Contract Notes - All PDF

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⌦ Week 1 Offer 合約● 3 pillars in creation of a contract​: Consensus ad idem​: an agreement, meeting of minds 合約 a) offer; b) acceptance; c) certainty of terms; Intention​ ​to create legal terms 意圖 Consideration​ 對價 DefinitionUnilateral and bilateralAn offer is ‘an expression by one person or group of...

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⌦ Week 1 Offer 合約 ● 3 pillars in creation of a contract: 1) Consensus ad idem: an agreement, meeting of minds 合約 a) offer; b) acceptance; c) certainty of terms; 2) Intention to create legal terms 意圖 3) Consideration 對價

An offer is ‘an expression by one person or group of persons, or by agents on his behalf, made to another of his willingness to be bound to a contract with that other on terms either certain or capable of being rendered certain." Unilateral and bilateral Definition

Unilateral contract: a promise in exchange for an act. Obligation entirely on promisor. Promisee not obliged to perform such act. Bilateral or synallagmatic: exchange of promises with enforceable obligations on each side. (most contracts) The offeror’s intention: usually objective test.

Offer must be unconditional

Replies to enquiries = offer?

Montreal Gas Co v Vasey Offerer intends to be contractually bound upon acceptance and does not reserve the right to change after acceptance. -> no  'if' sentences when making the offer. Harvey v Facey: "will you sell us?", did not answer about the intention to sell - no offer.

No

The reply must reasonably and objectively indicate an intention to be contractually bound upon acceptance by the party to whom it is addressed.

Ads ≠ offer

Partridge v Crittenden : put up ads to sell birds, violating statue, won appeal since merely an invitation to treat. General: Statements made in advertisements are not to be regarded as offers but as mere invitations to treat, i.e. invitations to commence negotiations.

Ads = offer

Carlill v Carbolic Smoke Ball Co : manufacturer for smoke ball preventing flu; ad - reward be paid if caught flu after using xx times xxx (already deposited); a reasonable person in her position; judgement for Carlill. Special: W  here the advertisement (or any other communication) employs such words and is made in such circumstances that it would be understood by a reasonable person as constituting a firm offer, it will be effective as such.

Ads & Offer

The test is objective and determined by the standard of reasonableness. - Koo Ming Kown v Next Media Ltd , Leonard v Pepsico

Shop displays

Display ≠ Offer

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd: displayed self-service; customer offers to buy, has to be accepted by pharmacist, thus under supervision for statue. HKSAR v Wan Hon Sik: displayed pirated discs; not an 'offer' to sell therefore not guilty. -> General: D  isplay/price tag will be an invitation to treat, NOT an unconditional offer.

Spencer v Harding : highest bidder not accepted General: An invitation to tender is NOT an offer. Call for tender: invitation to treat.

Invitation to tender ≠ offer

Tenders

Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council: invited to submit tenders for airport; application deadline by putting the form into the mailbox therefore held for the tender. -> T  here may also be an implied unilateral promise/offer to consider all tenders conforming to the requirements contained in the invitation. The circumstances to consider all conforming tenders: a) Invitation addressed to persons known to the invitor; b) Orderly procedure; c) At least one tender be considered. Lobley Co Ltd v Tsang Yuk Kiu -> Special:   If the invitation to submit tenders states that the tender satisfying certain conditions will be accepted, the invitation is a unilateral offer which will be accepted by whomever complies with its terms.

Obligation by tender

Obligations contained in terms of the invitation, accepted by making a conforming tender. City University of Hong Kong v Blue Cross (Asia-Pacific) Insurance Ltd: BlueCross wants to withdraw tender, BC wins however for Cityu's breach of informing them of error in application. -> W  here an invitation requires the tenderer not to amend or withdraw the tender for a certain period of time, the tenderer will be contractually obliged to comply.

Pay v Cave -> General: An offer may be revoked at any time before it is accepted.

Before acceptance

Revocation of offer

Byrne & Co v Leon Van Tienhoven & Co -> Special: A  revocation of offer is not effective unless and until it is actually communicated to the offeree. Dickinson v Dodds : informed by 3rd party of revocation, sufficient even not self. -> Not necessary that the offeror should be the party to have communicated the fact to him. A promise not to revoke an offer or to keep it open until a certain time (an ‘option’) will be contractually void unless supported by consideration. General: Impossible to notify revocation of the offer to every offeree individually.

