Contract Flashcards
What is included in agreement?
Offer and acceptance
What defines an offer?
- A willingness to be bound by the proposal which is agreed
2. Sufficient certainty in the terms of the proposal
What is an invitation to treat?
One party is inviting negotiation
What is a bilateral contract?
When one party makes a promise in return for a promise from another party
What is a unilateral contract?
A one-sided commitment.
A promise in return for an act
What happened in Williams v Cawardine?
Reward for information. Claimant knew but didn’t say until threatened. Still can claim reward.
What was established in Pharmaceutical Society of Great Britain v Boots Cash Chemist?
That goods on display are generally regarded as invitations to treat and not offers
What is an advertisement? (authority)
An invitation to treat
Partridge v Crittenden
When may an advertisement be an offer? (authority)
Advertisement of reward
Williams v Cawardine
What happened in Carlill v Carbolic Smoke Ball Co?
Newspaper ad stating £100 reward for set of instructions/. Advert was an offer to the world and wording waived need for communication of acceptance.
A unilateral contract
When is a sale complete at an auction?
At the fall of an auctioneer’s hammer
What is an invitation to treat in an auction?
When inviting for offers
What is an offer at an auction?
A bid - can be withdrawn before end of auction
What happens if auctioneer accepts bid?
Contract formed between bidder and owner of goods
What is a reserve price?
The lowest price that the auctioneer may accept for the lot
What is the authority for ‘without reserve’?
Barry v Davies: bid £200 for machines worth £14,000. Auctioneer refused to sell. Claimed £27,600 in damages.
Who do you sue if do not sell with ‘without reserve’?
The auctioneer
What occurs with tenders?
Request for tenders = invitation to treat
Tenders = offer
Business accepts the offer = bilateral contract formed
What is the authority for tenders?
Blackpool & Flyde Aero Club: Aero club sued for breach of an implied promise that they would be considered. Successful
What 3 ways are there for termination?
- Revocation - withdrawal of offer by offeror
- Rejection by offeree
- Lapse of time
What is the general rule for withdrawal of offer?
As a general rule, an offer can be withdrawn any time before acceptance. However once it has been accepted, it is irrevocable
How must you withdraw an offer? (authorities x2)
Must be communicated effectively
Byrne v Tienhoven & Co -withdrawal took effect on receipt
Routledge v Grant - letter saying offer open for 6 weeks. Another offer revoking. This was effective communication of withdrawal
When can a promise to leave an offer open not be withdrawn? (authority)
Mountford v Scott: £1 consideration to keep the offer open meant it was irrevocable
How can you revoke an offer to the public?
If withdrawn in same channel that is was made and to the same degree as the offer
What about revocations sent to a business? (authority) 3x steps
The Brimnes - notice of revocation will be valid if
- It arrives during normal office hours
- Communication normal to that business
- Reasonable in the context
Can revocation be communicated by a third party? (authority)
Dickinson v Dodds: Yes
if third party objectively perceived as reliable/
He need not be authorised by offeror
Can you revoke of unilateral contracts? (authority)
Yes
However partial performance of a contract is sufficient to prevent revocation by offeror
Errington v Errington Woods; Father who promised house to son if paid payments. Did so and promise was irrevocable if continued to do so would get house
What happens with a counter-offer? [authority]
Implied rejection of first offer, therefore destroys contract [Hyde v Wrench]
What happens at a request for information? [authority]
Does not affect the offer - it can still stand and can be accepted [Stevenson Jacques and Co]
What occurs at a lapse of time (revocation)?
Offer may become incapable of acceptance through a lapse of time
The length of this time is reasonable in the context
What is the definition of acceptance?
A final and unqualified express of assent to the terms of the offer
What was established in Entores Ltd v Miles Far East Corp?
Acceptance MUST be communicated
Who can communicated the acceptance?
Offeree or duly authorised agent
What is the difference between third party withdrawal and third party acceptance?
Withdrawal = reliable third party Acceptance = duly authorised agent
Can the offeror waive the need for communication? (authority)
YES in an unilateral contract
Carlill Smoke Ball
Acceptance and silence?
