CONTRACT LAW REVISION NOTES:
Table of Contents
FORMATION OF A CONTRACT:..................................................................................................................1
BILATERAL AGREEMENT:.......................................................................................................................................2
The postal rule of acceptance:...............................................................................................................................4
UNILATERAL AGREEMENT:....................................................................................................................................5
ONLY ENFORCABLE PROMISES CAN BE RELIED UPON BEFORE THE COURTS...............................................6
CONTENT OF A CONTRACT:.....................................................................................................................10
Terms:.................................................................................................................................................................10
Incorporation of terms:.......................................................................................................................................11
Signed documents:..............................................................................................................................................11
Unsigned documents:..........................................................................................................................................11
Terms implied in law:..........................................................................................................................................13
Terms implied in law by custom:.........................................................................................................................14
UNFAIR TERMS:......................................................................................................................................15
Unfair Contract Terms Act 1977 (UCTA 1977)......................................................................................................15
Consumer Rights Act (CRA) 2015:........................................................................................................................17
MISREPRESENTATION:............................................................................................................................17
DURESS, UNDUE INFLUENCE AND UNCONSCIONABILITY:........................................................................22
DURESS:..............................................................................................................................................................23
Economic duress:.................................................................................................................................................23
UNDUE INFLUENCE:.............................................................................................................................................25
UNCONSCIONABLE BARGAINS:............................................................................................................................27
REMEDIES:..............................................................................................................................................28
What is a breach?................................................................................................................................................28
What is a remedy?...............................................................................................................................................28
Termination:........................................................................................................................................................29
Self-help remedies:..............................................................................................................................................29
DAMAGES:...........................................................................................................................................................32
FORMATION OF A CONTRACT:
Agreement is normally determined by the existence of offer and acceptance
Agreements willl broadly be one of 2 types:
1. Bilateral agreements: by far the most common in practice and consist of a promise in exchange for
a promise. Bilateral means both parties are bound on the exchange of promises, although there has
yet to be any performance of those promises. E.g. a typical sale of goods agreement
1
, 2. Unilateral agreements: consist of a promise in exchange for an act. It follows that only one party is
bound at the outset by a promise. The other’s acceptance is the performance of the requested act.
BILATERAL AGREEMENT:
Step 1: Does the communication amount to an offer?
Offer: a definite promise to be bound, without more, if the offeree agrees to the offer terms – if the offer is
accepted then an agreement will be the result. An offer can be direct, or it can be to the world at large -
(Carlill v Carbolic Smoke Ball Co. (1893)
Invitation to treat: an invitation to others to make offers as part of the negotiating process.
Mere “puff’: a promotional statement not to be taken seriously
How to distinguish between an offer and an invitation to treat?
Ask yourself….
Is it possible to respond to If so then this is likely to be an offer
the communication by saying If not, it is likely to be an invitation to treat
‘yes’ so that a concluded
agreement will result?
Look at the language used – e.g. Gibson v Manchester City Council (1979): the Council had
is it firm enough to constitute replied that it ‘may be prepared to sell’ the council house and
an offer? had invited the plaintiff to complete an application form.
Are the parties still Then it is likely that this is just an invitation to treat as opposed
negotiating? to a firm offer and acceptance – Harvey v Facey [1893]
Just because the word ‘offer’ Datec Electronics Holdings v United Parcels Service Ltd [2007] – it
is used that does not mean it is still up to the courts to make a decision as to whether there is
is an offer in a legal sense an offer or not
Recognised instances of invitations to treat – see if the facts come under any of these:
Instance Explanation
Advertisements, Partridge v Crittenden (1968) – confirms this on the basis that the supplier
circulars, and should have control over the making of the agreement. This is because if an
brochures advertisement constituted an offer, then the supplier would have to provide
the goods – this is difficult if stock if limited. (‘Limited stocks argument')
o In this case, there was an advertisement for a bird in a magazine, the
person was prosecuted for selling birds under a particular act, but the
judge decided in the case that they shouldn’t stand because they
weren’t offering to sell the birds, it was simply an invitation to treat
An advertisement that goods will be sold on a particular date is not binding
since it is just an invitation to treat – Harris v Nickerson (1873)
BE CAREFUL – ensure that the advertisement or brochure requests a promise
(bilateral) as opposed to an act (unilateral) – because rules for each are
different.
2
, Displays of goods Shop windows - Fisher v Bell (1961)
in shop windows Supermarket shelves - Pharmaceutical Society of Great Britain v Boots Cash
or on Chemists (1953)
supermarket The offer is made by the customer who brings the goods to the cashier and
shelves the cashier accepts the offer by scanning the goods.
Retailers’ No definite authority but its likely that these are invitations to treat
websites Regulation 12 of the E-Commerce (EC Directive) Regulations 2002 suggests
that the customer’s order may well be the offer so that the website would be
an invitation to treat.
Requests for bids Spencer v Harding (1870)
or tenders These are invitations to treat
The bid organiser remains in control and decides whose offer they wish to
accept.
Then, where the person makes a bid, that is an offer which is accepted by the
auctioneer when he bangs his hammer – Payne v Cave (1789)
Requests for bids Harris v Nickerson (1873)
at an auction or It is the auctioneer or advertiser who controls agreement by determining
an advertisement acceptance. The goods can be withdrawn from sale at a general auction, or
that an auction is an advertised auction can be cancelled, without incurring any liability
to be held
Step 2: Was the offer communicated to the offeree(s)?