Unilateral offer

Shuey v United States -> It seems likely that u nilateral offer may be revoked where revocation is published in the same fashion as the offer. General: O  ffer can be revoked at any time before acceptance.

Partly completed act

Subsequent inconsistent offer

Lapse of offer

Errington v Errington and Woods -> Acceptance of a unilateral offer is made by performance of the requested act. Where the offeree has, to the knowledge of the offeror, embarked upon performance of the requested act, the offeror will not be free to revoke the offer unless the offeree leaves the act ‘incomplete and unperformed’. Pickfords Ltd v Celestica Ltd The offeror makes a subsequent offer, containing materially different terms = revoke the first offer.

Manchester Diocesan Council for Education v Commercial & General Investments Ltd : too late to accept an offer Yick Fung Garment Factory Ltd v Chan Mei Ying Lapse - NO offer -> An offer will lapse if a) the terms prescribe a deadline for acceptance, which has passed without an acceptance being made; or b) a reasonable person in the position of the offeror would interpret the offeree's conduct (or lack of conduct) as manifesting an intention to reject the offer.

⌦ Week 2 Acceptance ● Definition An acceptance is: an indication, express or implied, by the offeree made whilst the offer remains open and in the manner requested in that offer of the  offeree’s willingness to be bound unconditionally to a contract with the offeror on the terms stated in the offer.

Rejected offer ≠ later accepted

Lee Siu Fong Mary v Ngai Yee Chai: former lovers, claimed loans partly paid; N offer to pay some and deny others; L rejected; L sued to recover loans and failed. Held for N. Yick Fung Garment Factory Ltd v Chan Mei Ying : offer of employment rejected cannot later be accepted. -> General: T  he rejection of an offer will cause the offer to lapse so that it cannot later be accepted. [3-61] Counter-offer: Where the offeree responds to an offer with an offer of his own in non-identical terms to the original offer.

Counter-offer -> terminate original

Conditional acceptance

Hyde v Wrench: bargaining means rejecting the 1st offered price. Shun Ho Energy Development Co Ltd v Golden Crown Industries Ltd : tenant bargain on landlord’s offer to renew tenancy, held no contract. -> General: A counter-offer operates to reject and automatically terminate the original offer in its entirety. It amounts to rejection of the original offer and once an offer is rejected, the offeree cannot revive it unilaterally. [3-64] Combi (Singapore) Pte Ltd v Winston Camera & Radio Co Ltd : accept offer but adding the D must do sth; held a counter-offer. Capacious Investments Ltd v Secretary for Justice : accept but reserve the right to claim interest from gov’s land compensation, not entitled later. Cathay Pacific Airways Ltd v Hong Kong Air Cargo Terminals Ltd : -> General: A conditional acceptance = (mostly) counter-offer with new terms. [3-67] Stevenson, Jacques & Co v McLean : requesting for info about selling iron. -> Special: a request for clarification or further particulars will NOT necessarily constitute a counter-offer.

Requested clarification; Statement of understanding ≠ counter-offer

Global Tankers Inc v Amercoat Europa NV : P repeated D’s offer not introducing new terms. -> Special: i f the addition to the expression, objectively interpreted, is merely a statement of the offeree’s understanding of the offer, the acceptance will be effective notwithstanding the additional material. Yau Fook Hong Co Ltd v Attorney General : gov accepted offer to surrender interests and suggested steps, acceptance effective. -> W  here an acceptance merely sets out steps or procedures that are

necessary to be followed in order to give effect to the agreement, it will not function as a counter-offer.

Standard forms

Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd: P offers to sell a machine tool, battle of forms; last is D’s reply as counter-offer, later accepted by P through acknowledgement in written contract. Manohar Chugh (t/a Electric & Electronic Industries) v OKA Electronics Ltd -> General: A  n acceptance is not effective until it is actually communicated to the offeror. Acceptance will be effective at the time and in the place it is received by the offeror. (fax) Entores Ltd v Miles Far East Corp: fax machines, contract made where received Brinkibon Ltd v Stahag-Stahl und Stahlwarenhandelsgesellschaft mbH : acceptance sent by telex where received. Susanto-Wing Sun Co Ltd v Yung Chi Hardware Machinery Co Ltd : fax from TW to HK, acceptance from HK to TW; contract effective in TW. -> General: An acceptance is not effective until it is communicated to the offeror; effective at  the time and in the place it is received by the offeror.

