Contract and Unjustified Enrichment Study Notes
Table Of Contents
Contract Formation (Offer/Acceptance).................................................................2
Promises...................................................................................................3
Conditions................................................................................................3
Offer Plus Acceptance..............................................................................3
Acceptances.............................................................................................3
Battle Of The Forms..................................................................................4
Interpretation Of Contracts.................................................................................... 4
Approach 1: Literal Interpretation............................................................4
Approach 2: Contextual Interpretation (Ics Principles).............................4
Approach 3: Commercial Common Sense................................................5
Return Towards Literalism/Scottish Position.............................................5
Shared Misuse Of A Term: Objective Vs Subjective Meaning....................5
In Practice:...............................................................................................5
Implied Terms........................................................................................................ 6
Terms Implied In Law................................................................................6
Terms Implied In Fact................................................................................7
Good Faith And Relational Contracts........................................................7
Discretionary Powers And The Braganza Duty.........................................8
In Practice.................................................................................................8
Error...................................................................................................................... 8
Types Of Error...........................................................................................8
Bell’s Five Categories Of Error In Substantials..........................................9
Current Law Of Error: Error Plus................................................................9
Unilateral Un-Induced Error (Onerous Contracts)...................................10
Additional Considerations.......................................................................10
Misrepresentation................................................................................................ 10
Requirement For A Positive Act..............................................................10
Requirements For Affecting Contract Validity.........................................11
Forms Of Misrepresentation And Remedies............................................11
Restitutio In Integrum (Restoration).......................................................11
Requirements of Writing (Scotland) Act 1995......................................................11
Validity: Subscription And Authentication...............................................12
Probativity..............................................................................................12
Statutory Personal Bar............................................................................12
, Unrequired Writing And Implied Terms...................................................13
Third-Party Rights and Assignation......................................................................13
Jus Quaesitum Tertio...............................................................................14
Contract(Third Party Rights)(Scotland) Act 2017....................................14
Assignation.............................................................................................14
Illegality............................................................................................................... 15
Stage 1: Is the Contract to Be Treated as Illegal?...................................15
Stage 2: Should the Party have Access to Remedies in Unjustified
Enrichment?...........................................................................................16
Immortality in Contract..........................................................................16
Protective Application of Illegality Rules.................................................17
Frustration........................................................................................................... 17
Development of the Test for Frustration.................................................17
Impact of Frustration and Remedies.......................................................18
Force Majeure Clauses............................................................................18
Breach and Termination....................................................................................... 19
Materiality..............................................................................................19
Key Concepts and Procedures................................................................19
Retention (Mutuality)........................................................................................... 21
Counterpart Obligations.........................................................................21
The Breach Must be Material (more than trivial)....................................22
No Abusive or Unfair Use (Equitable Control).........................................22
Obligations must be Contemporaneous.................................................22
Specific Implement.............................................................................................. 23
Damages............................................................................................................. 24
Calculation of Damages.........................................................................25
Impact of Contract Terms on Calculation................................................25
Causation...............................................................................................26
Contributory Negligence.........................................................................26
Contract Formation (Offer/Acceptance)
Contract = agreement between two or more parties, concluded orally or in writing. Or
may be concluded by an offer met by an acceptance. Must have meeting of the minds
and intention to create legal relations.
Commercially the law presumes an intention, social/family the law does not presume an
intention.
Contracts that entail money (commercial contracts) are always done in writing
Parties must be agreed on the basic essentials (who the parties are, the subject matter,
the price)
, Promises
Possible to make a legally binding unilateral promise to another party. Must have an
intention to be legally binding, promisee doesn’t need to accept.
