Formation of Contract/Promise Flashcards

Question

Authority for the intention required to form a promise?

Answer 1

Regus (Maxim) Ltd v Bank of Scotland [2011] CSOH 129 - Promisor must intend to be legally bound. Also, a promise is binding only if the promisor's own words are clear and unambiguous.

Answer 2

Morton’s Trs (1899) - statement of future intention held to be a promise

Answer 3

Cawdor v Cawdor 2007 SLT 152 No Acceptance Needed * “Delivery to or acceptance by the promisee is not necessary to the constitution of a promise … though … the presence or absence of communication to the other party may be an adminicle of evidence in the question whether the statement amounts to a promise” * Knowledge on the part of the beneficiate of the promise is not required

Answer 4

Regus (Maxim) Ltd v Bank of Scotland [2011] CSOH 129 But must be “delivered” or communicated * Not necessarily to promisee * “It is binding even though it is not known to the promisee” Cannot be secret, must have a public aspect, usually in writing * Promisee may not yet exist promises can be made in favour of “absents, infants, idiots, or persons not yet born” (Stair)

Answer 5

Duguid v Caddall’s Trustees (1831) Cannot be revoked * “It is irrevocable, unlike an offer, which may be withdrawn at any time before acceptance”

Answer 6

Rejection strikes down the obligation * “If he in whose favour [promises] are made accept not, they become void, not by the negative non-acceptance, but by the contrary rejection” (Stair I,10,4) - if promisee rejects the promise, it is void.

Answer 7

Suspensive condition “if … then …” * Petrie v Earl of Airlie (1834) - reward offered for naming somebody that had defamed Earl of Airlie. Person who defamed, his brother informed the Earl. The Earl then refused to pay. Court held the promise was legally enforceable, and that he had to pay.

Answer 8

Regus (Maxim) Ltd v Bank of Scotland [2011] CSOH 129 no * Gratuitous or Onerous? * “where the promise is made subject to a condition requiring action by the promisee, the fulfilment of the condition does not convert the promise into a contract ex post facto” (para 35)

Answer 9

Requirements of Writing (Scot) Act 1995 General Rule s.1(2)(a)(ii) [a written document is required for … the constitution of …] a gratuitous unilateral obligation …

Answer 10

Requirements of Writing (Scot) Act 1995 Exception s.1(2)(a)(ii) [a written document is required for … the constitution of …] a gratuitous unilateral obligation except an obligation undertaken in the course of business

Answer 11

* If conditional, cannot be enforced * Stricter requirements of form * Strictly construed – presumption against donation Preference for contract (Woolman 4.4-4.5)

Answer 12

* a unilateral voluntary obligation * Requires intention and communication * it does not need acceptance * it is irrevocable after delivery * if rejected, the promise is extinguished it may need to be in writing, if not made in the course of business

Answer 13

Muirhead & Turnbull v Dickson 1905 But commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say Robertson v Anderson 2003 Establishes that it is not about if the parties appear to consent, it is about how the reasonable person would interpret their actions. Objective, not subjective

Answer 14

* Agreement = offer + acceptance * “an offer accepted is a contract, because it is the deed of two, the offerer and the accepter” (Stair I,10,3)

Answer 15

Mathieson Gee (Ayrshire) Ltd v Quigley 1952 (the mouldy pond) Establishes that terms of the offer must coincide with acceptance. Establishes that for parties to achieve consensus in idem, the terms of the contract have to be agreed and understood by both parties. i.e. no consensus in idem occurs when a party offers one thing, and the other party agrees to another

Answer 16

* A proposal to enter into a contract * Intention to be legally bound * Sufficiently definite terms * e.g. sale – subject matter + price Can be with withdrawn up to point of acceptance - an offer in itself is not a legal obligation, it must be accepted

Answer 17

* Pre-contractual step * Response = offer No intention to be legally bound

Answer 18

* Instantaneous contracts - most obvious example, going into shop buying something, taking it out of the store. Where does the offer takes place? Caselaw says it is an open offer, the offer is accepted when the consumer purchases the product. * Protracted negotiations - particularly in commercial contracts, can take months to alter the contract to suit both parties. Difficult to establish when the offer is accepted. * Standard Form Contracts - where companies routinely contract on the terms and conditions

Answer 19

Grainger & Son v Gough [1896] Must look at the function/purpose of the ad/catalogue Establishes that ads and catalogues are generally invitations to treat because - It was an invitation to customers to make an offer, which they could then accept or reject The function of the catalogue was to attract customers, rather than entering into a contract with everyone who applies.

