Contract Cases AND Summary PDF

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CONTRACT CASES AND SUMMARYOFFERLaw of Contract- Module 1 Goes back to 1719 Essentially about legal rules that regulate agreements that people make About people promising stuff and whether or not those promises have any force in law o is this a legally enforceable promise if so, contract o how do we...

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CONTRACT CASES AND SUMMARY OFFER Law of Contract- Module 1 -

Goes back to 1719 Essentially about legal rules that regulate agreements that people make About people promising stuff and whether or not those promises have any force in law o is this a legally enforceable promise if so, contract o how do we tell whats what?

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Rules exists in o judge made law (cases decided in the courts; case law) o parliament enacts a piece of legislation ex. legislation on contract rights of third party in 1999, growing number of consumer protection type legislations- most recent consumer rights act of last year

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European influences especially in relation to consumer law started in Europe, UK had to catch up European influences can be far reaching, it doesn’t affect not only the rules in terms of regulations and directives which come from Europe, but also it introduced new sets of principles and ideologies to our courts o Concepts for example as ‘good faith’ have been interpreted by English judges  Example of that is from the director general fair trading and first national bank case where the House of Lords use European Civil Codes to help it understand what good faith should mean. The phrase is contained in a directive on ‘unfair terms’ in consumer contracts and is directly applicable in our law. Decisions by the court can be made quite simply based on commercial expediency courts won’t be thinking necessary on the legal reasons why it’s doing something, courts will be looking at whether or not it would be commercially sensible.  looking outside of just the law, and taking a broader and wider consideration into account. o If we say this rule is wrong, then that could affect the whole sector (ex. We’d have a whole load of problems if we made this the law; have to think about things other than the actual legal rules) o Courts might make decision on what is fair or reasonable o Application of equitable doctrines such as promissory estoppel (promise is enforceable by law, even if made without formal consideration) will sometimes give a different result from the actual application of a legal rule

THINK ABOUT WHY IS THE LAW DOING THAT? -

For a promise to give rise to a legal obligation ie. Binding contract there must be for example offer and acceptance, consideration, intention to create legal relations and certainty o Are occasions where one of these constituencies are missing, yet the courts will still enforce it, and an agreement may not be upheld for ex. Public policy reasons

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o Ex. If someone puts a gun to your head, agreement isn’t real- being vitiated by the gun. In the case of a private agreement, where the promise is made in a domestic or social setting, the court in deciding, is there a contract will start from a position that the law presumes that in a social or domestic setting that people don’t intend their agreement.  just a starting point. o Ex. Dad says ‘ I promise to buy you a car if you go to law school’  not a legally binding contract- not something law will get involved. o Resort to litigation is the last resort

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Not the job of the law to rewrite contracts very much about someone making an offer, you don’t have to accept. o Not the job of the court to decide whether contract you entered was a good one.

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Classical legal theories will contend both legislative and judicial restraints required when considering agreements and promises that people make ie. The law, courts and parliament take a hands-off approach.  everyone freely entered in the agreement they want, not up to them to look at the nitty gritty of the contract o George Jessel who was master of the roles in 1875 said “men of full age and competent understanding shall have the upmost liberty of contracting and their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by the courts of justice” went on to say the judges are not freely to interfere with this contract LAISSEZ-FAIRE APPROACH respecting peoples freedom of entering into contract, ‘hands-off’ o Popular in 19th century. Being for the public good. o Jessel says law does not prevent man from being foolish *making foolish agreements* Consumer legislation is a good example of paternalistic approach state is protecting ‘the little guy’; state recognizes that the business and the person or consumer is not equal Sanctity of contract- law is reluctant to undo a bargain simply to allow a person to escape a ‘bad deal’ o Will not permit a person of age to freely enter a contract, then back out after finding out something when you didn’t read it

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Contract is an agreement with the force of law behind it= agreement given rise to obligation - Needs consideration= exchange of promise is consideration - Promises that are given gratuitously are not enforceable by law- nothing given in return. o Ex. I promise to give you my car, I promise to give you 30k. consideration is given. I promise to give you my car nothing given in return, no consideration. TYPES OF CONTRACT - Private contract o Example: selling car, advertise it in the Friday ad, and you come and buy it. We are both private. - Consumer contract

