The rules and theory of contract law;
- Rules and principles of contract law; a contact is defined as an agreement that the law
will enforce. Areas we will study:
1. Formation of contract; making an agreement to do something
2. The terms of the contact; the terms are the obligations and right of each party to
the contract
3. Vitiating factors; covers factors that may make a contract invalid
4. Discharge of contract; examining exactly what amounts to performance of a
contract, when there is a breach and what happens when performance of the
contract is prevented by the events outside the control of the parties
5. Remedies; legal remedies a party to the contract can seek when the contract
has been breached or affected by a vitiating factor
Contract law is largely derived from case law. Equity provides some ways of
overcoming aspects of inherent unfairness in common law. There are some Acts of
Parliament that have been passed to deal with problems that have arisen in common
law such as The Sale of Goods Act 1979. European law has influenced today's
contract law by making regulations that are often designed to help consumers.
- Balancing interests and justice; judges often have to balance competing interests in
their judgements which can lead to unusual results. Parliament also sets out to balance
rights between contracting parties which goes against the theory of freedom of
contract. Caveat emptor means let the buying beware and could operate harshly
against the interest of the weaker bargaining party. Examples of conflicting decisions
are Olley v Marlborough Court Hotel 1949 and Thompson v LMS railway. Only a party
to a contract can take legal action on it, this could lead to injustice, despite the legal
position of the agent (a person who is authorised to act for another in the making of a
contract with third parties, the resulting contract is made between the principal and the
third party and not with the agent). The Contract (Rights of Third Parties) Act 1999
modified the law by allowing third parties to make a claim where the contract expressly
provided for it or where the contract purported to confer a benefit on them. The Law
Reform (Frustrated Contracts) Act 1943 enabled the courts to apportion the losses
more fairly between the parties by ordering ‘just a sum’ to be paid where either
expenses have occurred or a valuable benefit obtained.
- The principle of fault; the principle of fault has two distinct elements - the degree of
responsibility for actions and the liability under the law. Responsibility is seen as one
theory in contract law. A misrepresentation is an untrue statement of fact made by one
party to the contract which induces the other party to enter into the contract. There are
categories as innocent, negligent or fraudulent by the perceived amount of fault.
Generally silence will not amount to misrepresentation as there is a freedom of
contract. Breach of contract depends on the level of blameworthiness to determine the
injured party's rights, this will determine whether a person can end the contract or must
continue it but claim some compensation.
- Morality; a rule is something that influences the way in which we behave, either
because we submit ourselves to it voluntarily, as with moral rules, or because it is
enforceable by some authority, as with laws. Many rules aren’t morally binding or have
the force of law but they are kept because of the context for which they operate.
Morality is generally to do with beliefs so many are affected by religion, we all have a
moral code of some kind which defines what we think is and is not acceptable
behaviour. Morality can differ from culture and individual. Morality is most obviously
, intertwined with criminal law but aspects of contract law are also affected. Contracts
can be declared void because of their immorality for example Pearce v Brooks.
Equitable remedies are a reflection of morality and justice in contract law. Freedom of
contract allows any contract to be made (subject to illegality) however it may be viewed
that some contracts are deemed so outrageous that they are immoral, but rarely illegal.
Formation of contract:
What is a contract?
1. Offer
2. Acceptance
3. Consideration
4. Intention to create legal relations
Freedom of contract;
- The freedom of parties to enter into any form of agreement they choose and in
whatever form they choose and to choose their own terms
Sanctity of contract;
- Once the contract has been entered parties must perform their obligations
Offer key terms;
- Offer; an expression of willingness to be bound by certain terms
- Offeror; the person who makes the offer
- Offeree; the person to whom the offer is made
- Invitation to treat; an indication that one person is willing to negotiate a contract with
another but that person is not yet willing to make a legal offer
- Bilateral contract; requires both offeror and offeree to do something, both have
obligations
- unilateral contract; a contract agreement in which an offeror promises to pay after the
occurrence of a specified act
- Counter offer; a response to an offer which makes a firm proposal that materially
affects the terms of the offer (an offer made in response to a previous offer by the other
party during negotiations for a final contract. Making a counter offer automatically
rejects the prior offer, and requires an acceptance under the terms of the counter offer
or there is no contract.)
The offer;
- The offer must be definite in its terms, if not then invitation to treat (Gibson v
Manchester City Council)
Invitation to treat;
- Advertisements are generally an invitation to treat (Partridge v Crittenden)
- Advertisements can be Bilateral; the offeree sends money in answer to an
advertisement offer in return for the goods.
