CONTRACT LAW
Table of Contents
Offer & acceptance...................................................................................................................................2
Requirements for a valid offer..................................................................................................................3
Invitations to treat...................................................................................................................................4
Termination of an offer.............................................................................................................................7
Three rules in relation to acceptance........................................................................................................9
Acceptance must be communicated........................................................................................................10
Consideration, ICLR and capacity............................................................................................................13
Consideration – key principles.................................................................................................................13
Existing obligations.................................................................................................................................16
Promissory estoppel...............................................................................................................................20
Intention to create legal relations (ICRL).................................................................................................22
Capacity.................................................................................................................................................24
Duress and undue influence - introduction..............................................................................................26
Duress....................................................................................................................................................27
Economic duress.....................................................................................................................................29
Economic duress and consideration........................................................................................................33
Undue influence......................................................................................................................................33
Undue influence and third parties...........................................................................................................37
Introduction to terms..............................................................................................................................40
Express terms contrasted with representations.......................................................................................40
Express terms.........................................................................................................................................44
Implied terms.........................................................................................................................................48
Sale of Goods Act 1979...........................................................................................................................50
Supply of Goods and Services Act 1982 (as amended) (SGSA)..................................................................52
Consumer Rights Act 2015......................................................................................................................53
Conditions and warranties......................................................................................................................57
Exemption clauses..................................................................................................................................60
Construction of exemption clauses..........................................................................................................61
Unfair Contract Terms Act 1977 (UCTA 1977)..........................................................................................65
CRA 2015 exemption clauses...................................................................................................................69
Misrepresentation..................................................................................................................................71
Elements of an actionable misrepresentation.........................................................................................72
Statements of fact..................................................................................................................................74
,Categories of misrepresentation.............................................................................................................77
Remedies for misrepresentation.............................................................................................................79
Mistake..................................................................................................................................................84
Unilateral mistake of identity.................................................................................................................86
Introduction to privity of contract...........................................................................................................89
Common law methods of circumventing doctrine of privity.....................................................................89
Contracts (Rights of Third Parties) Act 1999............................................................................................93
Introduction to discharge........................................................................................................................96
Discharge by performance......................................................................................................................96
Discharge by agreement.........................................................................................................................99
Discharge by breach.............................................................................................................................102
Discharge by frustration.......................................................................................................................106
Consequences of frustration..................................................................................................................111
Remedies..............................................................................................................................................114
Assessment of damages........................................................................................................................114
Particular types of loss..........................................................................................................................118
Causation, remoteness, and mitigation.................................................................................................120
Remedies – advanced points.................................................................................................................124
Remedies under Consumer Rights Act 2015...........................................................................................127
Liquidated damages and penalties........................................................................................................131
Specific performance and prohibitory injunctions..................................................................................134
Guarantees and indemnities.................................................................................................................137
Offer & acceptance
Introduction to offer & acceptance
- In order for a contract to be binding, 3 elements must be present:
o Offer & acceptance
o Intentional to create legal relations
o Consideration
- For a contract to exist, one party (the offeror) needs to make an offer, and the person to whom the
offer is made (the offeree) needs to communicate unequivocal acceptance
o Clear & certain offer displaying an intention to be bound + Unequivocal acceptance = offer &
acceptance (i.e. agreement)
- Objective approach to agreement: when determining whether agreement exists between offeror &
offeree, court is not concerned with inward mental intent of parties
o Instead concerns with what a reasonable man would say was the intention of the parties,
having regard to all circumstances
- The idea of offer & acceptance is that it shows a ‘meeting of minds’
o Law applies an objective test when it comes to identifying agreement
,7 steps to analyse offer & acceptance
1. Identify whether a communication is an offer or an invitation to treat
2. (Relevant where there is further communication between the parties) Is the statement by the other
party a counteroffer or a request for further information?
a. What is the effect of a counteroffer or request for further information on the original offer?
3. Is the acceptance in response to the offer?
4. Ask whether acceptance is unqualified…
a. Does it correspond exactly with the terms of the offer?
b. Where the acceptance does not mirror the offer, it raises the question whether it is a
counteroffer or a request for further information
5. Ask whether the acceptance was made using a valid mode
6. Check whether the acceptance is communicated
a. Determined by mode of acceptance used by the offeree
i. Ex: If offeree sent acceptance by post, then discussion of the postal rule & associated
issue will be relevant
7. Ask whether the offer was open at the point of acceptance
a. Need to check whether the offer had been terminated either as result of rejection, lapse, or
revocation
Requirements for a valid offer
Summary
- An offer must be clear & certain
- An offeror must show an intentional to be legally bound: words such as ‘may be prepared to sell’
do not show this
- There are 2 kinds of contract: unilateral & bilateral
- Bilateral contracts are more common, each party assumes an obligation to the other party by
making a promise to do something, such as to sell an item to the other party in exchange for a
payment
- Unilateral contracts are less common. One party makes an offer or proposal in terms which call
for an act to be performed by one or more other parties. Only actual performance of the required
act will constitute acceptance
Offer & acceptance: offers generally
- For offer & acceptance to be exist, 2 conditions must be met:
o Clear & certain offer displaying an intention to be bound
An offer must be clear and certain
Ex: ‘may be prepared to sell’ is not sufficiently clear & certain to be an offer
Intention to be bound: offeror must show an intention to be legally bound
o Unequivocal acceptance
Unilateral & bilateral contracts
- Bilateral contract: most common type of contract
o Both parties assume an obligation to each other, usually by making a promise to do
something
o Example: “in 10 days time, you will deliver a watch to me, and I will pay you £100.”
