The Law of Contract: Offer and Acceptance, Intention to Create Legal Relations, Capacity, Consideration. Chapter 3 &4

DEMONSTRATE KNOWLEDGE OF THE PRINCIPAL RULES RELATING TO ACCEPTANCE

Acceptance is the unconditional assent to all the terms of the offer. Acceptance in a bilateral contract must be communicated to the offeror by the offeree or his authorized agent. If a particular method of acceptance is required, acceptance will only be valid if it is communicated in that way or an equally effective manner. Acceptance in a unilateral contract does not have to be communicated. Jones: Introduction to Business Law, 5th edition. Where the postal rules apply, a letter of acceptance is effective when it is put in the post box provided the letter is correctly stamped and addressed. The general rule that acceptance must be communicated to the offeror applies to contracts made on the internet.

What are the essential elements of a valid contract

Agreement (offer and acceptance of definite terms). Consideration (a promise to give, do, or refrain from doing something in return for a similar promise). An intention to create legal relations (usually presumed in a business transaction). Compliance with required formalities where applicable. Capacity to contract.

DEMONSTRATE KNOWLEDGE OF THE PRINCIPAL RULES RELATING TO OFFERS

An offer must be clear and the terms of the offer certain. An offer must be distinguished from an invitation to treat, a statement giving information or expressing an intention, or a mere puff or boast. An offer must be communicated to the other party by the offeror or a reliable third party. An offer may be terminated by revocation, lapse of time, death, counter offer, rejection. A unilateral contract cannot usually be revoked by the offeror once the act by the offeree is commenced.

UNDERSTAND THE MEANING OF CONSIDERATION AND EXPLAIN WHAT CONSTITUTES CONSIDERATION

Consideration by both parties is necessary for a legally binding contract. Past consideration is not accepted as consideration. Consideration must be something measurable and of material value. An existing legal duty to perform an action is not good consideration. An obligation owed to a party in an existing contract cannot usually be used as consideration for a new promise with the same party. However, this principle has been qualified by Williams v Roffey Bros & Nicholls (Contractors) Ltd (1990), where a promise to perform a duty already imposed in a contract can be good consideration if there have been renegotiations, provided there has been no fraud or duress and practical benefits have been gained by the promisor. The law on whether a promise by a creditor to accept less than the sum owned is in development. Usually this does not discharge the debtor from the whole debt but in some circumstances the promise may be enforceable depending on the facts of the case.

OUTLINE THE LAW RELATING TO CAPACITY TO CONTRACT

Minors, persons with mental disabilities, intoxicated persons, and corporations may lack contractual capacity to enter into certain types of contracts. Contracts made with minors are usually voidable by the minor, but contracts made for necessaries, training, or education, are binding on the minor, provided they do not contain harsh terms which are detrimental to the minor. The contractual capacity of a company is stated in its constitution. Contracts made in good faith with a company are enforceable against the company even if they are outside the company's capacity.

How can contracts be classified continued...?

"Express" Contract: Based on written or spoken words "Implied" Contract: Based on conduct or actions "Quasi-Contract" ("Implied-in-law" contract): Imposed in certain cases to avoid unjust enrichment, even if all elements of contract formation not satisfied (Weichert Co. Realtors v. Ryan)

Dunlop v Selfridge [1915]

'consideration is an act or forbearance (or the promise of it) on the part of one party to a contract as the price of the promise made to him by the other party to the contract'.

Death:

(i) Death of offeree terminates offer. Death of offeror terminates offer unless offeree accepts offer in ignorance of death and the contract is not of a personal nature.

(ii) Statements giving information or expressing an intention Supplying Information/ Statements made in negotiation(ii)

(ii) Statements giving information or expressing an intention Supplying Information/ Statements made in negotiation

Hadley v Kemp [1999]

3 members of a former pop group Spandau Ballet, claimed they had entered into an oral agreement in 1980/81 with a fourth member of the group in which they had agreed he would share his publishing income with them. After the defendant ceased making payments they sued him. Court stated that if there had been an oral agreement then to be effective it must have been spoken with an intention to create legal relations.The parties had been friends since their school days and the relationship was not simply one of business.There was no evidence to show the defendant had made a statement about sharing his publishing income with the intention of creating legal relations

A condition

A condition is a term that, if breached, gives the aggrieved party the right either to terminate the contract or affirm it. In addition, the aggrieved party can also claim damages

What is a contract?

A contract is an agreement between two or more persons which is intended by them to be legally binding and enforceable by law. Contracts may be created orally, in writing, or inferred from the parties' conduct.

Carlill v Carbolic Smoke Ball Co (1893)

An advertisement to prevent flu by using a smoke ball was more than a 'mere boast.' This case also demonstrated that some advertisements were capable of being offers to the world at large

(i) Counter - offer

An offer made in reply to an offer. Its effect is to destroy the original offer so it cannot be accepted.