Acceptance cannot usually be inferred from silence
What is the battle of the forms? (authority)
Each company tries to use their standard forms
The last shot usually wins (Butler Machine v Ex-Cell-O Corp)
What is the postal rule? (authority)
A letter of acceptance which is posted is COMPLETE ON POSTING and contract formed at this point [Adams v Lindell]
What happens if lost in post? (authority)
Even if lost, still applies Household Fire and Carriage v Grant
What are conditions of the postal rule? (4)
- Only applies to acceptances
- Must be reasonable for there to be acceptance by post (eg in line with previous communication)
- Letter must be properly stamped, addressed and posted
- The postal rule CAN be excluded by the offeror, either expressly or impliedly eg must give me notice
What is presumed contractual intention for domestic and social agreements? (authority)
No contractual intention
Balfour v Balfour: husband sent money to wife, marriage goes sour and stops sending payments. There was no presumption to be legally binding.
Can domestic/social contractual intention be rebutted? (authority)
Yes
Merritt v Merritt - husband and wife signed agreement to pay wife for mortgage. This was commercial agreement so was rebutted
What is presumed contractual intention for commercial agreements? (authority)
Presumption that there is an intention to create legal relations (Edwards v Skyways)
When has a commercial agreement been rebutted?
Rose and Frank Co v Crompton Bro: included an honourable pledge that it was not for legal relations. Rebuttal successful.
What authority provides the definition for consideration?
Currie v Misa
What was established in Chappel v Nestle?
Consideration must be sufficient but need not be adequate
What is insufficient consideration (authority)
Stopping moaning [White v Bluett]
What was established in Roscorla v Thomas?
Past consideration is NOT CONSIDERATION
What are three exceptions to the rule in Roscorla v Thomas?
- Act must have been done on promisors request
- Parties must have a mutual understanding from the offset that the act was to be rewarded in some way
- The payment would have been legally enforceable had it been promised in advance
What happened in Lampleigh v Brathwait?
Rode to and from king on promisors request. Returned and was promised £100 but not paid. This was enforceable as on promisors request
What happened in Casey’s Patents?
Claimant asked to manage certain patents and later promised 1/3 but not paid. It was assumed there would be some sort of reward.
Would duty imposed by the law amount to consideration?
Not generally sufficient
What authority for duty imposed by law?
Collins v Godefroy - paid to attend court as witness and didn’t receive payment. As enforced by law to attend anyway, this was not consideration
Can a contractual obligation owed to a third party amount to consideration? (authority)
YES
Scotson v Pegg: paid twice to unload and carry coal by two different parties. An existing contractual duty can amount to valid consideration to a new promise
Can contractual obligation owed to other contracting party amount to consideration?
Generally no, if nothing more has been done
Stilk v Myrick: reduced crew small, promised extra money but had not had to do extra work so no consideration for promise
Can contractual obligation owed to contracting party amount to consideration if some extra is done?
YES
Harley v Ponsonby - half crew deserted, perilous work. Extra work will amount to consideration
What is the Williams v Roffey exception? (and what happened in case)
Needed extra money to get building finished, defendant gained practical benefit of finishing it.
Therefore if obtain a PRACTICAL BENEFIT then can amount to good consideration
Where may Williams v Roffey not apply?
Duress or fraud
What is the general rule for part payment of undisputed debts? (and authority)
Part payment is not sufficient consideration for a promise by a creditor to forgo balance (Foakes v Beer)
What exceptions apply to the Foakes v Beer principle?
PRACTICAL BENEFIT
- Debtor paid early?
- Debtor paid using goods or something else?
- Part payment is made in discharge for all
What is promissory estoppel?
Where are party to a contract has made a promise to forgo a legal right, once acted upon, he will have a good defence to any claim brought by the promisor
What happened in the High Trees Case?
Landlord promised reduced rent for war, defendant acted upon this, then after the war claimed all missing rent for years of the war.
What 4 conditions did Lord Denning set out for promissory estoppel?
- There must be a promise to waive a legal right and the promise must be intended to be acted upon
- Promisee must act on the promise (position must change)
- Promissory estoppel will act as a shield not a sword (can only be used as a defence)
- It must be inequitable/unjust for the promisor to go back on his promise
What is authority for shield not a sword (promissory estoppel)
Combe v Combe - tried to bring a claim in promissory estoppel
How does promissory estoppel effect continuous payment contracts?
- The legal right is suspended and can be resumed with reasonable notice to promisee
- If promise intended to last a particular length of time, legal right is enforceable after this event
How does promissory estoppel effect one off payments?
