LAWS6021 Principles of Contract Study Notes Week 1-7 PDF

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Download LAWS6021 Principles of Contract Study Notes Week 1-7 PDF

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LAWS6021 Principle of Contract

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

Principle

General Rule

Authority

Case Description

Offer

Not every reply to an inquiry will constitute an offer

Harvey v Facey

Ads =/= offer, are invitation to treat

Partridge v Crittenden

Ads = unilateral offer (Special rule)

Carlill v Carbolic

“Will you sell us Bumper Hall Pen? Telegraph lowest cash price” “Lowest price for Bumper Hall Pen £900” Putting sale of birds on advertisement which was illegal, but then it was only invitation to treat Housewife read ad “use 3 times a day for two weeks would prevent colds & influenza, deposited £1k to show sincerity” and used accordingly then contracted disease and sued for £100. ABTA offered scheme of travel protection. The tour operator of the defendants had the notice about the scheme in their offices and customers booked the holidays, they were not aware that the scheme was no longer available. Customer sued for damages, successful. Drugs need pharmacist presence before anybody can buy. Boots displayed them and people grabbed and paid without pharmacist present. Council sued no pharmacist at store. Blackpool Aero Club submitted tender for airport operations but tender missed deadline becoz’ of town’s clerk error. Aero club sued council for breach of contract, held that there wwas no contract as tenders were invitation to treat. But also held that there were breach of contract to be considered equally. Tenderer wrote on tender to give notice for wrong terms in submission. City U did not give notice for wrong $$ submitted by Blue Cross. Held for defendant.

An expression by one person or group of perrsons, 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."

Bowerman v Association of British Travel Agents Ltd

Shop display =/= offer, are invitation to treat

Pharmaceutical Society v Boots Cash Chemists

Tenders are invitation to treat rather than an offer

Blackpool & Fylde Aero Club v Blackpool Borough Council

Obligations contained in terms of the invitation, accepted by making a conforming tender.

City university v Blue Cross

Offer may be revoked before it is accepted Offer may be revoked before it is accepted, special rule, becoz’ Where the offeree has, to the knowledge of the offeror, embarked upon performance of the requested act

Pay v Cove Errington v Errington and Woods

LAWS6021 Principle of Contract

Principle

Acceptance Definition of acceptance = an indication, expressed 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 state in the offer – Halsbury’s Law of Hong Kong, Vol 18, 2nd ed, 2020 reissue

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule

Authority

Offer will lapse if the terms prescribed a deadline for acceptance, or a reasonable person will interpret the offeree’s conduct as manifesting intention to reject offer

Manchester Diocesan Council for Education v Commercial & General Investment Ltd (MDC v CGI)

There can be no agreement and therefore no contract unless an offer has been accepted Rejected offer cannot be accepted later

Tinn v Hoffman & Co

Counter offer = rejected offer

Shun Ho Energy v Golden Crown

Conditional acceptance = counter offer with new terms

Cathay Pacific v Hong Kong Air Cargo Terminal Capacious Investments Ltd v Secretary for Justice

Requested clarification; Statement of understanding =/= counteroffer Communication of acceptance – will be effective at the time and in the place it is received by the offeror. **Fax

Communication of acceptance – postal Where 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 communication of acceptance (Special rule)

Prescribed means of acceptance – the offeror may prescribe specific mean to communicate acceptance but (Special rule) unless it is made clear that no other method is acceptable, then

Lee Siu Fong Mary v Ngai Yee Chai

Stevenson, Jacques & Co v McLean Entores v Miles Far East Susanto-Wing Sun Co Ltd v Yung Chi Hardware Machinery Co Ltd Household Fire and Carriage Accident Insurance Co Ltd v Grant

Case Description

Former lover, Lee claimed loans to Ngai, Ngai offered to pay part, Lee rejected. Lee sued Ngai to recover loan, unsuccessful. Tenant bargain on landlord’s offer to renew tenancy, held no contract

Accept offer for remuneration of land but reserve the right to claim interest from gov’s land compensation, not entitled later. Requested info to sell iron Fax machine, contract made when machine received Fax from TW to HK, acceptance from HK to TW; contract effective in TW.

Holwell Securities Ltd v Hughes

Carlill v Carbolic

MDC v CGI valid offer even not prescribed means of acceptance, and even after a couple of months

In a unilateral offer (a promise to the public), offeror’s right to receive notification of acceptance is waived MDC offered to sell property, CGI submitted tender and MDC accepted. Instead of sending acceptance to designated email

LAWS6021 Principle of Contract

Principle

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule communication by any other means that are no less advantageous to the offeror will suffice. Silence =/= acceptance

Silence = acceptance (Special Rule) Acceptance by conduct Acceptance by conduct (Special Rule) – the offeror apparently knew that the offeree did not intent to accept offer Acceptance ignorant of offer cannot create contract Acceptance aware of the offer when performing the requested act

Authority

Felthouse v Bindley

Rust v Abbey Life Insurance Co Ltd Brodgen v Metropolitan Railway Co Shanghai Tongji v Casil Cleaning Koo Ming Kown v Next Media R v Clarke

Williams v Carwardine

Certainty of Terms / Agreement on essential terms

Contract will be established only when there is consensus ad idem (meeting of minds), and contract may be void for uncertainty if any technique to revive or recognize terms is unsuccessful

Contract may be void for lack of certainty of terms

May & Butcher v R

Technique to recognize agreed but maybe unexpressed terms – Agreed Mechanism

Walford v Miles No contract coz’ of open-ended terms

Technique – Contextual Construct (subsidiary to a main contract etc.)