(i) By Revocation

An offer may be revoked at any time before acceptance - once revoked the offeree cannot accept it.

An offer must be distinguished from an invitation to treat, statements giving information or expressing an intention or a 'mere puff' or boast

An offer must be distinguished from an invitation to treat, statements giving information or expressing an intention or a 'mere puff' or boast

Hillas v Arcas (1932)

An option in a contract for the supply of wood that permitted the buyer to buy additional wood the following year was valid as the details could be obtained from previous dealings and the custom and practice in the timber trade.

Bilateral vs. Unilateral Contracts

Bilateral Contracts: Each party takes on some sort of obligation, usually promising to do something in return for a promise to do something by the other party. Most contracts are bilateral which means that both parties can bind themselves by exchanging promises e.g. I promise to pay you £500 if you promise to deliver your law notes to me. Unilateral Contracts: where one party promises to do something usually in return for completion of a specified act, but the other party does not promise to carry out the act e.g. I promise to pay you £500 if you find my pet snake.

An Offer must be communicated to the other party. A person cannot accept an offer he does not know about. Give some examples of this?

Bloom v American Swiss Watch Co. (1915)Claimant gave information concerning a jewel thief but he did not know at the time there was a reward for information. He later learnt of the reward and tried to claim it but the defendant was not legally obliged to pay him the reward monies

(ii) A 'mere puff or boast'

But note the difference between a mere boast and a promise which a reasonable man would take seriously.

Revocation is not effective until received. Example of this?

Byrne v Van Tiehoven (1880) Revocation must be communicated to the offeree. Until the revocation is communicated, the offer remains open and can be accepted. Facts: The defendants wrote to the claimants in NY offering to sell them tinplate. Then, he posted to revoke the offer. But the claimants accepted the offer before received the letter of revocation. Decision: A withdrawal of an offer is only effective when it is received. So the contract is still binding.

Butler Machine Tools Ltd v Ex -Cell-O Ltd. (1979)

C sent standard forms to D offering to sell tools for named price but he stated that the price could change. D sent back own terms with a fixed price for tools and asked C to sign slip agreeing to terms. C signed the acceptance slip but when he delivered tools wanted more cash from D. Decision: D was entitled to goods at fixed price as D's own terms were a counter offer which had been accepted by C when C signed the slip.

Unilateral Contracts, example?

Carlill v Carbolic Smoke Ball Co. (1893)

Examples of Consideration need not be of adequate value

Chappell v Nestle Co Ltd (1959) Chocolate wrapper was sufficient consideration Thomas v Thomas (1842) Rent of £1 per year was sufficient

Simpkins v Pays (1955)

Claimant (lodger) had agreed with def. & her grand daughter to 'go shares' in a weekly competition. Held NOT A DOMESTIC AGREEMENT, JOINT ENTERPRISE WHERE ALL PARTIES EXPECTED TO SHARE WINNINGS

Consideration

Consideration has been defined as the price by which one party bought the other party's act or promise.

Tweddle v Atkinson (1861)

Consideration must move from the promisee

contractual terms

Contractual terms are defined as conditions, warranties and innominate terms

Household Fire v Grant (1879)

D applied for shares in a company and letter of allotment (acceptance) never arrived. Company went into liquidation. D was called upon to pay for amount still outstanding (shares were only part paid) Even though D had not known about acceptance it had happened and he had to pay for the shares. Even if the letter never arrives, it is still valid acceptance provided it is not the fault of the sender. Facts: The company posted a letter to the defendant allotting shares to him, but the letter never arrived. The company went into liquidation and the defendant was called upon to pay the amount still outstanding. Decision: Acceptance was complete when acceptance was posted even though it never arrived. The defendant had to pay

Stevenson v Mclean (1880)

D wrote to C offering to sell iron at 40s cash per ton, stating that he would hold the offer open until the following Monday. C then telegraphed D asking if D would agree to delivery over 2 month and if not what was the longest time he could give. D did not reply but on receiving the telegram sold the iron to someone else. Later than day C telegraphed accepting the original offer. When D did not deliver the iron C sues him for breach of contract.

Fisher v Bell (1961)

Decisions: The display of goods in a shopwindow was an ITT so no offence had been committed.

Currie v Misa (1875)

Defined consideration- "Some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other"

Offeror does not have to tell the Offeree he has withdrawn the offer as long as a reliable third party tells the offeree.

Dickinson v Dobbs (1876) D offered to sell his house to C. Before C accepted it he learned from B that D had sold his house to 3rd party. C could no longer accept the offer.

