Contract Law
Agreement:
An offer must be accepted for there to be a contract
o This can either be by words or conduct
An offer cannot be accepted if it has been terminated. There are 4
ways to terminate an offer:
o Counter offer
o Lapse of time
Either after a specified time, or a reasonable time in the
circumstances.
o Withdrawal/revocation
Offer can be revoked at any point until acceptance
UNLESS the offeree gave something in return for the
promise to keep the offer open.
Revocation must be communicated
o Express rejection
Note with unilateral contracts there will not be separate acceptance
and consideration- performance of the act will satisfy both.
o Unilateral contracts are where there is a promise in return for
an act.
o Payment will be dependent upon performance, so until the act
is performed there is no acceptance.
o Implied term in most unilateral contracts that there is a
promise not to revoke once performance has begun.
The postal rule is that acceptance takes place as soon as the letter
of acceptance is posted, NOT when it is received
o Will apply even if the acceptance is delayed/lost in the post.
o ONLY applies to acceptance (revocations will be effective once
received)
o BUT- Will not apply if the offer excludes postal acceptance.
o BUT- Will only apply if post is a reasonable means of
communication in the circumstances
EG- Will not be reasonable if the offeror stated that they
need an offer in the next few days
o BUT- Will only apply if the letter was properly addressed and
posted.
If an acceptance is sent within business hours, it is effective on
receipt, NOT when read.
, If an acceptance is sent outside business hours, it is effective at
the start of business the next working day.
No general rule for electronic communication and instant
messaging- will usually depend on the circumstances of the case
and intentions of the parties.
o In The Brimes Case it was said that a message sent to a
business will be communicated when it would have come to
the attention of the recipient acting in a business-like manner.
At auction, the bids are classed as offers and the fall of the
hammer will be acceptance.
An auctioneer will be obliged to accept whatever offer has been
given ONLY if they make a unilateral offer, stating that it is to be
sold ‘without reserve’
o If this is the case, the claimant will be awarded damages of
the value of the item, minus the amount of the claimants bid
o BUT- If they make this offer ‘with reserve’, then they are
able to revoke the offer.
Similarly to auctions, if a company invites a number of companies to
submit tenders, they will only be obliged to accept an offer if they
specifically promised to accept the lowest tender
Generally, silence will NOT amount to acceptance, though in some
circumstances it will:
o If it is the offeree indicating that their silence will amount to
acceptance, not the offeror
o Unilateral contracts
o Where there is an established course of dealing that does not
require acceptance every time
A revocation may be communicated by a reliable third party
Intention to create legal relations:
Commercial context: Strong presumption to create legal relations
o Very difficult to rebut without clear words.
o BUT- This is rebuttable if the agreement is stated as ‘binding
in honour only’
Domestic context: Presumption of no intention to create legal
relations
o BUT- This is rebuttable by a number of factors, including the
relationship of the parties and any money involved
, Consideration:
Consideration = a benefit to one party or a detriment to the
other.
In order to sue for a breach of a promise, the party must show they
gave some consideration for it.
Executory consideration = consideration that is promised to be
performed by one or both parties at a future date.
Executed consideration = consideration that has already been fully
performed or executed by one or both parties at the time of contract
formation.
The law is not concerned with the value or adequacy of
consideration
o Payment of £1 could still be good consideration.
o BUT- The law is concerned with the sort of thing that the
consideration is.
Will usually be satisfied.
Money, goods, services etc…
Past consideration is not good consideration
o EG- Helen looks after Carls cat as a favour while he is away.
When he returns he promises to give her £20- this is not
enforceable as the money was paid after the consideration.
o UNLESS the past act was done at the promisors request
o UNLESS there was some mutual understanding that the act
would be compensated for in some way.
o UNLESS the promise had been made in advance.
Performance of an existing contractual duty will not be consideration
o UNLESS they exceed this obligation
o UNLESS there is a promise of further payment to confer a
practical benefit (without duress)
EG- Having building work completed earlier.
This will NOT cover the part payment of a debt- part
payment of a debt in itself will not confer a practical
benefit.
Unless the part payment of a debt also gives
something extra.
Pinnels rule: A creditors acceptance of only part payment of a
debt will not be binding and will not discharge the debt
o UNLESS there is some fresh consideration
EG- Payment at an earlier date to benefit the creditor.
EG- Payment in a different form.