Answer 20

Carlill v Carbolic Smoke Ball Co [1893] Could be analysed as a conditional promise in Scotland? English case, but used as authority in Scotland Establishes that if an advertisement is intentionally specific, and shows an intention to be legally bound (such as the company putting away money for the reward) then the advertisement will be held as an offer open to the world.

Answer 21

* Fisher v Bell [1961] - same principle applies as ads and catalogues. Products on display are an invitation to treat, contract is entered into at the till when you pay the money.

Answer 22

Thornton v Shoe Lane Parking [1971] - somebody parking in car park, car park had a disclaimer of liability notice. Issue was when the contract was entered into to. Analysis was that there was an automatic machine which gave out a ticket. The machine was making a standing offer to anyone who take a ticket, which amounts to an acceptance of the offer.

Answer 23

* Cannot be accepted if 1. Withdrawn/revoked (main distinction between promise) 2. Rejected 3. Lapsed 4. Death of parties

Answer 24

Burnley v Alford 1919 Revocation must be communicated before acceptance is communicated - timing is crucial Establishes that the courts take an objective approach. If revocation is communicated during business hours, then the offer is revoked even if the offeree is unaware of the communication, due to negligence of a third party for example. (In this case solicitor took the afternoon off and was unable to communicate to the offer, who then accepted the offer, court held that they could not accept)

Answer 25

Littlejohn v Hadwen Cannot be revoked if a firm offer (an offer that is to be open for a certain period of time). Analysed as a promise within an offer.

Answer 26

Time Limits “promise to keep offer open until (cannot be revoked) “must be accepted by …” (can be revoked) Heys v Kimball (1890) 17 R 381 - offer made in condition that offer was accepted within 3 days. However this did not mean the offer could not be withdrawn. Not a valid acceptance if accepted after an unreasonable amount of time Wylie & Lochhead v McElroy & Sons (1873) - offer with a price for a particular construction contract. Only open for a day. W accepted over a month later. Court held it was an unreasonable delay. Facts and circumstances matter.

Answer 27

(i) Trade practice (e.g. Dunlop Wilson & Co) (ii) Market in which offer made (e.g. Wylie & Lochhead) (iii) Mode of communication (example, written offer will be open for longer) (iv) If offeree has relied on the offer.

Answer 28

Presumption in favour of contract - law often uses presumptions in tricky situations. The starting point for the courts, if it is a close call, to start with a contractual framework, offer and acceptance. Look for evidence of acceptance (this would suggest it is a contract, but not always).

Answer 29

* Definition - DCFR II.4.204 (Avizandum p.321) * “(1) Any form of statement or conduct by the offeree is an acceptance if it indicates assent to the offer. (2) Silence or inactivity does not in itself amount to acceptance.”

Answer 30

* Definition - DCFR II.4.201 * “(1) A proposal amounts to an offer if: ○ a) it is intended to result in a contract if the other party accepts it, and ○ b) it contains sufficiently definite terms to form a contract. * (2) An offer may be made to one or more specific persons or to the public.”