Rose and Frank v Crompton Bros Ltd. (1925)

Differentiate decision of the CA to the decision of the House of Lords - Both held agreement not legally binding, but while CA said that orders and acceptances did not constitute legally binding contracts,House of Lords differed on the second point and held that agreement is binding Rule against ousting the jurisdiction of the courts seemed to have been broken in the contract clause under consideration, and seemed side stepped by utilising the concept that the principle only operates where the contract was intended to be legally binding

Partridge v Crittenden (1968)

Facts: Partridge placed an advertisement in a magazine for the sale of wild birds. He was charged with unlawfully offering for sale a wild live bird contrary to the Protection to Birds Act 1954. Advert for sale of a wild bird was not contrary to Protection of Wild Birds Act - offering a wild bird for sale because: Advert = invitation to treat Decisions: the ad. was an ITT and so no offence was committed.

A person must do more than their existing duty.

GlasbrookBros v Glamorgan CC (1925)During a minors' strike - owners wanted more officers than superintendent thought necessary - owners wanted a special guard on the mines. Owners offered to pay for them then later refused arguing that the police were only doing their duty. Held: Police had provided more protection then the Superintendent thought necessary therefore it was good consideration.

Case example of an "offer must be clear and the terms of the offer certain."

Guthing v Lynn (1831)A promise to pay an extra £5 for a horse if 'the horse is lucky for me' was too vague to create a valid contract. But note that an apparently vague offer may be capable of clarification by reference to previous dealings, trade custom. Hillas v Arcas (1932)

Harvey v Facey (1893)

H sent telegram to F 'Will you sell me Bumper Hall Penn? Telegraph lowest price?' F replied 'Lowest price acceptable £900.' Decision: F's telegram was just a statement of price rather than an offer to sell at that price An offer must be distinguished from a statement made by a party which is merely giving information to the other party or expressing an intention to do sth. in the future.

Merritt v Merritt (1969)

Husband and wife were separated and court found that the parties had clearly intended their agreement to be legally binding.

Case example of a conuter offer

Hyde v Wrench (1840) A counter offer is where one party makes an offer and the other party suggests different terms. It acts like a rejection and destroys the original offer which can no longer be accepted. Facts: The defendant offered to sell his farm for 1000, the claimant replies to buy for 950. The defendant refused to accept the 950. The claimant then attempted to buy the farm for 1000.Decision: The offer made by the defendant to sell the farm for 1000 was no longer open. The claimant's offer of paying 950 was a counter offer, which had the effect of a rejection of the original offer.

So what of the situation where an acceptance is wrongly addressed or does not reach the offeror simply because of the offeree's fault?

L J Korbetis v Transgrain Shipping BV [2005] EWHC (QB) 1345 Where an acceptance by fax was sent to the wrong number, the postal rule did not apply. For further reading see the 'postal rule article' on My Studies. Note: The postal rules only apply to acceptance of an offer and do not affect a posted offer or a posted revocation. Parties may exclude the postal rules when making a contract. UPDATE: Greenclose Ltd v NatWest Bank plc [2014] EWHC 1156 - considered whether the postal rule of acceptance applies to communications by e mail - e mails are not subject to the postal acceptance rule.

OUTLINE THE DOCTRINE OF PRIVITY OF CONTRACT AND BE FAMILIAR WITH THE EXCEPTIONS TO THE DOCTRINE

Privity of contract means that persons who are not party to an agreement cannot be bound by its contractual terms. This rule has been changed by the Contracts (Rights of Third Parties) Act 1999 which enables third parties, who have given no consideration in a contract, to enforce the terms of the contract, where the contract expressly permits enforcement by third parties, or where the purpose of the contract is to benefit the third party.

Consideration need not be of adequate value, what does this mean?

Provided that the consideration has some value, however small that value might be, it can constitute consideration i.e. the courts are not concerned if you make a bad bargain.

Chappell v Nestle (1960)

Purchasers of a Nestle chocolate bar could avail of a free record if they sent 1 shilling and sixpence plus three empty Nestle wrappers . P owned copyright of the record in question and sought compensation. They also sought the empty wrappers. The court enforced this with Lord Summerville saying, "A peppercorn rent does not cease to be good consideration if it is established the promisee does not like pepper and will throw away the corn."

(i) Lapse of time

Ramsgate Victoria Hotel v Montefiore (1866) Investor offered to buy shares in Hotel company in June. He heard nothing from company but in November was allocated shares (allocation of shares is considered to be acceptance). He no longer wanted them. Held - Investor's offer to purchase in June had expired = unreasonable delay in acceptance. He did not have to pay for the shares as there was no contract.

Acceptance

Represents offeree's intent to be bound by terms of offer and resulting contract Silence generally does not constitute acceptance Terms of acceptance must be identical to terms of offer ("Mirror-Image" Rule) Effective when communicated by offeree to offeror If no method of communicating acceptance specified in offer, any reasonable means of acceptance effective (Examples: telephone, mail, fax, e-mail)

What are the different ways to end a contract?