Agreement:
An offer must be accepted for there to be a contract
o This can either be by words or conduct
An offer cannot be accepted if it has been terminated. There are 4
ways to terminate an offer:
o Counter offer
o Lapse of time
Either after a specified time, or a reasonable time in the
circumstances.
o Withdrawal/revocation
Offer can be revoked at any point until acceptance
UNLESS the offeree gave something in return for the
promise to keep the offer open.
Revocation must be communicated
o Express rejection
Note with unilateral contracts there will not be separate acceptance
and consideration- performance of the act will satisfy both.
o Unilateral contracts are where there is a promise in return for
an act.
o Payment will be dependent upon performance, so until the act
is performed there is no acceptance.
o Implied term in most unilateral contracts that there is a
promise not to revoke once performance has begun.
The postal rule is that acceptance takes place as soon as the letter
of acceptance is posted, NOT when it is received
o Will apply even if the acceptance is delayed/lost in the post.
o ONLY applies to acceptance (revocations will be effective once
received)
o BUT- Will not apply if the offer excludes postal acceptance.
o BUT- Will only apply if post is a reasonable means of
communication in the circumstances
EG- Will not be reasonable if the offeror stated that they
need an offer in the next few days
o BUT- Will only apply if the letter was properly addressed and
posted.
If an acceptance is sent within business hours, it is effective on
receipt, NOT when read.
, If an acceptance is sent outside business hours, it is effective at
the start of business the next working day.
No general rule for electronic communication and instant
messaging- will usually depend on the circumstances of the case
and intentions of the parties.
o In The Brimes Case it was said that a message sent to a
business will be communicated when it would have come to
the attention of the recipient acting in a business-like manner.
At auction, the bids are classed as offers and the fall of the
hammer will be acceptance.
An auctioneer will be obliged to accept whatever offer has been
given ONLY if they make a unilateral offer, stating that it is to be
sold ‘without reserve’
o If this is the case, the claimant will be awarded damages of
the value of the item, minus the amount of the claimants bid
o BUT- If they make this offer ‘with reserve’, then they are
able to revoke the offer.
Similarly to auctions, if a company invites a number of companies to
submit tenders, they will only be obliged to accept an offer if they
specifically promised to accept the lowest tender
Generally, silence will NOT amount to acceptance, though in some
circumstances it will:
o If it is the offeree indicating that their silence will amount to
acceptance, not the offeror
o Unilateral contracts
o Where there is an established course of dealing that does not
require acceptance every time
A revocation may be communicated by a reliable third party
Intention to create legal relations:
Commercial context: Strong presumption to create legal relations
o Very difficult to rebut without clear words.
o BUT- This is rebuttable if the agreement is stated as ‘binding
in honour only’
Domestic context: Presumption of no intention to create legal
relations
o BUT- This is rebuttable by a number of factors, including the
relationship of the parties and any money involved
, Consideration:
Consideration = a benefit to one party or a detriment to the
other.
In order to sue for a breach of a promise, the party must show they
gave some consideration for it.
Executory consideration = consideration that is promised to be
performed by one or both parties at a future date.
Executed consideration = consideration that has already been fully
performed or executed by one or both parties at the time of contract
formation.
The law is not concerned with the value or adequacy of
consideration
o Payment of £1 could still be good consideration.
o BUT- The law is concerned with the sort of thing that the
consideration is.
Will usually be satisfied.
Money, goods, services etc…
Past consideration is not good consideration
o EG- Helen looks after Carls cat as a favour while he is away.
When he returns he promises to give her £20- this is not
enforceable as the money was paid after the consideration.
o UNLESS the past act was done at the promisors request
o UNLESS there was some mutual understanding that the act
would be compensated for in some way.
o UNLESS the promise had been made in advance.
Performance of an existing contractual duty will not be consideration
o UNLESS they exceed this obligation
o UNLESS there is a promise of further payment to confer a
practical benefit (without duress)
EG- Having building work completed earlier.
This will NOT cover the part payment of a debt- part
payment of a debt in itself will not confer a practical
benefit.
Unless the part payment of a debt also gives
something extra.
Pinnels rule: A creditors acceptance of only part payment of a
debt will not be binding and will not discharge the debt
o UNLESS there is some fresh consideration
EG- Payment at an earlier date to benefit the creditor.
EG- Payment in a different form.
