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Contract Law Notes Lecture no 26.09 Introduction Offer Contract Law: Promises, agreements made between people Cover a range of economic transaction Contracts cover business between people (its about the legal rule covering peoples promises has a long Distinguishes between enforceable and unenforceab...

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Contract Law Notes Lecture no.1 26.09.2017 Introduction & Offer

Contract Law:  Promises, agreements made between people  Cover a range of economic transaction  Contracts cover business between people (its about the legal rule covering peoples promises –it has a long history-)  Distinguishes between enforceable and unenforceable contracts  Case-laws need to be studied Historically: contract laws come from judges/courts Now: the state is the key, statutes become more important, parliament and EU have a “bigger say”

Consumer Rights Act -> new way of selling, making agreements EU law becomes more important -> its been transferred into domestic laws (see Brexit as a context issue, the European influence was very far reaching)

“Good faith” concept: needs to be interpreted by English judges (European concepts) Law of contract is affected in its ideology be European law (generally from different places)

Influences on judge’s decisions Based not only on fairness, reasonableness Commercial arrangements/ as another influence expediency

Binding Contracts o o o o

Offer and acceptance Certainty and stability Consideration!! Intention to create legal relations

 Ashley v Blue case “Its about the basic requirements of making a contract legally binding”

Starting point: to presume there was no contract made between individuals/ parties never had intention to make an agreement or create legal relations

For business it is of interest to not go before court  Parties avoid litigation (see reputation, economic, financial reasons)  Rather arbitration process (where a 3rd independent party is appointed to solve the dispute)  It is generally for commercial law parties (commercial transactions, shipping, trading) Commercial law parties  Parties avoid delegation (see reputation, economic reasons)  Rather arbitration processes (mediation)

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Judges/courts don’t want to undo bargains Its not about whether it was a good deal or not, courts decide on the freely made contract Courts don’t decide on the fairness of a contract

Laissez-faire & sanctity Lawyers seek to preserve an agreement under threat, since much more is at stake when a contract fails  around 100 years ago  this principle remains (of court taking its hands off)  “No one would voluntarily enter transaction if they thought it was unfair” the court says  law doesn’t prevent man from being a fool Contract vs Tort  you’re free to enter a contract  you’re free to enter bargains (but not always possible) Law is reluctant of undoing contracts (see Sanctity of contract) Lecture no.2 28.09.2017 Offer What is a contract? There has been no attempt to define what a contract is but to describe the contract law Everybody is entitled to a remedy if their contract is bridged Legal rules have been developed

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!Ideas of Offer and Acceptance! a Bargain IS NOT a Gift (Consideration -> given in return for something else) Types of contract  Private contract  Consumer contract -> one party makes a contract in the course of their business  Commercial contract -> two parties make a contract in the course of their business  Unilateral contract -> uni (one/single) promise, it is a promise and not an exchange Promise -> Exchange [e.g. Lost puppy A: promises money to whoever finds the puppy/ they made a promise but B is the one to perform the action B: they found the puppy and returned it/ but it wasn’t something they had promised to do Doing the requested act = is the exchange]  Bilateral contract: there is an exchange of promises Promise -> Promise  Formal contract: a contract that is formalized and signed OFFER It is the first ingredient of forming a contract

Formation of a contract  Offer and acceptance isn’t always sufficient  There must be an agreement

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 One party has to accept the other parties offer “CONSENSUS AD IDEM” -> meeting of minds (this is offer and acceptance)

 Martin Smith v Williams [1998] CMLR 334 “If the parties reach accord by means of offer and acceptance then they should be contractually bound” BUT  New Zealand Shipping Co v Satterthwaite [1975] 1 AC 154 “English law, having committed itself to a rather technical and doctrine of contract in application, takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer and acceptance”

The court will look objectively on the facts and decide whether or not there is an offer and acceptance. OBJECTIVE TEST  Smith v Hughes (1871) LR 6 Court: takes objective approach, not into the detail. Per Blackburn J: “If whatever a mans real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”

 Gibson case You don’t look into the intent of a mans mind

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EXCEPTION Where the objective approach doesn’t count.  Hartdock v Scheels When the offeree knew the truth about the contract that the offeror made. Offer and acceptance where there, but due to the circumstances the court decided the contract wasn’t to be accepted. OFFER Professor Treitel: “An offer is an expression of willingness to contact on specifies terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.”