Revocation by Offeror Rejection by Offeree Death/Incapacity of Offeror Destruction/Subsequent Illegality of Subject Matter of Offer Lapse of Time/Failure of Condition(s) Specified in Offer

Dickinson v Dobbs (1876)

Revocation of an offer is effective if it has been communicated by a reliable third party.Facts: Dodds offer to sale his house to Dickinson. Before acceptance, Dodds told berry that he had sold his house to Allen.Decision: The offer is withdrawn because it had been informed to the third party. But note, if the offer is for a unilateral contract and performance has begun it may not be possible to terminate the offer (see above).

Routeledge v Grant(1828)

Revocation of an offer means that the offer to make a contract is withdrawn. The offeror can withdraw the offer at any time up until it is accepted. Facts: Grant offered to buy house and gave Routledge 6 weeks to accept the offer. The defendant then withdrew his offer before the six weeks was up. Decision: The defendant was entitled to withdraw his offer at any time before acceptance.

Example of Revocation

Routeledge v Grant(1828)

Part -payment of debt, is that good consideration?

Rule in Pinnels Case (1602) a) Payment of a lesser sum on the due day in satisfaction of a greater sum cannot be satisfaction for the whole. b) Payment of a lesser sum at the creditor's request before the due day is good consideration for a promise to forgo the balance. i.e. A promise by a creditor to accept less than the full sum owed does not discharge the debtor from the legal obligation to pay the full sum owed unless the debtor gives some additional consideration (benefit) to the creditor..

Esso Petroleum v Commissioners of Custom and Excise (1976)

Sales promotion by Esso was a commercial agreement with an intention to create legal relations. Although the operation of the exception appears to be quite cut and dried, difficulties can often arise on the facts of a particular case. (World Cup coins: intention to create legal relations in respect of the transfer of the coins between garage proprietors and motorists was the majority view)

Silence cannot constitute acceptance. Example of a case

Silence cannot constitute acceptance.Facts: The claimant and his nephew were negotiating for the sale of a horse. The claimant said ' If I hear nothing about it I consider the horse is mine'. The nephew did not reply. The horse was sold at auction and the claimant sued the auctioneer.Decision: There had been no communication by the nephew of his intention to accept the offer. Contractual liability cannot be imposed.

What are the intentions of creating legal relationships

Social, domestic and family arrangements are presumed that the parties intended the agreement is not legally binding Family agreements can be binding e.g. family partnership agreement or if parties separated. · Commercial or Business Agreements. Presumed that the parties intended the agreement to be legally enforceable unless expressly disclaimed or circumstances indicate otherwise.

Ramsgate Victoria Hotel v Montefiore (1866)

Sometimes an offer will expire at the end of the time limit.If there is no time limit stated, then the offer will expire at the end of a reasonable time.

But you must distinguish between counter offer and a request for information

Stevenson v Mclean (1880) A request for information is not a counter offer. Facts: The defendant offered to sell iron at 2 cash per ton The claimant telegraphed asking if delivery and payment of the iron could be made over two months. The claimant received no reply, and the defendant sold the iron to a third party. Decision: The defendant was in breach of contract as the claimant's question was a request for information as opposed to a counter offer and his second telegraph was acceptance of the offer.

Ambiguities in business contracts?

The burden of proof is on the person seeking to show there is no intention to create legal relations

Thomas v Thomas (1842)

The case where a testator said his house should be left to his widow for the rest of her life when he died. After his death, his executors promised to carry out his desire provided that the widow paid £1 per annum towards the ground rent and kept the house in repair. Although the testator's desire was the motive for transaction, the consideration was the widow's promise to pay £1 and to keep the house in good repair.

The contractual capacity of a company is stated in its constitution. Contracts made in good faith with a company are enforceable against the company even if they are outside the company's capacity.

The contractual capacity of a company is stated in its constitution. Contracts made in good faith with a company are enforceable against the company even if they are outside the company's capacity.

1) Alan promises Daisy £10 if she behaves herself for a week. Daisy agrees Do any legal obligations arise?

There is an family agreement, but it is not legally binding. This also executory consideration as the exchange of promises it will happen in the future but not yet carried out

Does an exchange exist in a contract?

There must be an exchange - one person must do something, omit to do something or promise to do or omit to do something in exchange for another person doing, omitting or promising something.

Contracts (Rights of Third Parties) Act 1999

Third parties can enforce any contract that expressly permits enforcement by third parties or where the purpose of the contract is to benefit them. A contract cannot be cancelled or varied without a third party's permission unless the contract expressly provides for this. The third party must be identified by name, class or description but need not be in existence when the contract is made.