- Unilateral contract:
o One part makes an offer / proposal in terms which call for an act to be performed by 1 or
more parties
Does not involve mutual promises
Only the person making an offer assumes an obligations
, Other party accepts the offer by performing required act in accordance with
the requirements of the offer
Common example: when a person puts a notice offering a reward for the safe return
of their lost pet
Person putting up notice has assumed obligation to pay a reward to person
returning the pet
Anyone can accept the offer by performing the required act of returning the
pet
o Example: “if you delivery a watch to me in the next 10 days, I will immediately pay you
£100.”
Invitations to treat
Summary
- An invitation to treat is not an offer
- An invitation to treat is a first step in negotiations
- An offeror must show an intention to be legal bound: words such as ‘may be
prepared to sell’ do not show this
- Advertisements are generally invitations to treat, unless they commit to accept the
highest/lowest big (making them unilateral offers)
- Invitations to tender are generally invitations to treat, unless they commit to
accept the highest/lowest big (making them unilateral offers)
- In most auctions, the bid is the offer, which is accepted by the fall of the
auctioneer’s hammer. In an auction sale without the reserve, the auctioneer can be
sued if they refuse to sell to the highest bidder
Invitations to treat
- An offer must be distinguished from a mere invitation to treat
- Invitation to treat: first step in negotiations which may/may not lead to a firm offer
by one of the parties
o Usually takes the form of an invitation to make an offer
- An offer: undertaking to be contractually bound by the terms of that offer in the
event of an unconditional acceptance being made by the offeree
o In contrast, an invitation to treat cannot be accepted to form a binding
contract
Invitations to treat – contexts
- 5 contexts for invitations to treat
o Advertisements
o Displays of goods
o Invitations to tender
o Auctions
o ?
Table of Contents
Offer & acceptance...................................................................................................................................2
Requirements for a valid offer..................................................................................................................3
Invitations to treat...................................................................................................................................4
Termination of an offer.............................................................................................................................7
Three rules in relation to acceptance........................................................................................................9
Acceptance must be communicated........................................................................................................10
Consideration, ICLR and capacity............................................................................................................13
Consideration – key principles.................................................................................................................13
Existing obligations.................................................................................................................................16
Promissory estoppel...............................................................................................................................20
Intention to create legal relations (ICRL).................................................................................................22
Capacity.................................................................................................................................................24
Duress and undue influence - introduction..............................................................................................26
Duress....................................................................................................................................................27
Economic duress.....................................................................................................................................29
Economic duress and consideration........................................................................................................33
Undue influence......................................................................................................................................33
Undue influence and third parties...........................................................................................................37
Introduction to terms..............................................................................................................................40
Express terms contrasted with representations.......................................................................................40
Express terms.........................................................................................................................................44
Implied terms.........................................................................................................................................48
Sale of Goods Act 1979...........................................................................................................................50
Supply of Goods and Services Act 1982 (as amended) (SGSA)..................................................................52
Consumer Rights Act 2015......................................................................................................................53
Conditions and warranties......................................................................................................................57
Exemption clauses..................................................................................................................................60
Construction of exemption clauses..........................................................................................................61
Unfair Contract Terms Act 1977 (UCTA 1977)..........................................................................................65
CRA 2015 exemption clauses...................................................................................................................69
Misrepresentation..................................................................................................................................71
Elements of an actionable misrepresentation.........................................................................................72
Statements of fact..................................................................................................................................74
,Categories of misrepresentation.............................................................................................................77
Remedies for misrepresentation.............................................................................................................79
Mistake..................................................................................................................................................84
Unilateral mistake of identity.................................................................................................................86
Introduction to privity of contract...........................................................................................................89
Common law methods of circumventing doctrine of privity.....................................................................89
Contracts (Rights of Third Parties) Act 1999............................................................................................93
Introduction to discharge........................................................................................................................96
Discharge by performance......................................................................................................................96
Discharge by agreement.........................................................................................................................99
Discharge by breach.............................................................................................................................102
Discharge by frustration.......................................................................................................................106
Consequences of frustration..................................................................................................................111
Remedies..............................................................................................................................................114
Assessment of damages........................................................................................................................114
Particular types of loss..........................................................................................................................118
Causation, remoteness, and mitigation.................................................................................................120
Remedies – advanced points.................................................................................................................124
Remedies under Consumer Rights Act 2015...........................................................................................127
Liquidated damages and penalties........................................................................................................131
Specific performance and prohibitory injunctions..................................................................................134
Guarantees and indemnities.................................................................................................................137
Offer & acceptance
Introduction to offer & acceptance
- In order for a contract to be binding, 3 elements must be present:
o Offer & acceptance
o Intentional to create legal relations
o Consideration
- For a contract to exist, one party (the offeror) needs to make an offer, and the person to whom the
offer is made (the offeree) needs to communicate unequivocal acceptance
o Clear & certain offer displaying an intention to be bound + Unequivocal acceptance = offer &
acceptance (i.e. agreement)
- Objective approach to agreement: when determining whether agreement exists between offeror &
offeree, court is not concerned with inward mental intent of parties
o Instead concerns with what a reasonable man would say was the intention of the parties,
having regard to all circumstances
- The idea of offer & acceptance is that it shows a ‘meeting of minds’
o Law applies an objective test when it comes to identifying agreement
,7 steps to analyse offer & acceptance
1. Identify whether a communication is an offer or an invitation to treat
2. (Relevant where there is further communication between the parties) Is the statement by the other
party a counteroffer or a request for further information?