- Advertisements can be Unilateral; the offeror makes a promise in exchange for an act
done by the other party (Carhill v Carbolic Smokeball Company)
- Goods in a shop window/shelf; these are invitation to treat (Fisher v Bell /
Pharmaceutical society of GB v Boots)
, - Lots at an auction; bidder makes an offer, acceptance when the hammer falls therefore
invitation to treat (British Car Auctions v Wright)
- Request for information; merely finding out information, not invitation to treat or offer
(Harvey v Favey)
Who can make an offer;
- Anyone in any format (Thornton V Shoe Lane Parking)
To whom can an offer be made;
- Named individual (Gibson v Manchester City Council)
- A group of people
- The world at large (Carhill v Smokeball)
- Can be targeted at particular individuals
- May be conditional on another contract being made
How long does an offer last;
- Offer comes into existence when communicated with the offeree
- Cannot be accepted once it has ended
- Offeree must know of the offer (Taylor v Laird)
- Exact time can be critical (Stevenson v McLean)
How can an offer end;
- Revocation (to withdraw);
1. Must be communicated to the offeree (Routledge v Grant)
2. When offer to the whole world by reasonable time or by publishing revocation
(Carhill)
3. Separate collateral contract
4. Revocation can be made by a reliable person (Dickinson v Dodds)
- Rejection;
1. Once rejected the offer cannot be accepted by the same person later
2. Offer made to several people, if once refused doesn't close the offer to others
3. Rejection must be communicated
4. If a counter offer makes a significant difference then it is a rejection of offer
(Hyde v Wrench)
5. Requests for information are not counter offers so no end to the offer
(Stevenson v McLean)
- Lapse of time;
1. If an offer is for a fixed amount of time then it comes to an end at the end of the
time period
2. Offer comes to an end after reasonable time as elapsed, depends on nature of
the offer (Ramsgate v Victoria Hotel v Montefiore)
- Death;
1. If the offeree dies then the offer comes to an end as it cannot be accepted, their
would need to be a new offer
2. Death of the offeror will bring the offer to an end once the death is
communicated
- Acceptance;
1. Brings offer to an end as start of the contract
- Rules and principles of contract law; a contact is defined as an agreement that the law
will enforce. Areas we will study:
1. Formation of contract; making an agreement to do something
2. The terms of the contact; the terms are the obligations and right of each party to
the contract
3. Vitiating factors; covers factors that may make a contract invalid
4. Discharge of contract; examining exactly what amounts to performance of a
contract, when there is a breach and what happens when performance of the
contract is prevented by the events outside the control of the parties
5. Remedies; legal remedies a party to the contract can seek when the contract
has been breached or affected by a vitiating factor
Contract law is largely derived from case law. Equity provides some ways of
overcoming aspects of inherent unfairness in common law. There are some Acts of
Parliament that have been passed to deal with problems that have arisen in common
law such as The Sale of Goods Act 1979. European law has influenced today's
contract law by making regulations that are often designed to help consumers.
- Balancing interests and justice; judges often have to balance competing interests in
their judgements which can lead to unusual results. Parliament also sets out to balance
rights between contracting parties which goes against the theory of freedom of
contract. Caveat emptor means let the buying beware and could operate harshly
against the interest of the weaker bargaining party. Examples of conflicting decisions
are Olley v Marlborough Court Hotel 1949 and Thompson v LMS railway. Only a party
to a contract can take legal action on it, this could lead to injustice, despite the legal
position of the agent (a person who is authorised to act for another in the making of a
contract with third parties, the resulting contract is made between the principal and the
third party and not with the agent). The Contract (Rights of Third Parties) Act 1999
modified the law by allowing third parties to make a claim where the contract expressly
provided for it or where the contract purported to confer a benefit on them. The Law
Reform (Frustrated Contracts) Act 1943 enabled the courts to apportion the losses
more fairly between the parties by ordering ‘just a sum’ to be paid where either
expenses have occurred or a valuable benefit obtained.
- The principle of fault; the principle of fault has two distinct elements - the degree of
responsibility for actions and the liability under the law. Responsibility is seen as one
theory in contract law. A misrepresentation is an untrue statement of fact made by one
party to the contract which induces the other party to enter into the contract. There are
categories as innocent, negligent or fraudulent by the perceived amount of fault.
