Contract Formation Flashcards
(20 cards)
1
Q
Contract Formation - Topics
A
- Offer
- Acceptance
- Consideration
- Intention to Create Legal Relations
2
Q
Offer - Topics
A
- Offer - Definition
- Unilateral Offer
- Carlill v. Carbolic Smoke Ball Company 1893
- Billings v. Arnott (1945)
- Leonard v. PepsiCo [1999]
- Offer Revocation
3
Q
Offer - Definition
A
- Clark: “a clear and unambiguous statement of the terms upon which the offeror is willing to contract should the offeree decide to accept”
- Lefkowitz v. Minneapolis Superstore [1957]: clear, definite and explicit and leaves nothing open to negotiation.
- Carlill v. Carbolic Smoke Ball (1893): Offer must be made with the objective intention that is seriously made.
4
Q
Unilateral Offer - Definition & Case Law
A
- General rule: display of goods and ads are invitations to treat, but not absolute rule.
- McDermott & McDermott: An offer that binds the offeror without creating any concurrent obligation on any other person until such time as they have accepted by acting on it.
- Carlill v. Carbolic Smoke Ball: Held to be a binding offer given the deposit of £1,000 in the bank which showed the promise was not mere sales puff
- Billings v. Arnott (1945): Irish case. Arnott’s notice held to be unilateral offer
- Daulia v. Four Millbank [1977]: Unilateral offer cannot be withdrawn once performance has commenced.
- Leonard v. PepsiCo [1999]: The ad was held not sufficiently definite to be an offer
5
Q
Carlill v. Carbolic Smoke Ball Company (1893)
A
- Manufacturer placed ads stating they would pay £100 to any person who purchased a smoke ball, used it as directed, and still contracted influenza. Also stated that £1000 had been deposited in a bank as evidence of the manufacturers’ sincerity
- Mrs. Carlill purchased & used the smoke ball as directed but still contracted influenza
- Held: Offer not too vague - sufficient detail to use as instructed with a timeframe
- Held: Offer can be made to whole world, accepted only by those meeting conditions
- Held: Offer deemed to be seriously intended – bank account deposit as proof
- Held: Not necessary to communicate acceptance – acceptance by performance
- Held: Paying for the smokeball and using as instructed was sufficient consideration
6
Q
Billings v. Arnott (1945)
A
- Example of a unilateral offer in Ireland.
- Arnott issued a notice offering half salaries to any of their employees who joined the Defence Forces, but later refused Mr. Billings.
- Mr. Billings joined the Defence Forces anyway, and subsequently sued the company
- Held: a valid unilateral offer accepted by performance. The notice was unconditional, with no reservation allowing the company to refuse to release any employee.
7
Q
Leonard v. PepsiCo [1999]
A
- TV ad by Pepsi jokingly implied customers would receive a Harrier fighter jet for 7 million Pepsi points but refused to supply the jet when plaintiff acquired the points
- The NY Court held that the ad was not sufficiently definite to constitute an offer, absence of any words of limitation (e.g. ‘first come, first served,’) was a factor.
- Held that no reasonable person could have believed that the advertisement genuinely offered Pepsi drinkers a fighter plane
8
Q
Offer Revocation
A
- General rule: offer can be revoked any time before it is accepted, even if it was expressed to be kept open until specific time, if no consideration paid prior
- Notice of withdrawal must be communicated to the offeree
- Byrne v. Van Tienhoven (1880): To be effective, the revocation must precede complete acceptance. Postal rule doesn’t apply to the revocation.
- Dickinson v. Dodds (1876): Offer can be withdrawn before the deadline and revocation doesn’t need to be communicated personally.
9
Q
Dickinson v. Dodds (1876)
A
- The defendant offered to sell property to the plaintiff stating that the offer would be open until 9am on Friday.
- On Thursday afternoon, the plaintiff was informed by a third party that the property had been sold to somebody else. This third party had not been asked by the defendant to inform the plaintiff.
- The plaintiff then handed in a letter of acceptance on Thursday evening and, subsequently, sued for breach of contract.
- The Court held that the revocation was valid.
- The test is whether the information was such that a reasonable person should have been persuaded by its accuracy.
10
Q
Acceptance
A
- McDermott & McDermott: “a final and unequivocal expression of agreement to the terms of an offer.”
- Consists of the fact of acceptance and communication of acceptance
- Billings v. Arnott (1945): A unilateral offer can be accepted by performance
- In the Carlill case, the acceptance was the purchase and use of the smoke ball.