Can be used for one-off payments
What was established in DC Builders v Rees?
The promisee must have clean hands
What was established by Re Selectmove? and what happened?
Winding up order for Re Selectmove in arrears for tax. Company appealed as said could pay back in installments
This was not a practical benefit as it is almost always a practical benefit for a creditor to get some money back
What is the doctrine of privity of contract?
Only parties to the contract can acquire rights to it
What statute was introduced for third parties to a contract?
Contracts (Rights of Third Parties) Act 1999
What did the Contracts (Rights of Third Parties) Act 1999 introduce?
Allows a third party to enforce a contract term if
- The contract expressly provides that he may
- The term purports to confer a benefit on him
How may a third party be named in a contract?
Expressly
Member of class (employee etc)
What is actual authority for an agent?
Expressly appointed agent to carry out specific parts of a contract
What is apparent/ostensible authority for an agent?
Implied permission but no actual authority.
What is ratification?
Can validate the unauthorised acts of the agent and back-dates the authority
- Must be done with reasonable time
What is a breach of warranty of authority?
If an agent acts outside their authority
What is the business efficacy test? (authority)
Moorcock
Court should consider whether a term is necessary to make a contract work commercially
What is the officious bystander test?
Term could only be implied if the point was so obvious that it went without saying that was what the parties intended
What 2 other assumptions can be made by the courts? (and authorities)
- Local custom or trade usage (Hutton v Warren)
2. Previous court dealings (Spurling v Bradshaw)
What are the three statutes that govern implied terms?
Sales of Goods Act 1979
Supply of Goods and Services Act 1982
Consumer Rights Act 2015
What types of contract are included in the Sales of Goods Act 1979?
Business to business
Consumer to business
Consumer to consumer
What types of contract are included in the Supply of Goods and Services Act 1982?
Contracts for services and work materials
What types of contract are included in the Consumer Rights Act 2015?
Contracts between trader and consumer
What is a trader?
A person acting for purposes relating to trade, craft or profession
What is a condition?
A major term
What is a warranty?
A minor term
What is an innominate term?
It will look at the effects of the breach to decide whether there are relevant remedies available
What is the effect of a breach of a condition?
- Can terminate
- Can get damages
Even if there has only been a minor breach
What is the effect of a breach of a warranty?
- Can get damages
Even if major breach
What is the authority for an innominate term?
Hong Kong Fir Shipping v Kawaski Kisen Kaisha: ask if the breach of an innominate term had deprived the innocent party substantially of the whole contract
What is an authority for rebuttal of a condition?
Schuler v Wickman Machine Tool Sales: said it was condition in contract but HoL decided that it was not meant in a strict legal sense
What are the three ways to incorporate a term in to an exemption clause?
- By signature
- By notice or unsigned document
- By previous consistent course of dealing
What is the authority for incorporation by signature?
L’Estrange v Graucob - clause was regrettably small but had been signed so incorporated
What situations may arise where incorporation by signature wouldn’t be incorporated?
- If the clause is ineligible
2. Misrepresentation [Curtis v Chemical Cleaning and Dying]
What three things must be included in incorporation by notice or unsigned document?
- Document. must be contractual in nature
- Innocent party must know of the clause or must take reasonable steps to bring it to notice
- Must be shown before contract is finalised
What happened in Chapleton v Barry? (and test)
Deck chair ticket not contractual in nature
Test: would a reasonable person expect that type of document to contain some terms of contract
What may a court consider for incorporation by notice? (4)
- Clause must be legible
- Position of the clause
- Prominence of clause on document
- Type and nature of the clause
What must be done for an onerous or unusual exemption clause?
Must be drawn attention to by the other party in a more explicit way
What happened in Thornton v Shoe Lane Parking?
Claimant given car parking ticket which excluded liability for injury. Onerous and did not do enough to make aware
What authority is there for timing for exemption clause?
Olley v Malborough Court Ltd: made contract with hotel at reception guest, exemption clause fo lost or stolen goods in the room was too late
What amounts to consistent and course of dealings? (x2 authorities)
Kendall (Henry) & Sons: previous course of dealings, had plenty of opportunity to read clause
Hollier v Rambler Motors: only 3-4 times over 5 years. Not consistent
What is the contra proferentum rule?
If a party tries to rely on a clause which is ambiguous or unclear then the court will interpret this against them