Gratuitous unilateral obligations must be in writing except an obligation undertaken in
the course of business, Requirements of Writing (Scotland) Act 1995, s1(2)(a)(ii)
Conditions
Obligations can be conditional (will become enforceable or cease to be on occurrence of
event)
1. Suspensive condition: performance delayed, can result in a condition being
purified or non
2. Resolutive: binding immediately but ceases to bind on purification of the condition
3. Potestative: within the powers of the parties to fulfil the condition
4. Casual: purification of the condition up to a third party or subject to change
5. Mixed: condition is dependent on a combination of potestative and casual factors
Offer Plus Acceptance
“Commercial contracts cannot be arranged by what people think in their inmost minds.
Commercial contracts are arranged according to what people say” Lord President
Dunedin, Muirhead & Turnbull v Dickson (1950)
The offer must meet the terms of the acceptance (minimum entry requirements).
Language of the offer must invite acceptance and be capable of resulting in a contract.
Must show real indication of desire or willingness to contract (Harvey v Facey
[1893] did not do this and so there was no contract)
Types of offers:
Shop displays, an invitation to treat (negotiate, not a plain offer) Fisher v Bell
[1961]
Adverisement, the same, Partridge v Crittenden [1968]
Tenders, actions, websites/social media
Rewards, Carlill v The Carbolic Smokeball Company [1893]
An offer is effective when communicated to the offeree, reflects an objective approach to
contract formation. Can be revoked up until it has been accepted by the offeree. Can also
terminate through rejection, passing of a reasonable time without a response, death of
either party.
Acceptances
Can accept through statements or words. Silence or inactivity is not, as a general rule,
considered to be a valid acceptance. An acceptance is ineffective until communicated to
the offeror.
To form a binding contract, terms of acceptance must meet terms of the offer --
consensus in idem.
QUALIFIED ACCEPTANCE: contains terms which conflict with the terns original offer, kills
the original offer (original offer can no longer be accepted) Wolf and Wolf v Forfar
Potato Co 1984
POSTAL ACCEPTANCE RULE: acceptance takes effect at the moment it is posted. Only
applies to acceptances, not offers. Means a contract is concluded even if the acceptance
gets lost in the post/doesn’t arrive (Thomson v James (1855))
Table Of Contents
Contract Formation (Offer/Acceptance).................................................................2
Promises...................................................................................................3
Conditions................................................................................................3
Offer Plus Acceptance..............................................................................3
Acceptances.............................................................................................3
Battle Of The Forms..................................................................................4
Interpretation Of Contracts.................................................................................... 4
Approach 1: Literal Interpretation............................................................4
Approach 2: Contextual Interpretation (Ics Principles).............................4
Approach 3: Commercial Common Sense................................................5
Return Towards Literalism/Scottish Position.............................................5
Shared Misuse Of A Term: Objective Vs Subjective Meaning....................5
In Practice:...............................................................................................5
Implied Terms........................................................................................................ 6
Terms Implied In Law................................................................................6
Terms Implied In Fact................................................................................7
Good Faith And Relational Contracts........................................................7
Discretionary Powers And The Braganza Duty.........................................8
In Practice.................................................................................................8
Error...................................................................................................................... 8
Types Of Error...........................................................................................8
Bell’s Five Categories Of Error In Substantials..........................................9
Current Law Of Error: Error Plus................................................................9
Unilateral Un-Induced Error (Onerous Contracts)...................................10
Additional Considerations.......................................................................10
Misrepresentation................................................................................................ 10
Requirement For A Positive Act..............................................................10
Requirements For Affecting Contract Validity.........................................11
Forms Of Misrepresentation And Remedies............................................11
Restitutio In Integrum (Restoration).......................................................11
Requirements of Writing (Scotland) Act 1995......................................................11
Validity: Subscription And Authentication...............................................12
Probativity..............................................................................................12
Statutory Personal Bar............................................................................12
, Unrequired Writing And Implied Terms...................................................13