Offers can be:  Expressed  Implied To whom an offer can be made:  Carbolic Smoke Ball case Sales talk, propaganda, sales puff, advertising gimmick. But they deposited the money to the Bank to show their sincerity.

Explicit offers Implicit offers  Speaking it cut  You don’t have to speak it out  Offers at express because its implied  You actually say that you want  It is implied that when you go to offer something into a shop you will pay at the

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 You form a contract explicitly

end  You don’t write anything down Lecture no.3 3.10.2017 Offer

 Carbolic Smoke Ball No binding agreement They don’t have a contract with the whole world, but they made an offer to all the world, so if it is accepted it is a contract (it satisfies the conditions of the offer) Unilateral contract Meeting of minds? In cases of this kind it is shown by the language used that they don’t expect an acceptance (unilateral contract). The performance of the act is the acceptance.  Bowerman v ABTA Per Bowen, LJ: “This is not a contract with all the world… it is an offer made to all the world; and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition?” It is a Unilateral contract. Offer -> if you book with us ‘your money is safe’; they will give them back the money, the booking is the performance.

WHEN IS AN OFFER NOT AN OFFER

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INVITATION TO TREAT Advertisements aren’t offers, they may eventually lead to a contract. Statements which indicate the maker’s willingness to receive offers, they are not offers themselves.  Gibson v Manchester City Council Council may be prepared to sell house for this price, if you’re interested complete the form and send it back. The sales will continue if there has been a contract (sighed). C: (HoL) no contract, the statements where merely an invitation to treat. Gibson made the offer (Treitels definition); he only knew the price, but not all the terms so he couldn’t accept the ‘offer’. Where there is room for negotiation it is more likely to be an invitation to treat.  Storer v Manchester City Council They enclosed the agreement. All information was there. It was missing the date when he would stop renting the house and start being the owner. There was a binding agreement, when he signed the form back. There was an offer –letter enclosing the agreement- and acceptance –when he did so-. Examples  Partridge v Crittenden (room for further negotiation) Stated the price of the birds but didn’t specify how many and if they would be delivered. Not an offer due to the wording.

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C: literal approach. Demand could outweigh the advice. If he was in a contract with 20 people but only had 10 birds.  Harris v Nickerson The advert for an auction wasn’t an offer but invitation to treat. Legal reasoning -> common sense. Bilateral contract.

 Grainger & Sons v Gough Price list is not an offer. There is a possibility of demand exceeding supply. You can’t go into a shop and demand to be sold goods at a certain price.

Lecture no.4 5.10.2017 Offer

 Pharmaceutical Society of GB v Boots Cash Chemists Per Goddard, CJ: “it is wrong to say that the shopkeeper is making an offer to sell every article in the shop to any person who might come in… the shopkeeper must be free to refuse to sell.” Self service shop, to what point was a contract included in a self service shop? Pharmacy and Poisons Act 1993 They were invitations to treat, some things have to be sold by a licensed pharmacist; they can be accepted or rejected.

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 Flick knife case Display of an article with a price is merely an invitation to treat, not an offer. Blurred line between offer and invitation to treat. Room for interpretation, we don’t have a firm authority on that question (UK). In the USA, however, there is such an authority.

AUCTIONS  Payne v Cave (1789) 3 Term Rep 148 General rule, the offer is made by the bidder and acceptance occurs when the hammer has been hit, before that the offer can be revoked/retreated.

 With reserve/ reserved price The auctioneer can withdraw the item before the hammer is hit (before acceptance occurs). The auctioneer can withdraw the item if the price isn’t anywhere near to the price they were bidding it for.

Owners can’t bid.  Sale of Goods Act 1979 S 57(2)  Warlow v Harrison (1859) 1 E&E 309 Collateral contract.

