Paper 3: formation of a contract Flashcards
Definition of a contract
An enforceable agreement between two parties
Definition of an offer
A definite promise to be legally bound
Definition of acceptance
Unconditional assent to all the terms of the offer
Definition of consideration
The price one party pays for the other parties promise
Definition of intention to create legal relations
The courts must have satisfied that the parties intended to be bound
Definition of unilateral contracts
One party known as the offeror, makes a promise in exchange for an act by another party known as the offeree
Definition of bilateral contracts
A reciprocal arrangement between two parties by which each promises to perform an act in exchange for the other parties act
Harvey v Facey (1893)
Held: Facey’s telegram was not a definite promise to sell but a mere statement of price and value. Harvey tried to accept this but could not as the statement was not an offer
Carlil v Carbolic Smoke Ball Co (1893)
Held: the advert was an offer as it was so detailed and it could be accepted by anyone who used the smoke ball correctly and still got flu. If the advert indicates a course of action in return for which the advertiser makes a promise to pay, then she is bound by this promise
Partridge v Crittenden (1968)
Held: not guilty as he was an offer but an invitation to treat. The contract s not formed until the person seeing the advertisement has made an offer to buy, which has then been accepted
Pharmaceutical Society of Great Britain v Boots Cash Chemist Ltd (1953)
Held: boots were not guilty as goods on a supermarket shelf are only an invitation to treat, an offer is made when a customer picks the item off the shelf to bu, they are invited to make an offer to buy, the contract is formed when sale is agreed at the cash desk
Fisher v Bell (1961)
Held: flick knives were not an offer to buy, they were invitations to treat, goods on display windows are not offers, but an invitation
Shopping principles
- Display or advert is an invitation to treat
- Customer offers to buy the goods at particular price
- he offer can then be accepted by the seller by some action
- The offer and acceptance may then be a binding contract
Gibson v Manchester City Council (1979)
Held: no contract, it was held that the councils proposal was an invitation to treat, Gibson made an offer on the form which the council rejected, therefore not forming a binding contract
Auction principles
- When the auctioneer holds up the ‘lots’ it is an invitation to treat
- Each bid is an offer
- Acceptance takes place when the auctioneer’s hammer falls
- Any bidder may therefore withdraw a bid before the hammer falls and the auctioneer may withdraw goods on behalf of the seller before that point
Harris v Nickerson (1873)
Held: no such right of action and could not recover the expenses. The advert for the auction was only an invitation to treat and did not amount to a promise that all the articles advertised would be put up for sale
Thornton v Shoe Lane Parking (1971)
Held: the offer is made when the machine holds it ready to receive the money. The acceptance takes place when the customer pays his money into the slot, so the machine is an offer as you cannot negotiate with a machine
Ramsgate Victoria Hotel v Montefiore (1866)
Held: 5 months is not a ‘reasonable’ length of time for acceptance of an offer to buy shares as they are a commodity with a rapidly fluctuating price. Therefore, the offer had lapsed before the company tried to accept therefore no contract between them
Byrne v Van Tienhoven (1880)
Held: there is a binding contract as revocation could only take effect on communication but the acceptance by telegram and post took effect as soon as it was sent. By the time Byrne received the letter of revocation on the 20th, the contract had been made and so the revocation had no legal effect
Dickenson v Dodds (1876)
Held: there was no contract as the offer had already been revoked by communication from the 3rd party and the 3rd party was shown to be a mutual acquaintance on whom both parties could rely
Hyde v Wrench (1840)
Held: the counter offer of £950 destroyed the original offer of £1,000
Stevenson v McClean
Held: it is difficult to draw a line between a counter-offer and a request for further information
Felthouse v Bindley (1862)
Held: the court held that there was no contract as there was no communication of acceptance by the nephew to the uncle
Entores v Miles Far East Corp (1955)
Held: the acceptance was only valid when received in London, as telex was a form of instantaneous communication
When does acceptance take place?
When it is clearly heard and understood
The Kodak case
- Offers on the internet are an invitation to treat
- Placing an order amounts to an offer
- An automatic reply from the service provider is not an acceptance
- Acceptance is only done when the company makes a formal acceptance
Yates v Pulleyn (1975)
Held: a specific method was not mandatory, it made no practical difference to the offeror since the letter was delivered on time, so this was not binding. Any acceptance which was communicated to the offeror by any other no less advantageous method would conclude the contract
Thomas v Thomas (1842)
Held: “consideration means something which is of value in the eye of the law, moving from the plaintiff: it may be of some benefit to the plaintiff or some different to the defendant”
Currie v Misa (1875)
Held: “a valuable consideration, in the sense of law, may consist either in some right, interest, profit, or benefit accusing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by another”
Dunlop v Selfridge (1915)
Held: “an act of forbearance or the promise thereof is price which the promise of the other is bought and the promise thus given value is enforceable”
Williams v Roffey Bros (1991)
Held: courts need to find the existence to reflect the intentions of the parties
Tweddle v Atkinson (1861)
Held: he was unsuccessful in his claim, he failed as he had given no consideration for the agreement himself. No consideration moved from him, he had given nothing in return for Atkinson’s promise
Re: McArdle (1951)
Held: daughter-in-law was unsuccessful in her claim and the money did not need to be paid as the promise was given in return for something already done. This was a past consideration and the promise made by the children was NOT binding which allows them to break their promise
Lampleigh v Braitwaite
Held:
