Entire Module Notes and Summary for Contract Law PDF

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ENTIRE Module Notes and Summary for Contract Law!!!Part ONE – Formation of a ContractContract Law Lecture Notes:Formation of a ContractLaw of obligations?Simple description of a contract - promises that parties express to one another, and the trust that it'll be fulfilled. A meeting of minds - they ...

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ENTIRE Module Notes and Summary for Contract Law!!!

Part ONE – Formation of a Contract Contract Law Lecture Notes: Formation of a Contract Law of obligations? Simple description of a contract - promises that parties express to one another, and the trust that it'll be fulfilled. A meeting of minds - they agree on a certain transaction etc.

Prevention and Resolution Contracts prevent disputes, or they will be avoided. "It can be said with only a little exaggeration that the principal purpose of making contracts is to avoid the need to rely upon the law of contract." (H. Collins) It is worthy to note – in exams you can back up your arguments with evidenced works. In these notes, an important person to note is Treitel, his definitions for the stages of a formation of a contract are very helpful and make the concepts easier to understand.

Formation of a Contract Offer, acceptance, consideration, intention

How Tretiel defines an ‘Offer’ "an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed", the "offeree". In other words - an offer is a statement of terms of a contract to which the offeror is bound to.

Relation to Key Case Law Offer - Taylor v Brewer Claimant sold lottery tickets, if he sold a certain amount, he was told he'd be paid extra. He fulfilled his obligation and they said that they were not going to pay him anything. 1. Pay what he earned. 2. Don't have to pay him extra as his work wasn't worth anything. 3. Don't pay him anything. This case shows us that we have to know what is being offered (not always just a price).

Bilateral vs. Unilateral offers Bilateral - an exchange of promises took place (such as in Taylor v Brewer!)

Unilateral - only one promise was made, and there is no expectation for the other party to make a promise in return.

Case example - Carlill v Carbolic Smoke Ball & Co. Smoke balls supposedly prevented illnesses. The company advertised this product with a reward, that if you got sick after using this product and could evidence purchase, you would get £200 in return. The company said that they didn't actually mean to offer the reward, but used it as an exaggeration to show how 'good' the product was. This was a unilateral promise, as the conditions under which the reward was listed was serious enough, as they mentioned bank deposits, which showed intention to fulfil a promise.

Offers: Gibson v Manchester City Council and Storer v Manchester City Council Both cases involved the selling of council houses. Gibson - communication stated that they "may sell him" the house. Although in the brochure he left the price empty as he wanted to negotiate the price. There was a change in Government so they could no longer sell the house to him. This angered Gibson as he believed they had a contract where he would be sold the house. This case went to the Supreme Court. Lord Denning argued that the use of exchanging promises is outdated and there should be more empasis on agreement when making a contract. Appealed to the House of Lords which drew emphasis on the wording. The fact that they said "may" made it so there was no contract in this case. Storer - communication stated that if he sent back the documents, they "will sell him" the house.

Invitation to Treat vs Offer: Clifton v Palumbo and Harvey v Facey Sale of real estate. Sale of land is complex that needs certain conditions to be set. They only set the price so this was not sufficient. An invitation of the price that the other party asked for.

Grainger & Son v Gough - wine merchants from outside the UK sold in the UK by sending lists that you would tick off if you wanted that corresponding wine. Since they were selling in the UK, they had to pay taxes. If you offer wine for sale in the UK, you are also entitled to pay tax, which they weren't. They claimed they weren't offering things directly, but inviting people to make an offer to buy the wine. They argued it couldn't be an offer as they had the ability to not send everyone who asked to send the wine as they might sell out. 'Subject to availability'.

Fisher v Bell - a man displayed flip knives in the window, which is prohibited in law. He didn't put a price so he stated it was "an invitation to treat". PSG v Boots - Boots were displaying medicine, which they did sell with advice on the sell, whether you fulfilled the requirements etc. But it was an issue as anyone would pick up the product which they could argue means they must have it sold to them as it can be seen as Boots making an offer.

Dickinson v Dodds - can you change your mind? Dodds had a house for sale, but agreed to give real information to Dickinson on Friday. On Thursday, Dodds found another buyer. Dodds tried to tell Dickinson that he had found another buyer and had to tell his agent. - This shows us that offers can be revoked, especially if they never particularly agree to the sale. It didn't matter that Dodds made the promise to keep the offer open, as his promise was not enforced. - This was a BILATERAL offer.

Errington v Errington - said his children can live in the house once the mortgage is paid. They couldn't pay the whole mortgage before the father died. It wasn't enforceable after the father died, but they argued that because they started performing the contract's promise. It was stated that parties must be given a reasonable chance to fulfil the promise once the performance has started.

Daulia v Four Milbank Nominees - furthered this. Luxor v Cooper - agent went to look for buyers, and was supposed to be paid commission for looking for the seller. The seller revoked his sale an stated that he believed the agent wasn't entitled to pay on the basis that he wasn't selling anymore. They decided that he didn't put much effort into his promise and it wasn't of any risk to him, so the promise could be revoked.

How to Define Acceptance “expression of willingness to contract on specified terms made with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed”. An offer must be: (1) clear and certain, (2) communicated and (3) must show intention to enter into a legal relationship (objectively ascertained). This is taken from TRETIEL. In other words, when willingness is expressed on the terms of the contract, parties are legally bound when acceptance has taken place. For acceptance to be valid, the offer has to be clear and certain, well communicated and there must be intent to enter legal relations.

Acceptance Recap – How it is defined When willingness is expressed on the terms of the contract, parties are legally bound when acceptance has taken place. For acceptance to be valid, the offer has to be clear and certain, well communicated and there must be intent to enter legal relations.

Key Case Law Felthouse v. Bindley - an uncle tried to purchase a racehorse from his nephew. The uncle offered money and said if he didn't hear back from his nephew then he accepted the offer. Held - you cannot presume acceptance. You cannot rely on the silence of the other party to presume the item in question is yours.

Counter/Offer & Request for more Information What is a Counter Offer? A counter offer is an offer made as a response to a previous offer by a party during negotiations for a contract. The effect of a counter offer rejects the inital offer, and requires new acceptance (see above) under the terms of the counter offer, otherwise there is not a contract.

What is a Request for More Information? A request for information is NOT a counter offer. If the other party requests information, original offer stands, and the other party has neither accepted or rejected the offer.

Key Case Law Hyde v. Wrench - offer to sell land for £1,000. The buyer tried to negotiate for £950, and the seller disagreed. The buyer then agreed to pay the full price, but by then the seller had already sold the land. The buyers argued that because they were offered to buy for £1000 that they shouldn't have sold the land. However this was wrong as their negotiation was a counter-offer. The sellers were not unlawful in selling off the land to another buyer.

Agreement Butler Machine Tool v. Ex-Cell-O Corp. - discussed the price of a particular machine. The seller operated on the basis of their standard terms and conditions, with a price variation clause (If they're making something out of raw materials, and the price goes up, the cost of the machine increases accordingly). This was not in the contract, but in the terms and conditions. This clashed as offers and acceptance must match. The buyer and seller's terms did not match, so there was a battle of the forms.

RTS Flexible v. Molkerei Allois Mueller GmbH - Muller ordered a machine for a factory. In a document, it stated that it was subject to contract (the parties are not sure about the contract yet, a disclaimer). The machine was purchased and installed, but the contract wasn't officially there. The courts stated that the document suitably took place of an actual contract, because the fact that the machine was bought and installed showed that there was an agreement in place.

Objectivity Understanding the standard of an Ordinary Reasonable Person, and how that ORP would react in the same/similar circumstances. 

Detached Objectivity

In this circumstance the reasonable person is in the position of a third party, independent to the promisor and promisee. 

Promisor Objectivity

This means that the promise (offer OR acceptance) is taken from the ORP standing in the position of the promisee. 

