Contract law
Roger Halson
Catharine MacMillan
Richard Stone
,The 2016, 2017 and 2018 revisions to this module guide were prepared for the
University of London by:
uu Roger Halson, Professor of Contract and Commercial Law at the University of Leeds.
In the 2004 edition of this guide Catharine MacMillan was primarily responsible for
Chapters 1–2, 4–5, 7–8, 10–14 and 16–17. Richard Stone was primarily responsible for
Chapters 3, 6, 9 and 15. Catharine MacMillan was responsible for the 2009, 2012, 2013
and 2014 revisions. The 2015 updates to the guide were prepared by Anne Street.
This is one of a series of module guides published by the University. We regret that
owing to pressure of work the authors are unable to enter into any correspondence
relating to, or arising from, the guide. If you have any comments on this module guide,
favourable or unfavourable, please use the form at the back of this guide.
Acknowledgements
Figure 8.1 has been reproduced by kind permission of:
uu Jan Daniëls © MarineTraffic.com
Figures 16.1, 16.2 and 16.3 have been reproduced by kind permission of:
uu Hugh Conway-Jones © www.gloucesterdocks.me.uk
University of London
Publications Office
Stewart House
32 Russell Square
London WC1B 5DN
United Kingdom
london.ac.uk
Published by: University of London
© University of London 2018
The University of London asserts copyright over all material in this module guide
except where otherwise indicated. All rights reserved. No part of this work may
be reproduced in any form, or by any means, without permission in writing from
the publisher. We make every effort to respect copyright. If you think we have
inadvertently used your copyright material, please let us know.
,Contract law page i
Contents
Module descriptor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
1 Introduction and general principles . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Studying the law of contract . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Method of working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 Some issues in the law of contract . . . . . . . . . . . . . . . . . . . . . . . 9
1.5 Plan of the module guide . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.6 Format of the examination paper . . . . . . . . . . . . . . . . . . . . . . 15
Part I: Requirements for the making of a contract . . . . . . . . . . . . . 19
2 Agreement: offer and acceptance . . . . . . . . . . . . . . . . . . . . 19
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 The offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Communication of the offer . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Acceptance of the offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Communication of the acceptance . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Exceptions to the need for communication of the acceptance . . . . . . . . 27
2.6 Method of acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.7 The end of an unaccepted offer . . . . . . . . . . . . . . . . . . . . . . . 30
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2 Promissory estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4 Other formative requirements: intention, certainty and completeness . . 57
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.1 The intention to create legal relations . . . . . . . . . . . . . . . . . . . . 59
4.2 Certainty of terms and vagueness . . . . . . . . . . . . . . . . . . . . . . 62
4.3 A complete agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Part II Content of a contract and regulation of terms . . . . . . . . . . 69
5 The terms of the contract . . . . . . . . . . . . . . . . . . . . . . . . 69
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.1 Is a statement or assurance a term of the contract? . . . . . . . . . . . . . 71
5.2 The use of implied terms . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.3 The classification of terms into minor undertakings and major undertakings . . 78
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
, page ii University of London
6 The regulation of the terms of the contract . . . . . . . . . . . . . . . 85
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
6.1 Indirect common law controls . . . . . . . . . . . . . . . . . . . . . . . . 87
6.2 Statutory control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Part III The capacity to contract – minors . . . . . . . . . . . . . . . . 105
7 Contracts made by minors . . . . . . . . . . . . . . . . . . . . . . . 105
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
7.1 Contracts for necessaries . . . . . . . . . . . . . . . . . . . . . . . . . . 107
7.2 Beneficial contracts of service . . . . . . . . . . . . . . . . . . . . . . . 107
7.3 Voidable contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.4 Recovery of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Part IV Vitiating elements in the formation of a contract . . . . . . . . . 111
8 Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
8.1 Some guidelines on mistake . . . . . . . . . . . . . . . . . . . . . . . . 113
8.2 Bilateral mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
8.3 Unilateral mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.4 Mistake in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 129
9 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
9.1 Definition of misrepresentation . . . . . . . . . . . . . . . . . . . . . . 133
9.2 Remedies for misrepresentation . . . . . . . . . . . . . . . . . . . . . . 138
9.3 Exclusion of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 147
10 Duress and undue influence . . . . . . . . . . . . . . . . . . . . . . 149
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
10.1 Duress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
10.2 Undue influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Part V Who can enforce the terms of a contract? . . . . . . . . . . . . . 161
11 Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
11.1 The doctrine of privity . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
11.2 The Contracts (Rights of Third Parties) Act 1999 . . . . . . . . . . . . . . . 164
11.3 Rights conferred on third parties at common law . . . . . . . . . . . . . 167
11.4 Liability imposed upon third parties . . . . . . . . . . . . . . . . . . . . 172
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Roger Halson
Catharine MacMillan
Richard Stone
,The 2016, 2017 and 2018 revisions to this module guide were prepared for the
University of London by:
uu Roger Halson, Professor of Contract and Commercial Law at the University of Leeds.
