must identify goods/land and agree that a price is payable (but price can be set later per s.8 Sale of Goods Act 1979)
Lease: Must agree on subjects (property), rent, and duration
📖 Fleming Buildings Ltd v Forrest [2010] CSIH 8
📖 Bogie v The Forestry Commission 2002 SCLR 278
courts prefer to uphold contracts
Even if incomplete, courts will try to uphold a contract
Courts favor effective interpretation over striking down agreements
📖 Bogie v The Forestry Commission 2002 SCLR 278
📝 “I accept the need to prefer a construction of the parties’ communings that will treat them as effective to constitute a binding contract.” — Lord MacFadyen, para. 38
📖 Avintair v Ryder Airlines 1994 S.L.T. 613
english law perspective on contract formation
Even if some terms are not finalised, parties may still have intended to be bound
📖 RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH [2010] 1 W.L.R. 753
📝 “An objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.” — Para. 45
offer + acceptance = contract
📝 “An offer accepted is a contract, because it is the deed of two, the offeror and the acceptor.”
📖 Stair, Institutions, I.10.6
definition of an offer
📝 “A statement of terms which the offeror proposes to the offeree as the basis of an agreement.”
📖 15 Stair Memorial Encyclopedia, para. 62
📌 Key Feature: Must be clear that unqualified acceptance will create legally binding obligations
📖 William Lippe Architects Ltd v Innes [2006] CSOH 182A
offer must be communicated
An offer must be communicated to be accepted
If not communicated, it is not legally valid
📖 Thomson v James (1855) 18 D 1
📝 “An offer is nothing until it is communicated to the party to whom it is made.” — Lord President MacNeill, at 10
who can accept an offer
Offers can be made to:
✅ A specific person (only they can accept)
✅ The whole world (e.g., advertisements)
📖 Fleming Buildings Ltd v Forrest [2010] CSIH 8
revoking an offer
An offer can be revoked at any time before acceptance
No set formalities required for revocation
📖 McMillan v Caldwell 1991 SLT 325
lapse of an offer
If an offer has a time limit, it lapses when that period expires
If no time limit, it lapses after a reasonable period
📖 Flaws v International Oil Pollution Compensation Fund 2002 SLT 270
📖 Glasgow Steam Shipping Co. v Watson (1873) 1 R. 189
📖 Wylie & Lochhead v McElroy and Sons (1873) 1 R 41
keeping an offer open
If an offeror promises to keep an offer open for a time, they must honour that promise
📖 Paterson Ltd v Highland Railway Co. 1927 SC (HL) 32
not an offer
A unilateral promise (no acceptance needed).
A reply to a request for information or an enquiry (Harvey v Facey [1893] A.C. 552).
A party recapping their negotiating position (Glasgow City Council v Smith [2015] CSOH 143).
invitations to treat
📌 An ITT invites an offer but is not an offer itself.
Display of goods in shop windows: ITT (Fisher v Bell [1961] 1 Q.B. 394).
Goods on supermarket shelves: Likely ITT (Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 Q.B. 401).
Auctions & tenders: ITT.
Vending machines: Likely a standing offer (Thornton v Shoe Lane Parking [1971] 2 QB 163).
Advertisements: Presumed to be ITT, even if labeled an offer (Fenwick v Macdonald Fraser & Co Ltd (1904) 6 F 850).
🚨 Exception: If the presumption is rebutted, an advert can be an offer.📖 Carlill v Carbolic Smoke Ball Co. [1893] 1 Q.B. 256 per Bowen L.J., 268:📝 “It is an offer made to all the world; and why should not an offer be made to all the world which is to ripen into a contract with anyone who comes forward and performs the condition?”
📌 Note: If judged in Scotland, it would likely be treated as a promise rather than an offer.
stair’s three stages of will
📖 Stair, Institutions, I.10.2:
1️⃣ Desire: Deciding you want to do something (not enough for a right).2️⃣ Resolution: Deciding you will do something (still changeable).3️⃣ Engagement: Making a binding commitment to another person (only this creates obligations).
📌 An offer is a form of engagement.
Offer + acceptance = contract
📖 Stair, Institutions, I.10.6:📝 “An offer accepted is a contract, because it is the deed of two, the offeror and the acceptor.”
📖 MacQueen and Thomson, para 2.35:📝 “An acceptance is the final unqualified assent by the offeree to the terms stipulated in the offer.”
📌 An offer remains open until:✅ Accepted❌ Revoked (before acceptance)❌ Expired
how to accept an offer
✅ Words/conduct must indicate unqualified acceptance.✅ If the offeror specifies a method of acceptance, it must be followed.✅ The offeree must communicate acceptance (Sabre Leasing Ltd v Copeland 1993 S.C. 345).❌ Silence ≠ acceptance (Higgins v Wilson & Co (1848) 6 Bell 195).
📌 Exception: Silence may indicate acceptance in certain circumstances.📖 Shaw v James Scott Builders and Co. [2010] CSOH 68:📝 “Mr Scott’s silence in response to that email needs to be considered against that background. In that context I have no difficulty in concluding that the defenders are to be taken to have agreed the terms of the contract document.” (Lord Hodge, para 49-50).
the postal rule
📌 General rule: Acceptance is effective when communicated.📌 Exception: Postal Rule: Acceptance is effective when posted (Jacobsen Sons and Co v Underwood and Son Ltd. (1894) 21 R 654).
🚨 Implications:
The offeror cannot withdraw their offer after the letter is posted.
Does not apply to offers, counter-offers, or withdrawals (Carmarthen Developments Ltd. v Pennington [2008] CSOH 139).
📖 Thomson v James (1855) 18 D 1📖 Burnley v Alford (1919 1 SLT 123): Postal rule does not apply if the party is acting in a non-business-like manner.
📌 Modern Limitations:
Not applicable to faxes (Park, Petitioners (No 2) 2009 SLT 871).
Not applicable to instant communications (emails, phone, etc.) (Entores Ltd. v Miles Far East Corp [1955] 2 QB 327).
Scottish Law Commission recommends replacing it with a rule that an offer cannot be withdrawn once the acceptance is dispatched.
when is an acceptance not an acceptance?
📌 Three possible responses to an offer:✅ “Yes” → Contract concluded.❌ “No” → Offer rejected.❓ “Yes, but…” → Qualified acceptance = Counter-offer.
📖 Wolf & Wolf v Forfar Potato Co 1984 S.L.T. 100: A qualified acceptance rejects the original offer and becomes a new offer.📖 Rutterford Ltd v Allied Breweries Ltd 1990 S.L.T. 249: Confirms counter-offer rule.📖 Findlater v Maan 1990 S.C. 150: Two independent offers can coexist.
exception to counter offer rule - minor changes
📌 De minimis rule: A trivial change may not constitute a counter-offer.
📖 Erskine v Glendinning (1871) 9 M. 656📝 “The landlord was entitled to require that his tenant should enter into a formal lease . . . embodying the terms of their contract.” (Lord President Inglis, at 659).
📖 Stobo Ltd v Morrison’s (Gowns) Ltd 1949 SC 184📝 “The bare fact that the parties to a completed agreement stipulate that it shall be embodied in a formal contract does not necessarily import that they are still at the stage of negotiation.” (Lord President Cooper, at 191).