a. What is the effect of a counteroffer or request for further information on the original offer?
3. Is the acceptance in response to the offer?
4. Ask whether acceptance is unqualified…
a. Does it correspond exactly with the terms of the offer?
b. Where the acceptance does not mirror the offer, it raises the question whether it is a
counteroffer or a request for further information
5. Ask whether the acceptance was made using a valid mode
6. Check whether the acceptance is communicated
a. Determined by mode of acceptance used by the offeree
i. Ex: If offeree sent acceptance by post, then discussion of the postal rule & associated
issue will be relevant
7. Ask whether the offer was open at the point of acceptance
a. Need to check whether the offer had been terminated either as result of rejection, lapse, or
revocation
Requirements for a valid offer
Summary
- An offer must be clear & certain
- An offeror must show an intentional to be legally bound: words such as ‘may be prepared to sell’
do not show this
- There are 2 kinds of contract: unilateral & bilateral
- Bilateral contracts are more common, each party assumes an obligation to the other party by
making a promise to do something, such as to sell an item to the other party in exchange for a
payment
- Unilateral contracts are less common. One party makes an offer or proposal in terms which call
for an act to be performed by one or more other parties. Only actual performance of the required
act will constitute acceptance
Offer & acceptance: offers generally
- For offer & acceptance to be exist, 2 conditions must be met:
o Clear & certain offer displaying an intention to be bound
An offer must be clear and certain
Ex: ‘may be prepared to sell’ is not sufficiently clear & certain to be an offer
Intention to be bound: offeror must show an intention to be legally bound
o Unequivocal acceptance
Unilateral & bilateral contracts
- Bilateral contract: most common type of contract
o Both parties assume an obligation to each other, usually by making a promise to do
something
o Example: “in 10 days time, you will deliver a watch to me, and I will pay you £100.”
- Unilateral contract:
o One part makes an offer / proposal in terms which call for an act to be performed by 1 or
more parties
Does not involve mutual promises
Only the person making an offer assumes an obligations
, Other party accepts the offer by performing required act in accordance with
the requirements of the offer
Common example: when a person puts a notice offering a reward for the safe return
of their lost pet
Person putting up notice has assumed obligation to pay a reward to person
returning the pet
Anyone can accept the offer by performing the required act of returning the
pet
o Example: “if you delivery a watch to me in the next 10 days, I will immediately pay you
£100.”
Invitations to treat
Summary
- An invitation to treat is not an offer
- An invitation to treat is a first step in negotiations
- An offeror must show an intention to be legal bound: words such as ‘may be
prepared to sell’ do not show this
- Advertisements are generally invitations to treat, unless they commit to accept the
highest/lowest big (making them unilateral offers)
- Invitations to tender are generally invitations to treat, unless they commit to
accept the highest/lowest big (making them unilateral offers)
- In most auctions, the bid is the offer, which is accepted by the fall of the
auctioneer’s hammer. In an auction sale without the reserve, the auctioneer can be
sued if they refuse to sell to the highest bidder
Invitations to treat
- An offer must be distinguished from a mere invitation to treat
- Invitation to treat: first step in negotiations which may/may not lead to a firm offer
by one of the parties
o Usually takes the form of an invitation to make an offer
- An offer: undertaking to be contractually bound by the terms of that offer in the
event of an unconditional acceptance being made by the offeree
o In contrast, an invitation to treat cannot be accepted to form a binding
contract
Invitations to treat – contexts
- 5 contexts for invitations to treat
o Advertisements
o Displays of goods
o Invitations to tender
o Auctions
o ?