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o Example: I go to BMW’s garage and by my car, consumer contract. Selling car in course of their business, and I am buying as a private individual. Commercial contract o Both parties are dealing in course of their business. Ex: companies buying within each other Unilateral Contract o ONE party makes promise, other party has to perform the act o UNI only has one person is promising something, other party does not have to make promise in return  Can be made with millions of people  Person who accepts offer, has to perform action  Example: A offers reward to find Kitty the cat. The person who returns Kitty the cat has done the action, and completed the contract.  Does not have to send notice to the person promising letting them know they are doing the act. Example seen in Smoke Ball case. Bilateral contract o TWO people are exchanging promise  Most common  Example: I give you my car, you give me 30k.

FORMATION AND OFFER - Formation o ‘Is there a valid contract?’ And ‘What are the terms of the contract?’ o must be agreement between parties for validation of contract. o Must be ‘consensus ad idem’= a meeting of mind o OFFER AND ACCEPTANCE first thing to be satisfied. Lord Denning says, not always easy to find offer and acceptance, therefore need to look at the available evidence, instead of looking for offer and acceptance.  Denning’s approach was not acceptance by courts, they usually don’t look at all the evidence available because of the amount of time it takes: not practical. Not look at subjective, look objectively at what was said and done  pragmatic approach - Smith v Hughes (example for Objective contract- OBJECTIVE TEST) o Plaintiff Smith offered to sell oats to Hughes, he accepted. o When oats were delivered, Hughes refused to pay. Hughes said he agreed to buy old oats, but Smith brought him green young oats. o Smith didn’t have any old oats, so he couldn’t have offered old oats o OBJECTIVELY the contract is for the sale of oats, what did he get? Oats, therefore contract is valid. o There was a consensus, offer and acceptance for the sale of oats. - Miran v. College of Sulfert o Accidently accepted student to the college, student accepted o Contract was valid - Stora V. Machester City Council

o Objective approach stops people from stopping agreement if they don’t like the outcome o BUTTTTTTTT if one party knew of error in object objectivity test is wrong  Example hartock v shields case  Sale of hare skins accidently sold per pound instead of per skin. Mistake: Hartock thought it was a great offer so he went ahead with the sale. After realizing mistake, he retracted his offer. At court said, Hartock knew that the offer didn’t represent Shields intentions because both were Hare sellers, therefore both knew the trade and customs. OFFER - Without an offer, cannot be agreement. Binding contract comes after acceptance. - Offer can be implied example, buses Karla v. Carbolic Smoke Ball - Unilateral - Must perform the act to get the reward - Smoke ball said it was ‘mere puff’  like redbull, can’t sue for not growing wings o The fact that they put 1000 pounds in bank says that it is serious.  showed sincerity - Said if this was contractual stuff, then they are in contract with whole world, they said not possible. o Lord Justin Bowman said this is not contract with the world, but rather offer to world anyone who performs act will get into contract -

Formation= offer and acceptance o At point of acceptance= offer is created Company said o Advert was mere puff didn’t work because there was sincerity o Not possible to be in contract with world  didn’t work because it was a unilateral contract, offer to the world, not contract until promise is completed o There was no meeting of minds Karla did not let company know she accepted the offer.  When person makes offer, there must be a meeting of minds, because there could be a decline of the offer. Therefore, you must communicate the acceptance  In unilateral  no need to communicate acceptance, except notice of performance. In bilateral= you need notice because there is exchange of promises o Offer can be made to the world, NOT a contract until promise is performed.

ABTA v. Bowerman case - If you booked trip with ABTA and they went bust, they could get money back - Courts used smoke ball case to ensure contract. o Acceptance of offer was booking with them; therefore contract was valid.

