GDL CONTRACT LAW REVISION NOTES
(DISTINCTION LEVEL) 2023
Contract Law Notes
Agreement and Contractual Intention
Agreement:
In order for parties to reach an agreement, one party must make an offer which is
accepted by the other.
‘Offer’: Professor Treitel: ‘an expression of willingness to contract on certain terms,
made with the intention that it shall become binding as soon as it is accepted by the
person to whom it is addressed.’
‘Offeror’: Person who makes the offer. ‘Offeree’:
Person to whom the offer is made.
‘Expression’: May take different forms, e.g. a letter, newspaper advertisement, fax
and conduct, as long as it communicates the basis on which the offeror is prepared
to contract.
‘Intention’: Does not necessarily mean the offeror’s actual intention. Smith v
Hughes: Objective test. Courts look at what was said and done between the parties,
from the point of view of a ‘reasonable person’, and try to decide what a reasonable
person would have thought was going on.
Allied Marine Transport: If the offeror so acts that his conduct, objectively
considered, constitutes an offer, and the offeree, believing the conduct of the offeror
represents his actual intention, accepts the offer, then a contract will come into
existence. Subjective element of the offeree must believe the offeror intended to
make an offer.
Offer or Invitation to Treat:
Offers are distinct from inviting negotiation E.g. ‘I am thinking of selling my car,
£7,000 would be a realistic asking price, would you be interested in buying it?’ – An
‘invitation to treat’ is where there is no such intention to be bound.
,Goods on display are invitations to treat, as otherwise as soon as the customer put
selected the goods and put them in the trolley they might be regarded as accepting
the offer. The customer offers to buy the goods when presenting them at the
payment point, and acceptance takes place when the shop takes payment.
(Pharmaceutical Society of Great Britain v Boots Cash Chemists).
Advertisements: Generally regarded as invitations to treat. Partridge v Crittenden:
Defendant not guilty with ‘offering for sale’ a live wild bird contrary to law, by placing
an advertisement in a periodical. Seen as an invitation to treat, as if it was an offer
anyone asking for the advertised goods would be accepting an offer which would be
problematic if they had run out of stock.
Advertisements of rewards traditionally treated as an offer, as there is intention to be
bound as soon as the information is given (Williams v Carwadine). Payment has to
be made once information supplied, no negotiation is involved – Encouraging
people to come forward.
In exceptional circumstances, advertisements may be an offer if there is a clear
intention to be bound. Carlill v Carbolic Smoke Co: Company manufactured a
product designed to prevent flu. Their advertisement in the newspaper stated a
reward of £100 would be paid to anyone who contracted flu or a cold after using the
smoke ball 3 times per day for 2 weeks according to supplied directions.
Advertisement also stated company had deposited £1,000 with a named bank to
show the sincerity of its offer. Claimant contracted flue whilst using it. Company
raised 3 defences: (a) Advertisement was mere puff sales (dismissed, as £1,000 had
been deposited as evidence of sincerity – meaning a reasonable person would treat
£100 promise seriously); (b) No offer to any particular person (dismissed, as offer
was to anyone who fulfilled conditions stated); (c) Claimant gave no notice of
acceptance (dismissed, as held that company could not have been expected every
user of product to contact them). Case is the authority for the proposition that an
advertisement can constitute an offer to ‘the world’, and that it may, by the way in
which it is stated, waive the need for communication of acceptance prior to a claim
under it.
Unilateral and Bilateral Contracts:
Bilateral Contract: Arises where one party makes a promise in return for a promise
from the other party. Both parties are immediately bound.
Unilateral Contract: A promise in return for an act – Commitment is one-sided. The
promisor is bound to perform if, and only if, the person(s) to whom the promise is
made performs the specified act. E.g. An offer of reward.
,Auctions: s.57(2) Sale of Goods Act 1979: A sale by auction is complete on the
fall of the auctioneer’s hammer. Bids are offers which can be withdrawn at any time
before acceptance. Auctioneers calling for bids is an invitation to treat.
