Offer and Acceptance

Question 1

What is needed to have a contract?

Answer 1

1. Offer
2. Acceptance
3. Intent to create Legal Relations
4. Capacity of consideration

Question 2

What is the difference between commercial and social for intent?

Answer 2

Social – Presume no intent (Balfour v Balfour 1919) -> BUT this assumption can be rebutted (Simpkins v Pays 1955)
Commercial – Presume intent (Esso petroleum v Mardon 1976) -> BUT this can be rebutted too (Rose & Frank v Crompton 1923)

Question 3

Balfour v Balfour 1919

Answer 3

Example of intent not being presumed in social setting

Couple - husband and wife move to UK for business and MRS is diagnosed with Arthritis, husband has to leave but she stays as weather will make symptoms worse for her if moving due to climate (doctors advise). MR promises £30 a month until she joins him verbally. They end up separating, MR says it’s best for her to never join him. She claims she’s entitled to £30 a month.

Outcome: The Court held that domestic agreements between spouses were not intended to create legal relations, with the onus on the party claiming a contract to show there was intention

Question 4

Simpkins v Pays 1955

Answer 4

Mrs Pays, her granddaughter and lodger enter into a
competition each week.
* They agree to share any prizes.
* Entries are sent in Mrs P’s name.
* One week they win £750. But Mrs P refuses to share
money with lodger.
Decision: From facts there was an intention to enter into
legal relations - lodger entitled to 1/3rd of winnings

Example that no intent presumed in a social setting can be rebutted.

Question 5

Esso petroleum v Mardon 1976

Answer 5

Road was estimated by Mardon (“Expert”) to sell 200,000 gallons but massively underperformed, estimates were based on misinformation, so Esso lost money. Mr Mardon should have gotten professional evaluation.

Outcome: The Court of Appeal held that the contract could not be voided for misrepresentation as the defendants presented the inflated figure as an estimate rather than as a hard fact. On the other hand, as the defendant had taken it upon themselves to employ experts for the purpose of providing an estimate of sales, they owed a duty of care to the plaintiff to ensure that this was done on the basis of accurate information. The plaintiff was therefore able to recover the losses which he had suffered as a result of the defendant’s negligent misstatement.

Question 6

Rose & Frank v Crompton 1923

Answer 6

Facts:
An American company and English company entered into a sole agency agreement in 1913 for the sale of paper goods in the USA. The written agreement contained a clause stipulating that it was not a formal nor legal agreement, and an “honourable pledge” between business partners. American company placed orders for paper which were accepted by the British company. Before the orders were fulfilled, the British company terminated the agency agreement and refused to send the goods, claiming that the 1913 agreement was not legally binding.

Issues:
The questions arose as to (1) whether the sole agency agreement of 1913 constituted a legally binding contract, and (2) whether the orders constituted enforceable contracts of sale.

Outcome:
- Firstly, for the 1913 agreement expressly provides that it is to be solely an “honourable pledge”, - parties had no intent for this to create any legal interest
- Secondly, the arrangement does not constitute a legal contract does not preclude the orders and acceptances from constituting legally-binding contracts. The lack of enforceability of an express legal arrangement under an agency agreement does not preclude the legal transactions. The orders constituted mutual offers and acceptances with each transaction having ordinary legal significance.

Question 7

What is consideration?

Answer 7

a. We need an exchange to occur
b. Each party must provide something of value to each other
c. This need not be adequate value (Chapple v Nestle)
d. Past consideration is not valid (Consideration before a contract is formed) (McArdle)
e. Parties must have understood that the act was to be remunerated (Pao on 1980)
f. Consideration must be sufficient and beyond public duty (Glasbrook)

Question 8

Re McArdle (1951)

Answer 8

• Mr. M died and left his house to Mrs M and then to their children in equal
  shares.
• Daughter-in-law, (D) made house improvements costing £488.
• After improvements made all children signed agreement that they would
  reimbursed D when Mrs M died.
  Decision: Agreement was after work done and was not legally enforceable D
  could not claim reimbursement
  Consideration given before a contract is completed (past consideration) is not adequate
  for a binding contract.

Question 9

Chapple v Nestle 1966

Answer 9

Chocolate wrappers sent to Nestle could amount to part of the consideration for a record, as Nestle benefitted the sales of chocolate which may not otherwise have been sold. Even items which are disposed of by one parties as having no value may represent valuable legal consideration.

Question 10

Glasbrook Bros v Glamorgan CC (1925)

Answer 10

Exceeding public duty can be good consideration. During a strike at a colliery the colliery manager asked for additional police protection for the colliery and insisted he required police officers to be stationed on the premises. The police superintendent provided mobile officers but refused to station more officers at the colliery unless the manager paid extra to cover the expense. The manager agreed to this but later refused to pay.
Outcome: The police had a responsibility without being paid other than by way of ordinary public taxation to provide protection for life and property, keeping the peace and preventing crime. However, by providing officers stationed at the colliery the police had gone beyond their public duty, and the police were entitled to payment through the contract.