Generally silence will not amount to misrepresentation as there is a freedom of
contract. Breach of contract depends on the level of blameworthiness to determine the
injured party's rights, this will determine whether a person can end the contract or must
continue it but claim some compensation.
- Morality; a rule is something that influences the way in which we behave, either
because we submit ourselves to it voluntarily, as with moral rules, or because it is
enforceable by some authority, as with laws. Many rules aren’t morally binding or have
the force of law but they are kept because of the context for which they operate.
Morality is generally to do with beliefs so many are affected by religion, we all have a
moral code of some kind which defines what we think is and is not acceptable
behaviour. Morality can differ from culture and individual. Morality is most obviously
, intertwined with criminal law but aspects of contract law are also affected. Contracts
can be declared void because of their immorality for example Pearce v Brooks.
Equitable remedies are a reflection of morality and justice in contract law. Freedom of
contract allows any contract to be made (subject to illegality) however it may be viewed
that some contracts are deemed so outrageous that they are immoral, but rarely illegal.
Formation of contract:
What is a contract?
1. Offer
2. Acceptance
3. Consideration
4. Intention to create legal relations
Freedom of contract;
- The freedom of parties to enter into any form of agreement they choose and in
whatever form they choose and to choose their own terms
Sanctity of contract;
- Once the contract has been entered parties must perform their obligations
Offer key terms;
- Offer; an expression of willingness to be bound by certain terms
- Offeror; the person who makes the offer
- Offeree; the person to whom the offer is made
- Invitation to treat; an indication that one person is willing to negotiate a contract with
another but that person is not yet willing to make a legal offer
- Bilateral contract; requires both offeror and offeree to do something, both have
obligations
- unilateral contract; a contract agreement in which an offeror promises to pay after the
occurrence of a specified act
- Counter offer; a response to an offer which makes a firm proposal that materially
affects the terms of the offer (an offer made in response to a previous offer by the other
party during negotiations for a final contract. Making a counter offer automatically
rejects the prior offer, and requires an acceptance under the terms of the counter offer
or there is no contract.)
The offer;
- The offer must be definite in its terms, if not then invitation to treat (Gibson v
Manchester City Council)
Invitation to treat;
- Advertisements are generally an invitation to treat (Partridge v Crittenden)
- Advertisements can be Bilateral; the offeree sends money in answer to an
advertisement offer in return for the goods.
- Advertisements can be Unilateral; the offeror makes a promise in exchange for an act
done by the other party (Carhill v Carbolic Smokeball Company)
- Goods in a shop window/shelf; these are invitation to treat (Fisher v Bell /
Pharmaceutical society of GB v Boots)
, - Lots at an auction; bidder makes an offer, acceptance when the hammer falls therefore
invitation to treat (British Car Auctions v Wright)
- Request for information; merely finding out information, not invitation to treat or offer
(Harvey v Favey)
Who can make an offer;
- Anyone in any format (Thornton V Shoe Lane Parking)
To whom can an offer be made;
- Named individual (Gibson v Manchester City Council)
- A group of people
- The world at large (Carhill v Smokeball)
- Can be targeted at particular individuals
- May be conditional on another contract being made
How long does an offer last;
- Offer comes into existence when communicated with the offeree
- Cannot be accepted once it has ended
- Offeree must know of the offer (Taylor v Laird)
- Exact time can be critical (Stevenson v McLean)
How can an offer end;
- Revocation (to withdraw);
1. Must be communicated to the offeree (Routledge v Grant)
2. When offer to the whole world by reasonable time or by publishing revocation
(Carhill)
3. Separate collateral contract
4. Revocation can be made by a reliable person (Dickinson v Dodds)
- Rejection;
1. Once rejected the offer cannot be accepted by the same person later
2. Offer made to several people, if once refused doesn't close the offer to others
3. Rejection must be communicated
4. If a counter offer makes a significant difference then it is a rejection of offer
(Hyde v Wrench)
5. Requests for information are not counter offers so no end to the offer
(Stevenson v McLean)
- Lapse of time;
1. If an offer is for a fixed amount of time then it comes to an end at the end of the
time period
2. Offer comes to an end after reasonable time as elapsed, depends on nature of
the offer (Ramsgate v Victoria Hotel v Montefiore)
- Death;
1. If the offeree dies then the offer comes to an end as it cannot be accepted, their
would need to be a new offer
2. Death of the offeror will bring the offer to an end once the death is
communicated
- Acceptance;
1. Brings offer to an end as start of the contract
