Contract law – Revision notes
Subject Pages
Introduction to Contract law 2
Formation of a Contract 3-4
Offer/invitation to treat 5
Offer 6-7
Introduction to acceptance 8-9
Communication of acceptance 10-11
Acceptance and termination of the offer 12-13
Introduction into consideration 14-16
Sufficiency of consideration 17-18
Sufficiency of consideration pt 2 19-20
Promissory Estoppel 21-22
Introduction to terms and exclusion clauses 23-26
Construction 27
Terms 28-29
Exclusion clauses 30-31
Misrepresentation 32-37
Mistake 38-42
Discharge of obligations 43-45
Effects of frustration 46-48
Duress and Undue influence 49-52
Damages 53-57
1
,Introduction to Contract Law - Formation of the contract
What is a contract?
A legally binding agreement between two or more parties
An oral agreement can be binding
It creates and defines obligations
The obligations bind the parties to the agreement
Based on the principle of consent
Classical theory of Contract Law
“Freedom of contract”
- Parties are free to contract with whomever they like, on whatever terms they wish, and the court will be
reluctant to interfere with this agreement
Self-regulatory nature of contract law
- Courts intervene following an alleged breach of contract, but the parties are generally free to regulate their
own agreement
- There is a problem of inequality of bargaining power (e.g. consumer vs business)
Judicial intervention
- Development of implied terms at common law
- Contained within statutory provisions: Sales of Goods Act 1979, Consumer Rights Act 2015
Classification of Contracts
Deeds: Formalities must be met, and this is the reason why it will bind the parties (but no requirement of
consideration)
Simple contracts – not contained in deed, must be supported by consideration, no formal requirements
Bilateral and unilateral contracts
Bilateral = both parties have obligations under the contract, mutual exchange of obligations/ promises
- E.g. contract to buy and sell goods
Unilateral = Binding on one party, only one party has obligations following the performance of an act
- E.g. reward for the person that finds a missing dog
- Only binding when condition is met
Formation of contract
Three key elements of a contract
1) Offer and acceptance = Agreement
2) Consideration = Test of enforceability
3) Intention to create legal relations = Binding contract
2
,Formation of Contract
Offer and acceptance = Agreement
- The courts determine whether the parties have formed an agreement is objective
- Objective test = look at the words, conduct of the parties from the perspective of a reasonable man
- Storer v Manchester City Council, Lord Denning MR
- “In contracts, you do not look into the actual intent in a man’s mind. You look at what he said and did”
- Not subjective, because this can be bias, and individuals can lie
Gibson V Manchester City Council (1979)
- Claimant wanted to purchase council house, the council said they ‘may be prepared to sell the house at
a fixed price’
- “May be prepared to sell” is no contractual intent
Storer V Manchester City Council (1974)
- Claimant wanted to purchase council house; the council replied with the heading ‘” Agreement for sale”
- “Agreement for sale” has held to be an offer
- Council bounded a contract they didn’t intend
Definition of an offer
1) Statement of intention to be bound
2) On terms which are certain (vague/ambiguous terms are not suffice)
3) Which upon acceptance forms a binding contract
- The claimant must establish the existence of a firm offer made either to a particular person; to a group
of persons
3
, Defence Held
1) Cannot make an offer to the It was possible to make an offer to the
whole world world at large, that can ripen into a Carlill v Carbolic
contract should the necessary act be met Smoke Ball Co (1893)
2) Advertisement was a ‘puff’ so “Puffery” in advertisement example
there was no intention to create (Best rock album in the world) – lacks
legal relations substance
Applying an objective test, deposit of
£1000 was a display of contractual intent
3) Mrs Carlill did not communicate No need to communicate acceptance.
her acceptance Acceptance is by performance of the
required acts
4) Mrs Carlill did not provide any Her use of the ball was her
consideration consideration, consideration is the
exchange in the deal
5) The terms were too vague to form This wasn’t actually an issue as influenza
the basis of an offer – particularly was contracted during use, but would
as to the relevant time limit have at least protected her for a
reasonable time
Offer/invitation to treat?