Bowerman and another v Association of British Travel Agents Ltd. (1996)

Tour operator went insolvent and C tried to claim loss from ABTA. The 'ABTA Promise' to refund holiday expenses was advertised in press and court decided this was an offer to the public at large. The offer was accepted when C booked holiday with travel agent. Once performance by the offeree has begun a unilateral contract usually cannot be revoked as this could lead to injustice.

Doyle v. White City stadium (1935)

Under-age heavyweight boxer held to be bound by a clause in his contract stating he would lose his prize money if he was disqualified. (This was to encourage clean fighting.) MINORS ARE BOUND BY CONTRACTS OF APPRENTICESHIP & SIMILAR PROVIDING THAT ON THE WHOLE IT IS FOR THEIR BENEFIT. The agreement was binding on the minor as it encouraged clean fighting and protected young inexperienced boxers.

what types of contracts are there?

Unilateral and Bilateral

Hint - Structuring your answer

Use the IRAC formula - (Issue, Rule, Apply, Conclude). What is the legal issue? The issue is whether there is a valid contract in each situation. Explain the elements of a valid contract.

1. Adam has decided to sell his Apple ipad (32GB) and has put an advert in the local paper - "for sale, good condition, six months old, £350". Explain whether a valid contract between the parties has come about in each of the circumstances given below:

a) Leonie writes to Adam accepting the offer enclosing a cheque for the full £350. o Case law: Adams vs Lindsell, Household Fire Grant o Apply Postal Rule o Letter of acceptance is effective when it is put in a post box o Doesn't matter when he receives it

Consideration must be provided by the promisee, explain and demonstrate and example?

b) Under common law a party cannot enforce a contract unless he has contributed to consideration. Tweddle v Atkinson (1861)

Voidable

binding on one party while the other has the option to set the contract aside

Poussard v Spiers (1876)

discharge the contract and claim damage Facts: Poussard was employed to play a leading role in an operetta. She was not available for the first week of the show. The producer hired a substitute and refused to accept Poussard's services for the remaining performances. Decision: The producer was entitled to terminated the contract as the opening night of the operetta was of utmost importance and this can be regarded as a breach of a condition of the contract.

Void contract

has no legal effect because there is no contract

Form of a Contract General rule is a contract may be in any form, but exception for certain types of contracts. Some contracts must be:

i. By written deedIn writing, signed as a deed and witnessed e.g. transfer of land, lease of land for more than 3 years, contract made without consideration. ii. In writingSigned by one or both parties and containing the contract terms e.g. transfer of shares in a company. iii. Evidenced in writingCannot be enforced unless there is at least some written evidence of the terms e.g. contract of guarantee. r

a) Donna offers to pay £300 for the ipad. Adam says he will think about it. Two months later Adam tells Donna he will take the £300.

o Donna has now bought a new ipad and no longer wants Adam's ipad. o Adam says he will think about it, not acceptance o If an offer is described as two months later it means you should decide if the rules on expiry due to lack of time apply. Ramsgate Victoria Hotel v Montefiore(1866)

Content

parties can generally enter into a contract on any terms they want but some terms may be implied into the contract and other terms in the contract may be overridden by statute.

Invitation to treat definition

pre-offer- - an invitation to make an offer and therefore not an offer - adverts in magazines are usually invitations to treat as are goods displayed in self service shops or in shop windows

What if one or more of the essentials are not present in a contract?

the contract may be VOID or VOIDABLE or UNENFORCEABLE

· Acceptance must be communicated General rule - acceptance must be communicated to the offeror and received by him.

· Acceptance must be communicated General rule - acceptance must be communicated to the offeror and received by him.

Beneficial service contracts

· Beneficial service contracts - A contract for training, education, apprenticeship, or employment is binding on a minor provided it is, on the whole, for his benefit.

contracts for necessity

· Contracts for necessaries - include goods and services which are regarded as appropriate to the minor's social standing and required by the minor at the time the contract is made.

Whay contracts are minors entitled to?

· Contracts voidable by minors The minor can have them set aside before, or within a reasonable time after, reaching the age of 18 e.g. leases of property, and contracts to buy shares in a company. Unenforceable contracts Minors' Contracts Act 1987, s 3, if a court considers it fair and just, it may require a minor to return goods or proceeds from the sale of goods which he has received under an unenforceable contract.

· Contractual duty to the same party If you have a contract to carry out an obligation cannot use same obligation as fresh consideration.

· Contractual duty to the same party If you have a contract to carry out an obligation cannot use same obligation as fresh consideration.

Contract law is concerned with 3 basic questions

· Is there a contract? Consider the rules relating to formation of a contract. · Is the agreement one which the law should recognise and enforce? · When do the obligations of the parties to the contract come to an end and what remedies are there for breach of contract?