OFFER= NOT OFFER - When it is an invitation to treat - Most adverts are invitations to treat, can grow into offers, then contracts Ex. Karla v. Carbolic Smoke Ball - Unilateral= different from cases where you offer houses to let Ex to invitation to treat: shoes half price, BILATERAL, you get shoes, I get money. Because you need more details, there is room for negotiation, therefore invitation to treat. Gibson V. Manchester City Council case - Adopted policy of selling social housing, encouraging private housings - Gibson applied for details of pricing and mortgages - Gibson received a letter saying “if interested, fill out a form and send it back. Before his contract closed, the city council changed and they did not want to sell to Gibson. Went to court asking for SPECIFIC PERFORMANCE (equitable remedy because damages is no good) - The house of lords said there was no contract formed. Looking objectively, the letter said ‘may be prepared to sell’  invitation to treat o Letter was not point of acceptance, was an offer, council rejected Storer v. Manchester City Council - Council selling social housing, like the previous case - Storer applied to buy his house, council sent contract to him with details of mortgage, prices ect. He accepted and sent it back to the council - Council changed, and denied it - Lord Denning said the whole point of forms to fill out is to eliminate the back and forth. The enclosed letter is the offer, and him sending it back was the acceptance Patridge v. Crittenden - Selling animals; bilateral o Illegal to sell the birds he was selling - Adverts said “x, y, z at $29.95 each” o Did not mention anything about shipping, what quantities are available, ect o Therefore, invitation to treat  was convicted to a criminal offence, but was revoked because it was an invitation to treat and not an offer. Harris v. Nickerson - Unilateral, auction, took down an item that was advertised to auction o Harris sued for damages for wasting his time. o Seller of goods gave info about items, invitation to treat Grainger and Sons v Gough - ruled that posting catalogues of items for sale to people did not constitute an offer since there was insufficient detail. Important difference from offer and invitation to treat  where there is room for further negotiation= invitation to treat Advertisements are invitations to treat - Smoke Ball ex. Offer made to world, unilateral - Good displayed with price tag

o No room for negotiation shopkeeper can refuse to sell because of vigorous consumer protection laws Pharmaceutical Society of GB V. Boots - not necessarily a litigious case 1953- we’re moving towards self-serving shop - pharmacy and poison act= certain poison (medicine) can only sell under supervision of pharmacist o therefore, offer was not when goods are out for sale, would have been illegal to pick up and accept offer. Must be invitation to treat o offer was made by customer when they present the item to the cash register AUCTIONS - bidder= offer - acceptance= falling of the hammer - any bidder may retract bid before the hammer falls (acceptance) - owner not allowed to artificially bid Payne v Cave - Facts: At an auction for a worm tub, the defendant bid 40 pounds. He then asked the auctioneer if it was worth that price, to which he received a negative answer. Defendant retracted his bid. The tub was auctioned off the next day to the defendant for 30 pounds. - Procedural History: Plaintiff filed action to recover the difference. - Issue: Was there a contract formed when the defendant bid? - Holding: No. - Reasons: The contract is formed at the end of the auction, when the hammer strikes. Before that moment, neither party is bound; either can back out. Warlow v Harrison - owner of the horse was bidding - when the plaintiff found out he was bidding against the owner, he stopped and sued - an advertisement to sell goods at an auction without reserve= promise that you will sell to the highest legit bidder. - Breach of contract= without reserve= promise to sell Barry v Davis - Sale of 2 machines at an auction without reserve (no min price) - Barry was only person bidding for items worth $14,000 each, was bidding for $400/each - Auctioneer withdrew machines because he could get more money somewhere else - Barry sued for breach of contract o There was a collateral/ second contract with the sale without reserve o By removing the machine= there was breach TENDERS - Making quotes for something= generally invitation to treat Spencer v Harding - Nothing in circular that highest tender would be accepted AUTOMATIC MACHINES

