Lecture 4 Contract Law (I): Formation

Question 1

What is an offer? What case is an example of an offer?

Answer 1

A promise to be bound, on specified terms, as soon as the offer is accepted.
- contains all necessary essential terms (fixed&certain)
- sufficiently comprehensive and it can be accepted without further elaboration or clarification

Big v Boyd Gibbins ltd

Question 2

How do you differentiate an offer from an Invitation to treat?

Answer 2

Making an invitation to treat:
- inviting offers
- indication that party wishes, is interested and is open to negotiation for buisness
- where a person agrees to the terms of the invitation, he makes an offer
-maker of invitation is free to accept or reject the offer
Eg. Ads or display of goods in stores

Question 3

What happened in the Carlill v Carbolic Smoke Ball Company case?

Answer 3

Someone tried to claim the reward for getting ill even when the company said they wouldn’t.

But it was an advertisement, not an offer. In general ads are invitations to treat.

Question 4

What does the Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd case relate to?

Answer 4

How the display of goods is simply an invitation to treat. Once customer places goods in basket, brings to cash then they are making an offer. The shop keeper has the final say in accepting the offer.

Question 5

what does the Thornton v Shoe Lane Parking case relate to?

Answer 5

How machines make the offer when the machine holds it out. Acceptance takes place when the customer puts his money into the slot.
- Machines are not open to the negotiation process
- Machines will enter contract with anyone able to pay the required amount
- The customer is committed at the moment when they put the money into the machine

Question 6

What should be known about the Termination of an Offer?

Answer 6

It can be terminated in 4 ways
1. By removal/withdrawal (anytime prior to acceptance)
2. By rejection
3. Modification (counter offer)
4. By lapse of time

Question 7

Explain the mirror rule and the case that goes with it?

Answer 7

The acceptance must mirror the offer by demonstrating an unconditional, unqualified and complete willingness to enter the contract on the precise terms proposed.

Hyde v Wrench case relates selling farm with counter offer.

Question 8

Explain the rule that “acceptance cannot be deemed or assumed” and the case that follows it

Answer 8

Acceptance must be communication to the offeror, silence does not amount to acceptance. The law put the onus on the person whom the offer has been made to demonstrate that he has, by some positive conduct on his part, accepted the offer.

Felthouse v Bindley case with horse and no reply

Question 9

Explain the rule “the acceptance is effective only when it is communicated”

Answer 9

When offeror received the communication. Should be conveyed in a manner of communication that is reasonable in the circumstances:
- in person, by telephone
-in writing, by mail/post, by fax, by email
-by clicking a button indicating acceptance
-by mere conducts/actions

Question 10

Explain the case that relates to mere conducts/actions

Answer 10

Lowe (DJ) Ltd v Upper Clements Family Theme Park Ltd
Offer was accepted by delivering the crane to the theme park

Question 11

What are the two cases related to clicking an “I agree” button

Answer 11

Rudder v Microsoft (click wrap-agreement) not materially different from a multi-page written document

Dell Computer Corp v Union des consommateurs The Supreme Court upheld enforceability of contract terms introduced via hyperlink

Question 12

Explain how offer and acceptance work through email? What case relates to it?

Answer 12

We treat emails like telephone - acceptance occurs at the time of the receipt (when mailbox receives during office hours) case: Christmas v Fort MacKay

Question 13

Explain the rules and act for electronic contracts?

Answer 13

The same general rules are applied to electronic contracts as to other contracts. Uniform Electronic Commerce Act (UECA 1999)

Question 14

Explain acceptance by post/mail, what case relates to it?

Answer 14

It is an exception to the general rule: The postal rule. If it is reasonably anticipated by both parties that post will be used, acceptance is effective at at the time of the mailing/posting of the letter.

Case Adams v Lindsell

Question 15

Explain the Doctrine fo Consideration?

Answer 15

General rule: the party who seeks to enforce a promise must provide something of value in exchange for the promise; otherwise, the promise is unenforceable for lack of consideration.

A gratuitous promise (gift) is generally unenforceable

Question 16

Explain the classic description of consideration and the case that goes along with it.

Answer 16

A valuable consideration in the sense of law may consist either in some right, interest, profit, or benefit accruing the one party, or some forebearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other.

Question 17

Explain the Stilk v Myrick case

Answer 17

This case relates to a voyage originally with 11 men, but two left, the master agreed that the remainder of the crew could split the additional wages if they completed the trip. But he refused to pay when they returned.

Leon Elenborough:
- agreement is void for want of consideration
- no consideration
- they had all undertaken to do this trip prior, didn’t do anything extra

Question 18

What happens to consideration when parties variate their original contract? What cases relate?

Answer 18

-It is unenforceable if no fresh consideration is provided, Gilbert Steel Ltd v Univeristy Construction Ltd ex. Steel price rose, manufacturer asked for more money, customer agreed but then refused later

• It is enforceable if it is freely chosen by parties. Rosas v Toca lottery loan to Toca, contract was modified in a binding way and Toca had to repay the money

NAV Canada v Greater Fredericton Airport has ruled that a contractual variation unsupported by consideration is enforceable—provided it is freely chosen.

Question 19

What are the three cases when consideration is not necessary?

Answer 19

1. If the promise is made under seal (signature and wax seal)
2. If doctrine of promissory estoppel is applicable (A’s promise has been relied on & acted on by B) A doctrine in Equity - to cure the unfairness cause by the doctrine of consideration at common law. Central London Property Trust Ltd v High Trees House Ltd If promised relied on and acted on on the promise, he cannot break the promise. This can only be used as a defence (shield)
3. Legislative intervention to part payment tof a debt (Ontario, BC, Manitoba, Saskatchewan, Alberta) The common law rule that a creditor can go back on a promise to accept a lesser sum in full satisfaction of the debt has been reversed by legislation in several jurisdictions, including Ontario.

Question 20

Explain the intention to contact and two presumptions in two contexts

Answer 20

• Presumption in business/commericial situation (It is presumed that people have intention to create legal relations if agreement is reached in business/commercial situations)
• Presumption in social/domestic situation (It is presumed that people have NO intention to create legal relations if agreement is reached in social/domestic situations.)
• Both presumptions could be rebutted by evidence to the contrary