There are also three other exceptions to the general principle that part payment of a debt is not sufficient consideration to discharge the whole debt.

· Promissory Estoppel · Composition Agreements - where a group of creditors reach a composition agreement with the debtor with respect to his debts. No single creditor can sue the debtor for the outstanding balance owned. Payment of a debt by a third party

Stilk v Myrick (1809)

After some of a ship's crew had deserted during the voyage the master offered to split their wages amongst the remaining crew. Not held. CONSIDERATION MUST NOT BE SOMETHING WHICH THE PROMISEE IS ALREADY BOUND TO DO (prevents extortion)

Is there an exception for the general rule of consideration must bot be something which the promisee is already bound to do?

Yes, the exception to the traditional rule has been recognized by the courts in: Williams v Roffey Bros & Nicholls (1990)

No sale - silence did not amount to acceptance. However, is there an exception to this rule

Yes, the xceptions to the rule is that acceptance must be received.

Foakes v Beer (1884)

A creditor promised to abandon her claim to interest on the debt, but then tried to claim the debt in spite of this. The House of Lords nevertheless held that that promise was not binding on her because it was not supported by consideration. She was therefore entitled to the interest on her debt. Beer obtained a court judgment for a debt from Foakes. (When a judgment is obtained on a debt interest accrues on that debt). Beer agreed not to take matters further and enforce judgment if F paid off by instalments. F did this, but when debt paid. B sued him for the interest on the debt. Court held: B was entitled to interest because it had accrued and F was paying less than what was due.No consideration had been given by F for waiver of any part of B's right against him

Balfour v Balfour (1919)

A husband's promise to pay his wife an allowance was not legally binding despite husband's work taking him abroad. DOMESTIC ARRANGEMENTS NOT USUALLY LEGALY BINDING

Adams v Lindsell (1818)

A letter of acceptance correctly addressed and stamped is effective when it is put into the post box.Facts: The claimant posted the acceptance on Sept 5. However, the defendant did not received the acceptance until Sept 9. However, on Sept 8 the defendants sold the fleeces elsewhere. Decision: The acceptance was valid on the day of posting, Sept 5

· Postal Rules

A letter of acceptance properly addressed and stamped is effective from the moment of posting even if it never arrives. Adams v Lindsell (1818)

White v Bluett (1853)

A promise by son to stop complaining that he had been disinherited was not good consideration to release him from promissory note. Son had no right to complain so he was not giving up anything of material value.

What is a unilateral contract?

A unilateral contract is one where the offeror promises to do something, usually to pay money, in return for an act by the offeree e.g. '£100 reward for return of fluffy black cat called Pixie.'

A warranty

A warranty is a term that, if breached, does not give the aggrieved party the right to terminate the contract; it gives rise only to a right to claim damages.

Acceptance is the unconditional assent to all the terms of the offer.

Acceptance is the unconditional assent to all the terms of the offer.

Acceptance

Acceptance is the unconditional assent to all the terms of the offer. It may be oral, in writing or inferred by conduct. It must be absolute and unqualified. · The offeree must agree to all the terms of the offer and not try and introduce new terms. · 'Battle of the forms'

IMAGE Entores v Miles Far East Corp (1955) Reaffirmed in House of Lords in: Brinkibon v Stahag Stahl und Stahl (1983) Acceptance must be communicated by the offeree or his authorised agent. Powell v Lee (1908) If the offeror prescribes a particular method of acceptance it would seem that the offeree does not always have to use that method provided he uses an equally expeditious method.

Entores v Miles Far East Corp (1955) Reaffirmed in House of Lords in: Brinkibon v Stahag Stahl und Stahl (1983) Acceptance must be communicated by the offeree or his authorised agent. Powell v Lee (1908) If the offeror prescribes a particular method of acceptance it would seem that the offeree does not always have to use that method provided he uses an equally expeditious method.

What are the different types of consideration?

Executory consideration - exchanges of promises which will be carried out at a later date - 'yet to be done - e.g. Ordering of goods, payment on delivery or booking a package holiday. Both promises are enforceable. Executed consideration - Consideration that has already been completed. In the case of unilateral contracts, where the offeror promises something in return for the offeree doing something the consideration is only completed when the act is done and therefore the consideration (the act) is said to be executed consideration.

Proform Sports Management Ltd v (1) Proactive Sports Management Ltd and (2) Stretford (2006).