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He sues about the promise of the auctioneer to sell without a reserved price. The highest bidder will get the item. Breach of the contractual promise.  Barry v Davis [2000] 1 WLR 1962 Two machines at an auction without reserved price Collateral contract, he has to sell to the highest bidder, but he withdrew the machines. Auctioneer acted on behalf of the owner which is not allowed.

TENDERS Widespread commercial practice Request for tenders is an invitation to treat. Invitation to tender, everyone who is interested will make an offer and you decide if you want to accept it or reject it. Collateral contracts –second agreements-

 Spencer v Harding (1870) LR 5 CP 561 There was nothing in the circular that said that the highest bidder would be accepted.

 Harvella Investments Ltd [1984] 2 ALL ER 65 In their tender they promised to be binded to the highest bidder/tender/offer. Invited both parts to make an offer. They instructed the two parts to make a single offer.

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Lecture no.5 6.10.2017

Offer  Blackpool & Fylde Aero Club Ltd v Blackpool BC [1990] 3 ALL ER 25 Very clear procedures on how the tenders should be received. Before 12 o clock will be accepted. Plaintiff: town hall letter box -> he put the letter in 1 hour before the deadline. The letter box was not emptied on time. His application was therefore not considered by the company. He submitted it on time -> his tender should at least be considered. Court of Appeal agreed with the claimant. The council was making an offer to at least consider all before all of the tenders given in before the designated time. Contractually bound to consider his offer and all the tenders submitted. They contacted to consider all and every offer submitted.

AUTOMATIC MACHINES Contractual offer and acceptance  Vending machines The goods in the machine are offered and putting the money in it is the acceptance.  Car park example Terms and conditions when you enter the car park. Contract which is legally binding. They are not liable for anyone who is injured in their facilities.

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 Thornton v Shoe Lane Parking For a contract to be complete and for a party to rely on clauses to exclude liability must be brought before the contract is formed (so offer and acceptance) When does offer and acceptance take place? Offer: machine is offering ticket Acceptance: putting the money in the slot Per Lord Denning: “…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…” THE INTERNET Growing area of law Domestic statute and EU law  Electronic Commerce (EC Directive) Regulations (SI 2002/2013)  Consumer Contracts (Information and Additional Charges) Regulations 2013 (SI 2013/3134)  Argos 1999 Advertisement to sell television for $3, when the actual price was $300 There was no communication, no acceptance, they rejected the offer)  Kodak Selling camera for $100 when the actual price was $339 The order was confirmed; the email was the receipt/warrantee. They would sell the cameras for the full price with a discount.

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They accepted, due to the confirmation email they confirmed that they had received the offer but not accepted it.  Article 11 Intermediate state between offer and acceptance –law want to protect consumer if there was a wrong purchaseInvitation to treats don’t amount to offers! All the information needs to be given to the consumer beforehand Emails are acknowledgments of offers, but don’t complete a contract Until acceptance occurs they can cancel the order and you can revoke their offer –intermediate state-.

 Consumer protection Far reaching: contracts made at a distance (not necessarily face-to-face) Internet transactions, contracts on the phone, emails; Internet -> off premises/on premises Covers contracts on goods and services See definition: consumer, trader  Cooling off period Trade must give the consumer information before and after contract is made, give him the right to cancel the contract and time to cancel it. Cancelation period ends at the end of the 14 days when the goods come into possession of the consumer. Before the 14 days you still have the right to cancel the contract.

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If the trader doesn’t give that information on the above, the cooling-off period is extended to 12 months. Acceptance is a final and unqualified expression of assent to the terms of an offer. It may be expressed or implied by words, conduct. One must be aware of the offer. Acceptance must be communicated to the offer. A counter offer will bring the original offer to an end; this making is incapable of acceptance. –Hyde v Wrench (1840) 3 Beav 334 Lecture no.6 10.10.2017 Acceptance

Acceptance by words “I agree but…” is not an acceptance

 Hyde v Wrench (1840) 3 Beav 334 Farm example; defendant $1000; plaintiff offered $950; then he changed his mind. By refusing the $1000 and with his counter offer he ‘killed’ the first/original offer.  Stevenson Jacques & Co v McClean (1880) 5 QBD 346 Saturday 3.800 tons of iron for 40 schillings per tone till Monday Defendant sold the iron to someone else Was the communication a counter offer?

