Contract Law Notes
Formation
Terminology Recap:
Offeror- promisor
Oferee- promisee
Bilateral Contracts: an exchange of contractual obligations both ways
Unilateral Contracts: a promise to be obliged only if the other performs
Legal Requirements of a Contract
Offer
Acceptance
Consideration
Intention to create legal relations
Certainty
Capacity
Formalities
Objecti ve Perspecti ve
“a reasonable man would believe that he was assenting to the terms proposed by the other party”
“you do not look into the actual intention of a man’s mind. You look at what he said and did”
Off er
‘an expression of willingness to enter into negotiations with the hope of leading to the conclusion of
a contract at a later date’
When an offer comes to an end:
> If rejected
> If superseded by a counter-offer
> By a lapse of time
> If withdrawn or revoked
Rejection
o Replaced with a counter-offer
o Must be communicated to the offeror
Lapse of time
o Can specify the duration
o Fixed offer
o Reasonable time
Withdrawal
o Any time before it is accepted: Routledge v Grant
o Must be communicated
,Thornton v Shoe Lane Parking
o All terms and conditions need to be provided before acceptance
Exception:
Hollier v Rambler Motors
o 3 or 4 times in 5 years is NOT habitual
o The usual terns and conditions were more included in the contract
Acceptance
• Contract is formed upon communication of acceptance
• Both parties bound
• Later terms cannot be imposed
• Consenses ad idem- ‘meeting of minds’
• Postal Rule: Adams v Lindsell (does not apply to communication of counter-offers)
• Only is reasonable to use post: Henthorn v Fraser
• Silence is not enough- Fenthouse v Bindley
Entores v Miles Far East Corp
o Contract is formed in the jurisdiction where acceptance occurs
Brinkibon v Stahag Staht
o If a offeree has done all that the might reasonably be expected to do to get his message
through, acceptance should take effect when the offeree might reasonably expect it to be
communicated
= communication to a machine is sufficient- it is at the risk of the recipient if he was to fail to
man its fax machine
Hyde v Wrench
o Agreement must be certain
Intent to create legal relati ons
Social and Domestic: Balfour v Balfour
Commercial: Esso Petroleum v Customs
Considerati on
= price for the promise
“an act of forebeance of one party”
o Dunlop Pneumatic Tyre v Selfridge
“some right, interest, profit or benefit accruing to the one party OR some forbearance, detriment
loss or responsibility”
o Currie v Misa
> A promise to do something
> A promise not to do something
> Performance of a request act
,Executory contract: bilateral contract- entered into a contract for the terms to be satisfied in future
Executed contract: unilateral contract- fully performed contract- promise for an act
Practical Benefit
Williams v Roffrey
o Does not need to be equal to what the other party are giving
Past Consideration
Re McArdle
o Past consideration is no consideration
o Agreement to pay after improvement and repairs on a bungalow had been made was no
enforceable
Roscorla v Thomas
o Roscorla purchased a horse from Thomas
o Thomas then promised the horse was sound and free from vice
o The horse did not match that description
o Consideration was given after the promise had been made
Need not be adequate, but must be sufficient
Chappel v Nestle
o 3 chocolate wrappers and a postal order for 1 shilling in exchange for a record worth 6
shillings
o Held, wrappers did form part of the consideration as the object was to increase sales and
therefore provided value
= must be of SOME VALUE but does not need to be equivalent
Duty imposed by law
Glasbrook v Glamorgan CC
o D asked the police to provide extra protection during a miner’s strike
o Police submitted an invoice to cover the extra costs
o D refused to pay arguing that the police were under an existing public duty to provide
protection
o Held, by providing additional offers the police had gone beyond their existing duty
Ward v Byham
o Father agreed to pay £1 per week to ensure the child was well looked after and happy
o Father made payments until the mother remarried
o Held, by promising to ensure the child was well looked after and happy she had gone beyond
her existing legal duty and provided consideration for payment
, Promise to Pay More
Stilk v Myrick
o 2 out of 12 crew members deserted the captain’s ship
o The remaining crew was promised more money if they sailed the ship home
o The captain later refused to pay
o Held, the sailors were already obliged to sail the ship therefore gave no consideration for the
extra money
Hansen v Royden
o Duties and responsibilities increased
o Promisee has done more than he was originally contracted to do
Harley v Ponsoby
o 17 out of 36 crew members deserted the captain’s ship
o The remaining crew was promised more money if they sailed the ship home
o The captain later refused to pay
o Held, the sailors were entitled to the extra payment on the grounds they had gone beyond
their existing duty because the voyage had become too dangerous frustrating their original
contract resulting in free negotiation for a new contract
Williams v Roffrey Bros
o Consideration CAN be provided by the promise to pay more for an existing duty if the
promisor obtains a PRACTICAL BENEFIT for paying more
e.g. avoiding penalty clause
Practical benefit is equal value for consideration but cannot be provided for the original
consideration.