Hyundai Engineering v Vigour

Case Description address, MDF sent acceptance to CGI solicitor after a couple of months. Valid offer. “if I hear no more, I consider I have bought it.” No actual sale concluded and acceptance not expressed. insurance company, application, policy document and silence for a long time. Railway company did not sign contract but stored in drawer for 8 months

did not know there is a contract w Koo Did not tell identity of murderer until he was falsely charged, he always knew there was an offer Decided to tell who the murderer is based on other motives, always aware of the offer.

May & Butcher wanted to buy surplus tentage from Disposals Board. The Board agrees to sell (and May & Butcher agree to purchase) all old tents, but price and dates on which payment will be made shall be agreed on by the parties as the tents become available and all disputes will be submitted to arbitration. Held that agreement to agree on price is not contractually binding. Miles wanted to sell company to Walford and Walford was to obtain comfort letter from bank while Miles agreed not to sell to third party. Miles eventually sold to third party and Walford sued for breach of “lock-out” agreement. Held that there is no contract becoz’ lock-out agreement contained openended terms. Vigour made an agreement with Hyundai to suspend reference to arbitration, Hyundai wanted to continue arbitration. Held that

LAWS6021 Principle of Contract

Principle

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule

Authority

Technique – Prior dealing

Hillas v Arcos

Technique – Post-contractual conduct

New World Development v Sun Hung Kai Securities

Technique – Post-contractual conduct (Special Rule)

World Food Fair v Hong Kong Island Development No contract becoz’ of uncertainty of terms

Case Description agreement to suspend arbitration unsuccessful becoz’ they are only “agreeing to agree”. Hillas bought 22k units of timber from Arcos and agreement also contained option to buy up to 100k units the next year at a discounted rate of 5%. Arcos decided not to sell becoz’ of uncertainty of terms. Held valid contract as all terms were certain and worded exactly the same as initial agreement. Oral contract of joint venture, SHK paid NWD to be part of the JV but opted out after a while, alleged that any agreement reached was so uncertain or incomplete that it could not in law constitute an enforceable contract. But SHK made substantial contributions to NWD in accordance with the oral agreement. WFF wanted to lease space at TST shopping mall for food court, paid deposit and started renovating before any contract has been signed. Held no contract as no start date / rent-free dates.

Technique – Implied terms Special Rule: where the parties to a contract for sale of service/good in HK have made no agreement as to price (no mechanism or fixed price), where parties have not agreed to agree a price, agreement may be render certain by a term implied by legislation (what constitutes reasonable charge is question of fact determined by court for the service s7(2) or goods s10(2). s7(1) Supply of Service (Implied Terms) Ordinance Cap. 457) “Where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, is not left to be determined in a manner agreed by the contract or is not determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge. s10(2) Cap. 26 Sale of Goods Ordinance: Where the price is not determined in accordance with the foregoing provisions, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case “Usual conditions of acceptance” a Meaningless term will not cause an agreement to be void if the Nicolene Ltd v Simmonds remainder of the contract is workable without the term meaningless phrase but contract could be severed from rest of agreement.

LAWS6021 Principle of Contract

Principle

Contractual Intention // Presumption against Contractual Intention in Domestic Agreement

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule

Authority

Case Description

Non-essential Term

iRiver v Thakral

Thakral already selling other MP3 brands when iRiver come to agreement and requested Thakral to sign an exclusivity agreement. Thakral did not sign and sold other brands. iRiver sued Thakral for breach of contract, Held no contract there.

Parties to an agreement between close family members or friends do not intend their agreement to be contractually binding; and the responsibility of rebutting the presumption lies with the party seeking to establish contractual intention Rebutting Presumption factor – the agreement’s express terms

Sun Er Jo v Lo Ching No contractual intention

Mother sued 5 adult children for breach of trust and wanted to claim expenses in raising children. No contractual intention

Balfour v Balfour No contractual intention

Husband promised to pay wife £30 per month allowance. Wife sued husband to enforce the promise.

Snelling v Snelling Yes contractual intention

Brothers together started business, one opted out but contract said withdraw from business will forfeit $$. Brother sued to get his $$ back, not successful Daughter and son-in-law promised to help mom negotiate higher price in property compensation RMB 3M, and in return son-inlaw gets some $$ back. Mother promised to pay allowance and give house to daughter, if daughter moved from US to London. But no formal contract and any formality. Daughter not successful in getting the house. Mr. Merritt & Mrs. Merritt in process of divorce, Mr. Merritt promised to give Mrs. the house after Mrs. paid all mortgage.