- Kelly v. Cruise Catering [1994]: Postal rule confirmed. Contract formed as posted.
- Hyde v. Wrench (1840): Negotiation is a counter offer
- Re Selectmove Ltd [1985]: One party cannot impose silence as acceptance
11
Q
Consideration - Topics
A
- Definition
- Past Consideration
- Sufficient vs. Adequate Consideration
- Performance of an Existing Duty
12
Q
Consideration - Definition
A
- Sir Frances Pollock: “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.”
- For a promise to be enforceable it must be either contained in a deed under seal or made in exchange for some sufficient “consideration”.
- The promisor must receive a benefit, or the promisee must suffer a detriment.
13
Q
Past Consideration
A
- Past consideration is no consideration at all
- Re McArdle [1951]: A woman carried out work to a house jointly owned by her family members. After completion, her relatives promised in writing to pay her. Held that she could not recover as her consideration had been completed before the promise.
- Roscorla v. Thomas (1842): Irish case. Warranty unenforceable as after horse sale.
- Pao On [1980]: Exception if act done at promisor’s request and if payment implied.
14
Q
Sufficient vs. Adequate Consideration
A
- The courts “are not prepared to question the adequacy of consideration”
- Building Society v. Grant [2010]: “people can enter into bad bargains”.
- Carlill: paying for the smokeball and using it as instructed (detriment) was sufficient
- Hamer v. Sidway (1891): A forbearance of lawful action may be good consideration.
- Chappell v. Nestle [1960]: Chocolate bar wrappers were part of the consideration.
- O’Keeffe v. Ryanair [2002]: participation in PR activities and surrender of privacy, was real and sufficient consideration
15
Q
Hamer v. Sidway (1891)
A
- Uncle promised £5000 to his nephew for not drinking, smoking, swearing, & cards until he was 21.
- Forbearance held to be a valid consideration as he restricted his “lawful freedom of action” within defined limits in reliance on the uncle’s promise.
16
Q
O’Keeffe v. Ryanair [2002]
A
- Jane O’Keeffe was offered free travel for life on any Ryanair route for her and a nominated companion in exchange for her consent to be involved in publicity
- Ryanair denied the existence of a contract, contending it was merely a gift
- The court rejected Ryanair’s argument noting that the plaintiff provided real and sufficient consideration by participating in activities generating publicity for Ryanair
- The court found that an enforceable contract was made and that Ryanair was in breach of its contractual obligations when refused to honour a booking
17
Q
Performance of an Existing Duty
A
- Collins v. Godefroy (1831): performance of an existing duty generally not good consideration. A promise to pay a witness for attending court was unenforceable.
- Harris v. Sheffield United [1987]: Going beyond existing duty can constitute valid consideration. Special police services provided at a private football match, going beyond routine law and order duties, were considered sufficient consideration.
- In Ireland, under s 30 of the Garda Síochána Act 2005, Gardaí can contract to provide their services for private events, if it is in the public interest.
18
Q
Intention to Create Legal Relations - Family
A
- Presumption that transactions between family members are not intended to be legally binding. Applies to spouses, siblings, parents and children, or cohabitees.
- Balfour v. Balfour [1919]: A promise by a husband to pay his wife an allowance of £30 a month was held not legally binding.
- Jones v. Padavatton [1969]: Mother’s promise to her daughter not legally binding.
- K v. K [2018]: Presumption can be rebutted. Contract in writing. Detrimental reliance
19
Q
Jones v. Padavatton [1969]
A
- A mother promised her daughter an allowance if she would leave her job in Washington D.C. and return to England to study for the Bar.
- The mother bought a house for the daughter to live in and get rental income. The daughter hasn’t completed Bar exams after several years and the mother attempted to evict her.
- The court held that the parties did not intend to create a legally binding contract.
20
Q
Intention to Create Legal Relations - Business
A
- Action Alarms v. O’Rafferty: Presumption of intention in commercial agreements
- Blue v. Ashley: Presumption can be rebutted. E.g. conversation over drinks in a pub.
- O’Keeffe v. Ryanair [2002]: seeking consent, providing a large ticket, sending a draft written agreement demonstrated a clear intention to create a legal relationship.
- The Statute of Frauds: Agreements not intended to be performed within one year are not enforceable. E.g. Naughton v. Limestone [1952]: 4/y employment contract.