Sale in auction ‘without reserve’: Barry v Davies: Refusal of auctioneer to sell due
to bid price being exceptionally low. Claimant could sue as there was a contract
between auctioneer and bidder if good advertised ‘without reserve’ – Auctioneer is
promising to sell to the highest bidder (unilateral contract). Bidder had accepted
auctioneer’s unilateral offer by making the highest bid. Claimant could not sue owner
of goods as there was no contract between them.
Tenders: Businesses outsourcing work will invite contractors to submit tenders for the job
(invitations to treat). The tenders will be offers which may or may not be accepted by the
businesses.
In certain situations, tenders can constitute offers. Blackpool & Fylde Aero Club:
Council invited tenders to operate pleasure flights from Blackpool airport (invitations
sent to 7 interested parties). Invitation stated that tenders had to be received not
later than 12 noon 17th March. The Aero Club posted their tender at 11am 17th
March, however due to an oversight the letterbox was not emptied at noon on 17 th
March and therefore tender was recorded as late and not considered. Held, that
invitation had laid down a ‘clear, orderly and familiar procedure’ so that the tenderers
obviously would assume that if they submitted a conforming tender they would have
the right to have it considered along with the rest. The council should have specified
the terms on which tenders would be considered, but they had not done so, and
accordingly were bound by the reasonable expectation of the tenderers. Council had
a contract with the accepted tender, but also a unilateral contract with the Aero Club
(to consider all tenders submitted on time). The Club had accepted this offer by
submitting such a tender, and therefore the Council was liable for damages for loss
of opportunity.
Termination of Offer:
An offer may be terminated in 3
ways: - Revocation;
- Rejection by the
offeree; - Lapse of time.
Revocation:
, General Rule: Offer can be withdrawn at any time before acceptance. Once an offer
has been accepted it is irrevocable (Routledge v Grant).
Routledge v Grant: Promises to Keep offers open for a certain period of time are not
binding if they are gratuitous promises (in the sense that the offeree has not given, or
promised anything in return for the promise to keep the offer open).
Offeror can revoke the offer within the specified time as long as it has not been
accepted.
Exception to the rule in Mountford v Scott: Claimant paid £1 for the option to buy
Vs house for £10,000. Option was exercisable within 6 months. V purported to
revoke the offer.
Claimant subsequently sought to exercise the option. Held, that the offer was
irrevocable as the Claimant had paid for the option. In paying, the Claimant had
given consideration for the Offeror’s promise to leave the offer open for 6 months.
Offeree has given (or promised) something to the Offeror in return for keeping the
offer open.
Revocation must be communicated to the Offeree in order to be effective (not
when it is posted) (Byrne & Co.).
Professor Treitel: Some exceptions to the general rule that a revocation must
be communicated. Examples include: Withdrawal sent to Offeree’s last known
address if they have moved without notifying Offeror, or a withdrawal that reaches
the Offeree who simply chooses not to read it.
Revocation of offers made to the public should be at least as prominent as the
original advertisement in the same format/section/publication etc. (Shuey v United
States – US Authority, therefore not binding on English Courts).
Notice of Revocation Sent to Businesses: Brimnes: ‘if a notice arrives at the
address of the person to be notified, at such a time and by such a means of
communication that it would in the normal course of business come to the attention
of that person on its arrival, that person cannot rely on some failure of himself or his
servants to act in a normal business like manner in respect of taking cognisance of
the communication so as to postpone the effective time of the notice until some later
time when it in fact came to his attention.’ If notice arrives during office hours, it is
likely to be effective at that point, even if not read until the next day – Depends on
what is reasonable, bearing in mind the context and the situation as a whole.
Mention in an answer, even if not business situation.
Revocation must be communicated by a reliable third party (Dickinson v
Dodds): Need not have been authorised by the Offeror to communicate notice of
revocation, but he must be objectively perceived as being reasonable.