Rebutting Presumption factor – subject matter of the agreement (price or large amount)

Ho Lai King v Kwok Fung Ying Yes contractual intention

Rebutting Presumption factors – certainty of the agreement

Jones v Padavatton No contractual intention

Rebutting Presumption factor – parties at the time when the agreement was made were not at amicable relationship

Merritt v Merritt No contractual intention Balfour v Balfour Jones v Padavatton

Rebutting Presumption factor – subsequent conduct

Parker v Clark Yes contractual intention (becoz’ niece sold her own house)

Jones v Padavatton were on good terms when agreement was made Parker (elderly couple) invited Clark (niece couple) to move into their house to take care of the elderly, in return the niece couple will

LAWS6021 Principle of Contract

Principle

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule

Authority

Case Description

Ho Lai King v Kwok Fung Ying

get the house after they passed away. Niece sold their own house but then elderly broke into poor relationship and decided to kick them out and not give them house. Niece successful in claiming house. Niece has no house to live in

Rebutting Presumption factor – consequences of the agreement for the parties Rebutting Presumption factor – Reliance

Parker v Clark

Parties reaching an express agreement of a commercial character are presumed to intend it to have legal effect, unless the contrary is shown; and the responsibility of proving no contractual intention lies with the party asserting no legal effect.

New World Development v Sun Hung Kai Securities Yes contractual intention

Rebutting Presumption factor – Expressed negation

Rose & Frank v J R Crompton No intention

Rebutting Presumption factor – Subject to contract

Union Insurance v Hong Kong Land No intention

Letters of Comfort

Issue of a letter of comfort is not one of contractual intention

Bouygues SA v Shanghai Links

Consideration Agreement without consideration (or ‘price’) is a naked agreement Nudum pactum

A valuable consideration consists of either some rights, profit, interest or benefit accruing to one party; or any forbearance, detriments, loss and responsibilities given, suffered, or undertaken by the other. Consideration element – consideration must contain either new benefit to the promisor, or new detriment to the promise (in any format not only limited to monetary)

Currie v Misa

Contractual Intention // Presumption for Contractual Intention in Commercial Agreement

Ma Chi Wing Wendy v Estate of Ma Vincent Yes contractual intention

Dunton v Dunton 1892 valid consideration = promise to perform & surrendering liberty Bainbridge v Firmstone consideration = Bainbridge parting with his boiler

Wendy and older brother agreed to contribute $18kHKD rent to care for their mom, brother died so Wendy sued brother’s estate for rent. Wendy relied on agreement to pay for her mom’s expenses Oral contract of joint venture, SHK paid NWD to be part of the JV but opted out after a while, alleged that any agreement reached was so uncertain or incomplete that it could not in law constitute an enforceable contract US company agreed to sell paper goods to UK company, but agreement contains “not formal nor legal agreement”. During negotiation, it is stated that it “will be prepared to enter into written agreement”, so intention not to be bound until formal agreement Letter contained statement of facts, and no express promise of future conduct.

Couple divorced. Husband would pay wife £6 for her promise to conduct herself with sobriety and respectably / orderly manner. Firmstone promised to reassemble Bainbridge’s boiler after weight the boiler, afterward he did not reassemble. Bainbridge

LAWS6021 Principle of Contract

Principle

Agreement (Offer + Acceptance + Acknowledgement of acceptance + Certainty of Terms) | Contractual Intention | Consideration | Estoppel

General Rule

Authority

Pitt v PHH Asset (avoiding trouble) valid consideration

City Polytechnic v Blue Cross Insurance Consideration = Blue cross tender will be considered in a timely manner Hamer v Sidway Valid consideration as there is new detriment to nephew Consideration element – consideration must not be in the past (or in another way, consideration will not be considered valid if new term is added after the contract concludes)

Olley v Marlborough (past consideration, thus not contractually binding)

Lu Shang Chang v Kingroup (past consideration, thus not c

Past Consideration (Special rule) – Implied assumpsit 1) The act must be done at the promisor’s request 2) The parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit; 3) The subsequently promised payment or conferment of benefit must have been legally enforceable had it been promised in advance

Lampleigh v Brathwait Past consideration still valid consideration becoz’ of implied assumpsit Pao On v Lau Yiu Long Past consideration still valid consideration becoz’ of implied assumpsit

Case Description sued for damages, Firmstone said no consideration. PHH agreed to lock-out agreement (not to sell to third party) if Pitt agreed not to sue (even though there was “subject to contract clause” on papers). Then PHH sold to Miss Buckley. Wrong tender $ by Blue Cross but contract said tenderer needed to stick to their tender for 3 months. Blue Cross tried to withdraw but City Polytechnic sued. Blue Cross said no consideration. Uncle agreed to pay nephew $5k if nephew refrained from drink / swearing / using tobacco etc. until he became 21. Uncle died, nephew sued after he became 21. Olley (hotel guest) lost items from her room and sued hotel...