Contract Year One Summary
What is a contract?
- an agreement giving rise to obligations which are enforced or recognised by law
- a legally binding agreements
Objective test:
A contract is formed if..
“a reasonable man would believe that he was assenting to the terms proposed by the other party
and that party upon that belief enters into a contract with him” Smith v Hughes (1871)
= you must look at what was said and done as whether there was intention
Type of contract:
Bilateral- two identified parties who exchange promises and are both bound from that moment of
exchange
Unilateral- one party (the promisor) binds itself to perform a stated promise upon performance of a
stated act by the promisee, but under which the promisee gives no commitment to perform the act
and instead is left free to choose whether to perform or not
o Carlill v Carbolic Smoke Ball: D had placed an advertisement in which it promised to pay
£100 to any person catching influenza after using its smoke ball remedy. The plaintiff has
caught influence after using the smoke ball in the required manner, but D denied any liability
to pay £100. CoA held that the advertisement constituted an offer since it requested
performance of an act as acceptance
Elements of a legally binding offer?
Offer
Acceptance
Consideration (exchange)
Intention to create legal relations
Certainty
Offer
- An expression of willingness to contract on specific terms made with the intention that the terms
will become binding as soon as they are accepted by the person to whom the offer is addressed
- Must be communicated
- Contains all the detailed terms of the contract
- Satisfied certainty
Partridge v Crittenden: An advert for wild bird constitutes an offence to offer such birds for sales
under the Protection of Birds Act 1954 was considered merely an invitation to treat than an offer.
, Invitation to treat
- Things less than an offer
e.g. inquiries to the price, advertisement, displays of goods
Pharmaceutical Society of GB v Boots Cash Chemists:
o Boots introduced a self-serviced checkout system but the products by law can only be sold
under the presence of a trained pharmacist.
o It was held that the display of goods was only an invitation of treat but the customer makes
an offer to purchase when the items are presented at the tills meaning acceptance is when
payment is taken.
Acceptance
- What turns a specific offer, made with the intention to be bound, into an agreement
The consensus as ide, or ‘meeting of minds’ is used to identify a valid acceptance which
states that it must be unconditional and correspond with the exact terms proposed by the
offeror
Assuming there is consideration and intent, the contract is formed when acceptance is
communicated effectively to the offeror
The acceptance of a unilateral offer takes place when the offeree performs the act in a specific
wat- if the offeree has performed the act the offeror cannot reject it
Counter-offer
- Rejects the original offer and puts itself up in its place
- Imports new terms into the contract and therefore cannot be an acceptance as explained in
Hyde v Wrench
Acceptance must be communicated
= verbally or in writing
Fenthouse v Bindley: Mere silence is not acceptance
Ramsgate Victoria Hotel v Montefoire
o D offered to purchase shares in the claimant company at a certain price
o Six months later the claimant accepted the offer by which time the value of shares had fallen
o D has not withdrawn the offer but refused to go through with the same
o Held that the offer had lapsed after a reasonable period of time
Exception to acceptance- postal rule
Adam v Lindsell
o D was selling wool to the claimant and asked for a reply via post
o The letter of acceptance was delayed and therefore D sold to a third party
o Held as a breach of contract because a contract came into existence as soon as the ltter of
acceptance was placed in the post box
Consideration
- An act or promise is given in exchange for the promise
- i.e. the price for which the other promise was brought
What is a contract?
- an agreement giving rise to obligations which are enforced or recognised by law
- a legally binding agreements
Objective test:
A contract is formed if..
“a reasonable man would believe that he was assenting to the terms proposed by the other party
and that party upon that belief enters into a contract with him” Smith v Hughes (1871)
= you must look at what was said and done as whether there was intention
Type of contract:
Bilateral- two identified parties who exchange promises and are both bound from that moment of
exchange
Unilateral- one party (the promisor) binds itself to perform a stated promise upon performance of a
stated act by the promisee, but under which the promisee gives no commitment to perform the act
and instead is left free to choose whether to perform or not
o Carlill v Carbolic Smoke Ball: D had placed an advertisement in which it promised to pay
£100 to any person catching influenza after using its smoke ball remedy. The plaintiff has
caught influence after using the smoke ball in the required manner, but D denied any liability
to pay £100. CoA held that the advertisement constituted an offer since it requested
performance of an act as acceptance
Elements of a legally binding offer?
Offer
Acceptance
Consideration (exchange)
Intention to create legal relations
Certainty
Offer
- An expression of willingness to contract on specific terms made with the intention that the terms
will become binding as soon as they are accepted by the person to whom the offer is addressed
- Must be communicated
- Contains all the detailed terms of the contract
- Satisfied certainty
Partridge v Crittenden: An advert for wild bird constitutes an offence to offer such birds for sales
under the Protection of Birds Act 1954 was considered merely an invitation to treat than an offer.
, Invitation to treat
- Things less than an offer
e.g. inquiries to the price, advertisement, displays of goods
Pharmaceutical Society of GB v Boots Cash Chemists:
o Boots introduced a self-serviced checkout system but the products by law can only be sold
under the presence of a trained pharmacist.
o It was held that the display of goods was only an invitation of treat but the customer makes
an offer to purchase when the items are presented at the tills meaning acceptance is when
payment is taken.
Acceptance
- What turns a specific offer, made with the intention to be bound, into an agreement
The consensus as ide, or ‘meeting of minds’ is used to identify a valid acceptance which
states that it must be unconditional and correspond with the exact terms proposed by the
offeror
Assuming there is consideration and intent, the contract is formed when acceptance is
communicated effectively to the offeror
The acceptance of a unilateral offer takes place when the offeree performs the act in a specific
wat- if the offeree has performed the act the offeror cannot reject it
Counter-offer
- Rejects the original offer and puts itself up in its place
- Imports new terms into the contract and therefore cannot be an acceptance as explained in
Hyde v Wrench
Acceptance must be communicated
= verbally or in writing
Fenthouse v Bindley: Mere silence is not acceptance
Ramsgate Victoria Hotel v Montefoire
o D offered to purchase shares in the claimant company at a certain price
o Six months later the claimant accepted the offer by which time the value of shares had fallen
o D has not withdrawn the offer but refused to go through with the same
o Held that the offer had lapsed after a reasonable period of time
Exception to acceptance- postal rule
Adam v Lindsell
o D was selling wool to the claimant and asked for a reply via post
o The letter of acceptance was delayed and therefore D sold to a third party
o Held as a breach of contract because a contract came into existence as soon as the ltter of
acceptance was placed in the post box
Consideration
- An act or promise is given in exchange for the promise
- i.e. the price for which the other promise was brought