Existence of duress in the alteration context will prevent a conclusion that there is consideration for
the alteration promise despite the existence of factual benefits- Pao On v Lau Yiu Long
Promise to Accept Less
Lampleigh v Braithwaite
o A later promise to pay for their trouble of performing a request was enforceable
Pinnel’s Case
o Part payment for a debt cannot be satisfaction for the whole
o However, since the payment has been made early this was sufficient to discharge the debt
because provided the plaintiff with further benefit
Foakes v Beer
o Paid debt owed via instalments
o Interest was owed as there had only been part payment which is not good consideration
Raggon v Scougall
o Employee in WW1 keep on business with salary cut sues after a few years
o Doing the same work but paid less is unfair
o When they varied the contract it was almost rescission of the orginal contract
Formation
Terminology Recap:
Offeror- promisor
Oferee- promisee
Bilateral Contracts: an exchange of contractual obligations both ways
Unilateral Contracts: a promise to be obliged only if the other performs
Legal Requirements of a Contract
Offer
Acceptance
Consideration
Intention to create legal relations
Certainty
Capacity
Formalities
Objecti ve Perspecti ve
“a reasonable man would believe that he was assenting to the terms proposed by the other party”
“you do not look into the actual intention of a man’s mind. You look at what he said and did”
Off er
‘an expression of willingness to enter into negotiations with the hope of leading to the conclusion of
a contract at a later date’
When an offer comes to an end:
> If rejected
> If superseded by a counter-offer
> By a lapse of time
> If withdrawn or revoked
Rejection
o Replaced with a counter-offer
o Must be communicated to the offeror
Lapse of time
o Can specify the duration
o Fixed offer
o Reasonable time
Withdrawal
o Any time before it is accepted: Routledge v Grant
o Must be communicated
,Thornton v Shoe Lane Parking
o All terms and conditions need to be provided before acceptance
Exception:
Hollier v Rambler Motors
o 3 or 4 times in 5 years is NOT habitual
o The usual terns and conditions were more included in the contract
Acceptance
• Contract is formed upon communication of acceptance
• Both parties bound
• Later terms cannot be imposed
• Consenses ad idem- ‘meeting of minds’
• Postal Rule: Adams v Lindsell (does not apply to communication of counter-offers)
• Only is reasonable to use post: Henthorn v Fraser
• Silence is not enough- Fenthouse v Bindley
Entores v Miles Far East Corp
o Contract is formed in the jurisdiction where acceptance occurs
Brinkibon v Stahag Staht
o If a offeree has done all that the might reasonably be expected to do to get his message
through, acceptance should take effect when the offeree might reasonably expect it to be
communicated
= communication to a machine is sufficient- it is at the risk of the recipient if he was to fail to
man its fax machine
Hyde v Wrench
o Agreement must be certain
Intent to create legal relati ons
Social and Domestic: Balfour v Balfour
Commercial: Esso Petroleum v Customs
Considerati on
= price for the promise
“an act of forebeance of one party”
o Dunlop Pneumatic Tyre v Selfridge
“some right, interest, profit or benefit accruing to the one party OR some forbearance, detriment
loss or responsibility”
o Currie v Misa
> A promise to do something
> A promise not to do something
> Performance of a request act
,Executory contract: bilateral contract- entered into a contract for the terms to be satisfied in future
Executed contract: unilateral contract- fully performed contract- promise for an act
Practical Benefit
Williams v Roffrey
o Does not need to be equal to what the other party are giving
Past Consideration
Re McArdle
o Past consideration is no consideration
o Agreement to pay after improvement and repairs on a bungalow had been made was no
enforceable
Roscorla v Thomas
o Roscorla purchased a horse from Thomas
o Thomas then promised the horse was sound and free from vice
o The horse did not match that description
o Consideration was given after the promise had been made
Need not be adequate, but must be sufficient
Chappel v Nestle
o 3 chocolate wrappers and a postal order for 1 shilling in exchange for a record worth 6
shillings
o Held, wrappers did form part of the consideration as the object was to increase sales and
therefore provided value
= must be of SOME VALUE but does not need to be equivalent
Duty imposed by law
Glasbrook v Glamorgan CC
o D asked the police to provide extra protection during a miner’s strike
o Police submitted an invoice to cover the extra costs
o D refused to pay arguing that the police were under an existing public duty to provide
protection
o Held, by providing additional offers the police had gone beyond their existing duty
Ward v Byham
o Father agreed to pay £1 per week to ensure the child was well looked after and happy
o Father made payments until the mother remarried
o Held, by promising to ensure the child was well looked after and happy she had gone beyond
her existing legal duty and provided consideration for payment
, Promise to Pay More
Stilk v Myrick
o 2 out of 12 crew members deserted the captain’s ship
o The remaining crew was promised more money if they sailed the ship home
o The captain later refused to pay
o Held, the sailors were already obliged to sail the ship therefore gave no consideration for the
extra money
Hansen v Royden
o Duties and responsibilities increased
o Promisee has done more than he was originally contracted to do
Harley v Ponsoby
o 17 out of 36 crew members deserted the captain’s ship
o The remaining crew was promised more money if they sailed the ship home
o The captain later refused to pay
o Held, the sailors were entitled to the extra payment on the grounds they had gone beyond
their existing duty because the voyage had become too dangerous frustrating their original
contract resulting in free negotiation for a new contract
Williams v Roffrey Bros
o Consideration CAN be provided by the promise to pay more for an existing duty if the
promisor obtains a PRACTICAL BENEFIT for paying more
e.g. avoiding penalty clause
Practical benefit is equal value for consideration but cannot be provided for the original
consideration.
Existence of duress in the alteration context will prevent a conclusion that there is consideration for
the alteration promise despite the existence of factual benefits- Pao On v Lau Yiu Long
Promise to Accept Less
Lampleigh v Braithwaite
o A later promise to pay for their trouble of performing a request was enforceable
Pinnel’s Case
o Part payment for a debt cannot be satisfaction for the whole
o However, since the payment has been made early this was sufficient to discharge the debt
because provided the plaintiff with further benefit
Foakes v Beer
o Paid debt owed via instalments
o Interest was owed as there had only been part payment which is not good consideration
Raggon v Scougall
o Employee in WW1 keep on business with salary cut sues after a few years
o Doing the same work but paid less is unfair
o When they varied the contract it was almost rescission of the orginal contract
