week six Flashcards
what did Edwards v Skyways argue the ‘ex gratia’ decision meant?
that it was a moral obligation rather than a legal one
what was the decision of the court in Edwards v Skyways
the court found ‘ex gratia’ doesn’t mean a moral obligation, rather it is supposed to indicate that the party promising to pay is not admitting liability
in the case of a commercial agreement, there is a ______ ______ on the party claiming that a commercial agreement is not intended to be legally binding
heavy burden
commercial agreements almost always have the intention to?
create legal relations
what happened in Rose and Frank v Crompton
Crompton was a UK based manufacturer of carbonising paper, which was sold in the US by Rose and Frank.
later they wanted to enter into a new agreement, which also included a third party. the agreement was an honour clause
what did the honour clause in Rose and Frank v Crompton expressly negate?
the intention to create legal relations
what did the court in Rose and Frank v Crompton decide about the honour clause
they said it was effective. the agreement was in honour only and not legally enforceable. the overall relationship was not contractual but certain sales could be e.g. if one party placed an order at a particular price and received the goods then they would still have to pay for it
what are the 3 situations where it might be argued that there is no intention to create legal relations in a commercial situation
- honour clauses
- free gifts
- mere puff
what happened in Esso Petroleum v Customs and Excise Commissioners
there was a promotion at service stations in the UK, giving out a football world cup commemorative coin if you purchased 4 gallons of petrol.
the coin was described as a gift - this was relevant for tax. If the coins were sold then a tax had to be paid on their value.
what did Esso Petroleum argue in Esso Petroleum v Customs and Excise Commissioners 1976
that there was no intention to create legal relations with respect to the coins because the coins were not part of the contract of selling the petrol - it was just a free extra, there was no contract to receive the coin
what did the majority hold in Esso Petroleum v Customs and Excise Commissioners 1976
the coins were part of the contract - there was an intention to create legal relations. this decision was reached because the coins represented a commercial advantage - they were designed to attract customers
what is the idea of ‘puffery’
in commercial activity, statements can be made that no reasonable person would believe/take seriously - they are therefore not intended to create legal relations and are not enforceable
what was argued by Carbolic Smoke Ball Co. relating to puffery in Carlill v Carbolic Smoke Ball Co. 1893 - was the court convinced?
they argued that their advertisement to give 1000 pounds to anyone who used the smoke ball correctly and contracted influenza was puffery. the court was not convinced by this argument, especially because they said in their ad a statement that encouraged people to take it seriously (1000 pounds is deposited in a bank to show our sincerity)
what is the idea behind certainty and completeness
it is not enough that the parties reach agreement and intended that agreement to be contractual, the actual content of that agreement has to be sufficiently certain and complete
what did Tipping J say about certainty and completeness in Wellington City Council v Body Corporate 51702
“The parties must have reached consensus on all essential terms
what term did Blanchard J give in Fletcher Challenge v ECNZ as an example of something which is generally legally essential for a contract to be certain and complete
the price - it must be agreed, expressly or impliedly or the contract must have the means of reaching an agreement
if the court finds that the parties were intending to be bound at that time, the court will adopt what kind of approach in regards to certainty and completeness
a robust approach - the court will try to make the contract work and give effect to the parties’ intention
is a formula for the price e.g. $15 per tonne sufficiently certain for a contract?
yes
is a laid out price sufficiently certain for a contract?
yes
is selling at market value sufficiently certain for a contract?
yes, as long as there is enough of a market for it to have a determinable market value
is a reasonable price sufficiently certain for a contract?
yes, they will generally call it a market price.
is undergoing a valuation process, in which we consult a valuer, sufficiently certain for a contract?
yes, there is contractual machinery by which the price can be reached
is a fair price sufficiently certain for a contract?
yes, unless in the circumstances something strange was meant by the fair price
is a price ‘to be agreed’ at a later date sufficiently certain for a contract?
no, the court cannot decide what they would’ve agreed at that future time
is no price being mentioned sufficiently certain for a contract?
yes, the courts will infer you meant a reasonable price because if you didn’t mean that you would’ve said it
what did the court consider in Fletcher Challenge Energy v ECNZ, even though they had already decided there was no contract due to no intention to be bound at the point of the Heads of Agreement?
if there was an intention to be bound, would the contract have been sufficiently certain and complete due to the two clauses marked ‘not agreed’ and the one clause marked ‘to be agreed’
what did the court hold regarding the ‘not agreed’ and ‘to be agreed’ terms in the Heads of Agreement in Fletcher Challenge Energy v ECNZ
the ‘not agreed’ terms wouldn’t have prevented the contract being formed because the contract still would’ve worked sufficiently well.
the ‘to be agreed’ clause was a part of a formula for determining liability for non-delivery. the court found this could be assessed objectively - they could determine it so it was fine
what is the definition of vagueness in contract
there is a term that the parties have agreed to, but it is not clear what it is or what it means
how was the price for the van to be paid in Scammel v Ousten
a vehicle was traded in, setting off the price. the remainder was to be on a hire purchase basis
what did the court decide regarding the ‘two years at hire purchase terms’ term in Scammel v Ousten - was it certain?
no, it was not sufficiently certain because there were various possible hire purchase terms which could be applied - the court couldn’t say one set of terms was reasonable and the others weren’t therefore there was no contract here.
what do you have to give for each issue in a problem question
the issue itself, cases and their tests and an application of that case
what is the test of Smith v Hughes
in the shoes of a reasonable person, does it seem that the offeror is making an intention to contract?
what is the test from Hyde v Wrench
for a counter-offer, there must be a rejection of terms and an insistence on new terms
what is the test from Powierza v Daley
a reasonable person in the shoes of the offeror test in relation to counter-offer vs inquiry (“the line between rejecting an offer and inquiring can be a fine one, we are looking for a rejection and an insistence on new terms if it is a counter-offer”
what is the test from Nielson v Dysart Timbers Ltd (change in circumstance)
the court must determine objectively the intention of the offeror and if the offer is subject to a condition that lapsed if there was a substantial change of circumstances prior to acceptance
who delivered the judgment in Nielson v Dysart Timbers Ltd and was it unanimous or majority
Tipping J, majority
what is the test from Payne v Cave
revocation is possible and effective when communicated any time prior to acceptance
what judge in Peterson v Gothard said that the designation for email isn’t particularly high
Heath J
how must you conclude a problem person
by concluding and answering the question, giving advice using ‘likely’ ‘unlikely’ and ‘in my opinion’
what is a letter of comfort
provided by the owners or directors of a company to a prospective provider of finance to induce the financier to advance funds to the company
what is a letter of intent
these may be used to demonstrate commitment to a projected transaction over which the parties are negotiating - these will only give rise to legal consequences if the parties have used very specific wording indicating a promise or term is contractual in nature
an agreement to buy and sell at a price to be agreed will be unenforceable, whereas an agreement to buy and sell at ____ or some other ___ ____ ____ will be enforceable, even if the court is the only implicitly agreed or default arbiter of the price
market, objectively ascertainable
the essence of common law theory of contract is _____ - for there to be an enforceable contract, the parties must have reached ___ on all essential terms; or at least upon objective means of sufficient certainty by which those terms may be determined
consensus x2
are there circumstances where a process contract can be enforceable?
yes