(DISTINCTION LEVEL) 2023
Contract Law Notes
Agreement and Contractual Intention
Agreement:
In order for parties to reach an agreement, one party must make an offer which is
accepted by the other.
‘Offer’: Professor Treitel: ‘an expression of willingness to contract on certain terms,
made with the intention that it shall become binding as soon as it is accepted by the
person to whom it is addressed.’
‘Offeror’: Person who makes the offer. ‘Offeree’:
Person to whom the offer is made.
‘Expression’: May take different forms, e.g. a letter, newspaper advertisement, fax
and conduct, as long as it communicates the basis on which the offeror is prepared
to contract.
‘Intention’: Does not necessarily mean the offeror’s actual intention. Smith v
Hughes: Objective test. Courts look at what was said and done between the parties,
from the point of view of a ‘reasonable person’, and try to decide what a reasonable
person would have thought was going on.
Allied Marine Transport: If the offeror so acts that his conduct, objectively
considered, constitutes an offer, and the offeree, believing the conduct of the offeror
represents his actual intention, accepts the offer, then a contract will come into
existence. Subjective element of the offeree must believe the offeror intended to
make an offer.
Offer or Invitation to Treat:
Offers are distinct from inviting negotiation E.g. ‘I am thinking of selling my car,
£7,000 would be a realistic asking price, would you be interested in buying it?’ – An
‘invitation to treat’ is where there is no such intention to be bound.
,Goods on display are invitations to treat, as otherwise as soon as the customer put
selected the goods and put them in the trolley they might be regarded as accepting
the offer. The customer offers to buy the goods when presenting them at the
payment point, and acceptance takes place when the shop takes payment.
(Pharmaceutical Society of Great Britain v Boots Cash Chemists).
Advertisements: Generally regarded as invitations to treat. Partridge v Crittenden:
Defendant not guilty with ‘offering for sale’ a live wild bird contrary to law, by placing
an advertisement in a periodical. Seen as an invitation to treat, as if it was an offer
anyone asking for the advertised goods would be accepting an offer which would be
problematic if they had run out of stock.
Advertisements of rewards traditionally treated as an offer, as there is intention to be
bound as soon as the information is given (Williams v Carwadine). Payment has to
be made once information supplied, no negotiation is involved – Encouraging
people to come forward.
In exceptional circumstances, advertisements may be an offer if there is a clear
intention to be bound. Carlill v Carbolic Smoke Co: Company manufactured a
product designed to prevent flu. Their advertisement in the newspaper stated a
reward of £100 would be paid to anyone who contracted flu or a cold after using the
smoke ball 3 times per day for 2 weeks according to supplied directions.
Advertisement also stated company had deposited £1,000 with a named bank to
show the sincerity of its offer. Claimant contracted flue whilst using it. Company
raised 3 defences: (a) Advertisement was mere puff sales (dismissed, as £1,000 had
been deposited as evidence of sincerity – meaning a reasonable person would treat
£100 promise seriously); (b) No offer to any particular person (dismissed, as offer
was to anyone who fulfilled conditions stated); (c) Claimant gave no notice of
acceptance (dismissed, as held that company could not have been expected every
user of product to contact them). Case is the authority for the proposition that an
advertisement can constitute an offer to ‘the world’, and that it may, by the way in
which it is stated, waive the need for communication of acceptance prior to a claim
under it.
Unilateral and Bilateral Contracts:
Bilateral Contract: Arises where one party makes a promise in return for a promise
from the other party. Both parties are immediately bound.
Unilateral Contract: A promise in return for an act – Commitment is one-sided. The
promisor is bound to perform if, and only if, the person(s) to whom the promise is
made performs the specified act. E.g. An offer of reward.
,Auctions: s.57(2) Sale of Goods Act 1979: A sale by auction is complete on the
fall of the auctioneer’s hammer. Bids are offers which can be withdrawn at any time
before acceptance. Auctioneers calling for bids is an invitation to treat.