Fact: Claimant football agent entered into a representation agreement with Wayne Rooney when he was 15 years old. In June 2002, the player and his parents wrote to C stating they would not renew the agreement when it expired in December 2002. Three days after the expiry of the agreement, the player entered into a new representation agreement with the Defendant. C brought proceedings against the new agent for unlawful interference with and/or the procuring of a breach of contract. D applied for summary judgment on the grounds that as a matter of law there was no liability for inducing the breach of a voidable contract with a minor. Held:There could be no liability for inducing the breach of a voidable contract with a minor. If the contract was one which the minor was entitled to lawfully terminate, then there was no breach.(2) The only contracts which are binding on a minor are contracts for 'necessaries' - either necessary goods/services supplied or contracts for the minor's benefit (eg. contracts of apprenticeship or education). The contract in issue - where C was to act as the player's agent and carried out functions of personal representation - was not analagous to a contract for necessaries. Players' agents did not undertake matters essential to a player's training or livelihood. The agreement was a voidable contract and was not binding on the player who was a minor.

Gurthing v Lynn (1831)

Fact: the claimant agreed to pay a further $5 'if the horse was lucky'.Decisions: the promise to pay $5 for a lucky horse is too vague

Pharmaceutical Society of GB v Boots Cash Chemist (1953)

Facts: Carbolic advertised a medicinal smoke ball claiming that they would pay 100 reward to anyone who caught influenza after using the smoke ball according to the directions. The ad also stated as evidence of the defendants' sincerity they had deposited 1000 to the bank. However, Ms. Carlill caught influenza after having the smoke ball.Decision: The Decision both of these Judges note that while the Defendant could argue lack of consideration, Claimaint, in buying the Carbolic Smoke Ball and using it as directed, provided adequate consideration through the inconvenience she experienced by using the product. A display on supermarket shelves is an invitation to treat. Customer makes an offer to buy the goods at the cash desk The contract is completed when the cashier accepts the offer.

Williams v Roffey Bros & Nicholls(2019) facts and decision

Facts: The appellants Roffey Bros, were builders who were contracted to refurbish 27 flats belonging to a housing corporation. The contract had a penalty clause for late completion. The appellants subcontracted some work to Williams, a carpenter. When Williams fell behind with his work the appellants offered him bonus payment to finish on time. Williams carried on working until the payments stopped. He sued the appellants for breach of contract. Held: Held: The Court of Appeal held that the doctrine in Stilk v Myrick had been refined since then. Gildwell LJ said a promise to make bonus payments to complete work on time was enforceable if the promisor obtained a practical benefit and the promise was not given under duress of by fraud. It was the appellants' own idea to offer the extra payment. Therefore, there was no duress. The appellants also gained a practical benefit by avoiding the penalty clause. Russel LJ said (at 19) that the court would take 'a pragmatic approach to the true relationship between the parties'. Consequently, the promise for extra pay was enforceable.

Hillas v Arcas (1932)

Facts: the contract did not specify what type or quality the wood isDecisions: the details of the option could be obtained from previous dealings and the custom

Felthouse v Bindley (1863)

Felthouse v Bindley (1863) Negotiations were taking place regarding sale of a horse. P wrote to nephew and said 'if I hear no more about it I consider the horse is mine for £30 15s. N did not reply.

Minors' Contracts Act 1987 and the common law.

Generally a minor will not be bound by a contract he enters into (some exceptions, such as contracts for necessities or education). The other party is bound by the contract and it is legally enforceable unless the minor wishes it to be set aside.

Past Consideration, explain and show an example?

If a promise is made after an act has been done and is independent of it, it is called past consideration and is NOT good consideration in the eyes of the law. Re McArdle (1951)

Errington v Errington and Woods (1952)

If the offeree has started performance, the offeror has an obligation of not withdrawing the offer. Facts: The father promised the house should belong to his son and daughter-in-law if they had paid off the mortgage. However, when the father died he left the house to his widow. Decisions: The promise cannot be revoked once the couple enter into performance of the act. So the couple would have be entitled to have the property transferred to them.

why is the Williams v Roffey Bros & Nicholls(1990) case is an exception

In Williams and Roffey the Court of Appeal enforced a promise by the defendants to pay the claimants an extra sum of money for work which the claimants were already under a contractual duty to perform for the defendants at an agreed price. However it would appear that the Williams and Roffey decision is confined to cases that meet the following criteria: · The subject matter of the new agreement was to make an extra payment for an originally agreed amount of work. · The parties intended that the new promise would be legally binding. · The party agreeing to pay the extra sum gained some benefit from the agreement even if the other party suffered no detriment. · There was no evidence of duress by the party receiving the extra payment.

innominate terms

In between, there are innominate terms, where the remedy for breach will depend on the effect of that breach at the time it happens. If there is a substantial effect on the aggrieved party, it will be likely a fundamental term and give the right to that party to terminate the contract (and claim damages). If not, that party may only claim damages.