Promisee Objectivity

This is from the view of the ORP in the position of the promisee. Smith v. Hughes - Race horses can only eat old oats. The buyer had a stable of horses. The seller sold their oats to the buyer, and told them that it was old oats when in fact they were new. The buyer bought bags of new stock which he was then stuck with. The case stated that agreement must rely on if an ordinary reasonable person would think the same thing.

Agency Having someone sell a product for you, so the original supplier/manufacturer doesn't actually have any input in the sale. You need at least 3 parties for agency.

Auctions Harris v. Nickerson - both advertised for an auction. The advert listed specific items. A buyer travelled down to get the items in question, and they weren't actually being sold. The buyer wanted to be reimbursed for travel fees because the sellers made a promise that he accepted after seeing the advert. He treated the advertisement was a unilateral offer. Instead, the advert was an invitation to treat. In an auction, you never know for certain if you will get a certain item. The auctioneer is also only an agent for the selling. Warlow v. Harrison - an advertisement stated an auction for a racehorse without reserve (no minimum price stated by the seller. The seller cannot bid on the item themselves). As the seller couldn't by themselves, the advertisement was seen as a unilateral offer. The seller tried to increase the price by bidding against him even though it wasn't allowed.

Tenders A tender is an offer to do or perform an act which the party offering, is bound to perform to the party to whom the offer is made. A tender may be of money or of specific articles; these will be separately considered. Harvela Investments v. Royal Trust Company of Canada - shares from the RTCC were put on sale on a tender. Harvela was one of the bidders, and another bidder made a lower bid but made a referential bid (a promise that if someone went above them, they'd pay £100,000 over that specific bid). It was found that it was a unilateral offer if they made a referential bid, it meant the highest bidder wasn't rewarded. The bidders payed damages. Blackpool & Flyde Aero Club v. Blackpool BC - on a deadline, Blackpool submitted a bid to a tender at the last minute, so it wasn't accepted until a day over the deadline. The question was, did the one who gave the tender have to consider the bid that was over the deadline? It was found that they made a unilateral promise that they would at least consider the bid if it was submitted before the deadline, which it technically was.

Uncertainty and Incompleteness Hillas v. Arcos - agreed to purchase timber of a fair specification (unspecified). The party had previously delivered timber so it was in question if this prior knowledge was enough. As long as the court can fill in the gaps and interpret the case, it's fine. Scammel and Nephew Ltd. v. Ouston - someone was buying a new lorry in exchange for their old lorry. The courts said that there was no 'standard term of higher purchase agreement', which meant that the contract wasn't enforced, therefore not recognised as a contract. If there is a lot of uncertainty, a contract cannot be enforced and isn't seen as a contract. s.8 Sale of Goods Act 1979. Walford v Miles - Miles had a photo company that they were selling. Walford encouraged Miles to include a pre-contractual agreement that included a lock-in (that they will continue to negotiate) and a lock-out (that you cannot negotiate with any other parties) clause. The courts found that these clauses were not enforceable as they could not lock-in in 'good faith'. The idea of 'good faith' is repugnant to the English legal system, and that it's impossible to not argue over negotiation of a contract. The lock-in was also too uncertain as there were no deadlines etc. Pitt v PHH Asset Management Ltd - lock-out agreement was enforced as there was a deadline stated. Petromec v Petroleo Brasiliero SA - lock-in agreement was recognised as an oil supply contract was being negotiated. The involved law firms negotiated the precontractual agreement in minute details which meant that the courts knew what to expect from the parties, their obligations etc. This is a very exceptional case!

Intention to Create Legal Relations Commerical - you presume there was intent. Blue v. Ashley - in a pub, over drinks, 2 men discussed the sale of shares in Sports Direct. The other party agreed to pay £50mil over laughter and drinks. The price was raised, but only by £1mil. They tried to claim for the ither £49 mil, but the courts argued that the context of this agreement meant that there was no real intention to create legal relations.

Consideration of a Contract Purpose of Consideration? In the simplest of terms - getting something in exchange of another thing. Consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. In a contract, one consideration (thing given) is exchanged for another consideration.