Sale in auction ‘without reserve’: Barry v Davies: Refusal of auctioneer to sell due
to bid price being exceptionally low. Claimant could sue as there was a contract
between auctioneer and bidder if good advertised ‘without reserve’ – Auctioneer is
promising to sell to the highest bidder (unilateral contract). Bidder had accepted
auctioneer’s unilateral offer by making the highest bid. Claimant could not sue owner
of goods as there was no contract between them.
Tenders: Businesses outsourcing work will invite contractors to submit tenders for the job
(invitations to treat). The tenders will be offers which may or may not be accepted by the
businesses.
In certain situations, tenders can constitute offers. Blackpool & Fylde Aero Club:
Council invited tenders to operate pleasure flights from Blackpool airport (invitations
sent to 7 interested parties). Invitation stated that tenders had to be received not
later than 12 noon 17th March. The Aero Club posted their tender at 11am 17th
March, however due to an oversight the letterbox was not emptied at noon on 17 th
March and therefore tender was recorded as late and not considered. Held, that
invitation had laid down a ‘clear, orderly and familiar procedure’ so that the tenderers
obviously would assume that if they submitted a conforming tender they would have
the right to have it considered along with the rest. The council should have specified
the terms on which tenders would be considered, but they had not done so, and
accordingly were bound by the reasonable expectation of the tenderers. Council had
a contract with the accepted tender, but also a unilateral contract with the Aero Club
(to consider all tenders submitted on time). The Club had accepted this offer by
submitting such a tender, and therefore the Council was liable for damages for loss
of opportunity.
Termination of Offer:
An offer may be terminated in 3
ways: - Revocation;
- Rejection by the
offeree; - Lapse of time.
Revocation:
, General Rule: Offer can be withdrawn at any time before acceptance. Once an offer
has been accepted it is irrevocable (Routledge v Grant).
Routledge v Grant: Promises to Keep offers open for a certain period of time are not
binding if they are gratuitous promises (in the sense that the offeree has not given, or
promised anything in return for the promise to keep the offer open).
Offeror can revoke the offer within the specified time as long as it has not been
accepted.
Exception to the rule in Mountford v Scott: Claimant paid £1 for the option to buy
Vs house for £10,000. Option was exercisable within 6 months. V purported to
revoke the offer.
Claimant subsequently sought to exercise the option. Held, that the offer was
irrevocable as the Claimant had paid for the option. In paying, the Claimant had
given consideration for the Offeror’s promise to leave the offer open for 6 months.
Offeree has given (or promised) something to the Offeror in return for keeping the
offer open.
Revocation must be communicated to the Offeree in order to be effective (not
when it is posted) (Byrne & Co.).
Professor Treitel: Some exceptions to the general rule that a revocation must
be communicated. Examples include: Withdrawal sent to Offeree’s last known
address if they have moved without notifying Offeror, or a withdrawal that reaches
the Offeree who simply chooses not to read it.
Revocation of offers made to the public should be at least as prominent as the
original advertisement in the same format/section/publication etc. (Shuey v United
States – US Authority, therefore not binding on English Courts).
Notice of Revocation Sent to Businesses: Brimnes: ‘if a notice arrives at the
address of the person to be notified, at such a time and by such a means of
communication that it would in the normal course of business come to the attention
of that person on its arrival, that person cannot rely on some failure of himself or his
servants to act in a normal business like manner in respect of taking cognisance of
the communication so as to postpone the effective time of the notice until some later
time when it in fact came to his attention.’ If notice arrives during office hours, it is
likely to be effective at that point, even if not read until the next day – Depends on
what is reasonable, bearing in mind the context and the situation as a whole.
Mention in an answer, even if not business situation.
Revocation must be communicated by a reliable third party (Dickinson v
Dodds): Need not have been authorised by the Offeror to communicate notice of
revocation, but he must be objectively perceived as being reasonable.