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The telegraph was not a counter offer but request for further information.

BATTLE OF THE FORMS Negotiation format, the parties intentionally introduce this because they want the contract to be on their terms If there is no performance of the contract; quite simple no agreement has been made. The party who got their terms without any objection are the ones who win – when there has been an exchange of goods-.

 BRS v Crutchley [1968] 1 ALL ER 811 Defendants negligent in protecting the goods from theft. The terms and condition are very important. Defendant prevail, their terms had been accepted. Crutchley’s terms where the last to be accepted (silence alone, there is no complaining)

 Butler Machine Tool Co v Ex Cell O Corp [1979] 1 ALL ER 965 Offer: selling tools ($75.000) was object to condition to prevail over ant terms the buyer puts (included term to vary the price) 4 days later the defendant made an offer. The buyer ripped off and signed a paper accepting the terms and conditions. 9 days later he signed and sent it back with a letter. There was an increase of $3.000 for the tools. Both claimed their terms had been accepted. Court of Appeal: said that the contract did not include the price variation. The defendant’s terms were actually a counter offer.

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BATTLE OF THE FORMS CONT’D  Photolibrary v Burda Delivery of the transparencies with delivery note = offer Receipt and use of transparencies = acceptance Question: had there been an offer and acceptance? Paper/delivery note: in the event of a loss there should be a fee paid, but they never signed it. So Burda didn’t accept. High Court: the offer was the note and the transparencies and using them – the receipt- was the acceptance.

 Tekdata v Amphenol Opportunity to reconsider strict approach taken in Butler. Min 30

ACCEPTANCE BY CONDUCT  Brogden v Metropolitan Railway (1877) 2 App Cas 666 Min 33 Per Lord Cairns at 680: “Approbation was clearly given when the company commenced a course of dealing which is referable only to the contract and when that course of dealing was accepted and acted upon by Brogden in the supply of coals.” Railway didn’t respond, so Brogden didn’t accept. Counter offer, new term, acceptance of the new term? Mere act of putting the agreement in the drawer wasn’t acceptance.

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But the action of continuing the trade was acceptance. The actions they were taking were mirroring the contract. COMMUNICATION OF ACCEPTANCE  Some external manifestation of assent Actions must be done by the offeree so the court can consider it as acceptance.  Silence  Felthouse v Bindley (1862) 11 CBNS 869 “if I hear no more from you I will consider the horse mine.” Nephew selling in an auction a lot of things Told auctioneer not to include the horse Uncle sues the auctioneer To succeed the uncle has to show that the horse was his Even though the nephew had intention to sell the horse to him, he hadn’t done anything to communicate and ‘bind’ his action.

 Consumer Contracts (information, cancellation and additional charges) Regs 2013. Part 4 PERSCRIBED METHOD OF ACCEPTANCE Min 45  Tinn v Hoffman & Co (1873) 2 LT 271 Acceptance had to be return of post. Prescribed method does not mean a reply of return of post If someone achieves the goal of efficiency by another method, it is acceptance even though it wasn’t the way the offeror described it.

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Per Honeyman, J. 274: ‘by return of post’ – “…does not mean exclusively a reply by return of post… you may reply by telegram or verbal message or by any means not later than a written letter and sent by return of post…”

Lecture no.7 17.10.2017 Acceptance  Manchester Diocesan Council of Education v Commercial & general Investments [1970] 1 WLR 241 “The person whose tender is accepted shall be informed of the acceptance of his tender by a letter sent to him by post – address given in the tender…”

per Buckley, J.: “Where the offeror has prescribed a particular method of acceptance but not in terms insisting that only acceptance in that mode shall be binding, I am of the opinion that acceptance communicated to the offeror by any other mode which is less advantageous to him, will conclude the contract.” Was it a valid acceptance? -> yes it was There is not a sole method An offeror is bound only if his particular method is stated/made clear. THE POSTAL RULE EXCEPTION -> acceptance must be communicated to the person making the offer  Adams v Linsdell (1818) 1 B & Ald 681

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Sell wool, send it by mail, got lost and ...