Three Valuable Explanations ‘Consideration means something which is of some value in the eye of the law, moving from the plaintiff; it may be some detriment to the plaintiff or some benefit to the defendant, but at all events it must be moving from the plaintiff.’ (Thomas v Thomas (1842) 2 QB 851) ‘A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment loss or responsibility, given, suffered or undertaken by the other.’ Currie v Misa (1875) LR 10 Exch 153 ‘An act or forbearance of the one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.’ Dunlop v Selfridge [1915] UKHL 1

Sufficiency and Adequacy Thomas v Thomas - consideration has to be sufficient, but not adequate. A woman was able to live in a house because her husband wanted it, and was paying a mere £1 a year for maintenance. This was seen as valid consideration. Chappell v Nestle - Nestle offered that if you sent 6 wrappers from their chocolate bars, you could get a record worth 6 shillings for only 1 shilling. The question was, what was the real value of the record? 1 shilling and 6 wrappers shows that the wrappers were part of the price (value), therefore part of the consideration.

Something of Value White v Bluett - feelings and affection are usually not seen as good consideration. You also must give up a certain legal right to have it seen as consideration. A son had debt to his dad and the dad said "if you stop complaining, I won't chase up the debt". The father then tried to ask for the money afterwards. The courts found that the son legally didn't have a right to complain to his father so this didn't count as consideration. Hamer v Sidwey - An uncle asked his nephew to stop drinking, smoking, gambling etc. The uncle promised money to his nephew if he turned 21 with good behaviour. He turned 21 and the uncle refused to give money but the courts found that there WAS consideration here which was certain enough to be enforceable. He gave up his right to drink etc. so he could claim back from his uncle. The Atlantic Baron - Shipping case. A tanker was being constructed and the price was being discussed. One of the parties claimed that their consideration was that they promised to keep amicable relations with the other party, aka to stay 'good partners'. This wasn't seen as valid consideration. Upholding a good business relationship does not count as consideration in the eyes of the law. Public Duty Denney v Reppert - a bank robbery offered a reward for any information on the robbers. During the interviews with police, they gave enough statements to catch the robbers. The bank employees said that because their statements let them catch them, they should be entitled to the money. However the police argued that it was their public duty to comply with the police, and the courts agreed. This therefore didn't count as valid consideration. You cannot be rewarded for performing a public duty. Glasbrook v Glamoran - Announced a mining strike (violent). The mine owner was worried and called the police for protection, and offered them a lot of money. Later on they tried to claim the money, but the mine owner refused and said it was their public duty to protect them. The court said that if they had gone above and beyond their duty (e.g. personal protection or sending more people), then this could be seen as valid consideration. Duty to a Third Party Shadwell v Shadwell - A nephew got engaged, and his uncle said he'd give him money once he married. He got married, but the uncle had died. When sorting his estate, the people in charge of his assets said that there wasn't valid consideration as it wasn’t written down and the engagement was already promised by being engaged in the first place. It wasn't a detrimental act so it can't amount to valid consideration. The Eurymedon - the seller and consignor had a contract, wherein the consignor was exempt from responsibility if anything were to be damaged during shipment. The consignor hired carriers, and the goods were damaged during offloading by the Stevedores. They tried to use the exclusion of liability clause, but it was only for the seller and consignor, not for a third party.

Stylk v. Myrick - 2 sailors deserted a ship. The captain was worried that the rest of the crew would follow, so the captain said he'd pay them extra. Once they'd agreed and sailed, he refused to pay extra. The courts said this didn't count as consideration because the sailors didn't give the captain anything extra in return so they aren't entitled to more money. Hartley v Ponsonby Williams … - a contactor was behind schedule. They said that if they wanted them to finish on time, they'd need to pay extra. The hirers couldn't find another contractor so short notice so they agreed. This was seen as valid consideration. Foakes - overpayment of a debt. They couldn't pay so offered instalments, the other party agreed. When it was payed off, they claimed they were entitled to interest. The courts said there was no valid consideration because there was no practical ben...