Third-Party Rights and Assignation......................................................................13
Jus Quaesitum Tertio...............................................................................14
Contract(Third Party Rights)(Scotland) Act 2017....................................14
Assignation.............................................................................................14
Illegality............................................................................................................... 15
Stage 1: Is the Contract to Be Treated as Illegal?...................................15
Stage 2: Should the Party have Access to Remedies in Unjustified
Enrichment?...........................................................................................16
Immortality in Contract..........................................................................16
Protective Application of Illegality Rules.................................................17
Frustration........................................................................................................... 17
Development of the Test for Frustration.................................................17
Impact of Frustration and Remedies.......................................................18
Force Majeure Clauses............................................................................18
Breach and Termination....................................................................................... 19
Materiality..............................................................................................19
Key Concepts and Procedures................................................................19
Retention (Mutuality)........................................................................................... 21
Counterpart Obligations.........................................................................21
The Breach Must be Material (more than trivial)....................................22
No Abusive or Unfair Use (Equitable Control).........................................22
Obligations must be Contemporaneous.................................................22
Specific Implement.............................................................................................. 23
Damages............................................................................................................. 24
Calculation of Damages.........................................................................25
Impact of Contract Terms on Calculation................................................25
Causation...............................................................................................26
Contributory Negligence.........................................................................26
Contract Formation (Offer/Acceptance)
Contract = agreement between two or more parties, concluded orally or in writing. Or
may be concluded by an offer met by an acceptance. Must have meeting of the minds
and intention to create legal relations.
Commercially the law presumes an intention, social/family the law does not presume an
intention.
Contracts that entail money (commercial contracts) are always done in writing
Parties must be agreed on the basic essentials (who the parties are, the subject matter,
the price)
, Promises
Possible to make a legally binding unilateral promise to another party. Must have an
intention to be legally binding, promisee doesn’t need to accept.
Gratuitous unilateral obligations must be in writing except an obligation undertaken in
the course of business, Requirements of Writing (Scotland) Act 1995, s1(2)(a)(ii)
Conditions
Obligations can be conditional (will become enforceable or cease to be on occurrence of
event)
1. Suspensive condition: performance delayed, can result in a condition being
purified or non
2. Resolutive: binding immediately but ceases to bind on purification of the condition
3. Potestative: within the powers of the parties to fulfil the condition
4. Casual: purification of the condition up to a third party or subject to change
5. Mixed: condition is dependent on a combination of potestative and casual factors
Offer Plus Acceptance
“Commercial contracts cannot be arranged by what people think in their inmost minds.
Commercial contracts are arranged according to what people say” Lord President
Dunedin, Muirhead & Turnbull v Dickson (1950)
The offer must meet the terms of the acceptance (minimum entry requirements).
Language of the offer must invite acceptance and be capable of resulting in a contract.
Must show real indication of desire or willingness to contract (Harvey v Facey
[1893] did not do this and so there was no contract)
Types of offers:
Shop displays, an invitation to treat (negotiate, not a plain offer) Fisher v Bell
[1961]
Adverisement, the same, Partridge v Crittenden [1968]
Tenders, actions, websites/social media
Rewards, Carlill v The Carbolic Smokeball Company [1893]
An offer is effective when communicated to the offeree, reflects an objective approach to
contract formation. Can be revoked up until it has been accepted by the offeree. Can also
terminate through rejection, passing of a reasonable time without a response, death of
either party.
Acceptances
Can accept through statements or words. Silence or inactivity is not, as a general rule,
considered to be a valid acceptance. An acceptance is ineffective until communicated to
the offeror.
To form a binding contract, terms of acceptance must meet terms of the offer --
consensus in idem.
QUALIFIED ACCEPTANCE: contains terms which conflict with the terns original offer, kills
the original offer (original offer can no longer be accepted) Wolf and Wolf v Forfar
Potato Co 1984
POSTAL ACCEPTANCE RULE: acceptance takes effect at the moment it is posted. Only
applies to acceptances, not offers. Means a contract is concluded even if the acceptance
gets lost in the post/doesn’t arrive (Thomson v James (1855))