Communication of acceptance

(electronic) General: A  cceptance by email and other modes of electronic communication is effective at the time and in the place the message is received by the offeror. Place: An email message is received when it is accepted by a designated information system such as an email server (where the offeror has designated that information system for the purposes of receiving emails). Time: Acceptance is received at the time when it comes to the offeror’s knowledge (offeror’s place of business, or at his ordinary place of residence). (postal) Household Fire and Carriage Accident Insurance Co Ltd v Grant Holwell Securities Ltd v Hughes -> General: W  here reasonable persons in the position of the parties would have anticipated that the postal service would or might be used to communicate acceptance, communication of acceptance is deemed to be effective at the time and in the place the message of acceptance is placed into the care of the postal service in the customary way. (waiver of communication) Carlill v Carbolic Smoke Ball Co -> The offeror may expressly or impliedly waive his right to receive notification of acceptance. In a unilateral offer (a promise to the public), offeror’s right to receive notification of acceptance is waived and performance of requested act is sufficient to conclude the agreement.

-> General: The offeror may prescribe a particular method of communicating acceptance, and failure to accept in the way prescribed will generally render the purported acceptance ineffective.

Prescribed means of acceptance

Manchester Diocesan Council for Education v Commercial & General Investments Ltd : indicated intention for acceptance communication; not stating alternatives not effective; thus alternative no less advantageous and acceptance made. -> Special: H  owever, unless it is made clear that no other method is acceptable, then communication by any other means that are no less advantageous to the offeror will suffice. Silence ≠ prescribed means Felthouse v Bindley : “if I hear no more, I consider I have bought it.” no actual sale concluded and acceptance not expressed. -> General: The offeror may not impose an agreement on the offeree by prescribing that silence will be construed as acceptance. Rust v Abbey Life Insurance Co Ltd: insurance company, application, policy document and silence for a long time. -> Special: There may be exceptional circumstances in which the offeree’s silence may amount to acceptance. Brogden v Metropolitan Railway Co Pickfords Ltd v Celestica Ltd : intention to accept the offer It is possible for an offeree impliedly to accept an offer (or a counter-offer) by conduct provided the conduct comes to the attention of the offeror.

Acceptance by conduct

Objective test -> General: A  contract will thus be implied from conduct where a reasonable person, having regard to all the facts and circumstances of the case, would regard the parties’ conduct as amounting to a communicated offer followed by a communicated acceptance. Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd : Madam Sung -> Special: An apparent exception to the objective principle arises where the offeror knew that the offeree did not actually intend by his conduct to accept the offer. The objective test does not apply in favour of a party who knows the truth.

Acceptance in ignorance of offer

Koo Ming Kown v Next Media Ltd Taylor v Allon: did not know the existence of an offer -> General: An acceptance in ignorance of an offer canNOT create a contract since the parties must reach an agreement. (unilateral contract) -> General: In unilateral offers, if a person performs the requested act

without knowing the offer, although the offeror has received what he requested, it was not the result of any agreement - no consensus ad idem. Williams v Carwardine: decided to tell who the murderer is based on other motives, always aware of the offer. R v Clarke: rewards for murderer, always know the identity but told until was under false charge himself. -> Special: If the offeree was  aware of the offer at the time of performing the requested act, it is irrelevant that the offeree’s performance was motivated by considerations other than the offer.

⌦ Week 3 Certainty of terms Agreement of Essential items

Basic rule: a) parties settle all terms essential to the agreement’s performance; b) if any of the essential items cannot be ascertained, the contract will be void for uncertainty. Re Estate of Kong Wing Hong: f ailed to specify the commencement date of the lease agreement Chan Man Tin v Cheng Leeky: in cohabitation, ill-defined “Chastity, loyalty”, therefore not contractual May and Butcher Ltd v R Fact: the Liquidation Commission to sell surplus material used in war to Butcher;

⌦ Week 4 Intention 合約意圖 Animus contrahendi: an intention to be contractually bound. The critical question does not lie within the nature of the relationship, but whether the matter is essentially domestic/social in nature. Sun Er Jo v Lo Ching:  no contract grounds for mother’s compensation raising a child. Presumption against intention

General rule: Family arrangements/agreements between close family members are rebuttably presumed not to be legally binding unless a clear intention to the contrary is shown. Balfour v Balfour : couple, allowance in case of divorce.

