What is a contract?
A legally enforceable agreement made in writing, verbally or implied by the conduct of the parties.
What’s essential to a simple apparent contract?
Intention, Agreement and consideration.
What are the parts that make up a simple apparent contract?
Hint: I Always Consider Chocolate Consumption Legal
Intention, Agreement, Consideration, Capacity, Consent, Legality
Why is intention important?
The intention of parties distinguishes legally binding contracts for other types of arrangements.
How is intention determined?
The conduct of the parties is looked at and asked whether they were behaving in a way that indicated that they intended the agreement to be legally enforceable.
What two presumptions are made when using the objective test to identify intention?
- where the agreement is made in a social, or domestic, context, it is presumed that the agreement wasn’t intended to be legally enforceable (Balfour v Balfour 1919)
- where the agreement is made in a commercial, or business, context, it is presumed that the agreement was intended to be legally enforceable (Edwards v Skyways 1964)
What was the legal principle of Balfour v Balfour (1919)?
In domestic arrangements there is a presumption that there is no intention to create legal relations. The presumption can be rebutted depending on the circumstances.
What was the legal principle of Edwards v Skyways (1964)?
In commercial arrangements there is a presumption that there is an intention to create a legal contract.
What was the legal principle of Ermogenous v Greek Orthodox Community of SA Inc. (2002)?
There was intention to create legal relations and relying on the presumption, applying to religious arrangement, could lead to wrong conclusions where the full circumstances weren’t properly considered.
What was the legal principle of Trevey v Grubb (1982)?
There was intention to create a legal relationship (despite the presumption regarding social arrangements). Partie’s must’ve contemplated winnings to be shared in the event of winning.
What are the four cases relating to Intention?
- Balfour v Balfour (1919)
- Edwards v Skyways (1964)
- Ermogenous v Greek Orthodox Community of SA Inc. (2002)
- Trevey v Grubb (1982)
What is agreement?
When there had been a valid offer made and that offer has been accepted therefore bringing a contract into existence where the parties become legally obliged to proceed.
What is an offer? Who is the offeror and offeree?
An offer occurs when a person has expressed a willingness to immediately enter into a contract with the person to whom the offer is directed.
Offeror is the person making the offer.
Offeree is the person receiving the offer.
What happens when an offer is accepted?
An agreement is made.
What happens when a counter offer is made?
The offeree has rejected the first offer and is therefore terminated (Hyde v Wrench 1840)
What happens when an offer is not accepted or rejected?
The offeror can revoke the offer even in they promised to keep the offer open for a particular period. Unless consideration has been provided to keep the offer open.
What are the legal principles of Hyde v Wrench (1840)?
A counter offer is effectively a rejection - once rejected, an offer cannot be revived by the subsequent acceptance.
What is not the same as making an offer?
Responding to a request for information.
Explain an invitation to treat.
It is not an offer and the party who responds to the invitation will be the one making the offer. (Pharmaceutical Society of Great Britain v Boots 1953)
What are the legal principles of Pharmaceutical Society of Great Britain v Boots (1953)?
Advertising and placing goods on display are invitations to treat. They express a willingness to negotiate and don’t themselves constitute offers to sell.
What are the legal principles of an automatic vending machine?
Automatic vending and ticket dispensing machines aren’t considered invitations to treat as the display of goods in the machine is the offer which the offeree accepts by inserting coins in the machine and pressing the button.
What must an offeree do to indicate acceptance?
Indicate by words of actions that they’re willing to immediately enter into a legally enforceable contract with the offeror on the terms offered. The offeree cannot change their mind after accepting.
Acceptance must be what?
- Unqualified: offeree must accept the offer without modifying it
- Communicated: acceptance must be communicated to the offeror (Felthouse v Bindley 1862)
- Accepted by the offered in reliance on the offer (R v Clarke 1927)
What are the legal principles of Felthouse v Bindley (1862)?
An offeror cannot insist that a failure to respond (silence) is acceptance of an offer.
What are the legal principles of R v Clarke (1927)?
Acceptance must be made in reliance on (response to) the offer.
What are the four cases relating to Acceptance?
- Hyde v Wrench (1840)
- Pharmaceutical Society of Great Britain v Boots (1953)
- Felthouse v Bindley (1862)
- R v Clarke (1927)
What is consideration?
An agreement isn’t a contract unless both parties to the agreement have paid, or promised to pay, a price (consideration).
What forms can consideration come in?
- payment of money
- provision of goods
- provision of a service
- undertaking of an onerous obligation
- Refraining from doing something
- A promise to do any of these things
Who is the promisee?
The person receiving the promise and must provide consideration for that promise.
Where does consideration go?
Consideration must move from the promisee but doesn’t have to go to the promisor
What are the legal principles of Thomas v Thomas (1842)?
Consideration need not be adequate - contract law doesn’t require each party to pay a fair/adequate price, only a price of some legal value.
Consideration must be sufficient and not what?
- a vague promise (uncertain or of no legal value)
- past consideration (price paid for a promisee was paid before the promise was made) (Roscorla v Thomas 1842)
- a prior legal obligation (public: Collins v Godefrey 1831, contractual: Glasbrook Bros v Glamorgan County Council 1925)
What are the legal principles of Roscorla v Thomas (1842)?
Consideration must not be past
A promise’s legal obligation can be one that is owed as what? (consideration)
- a public duty (Collins v Godefrey 1831)
- a contractual duty (Glasbrook Bros v Glamorgan County Council 1925)
What are the legal principles of Collins v Godefrey (1831)?
If the price paid by the promisee is the fulfilment of a prior legal obligation, then this is considered insufficient consideration
What are the legal principles of Glasbrook Bros v Glamorgan County Council (1925)?
If the promisee does something beyond their legal or contractual duty, this consideration will be sufficient
What are the four cases relating to Consideration?
- Thomas v Thomas (1842)
- Roscorla v Thomas (1842)
- Collins v Godefrey (1831)
- Glasbrook v Glamorgan County Council (1925)
What is a deed?
A written, formal contract signed by parties before a witness and ‘sealed and delivered’
A promise is only enforceable when?
It is supported by consideration