Chapter two formation Of contract Flashcards
(16 cards)
Consensus in Idem
- the essentials of the contract always provided that, as already noted, they have both capacity and the intention to create legal obligations
What qualifies as essential for a contract
-The parties of the contract
-If its a contract of sale.Then the goods or land to be sold must be identified and the fact that a price must be agreed
(Not always needed to be agreed,sale of goods act 1979 allows the court go fix a reasonable price)
-if its for leases,the rent to be paid,duration fo lease other terms such as rent review clause
What case shows Good “faith”and reasonable endevours as a pre contractual offer
-Lord hodge stated that acting in “good faith” during negotiations was too uncertain to be enforceable.
-Riley’s Sports Bars v CGW Snooker
How is consensus in Idem assesed and the case
1-would a reasonable person looking at the actings of the parties conclude they have reached an agreement
-Muirhead and Turnbull v Dickson indicate that this is based on actions adn not what the parties are thinking
Option to purchase heritable property-desensus
-bogie v The forestry comission 2002
-the essential term (the subject of sale) was uncertain and incomplete, there was no consensus in idem, and therefore no binding contract.
Can a contract still be formed if the essential terms have been contracted
Yes,even if some of the unessentials haven’t been formalise
Whats the test for Contract formation
-The test for contract formation is objective: courts assess what was said and done, not the parties’ private intentions.
-Lord Clarke in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH
explained that even if some significant terms are unsettled, a contract may still exist if the parties did not intend those terms to be a precondition to being legally bound.
-However if the unsettled issue isnt a essential but crucial to the deal the contract doesnt go through
-if the parties agree not to be bound until formality is complete
Offer
“is a statement of terms which the offeror proposes to the offerree as the basis of the agreement”
-A valid offer must be capable of creating legally binding obligations if accepted without changes.
Communication of offer
An offer is not valid until communicated to the offeree.
📌 Case: Thomson v James (1855)
“An offer is nothing until it is communicated…”
Who can an offer be made to
Offers can be made to:
Specific persons (only they can accept).
📌 Case: Fleming Buildings Ltd v Forrest [2010]
The general public (e.g., advertisements or rewards).
Acceptance in these cases may involve performance of a specified act rather than direct communication.
What arent offers (1/2)
A unilateral promise (remember – no acceptance needed here).
Replies to a request for information or an enquiry as to willingness to sell (Harvey v Facey [1893] A.C. 552)
Party recapping its negotiating position (Glasgow City Council v Smith [2015] CSOH 143)
what arent offers(2/2)
Invitations to treat (ITT) – these invite an offer, but they do not make an offer!
-exception
-Carlill v Carbolic Smoke Ball Co. [1893] 1 Q.B. 256 (England)
Issue: Was an advert promising £100 to anyone who used the smoke ball and still got sick a valid offer?
Decision: Yes. The court found that this was a unilateral offer made to the public, which became a contract when someone fulfilled the conditions.
Key Quote:
“It is an offer made to all the world, which is to ripen into a contract with anyone who comes forward and performs the condition.”
Principle: An advert can be an offer if it shows clear intent to be bound and includes specific conditions for acceptance.
Postal acceptance rule
-The ‘postal rule’ says that the posting of an unqualified acceptance creates the contract – not the delivery of the letter containing the unqualified acceptance (Jacobsen Sons and Co v Underwood and Son Ltd. (1894) 21 R 654.)
-as soon as the acceptance is in the mail it cant be withdraw (Thomson v Alford)
Where have the Scottish court show reluctance for the Postal rule
-Fax
-Not instantaneous forms of communications(Entores Ltd v miles) relevant to phone or email
-The Scottish Law Commission has recommended that the rule be abolished and replaced with the rule found in the Draft Common Frame of Reference: That an acceptance is effective when it is communicated, but that an offer cannot be withdrawn in the time-frame between dispatch of the acceptance and its arrival
Whens the acceptance not a Acceptance
-A qualified acceptance is not in any form a acceptance rather a counter offer
What happebns when a offer is met with a qualified acceptance
The qualified acceptance rejects the original offer, strikes it down so that it is no longer capable of being accepted (ie. the original offer is no longer on the table if the offeree later changes their mind)
The qualified acceptance/counter-offer itself becomes an offer that is open to acceptance – ie. the offeree switches positions and becomes the offeror.