Answer 31

* Acceptance may be oral or in writing cf Requirements of Writing (Scot) Act 1995 Generally acceptance would follow the mode of the offer - i.e. if offer is oral, then acceptance is usually oral. (Holwell Securities Ltd v Hughes [1974])

Answer 32

University Of Edinburgh v Onifade 2005 Conduct has to indicate assent to the offer. This case establishes that determining if one's conduct indicate assent to the offer is done objectively. The judicial task is not to loom at the intention of the party, but what each party would reasonably conclude by the actions of the offeree. Note, silence does not equal acceptance, even if offer says so

Answer 33

* May & Butcher Ltd v The King [1934] (HL) - The agreement must be sufficiently definite to establish the essential terms * “As a matter of general law of contract all the essentials have to be settled. What are the essentials may vary according to the particular contract under consideration” ○ Sale: subject matter and price (these are the essential terms of a sale, these have to be settled and clear) ○ Lease: parties, rent, subjects, duration (essential terms for lease, duration is sometimes referred to as 'ish').

Answer 34

McArthur v Lawson (1877) They must not be “void from uncertainty” Key: whether or not the contract can be enforced as it stands Where the words used are too vague or if there are contradictory terms

Answer 35

Avintair v Ryder Airlines 1994 - situation were price for services were still to be settled, but performance had already begun. Court held a contract had been formed, and inferred a reasonable price. Critics said it should have been unjustified enrichment. Another exception is when essential terms are inferred from surrounding circumstances (including socio-economic considerations) *Neilson v Stewart 1991 SLT 523 In those particular circumstances, repayment of the loan was not an essential term **R & J Dempster Ltd v Motherwell Bridge and Engineering Co Ltd 1964 SC 308; 1964 SLT 353 steel shortage “in the market conditions operating when this contract was made, all the essentials were settled”

Answer 36

Wolf and Wolf v Forfar Potato Co This case is authority for the fact that a qualified acceptance is a counter offer, which rejects the original offer, which means the original offer then falls and is not able to be accepted. Effects - Rejects the original offer It itself becomes a counter offer

Answer 37

Findlater v Maan 1990 In situations where two qualified acceptances are sent out, but one is not received, then the latter is not struck down, and both are able to be accepted.

Answer 38

* Refers to the scenario were both businesses are contracting with each other, and both have standard terms and conditions. Butler Machine Tool Co Ltd v Ex-cell-o Corporation (Eng) Ltd [1979] - establishes - If you apply the qa rule, then B t and c is the offer, and E t and c is a qualified acceptance. Thus, E's ta and c strikes down the original offer. In effect, the company who says their t and c lastly, this is the ones that would be used (last shot wins)

Answer 39

Must be communicated to offeror Instantaneous communication Non-instantaneous

Answer 40

must be received & understood example- telephone call, face to face Entores v Miles Far East Corporation [1955] - Gives examples such as two men negotiating at either side of river, and at the moment of acceptance, a helicopter flies above. In that moment, there would be no contract. Establishes that the acceptor must take reasonable steps to make sure his acceptance is understood.

Answer 41

Dunlop, Wilson & Co v Higgins & Son (1848 The case establishes the postal rule, which means that a contract is formed when acceptance is posted, not when it is delivered. Rare now, because electronic communications. However, rule still exists We have to argue by analogy

Answer 42

Thomson v James (1885) In cases where acceptance and revocation are posted on the same day, acceptance takes priority and a contract is formed.

Answer 43

Thomas v BPE Solicitors [2010] - establishes that email must be received. Not a universal rule like postal rule, context matters such as when the email was sent (business hours etc) ‘The principle that an acceptance is effective on receipt … applies to communication by email,’ (at [86]) But a qualification: Email must be sent and arrive in fact at the right address; not rejected by the system ([88]) Greenclose Limited v National Westminster Bank plc [2014] - establishes that postal rule does not apply 'An email is not subject to the postal acceptance rule. It is a form of near-instantaneous communication. ‘

Answer 44

* Categorise communications * Offer vs Invitation to Treat? * Offer vs Promise? * Offer & Acceptance * Check for Essential Terms * Do any of the exceptions apply? * Check type of communication * Instantaneous or not? * Does postal rule apply?

Answer 45

* Supaseal Glass Ltd v Inverclyde Windows Mfg Ltd [2022] CSOH 49 * Writing is not required * The question of whether agreement had been reached should be judged objectively * There must be agreement on the essential terms * Not void from uncertainty

Formation of Contract/Promise Flashcards

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