Married couples

Estranged couples

Other family relationships Domestic Agreement

General rule: Parties did not intend their agreement to create contractual relations. Court refuses to regard the private dealings between married couples as material suitable for interference by the State. Merritt v Merritt: couple in separation Special rule: estranged couples agreements are legally binding. Jones v Padavatton: no contract rule applies to mother and daughter, lack of contractual clarity General rule: same principle applies for parents and offspring. Ma Chi Wing Wendy v Estate of Ma Vincent Fong Huen v Anthony Wong

Non-domesic subject matter

Yang Foo-Oi v Wai Wai Chen: Agreements that are essentially commercial are not subject to the presumption against contractual intention. Special rule: Agreements between family members are still subject to the presumption against contractual intention —> whether the matter is domestic in nature. Parker v Clark: two couples living together, disposal of old home for entitlement of a new residence. Legally binding even when the matter is domestic in nature.

Special Rule Special rule: courts are reluctant to hold lack of contractual intention or insufficiently certain agreement when: consequences of non-performance are serious; Agreement is substantially executed. Special:

Parker v Clark

Partly performed agreements Agreement to marry Presumption against intention (General) Social Agreement

Special rule: Some executory agreements (lack of contractual intention, uncertain of terms) are enforceable once partially executed by one party. An agreement to marry not enforceable as a contract. Coward v Motor Insurers Bureau: General rule: Presumption against an intention to create legal relations for social agreements Wu Chiu Kuen v Chu Shui Ching: two buying lottery and equally contributed

Rebuttal (Special)

Special rule: reasonable persons in the position of the parties would have intended their arrangements in social settings to create legally enforceable obligations. New World Development Co Ltd v Sun Hung Kai Securities Ltd General rule: Parties reaching an express agreement of a commercial character presumed to intend it to have legal effect unless the contrary is shown. Edwards v Skyways Ltd: ex gratia payment. Clear language indicating legal intention is needed

Presumption (General)

Ma Ip Hung v Lai Chuen: contract already formed. Legal relations when parties have signed a contractual document. Baird Textile Holdings Ltd v Marks & spencer plc If the parties have settled with sufficient certainty all the essential terms, not displacing the presumption. World Food Fair Ltd v Hong Kong Island Development Ltd If essential terms not expressly settled, contractual intention will be inferred from the parties’ conduct (reasonably explained by an essential term agreed but not expressed).

Commercial agreement

Rose and Frank Co v JR Crompton and Brothers Ltd: agreement to be sole manufacturer Special rule: Expressed negation of intention in jurisdiction of the courts Rebuttal (Special)

Union Insurance Society of Canton Ltd v The Hong Kong Land Co Ltd : selling building and changed the name Rule: Stipulation that any agreement reached is subject to a formal contract will defeat contractual intention, even where substantial performance has occurred.

Letter of comfort

Definition

General Rule

Definition

A tool of commerce developed to provide an alternative to a guarantee or surety. Usually a parent company does not want to incur legal liability. Issue of letter of comfort is NOT one of contractual intentions. A labour union to enter into a collective agreement with an employer or an association of employers on: - Employment-related benefits - Certain procedures in dealing with matters for conditions of payment Cable & Wireless Ltd Staff Association v Hong Kong Telecom International : labour union, procedural agreement Hong Kong Aircrew Officers Association v Cathay Pacific Airways

Collective Labour Agreement General position

General rule (English common law): C  ollective Labour Agreements are presumed not to involve an intention to create legal relations. Hong Kong - expert testimony to reach the conclusion that the local climate of opinion was against the contractual force of collective agreements. A manifestation of the common law’s transformation.

⌦Week 5 Consideration (Chap 6) 對價/代價 Nudum pactum: A promise/agreement without consid...