“…the offer is made when the proprietor of the machine holds it out as being ready to receive the money . The acceptance takes place when the customer puts his money into the slot…” per Lord Denning Thornton v Shoe Lane Parking - “…the offer is made when the proprietor of the machine holds it out as being ready to receive the money . The acceptance takes place when the customer puts his money into the slot…” per Lord Denning INTERNET E-commerce regulations - enacted to increase consumer confidence in e-commerce and promote certainty - does not harmonise totally the formation of contracts made on the internet - reg 9 (1) requires the provider to explain in plain terms exactly when the contract is concluded electronically and any necessary technical steps that have to be taken - article 11 states that the provider ‘shall acknowledge receipt of the order to the recipient…without undue delay…by electronic means…’ Ex. Argos accidently sells T.V for $3.99 instead of $399 - Realizes mistake and refuses to accept any offers - Said they had no intention to sell the T.V’s for that much Kodak did the same thing with cameras. - On site, customers were asked to click ‘buy now’ and got a receipt and warranty o Unclear if the receipt was the acceptance - They said invitation to treat on website o People received confirmation email as a response, not an acceptance. It was confirming the order, not acceptance ACCEPTANCE - In order to establish agreement, must consider acceptance - Also capable of rejection need acceptance - Acknowledgement of offer DOES NOT equal acceptance - Inquiry for further information DOES NOT equal acceptance - Can be expressed or implied ie. By actions putting newspaper and money on the table. o Acceptance must be communicated- there are exceptions in unilateral agreements Acceptance by Words - Purported acceptance part of the contract is agreeable, part is not DOES NOT equal acceptance. o Must be meeting of minds - Counter offer= response is the new offer!! Hyde v Wrench (counter offer)

offered to sell farm for $1000. Plaintiff said he’d buy for $950, then plaintiff changed his mind and said he’d give him the full $1000. Defendant then said he wouldn’t sell anymore. Plaintiff sued for specific performance o offering $950 kills the previous offer, nullifies the $1000 offer. o Courts held that in replying that he would buy for 950, he rejected the 1000, he brought original offer to end. He could not purport back and buy for 1000. Stevenson Jacques v McClean - D offered to sell 3.3000 tons of iron to P at 40 shillings/ ton - D said that they would keep offer open until Monday - On Monday, P telegraphed D saying ‘please respond whether they would accept to deliver 40 shillings/ton over span of 2 months’ o This is a request for more info - D did not reply and sold to someone else - Later that Monday P said they would pay o Courts said that because it was a request for more info- did not nullify contract, was still capable of acceptance -

 if there is no performance, can say no agreement or contract. If goods are exchanged or performance is stated, then agreement is valid Battle of the Forms BRS v Crutchley - Weren’t new to being in contract with each other o Delivery people - P delivered goods to D, P presented goods saying ‘all goods carried under their terms and conditions’ o D stamped the document saying it was under their terms and conditions o Whose terms prevailed?  Courts said D prevailed. P did not say anything when the goods were presented  They had business before, P never complained that D stamped it with their terms and conditions Butler Machine Tool v Ex Cell - D, Ex-Cell, inquired about machine goods P offered to sell at 75,000 o Subject to conditions - D put offer saying they would buy under their terms o The acceptance had a part on the doc to sign and accept with their terms o P signed with a letter saying the order was put under their own terms o Courts said the contract did not include price variation in P terms  Counter offer put those conditions to an end Photolibrary v Burda - Made use of the photos= yes in contract - Deliver of transparencies and note= offer

- Use of products= acceptance - Even though there was no signing, the receipt and use is acceptance Tekdata v Amphenol - The court considered which of two sets of contractual terms applied. The parties had dealt with each other over a long period. Under standard offer and acceptance the seller’s terms would apply. The buyer appealed, saying the court should look to the history of relations between the firms. - Held: The appeal succeeded. The traditional offer and acceptance analysis (the last set of terms applies) must be adopted unless the documents passing between the parties and their conduct show that their common intention was that some other terms were intended to prevail. The evidence here was not sufficient to displace the standard analysis. Acceptance by Conduct Brogden v Metropolitan Railway - Court agreed that putting agreement in his desk and not accepting= no contract o BUT by continuing the contract, despite not accepting= contract and acceptance - Brogden said he did not accept the terms but did not let them know, and continued doing trades= acceptance Silence as Acceptance? Felthouse v Bindley - Felthouse offered to buy Bindley’s horse said ‘if I hear nothing about you, I will consider a deal’ o Bindley did not respond, but did put the horse aside for him  Auctioneer sold it regardless  Felthouse sued auctioneer. He had to prove that the horse was his and not Bindleys. - Courts said that even though Bindley had the intention to sell, in law, did not communicate it to Felthouse. Therefore, silence could not constitute as a valid acceptance  Acceptance can be prescribed Tinn v Hoffman and co - Acceptance must be accepted by return of post (sent on the same day) - Honey...