In the 2004 edition of this guide Catharine MacMillan was primarily responsible for
Chapters 1–2, 4–5, 7–8, 10–14 and 16–17. Richard Stone was primarily responsible for
Chapters 3, 6, 9 and 15. Catharine MacMillan was responsible for the 2009, 2012, 2013
and 2014 revisions. The 2015 updates to the guide were prepared by Anne Street.
This is one of a series of module guides published by the University. We regret that
owing to pressure of work the authors are unable to enter into any correspondence
relating to, or arising from, the guide. If you have any comments on this module guide,
favourable or unfavourable, please use the form at the back of this guide.
Acknowledgements
Figure 8.1 has been reproduced by kind permission of:
uu Jan Daniëls © MarineTraffic.com
Figures 16.1, 16.2 and 16.3 have been reproduced by kind permission of:
uu Hugh Conway-Jones © www.gloucesterdocks.me.uk
University of London
Publications Office
Stewart House
32 Russell Square
London WC1B 5DN
United Kingdom
london.ac.uk
Published by: University of London
© University of London 2018
The University of London asserts copyright over all material in this module guide
except where otherwise indicated. All rights reserved. No part of this work may
be reproduced in any form, or by any means, without permission in writing from
the publisher. We make every effort to respect copyright. If you think we have
inadvertently used your copyright material, please let us know.
,Contract law page i
Contents
Module descriptor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
1 Introduction and general principles . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Studying the law of contract . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Method of working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.4 Some issues in the law of contract . . . . . . . . . . . . . . . . . . . . . . . 9
1.5 Plan of the module guide . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.6 Format of the examination paper . . . . . . . . . . . . . . . . . . . . . . 15
Part I: Requirements for the making of a contract . . . . . . . . . . . . . 19
2 Agreement: offer and acceptance . . . . . . . . . . . . . . . . . . . . 19
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 The offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Communication of the offer . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Acceptance of the offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Communication of the acceptance . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Exceptions to the need for communication of the acceptance . . . . . . . . 27
2.6 Method of acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.7 The end of an unaccepted offer . . . . . . . . . . . . . . . . . . . . . . . 30
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.2 Promissory estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4 Other formative requirements: intention, certainty and completeness . . 57
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.1 The intention to create legal relations . . . . . . . . . . . . . . . . . . . . 59
4.2 Certainty of terms and vagueness . . . . . . . . . . . . . . . . . . . . . . 62
4.3 A complete agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Part II Content of a contract and regulation of terms . . . . . . . . . . 69
5 The terms of the contract . . . . . . . . . . . . . . . . . . . . . . . . 69
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5.1 Is a statement or assurance a term of the contract? . . . . . . . . . . . . . 71
5.2 The use of implied terms . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.3 The classification of terms into minor undertakings and major undertakings . . 78
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
, page ii University of London
6 The regulation of the terms of the contract . . . . . . . . . . . . . . . 85
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
6.1 Indirect common law controls . . . . . . . . . . . . . . . . . . . . . . . . 87
6.2 Statutory control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Part III The capacity to contract – minors . . . . . . . . . . . . . . . . 105
7 Contracts made by minors . . . . . . . . . . . . . . . . . . . . . . . 105
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
7.1 Contracts for necessaries . . . . . . . . . . . . . . . . . . . . . . . . . . 107
7.2 Beneficial contracts of service . . . . . . . . . . . . . . . . . . . . . . . 107
7.3 Voidable contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.4 Recovery of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Part IV Vitiating elements in the formation of a contract . . . . . . . . . 111
8 Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
8.1 Some guidelines on mistake . . . . . . . . . . . . . . . . . . . . . . . . 113
8.2 Bilateral mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
8.3 Unilateral mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.4 Mistake in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 129
9 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
9.1 Definition of misrepresentation . . . . . . . . . . . . . . . . . . . . . . 133
9.2 Remedies for misrepresentation . . . . . . . . . . . . . . . . . . . . . . 138
9.3 Exclusion of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 147
10 Duress and undue influence . . . . . . . . . . . . . . . . . . . . . . 149
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
10.1 Duress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
10.2 Undue influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Part V Who can enforce the terms of a contract? . . . . . . . . . . . . . 161
11 Third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
11.1 The doctrine of privity . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
11.2 The Contracts (Rights of Third Parties) Act 1999 . . . . . . . . . . . . . . . 164
11.3 Rights conferred on third parties at common law . . . . . . . . . . . . . 167
11.4 Liability imposed upon third parties . . . . . . . . . . . . . . . . . . . . 172
Quick quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Am I ready to move on? . . . . . . . . . . . . . . . . . . . . . . . . . . 176