- Offer – clear display of contract intent, on fixed terms, that once accepted binds parties
- Invitation to treat – Inviting offers, a declaration that the party is open to the negotiation process
- We decide this using an objective test of the parties intention
- We use presumptions to help us decide whether it is an offer or an invitation to treat
4
Subject Pages
Introduction to Contract law 2
Formation of a Contract 3-4
Offer/invitation to treat 5
Offer 6-7
Introduction to acceptance 8-9
Communication of acceptance 10-11
Acceptance and termination of the offer 12-13
Introduction into consideration 14-16
Sufficiency of consideration 17-18
Sufficiency of consideration pt 2 19-20
Promissory Estoppel 21-22
Introduction to terms and exclusion clauses 23-26
Construction 27
Terms 28-29
Exclusion clauses 30-31
Misrepresentation 32-37
Mistake 38-42
Discharge of obligations 43-45
Effects of frustration 46-48
Duress and Undue influence 49-52
Damages 53-57
1
,Introduction to Contract Law - Formation of the contract
What is a contract?
A legally binding agreement between two or more parties
An oral agreement can be binding
It creates and defines obligations
The obligations bind the parties to the agreement
Based on the principle of consent
Classical theory of Contract Law
“Freedom of contract”
- Parties are free to contract with whomever they like, on whatever terms they wish, and the court will be
reluctant to interfere with this agreement
Self-regulatory nature of contract law
- Courts intervene following an alleged breach of contract, but the parties are generally free to regulate their
own agreement
- There is a problem of inequality of bargaining power (e.g. consumer vs business)
Judicial intervention
- Development of implied terms at common law
- Contained within statutory provisions: Sales of Goods Act 1979, Consumer Rights Act 2015
Classification of Contracts
Deeds: Formalities must be met, and this is the reason why it will bind the parties (but no requirement of
consideration)
Simple contracts – not contained in deed, must be supported by consideration, no formal requirements
Bilateral and unilateral contracts
Bilateral = both parties have obligations under the contract, mutual exchange of obligations/ promises
- E.g. contract to buy and sell goods
Unilateral = Binding on one party, only one party has obligations following the performance of an act
- E.g. reward for the person that finds a missing dog
- Only binding when condition is met
Formation of contract
Three key elements of a contract
1) Offer and acceptance = Agreement
2) Consideration = Test of enforceability
3) Intention to create legal relations = Binding contract
2
,Formation of Contract
Offer and acceptance = Agreement
- The courts determine whether the parties have formed an agreement is objective
- Objective test = look at the words, conduct of the parties from the perspective of a reasonable man
- Storer v Manchester City Council, Lord Denning MR
- “In contracts, you do not look into the actual intent in a man’s mind. You look at what he said and did”
- Not subjective, because this can be bias, and individuals can lie
Gibson V Manchester City Council (1979)
- Claimant wanted to purchase council house, the council said they ‘may be prepared to sell the house at
a fixed price’
- “May be prepared to sell” is no contractual intent
Storer V Manchester City Council (1974)
- Claimant wanted to purchase council house; the council replied with the heading ‘” Agreement for sale”
- “Agreement for sale” has held to be an offer
- Council bounded a contract they didn’t intend
Definition of an offer
1) Statement of intention to be bound
2) On terms which are certain (vague/ambiguous terms are not suffice)
3) Which upon acceptance forms a binding contract
- The claimant must establish the existence of a firm offer made either to a particular person; to a group
of persons
3
, Defence Held
1) Cannot make an offer to the It was possible to make an offer to the
whole world world at large, that can ripen into a Carlill v Carbolic
contract should the necessary act be met Smoke Ball Co (1893)
2) Advertisement was a ‘puff’ so “Puffery” in advertisement example
there was no intention to create (Best rock album in the world) – lacks
legal relations substance
Applying an objective test, deposit of
£1000 was a display of contractual intent
3) Mrs Carlill did not communicate No need to communicate acceptance.
her acceptance Acceptance is by performance of the
required acts
4) Mrs Carlill did not provide any Her use of the ball was her
consideration consideration, consideration is the
exchange in the deal
5) The terms were too vague to form This wasn’t actually an issue as influenza
the basis of an offer – particularly was contracted during use, but would
as to the relevant time limit have at least protected her for a
reasonable time
Offer/invitation to treat?
- Offer – clear display of contract intent, on fixed terms, that once accepted binds parties
- Invitation to treat – Inviting offers, a declaration that the party is open to the negotiation process
- We decide this using an objective test of the parties intention
- We use presumptions to help us decide whether it is an offer or an invitation to treat
4