Williams v Roffey Bros & Nicholls(1990)

Insufficiency, new consideration. 2nd exception to Stilk and Myrick (agreement to pay more is not good consideration). Claimant was contracted by defendant to work on a housing project. Required extra money halfway into the job. Defendant agreed to pay but then did not. Defendant then gave the job to someone else. Held that there was consideration in this case because the claimants would have inferred a practical benefit on the defendant (not incurring charge from the customer for late completion). Decided using the 5 Glidewell principles: i) A contracts with B for services, ii) B genuinely realises that A cannot complete, iii) B promises to pay A extra, iv) B gains a practical benefit or obviates a disbenefit, v) There is no evidence of duress - THEN: FACTUAL CONSIDERATION. NB: THIS Has NO application wrt part payment of a debt.

Consideration must be sufficient, what does this mean?

It must be 'sufficient' in the sense that the law recognises it as consideration. It must be real consideration, something measurable and of material value.

· Contractual duty to a third party

It would appear that performance of an act that a person is already under a legal obligation to perform for a third party can be sufficient consideration for a promise.

Mavis v Ahmed [Rule and apply re: offer] Rule: Explain what is meant by acceptance. Use some cases. How does acceptance differ from a counter offer (use case law). Apply: Analyse whether there is a valid acceptance. Conclude: Short sentence on whether there is a valid contract

Mavis v Ahmed [Rule and apply re: offer] Rule: Explain what is meant by acceptance. Use some cases. How does acceptance differ from a counter offer (use case law). Apply: Analyse whether there is a valid acceptance. Conclude: Short sentence on whether there is a valid contract

Who is not able to contractually capable to a contract?

Minors, persons with mental disabilities, intoxicated persons, and corporations may lack contractual capacity to enter into certain types of contracts.

Jones v Padavatton (1969)

Mrs J persuaded daughter to leave job as a secretary and study for the bar. In return she said she would give her a monthly allowance. Allowance was not provided but instead Mrs J bought house and daughter lived in it rent free and collected rent from tenants. 3 years later mother reclaimed house and back rent. (D had failed her Bar exams). D counterclaimed for money spent on running the house.

Does silence count as acceptance?

NO

Can a contract go through soley with a promise?

NO, English does not enforce gratutious promises and thus it must be backed up by consideration

Nash v Inman (1908)

Nash an Oxford student bought some waistcoats. His father avoided paying as he had many waistcoats already. Court said it was up to tradesmen to find out the circumstances of the purchaser and if they choose not to, to refrain from extending lines of credit to minors. McDermott says; 1. Court must determine as a matter of law whether the particular goods or services are capable of being necessaries. 2. If they are, P must prove that as a matter of fact, they are necessaries in the particular circumstances. · Contracts for necessaries - include goods and services which are regarded as appropriate to the minor's social standing and required by the minor at the time the contract is made.

Which are the teo excepetions to make a contract for minors

Necessities or Education

Edwards v Skyways(1964)

Negotiations for redundancy terms - choice of withdrawing contributions from pension fund or receiving paid up pension. Agreed first option and agreed D would also make ex gratia payment. C got pension fund but not ex gratia payment. Although term ex gratia cut against the intention to create legal relations, it was a commercial contract and up to D to rebut the presumption. He had not done this and therefore court decided there was an intention to create legal relations. Held:The agreement had been made in a business context which raised a strong presumption that the agreement is legally binding. The claimant could therefore enforce the agreement and was entitled to the money.

Re McArdle (1951)

Occupants of a house carried out improvements at cost of £488. Then asked owners to pay the £488. CONSIDERATION MUST NOT BE PAST.

9. The Electronic Contract

Websites are usually considered to be shop windows = invitations to treat. Offer is made by the purchaser and seller has option to accept or reject. Where an agreement is made on the internet the service provider must electronically acknowledge receipt: Electronic Commerce (EC Directive) Regulations 2002. Acceptance depends upon the wording of the electronic communication sent back to the purchaser. It may be when the seller accepts the order or when he dispatches the goods. Contract made on-line is considered to be in writing. The Electronic Communications Act 2000 - allows use of electronic signatures.

Are the exceptions with the general rule of consideration?

When a request is made for a service this request may imply a promise to pay for it.Stewart v Casey (Re Casey's Patents) (1892)

1) Think of why the courts distinguish between social and commercial agreements in terms of legal effect. Does it seem like the case law strikes the right balance? Think of Balfour v Balfour as a starting point.

Your starting point of analysis should be the presumption that there is ICLR in commercial agreements. Note the legal nature of a presumption - it must be rebuttable. Much of the difficulty here crops up in scenarios with mixed commercial and domestic characteristics - see Simpkins v Pays, Robertson v Anderson. 2. You will normally be able to think of consideration as 'the price of the promise.' But how does Williams v Roffey change this?

Unenforceable

a valid contract but one which the courts will not enforce

good faith

absence of knowledge of any defects or problems

Example of "an Invitation to Treat"

adverts in magazines are usually invitations to treat as are goods displayed in self service shops or in shop windows