Chapter 1: Introduction Flashcards
What is the definition of a contract
A legally binding agreement document
What are the 4 roles of a contract
- Determine the validility of a contract
- Resolving disputes between parties
- Identify the breach of the contract
- Provide remedies
What should one determine the nature of a contract, what do we need to look for when starting a contract?
- Determine the offeror and offeree
- Determine the expressed intention instead of actual intention
What are the 7 variety of situations does contract law deal with
- Family relationships
- Club membership
- Landlord and tenant
- Commercial transactions
- People with equal bargaining powers
- People with uneqaul bargaining powers
- International contracts
What is the fundamental theory that contract law uses
Contract law is based on the Laissez-faire ideology, that all parties enter into contract by will/choice and in their own terms
Are agreements or contracts enforceable by law
Only contracts are enforceable
What are the 4 elements/ingredients that create a contract
- Offer
- Acceptance
- Consideration
- Intention to Create Legal Relationship
How can we decide if the parties have reached an agreement
In a normal interaction with a reasonable man
Even if a parties intentions were not real, as long as he made it that a reasonable man would believe him, it would be equally bound to both sides
How is an agreement reached? Is it objectively or subjectively decided?
method?
Objectively decided, not subjectively. Meaning there should clearly stated (written/signature) or where intention was made clear
What are the 2 ways courts use to find the offer and acceptance
Reasoning Forward
* traditional appraoch: finding the offer and acceptance then lead to conclusion
Reasoning Backward
* Decide on the appropriate solution then move back to find the offer and acceptance to justify the decision
How many offers/contracts are there, and what are they
Unilateral contract
* promise for an act
* does not need to be communicated to the offeror
Bilateral contract
* consist of offer & invitation to treat
* Offer is promise for a promise
* ITT is the expression of willingness to enter into a contract to negotiate on terms with the intention to form a new contract at a later stage
What are 3 cases that deal with validity of a contract?
- Centrovincial Estates v Merchant Investors - invalid
- Gibson v MCC - invalid
- Storer v MCC - valid & binding
Centrovincial Estates v Merchant Investors [1983]
validity of contract
Facts:
- Claimants (landlord) accidentally wrote $65,000 when supposed to bill $ 126,000.
- Before they could withdraw the D accepted. C said there’s no legally bidning contract
Held:
- Slade LJ - Offeror under a bilateral contract can withdraw an unambiguous offer.
- Where it was merely a mistake and the offeree would not have known it was a mistake either
Takeaway
- Can withdraw if it was a genuine mistake
Gibson V Manchester City Council [1979]
Facts:
- D selling houses to tenants, handed out brochures to tenants. C filled brchure with purchase price and applicable mortgage terms
- City council responded that the “may” sell the house at the price stated. Didn’t want to sell in the end
Held:
- HOL said contract was not valid. The words “may be prepared to sell” made the difference.
- Claimant also needed to have made a formal application to buy
Storer V Manchester City Council (1974)
Facts
- Storer wanted to purchase a countcil house
- Council sent him a ‘tenancy purchase agreement’, which storer signed and returned.
- Before the Council countersigned, political control of the Council changed, and they decided not to proceed with the sale.
- Council argued that there was no valid contract as they haven’t yet signed
Held
- Lord Denning held valid & binding
- No need for formal execution, as long as there is clear agreement & ITCLR
- The Council’s letter and the purchase agreement, combined with Mr. Storer’s signature and return, amounted to an offer and acceptance.
What 5 cases deal with validity of offer & acceptance?
- Centrovincial Estates v Merchant Investors (1983) - valid
- Harris v Nickerson (1873) - invalid
- Harvey v Facey (1893)- invalid
- Clifton v Polumbo (1944) - valid
- Bigg v Boyd Gibbins (1971) - valid
Centrovincial Estates v Merchant Investors (1983)
validity of offer & acceptance
Facts
- Claimant (leaseholder) mistakenly offered 65k pounds to defendant where he accepted
- Instead it was supposed to be 126k pounds, so defendant sued that it was already binded
Held
- Court ruled in favour of defendant
- That subjectively mistaking does not prevent a contract from being made
Harris v Nickerson (1873)
Facts
- Defendant (auctioneer) would help claimant to sell furniture
- Last minute he withdraw the furniture
- Claimant brought to court for wasting time and sued for breach of contract
Held
- Court ruled that contract was not binding
- Advertisement that put up was only a declaration to inform purchasers that there would be a sale taking place
- Was not an offer to contract
Key point
- A statement of intention where the party says that he intends to do something, will not amount to an offer
Harvey v Facey (1893)
Facts
- Claimant telegraphed to sell property
- Defendant requested that 900 pounds was the highest
- Claimants accepted and told defendant to reply
- He didn’t
Held
- Court held that there was no contract created
- The first telegraph was request for information
- Second telegraph by claimants were the offer
- There was no acceptance
Takeaway
- Mere inquiry does not count
Cliffton v Polumbo
Facts
- Defendant negotiating to purchase plaintiff’s estate
- Plaintiff offered 600k pounds with the word ‘offer’
- But then decided that it was too low of a price which then wrote another letter to postpone and negotiate again
- Defendant agreed to the first offer written on 7 June
Held
- 1st offer - First letter though contained word ‘offer’, was a preliminary statement made in the negotiations
- 2nd offer - Whereas the second letter with ‘schedule of completion’ would be the binding factors