An offer must actually be communicated to the offeree(s) in order to be effective
Step 3: Did the offeree accept that offer or was the offer withdrawn before acceptance?
Acceptance: the final and unqualified agreement to all the terms contained in the offer
Step 4: Can the response to the offer constitute an acceptance in law?
The following 3 requirements must be fulfilled:
The response must correspond with the If an offeree either introduces a new term or
exact terms of the offer (mirror-image amends a term in the offer then the response will
rule) be a counter-offer as opposed to an acceptance –
Hyde v Wrench (1840) – a piece of land was going to
be sold for £1000 and the other party said how
about £950 instead. That counter offer destroyed
the original offer to sell the property for £1000.
And the original offer will therefore be destroyed
Battle of the forms:
Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation
(England) Ltd (1979)
Battle of the forms occurs when both parties try to
use their own formats
The party that presents its terms last without
provoking objection from the recipient who acts on
3
, the ‘contract’, succeeds in binding the recipient on
its terms
It must be a response to the offer – so the Cross offers made in disregard of one another do
response must be made with knowledge not comprise of a contract on either of the terms,
of the offer except if one such contract is agreed
Tinn v Hoffman [1873] – it was agreed in this case
that there must be an element of causation with
one party making the offer and the other party
accepting that very offer
The response must follow any method for Any reasonable method of acceptance will do
acceptance which has been proscribed in (orally, in writing, by conduct –
the offer (prescribed method) o Conduct - Brogden v Metropolitan Rly Co.
(1877)
If the offeror requires a particular method of
acceptance then the offeree must use that method.
The offeror – master of the offer
o Simply prescribing the method of acceptance
will not have this effect – need to make it
clear that this method MUST be followed
and that no other method will be permitted
as an acceptance
Counter-offer: purports to be an acceptance but has either added a new term or, more usually,
amended an existing term – original offer is destroyed
Request for further information: asking for more information or whether a particular means of
performance will be possible before finally committing via acceptance – original offer is not
destroyed (Stevenson Jacques & Co. v McLean (1880))
Step 5: Was this acceptance communicated to the offeror? When was it communicated?
The acceptance must be ‘received’ by the offeror (‘receipt rule’)
Silence will not normally constitute acceptance for a bilateral contract (Felthouse v Bindley (1862))
However, in Re Selectmove Ltd [1995], the Court of Appeal recognized, obiter, that if an offeree agrees to
silence being a means of acceptance, then failure to communicate with the offeror is equivalent to
acceptance.
The postal rule of acceptance:
This is an exception to the receipt rule
If post is a proper method to communicated acceptance then the acceptance is complete as soon as
the letter is posted
Acceptance is complete as soon as the letter is posted Adams v Lindsell (1818)
And it is irrelevant that the acceptance letter is lost in the post and never arrives (Household Fire
and Carriage Accident Insurance Co. (Ltd) v Grant (1879)
NOTE – postal rule only applies to acceptances, nothing else such as revocation of an offer
ALSO – the postal acceptance rule does not apply if it is inconsistent with the nature of the offer
e.g. the offeror requires ‘notice in writing’ (Holwell Securities Ltd v Hughes (1974)
Postal rule may also be inapplicable depending on the facts:
4
Table of Contents
FORMATION OF A CONTRACT:..................................................................................................................1
BILATERAL AGREEMENT:.......................................................................................................................................2
The postal rule of acceptance:...............................................................................................................................4
UNILATERAL AGREEMENT:....................................................................................................................................5
ONLY ENFORCABLE PROMISES CAN BE RELIED UPON BEFORE THE COURTS...............................................6
CONTENT OF A CONTRACT:.....................................................................................................................10
Terms:.................................................................................................................................................................10
Incorporation of terms:.......................................................................................................................................11
Signed documents:..............................................................................................................................................11
Unsigned documents:..........................................................................................................................................11
Terms implied in law:..........................................................................................................................................13
Terms implied in law by custom:.........................................................................................................................14
UNFAIR TERMS:......................................................................................................................................15
Unfair Contract Terms Act 1977 (UCTA 1977)......................................................................................................15
Consumer Rights Act (CRA) 2015:........................................................................................................................17
MISREPRESENTATION:............................................................................................................................17
DURESS, UNDUE INFLUENCE AND UNCONSCIONABILITY:........................................................................22
DURESS:..............................................................................................................................................................23
Economic duress:.................................................................................................................................................23
UNDUE INFLUENCE:.............................................................................................................................................25
UNCONSCIONABLE BARGAINS:............................................................................................................................27
REMEDIES:..............................................................................................................................................28
What is a breach?................................................................................................................................................28
What is a remedy?...............................................................................................................................................28
Termination:........................................................................................................................................................29
Self-help remedies:..............................................................................................................................................29
DAMAGES:...........................................................................................................................................................32
FORMATION OF A CONTRACT:
Agreement is normally determined by the existence of offer and acceptance
Agreements willl broadly be one of 2 types:
1. Bilateral agreements: by far the most common in practice and consist of a promise in exchange for
a promise. Bilateral means both parties are bound on the exchange of promises, although there has
yet to be any performance of those promises. E.g. a typical sale of goods agreement
1
, 2. Unilateral agreements: consist of a promise in exchange for an act. It follows that only one party is
bound at the outset by a promise. The other’s acceptance is the performance of the requested act.
BILATERAL AGREEMENT:
Step 1: Does the communication amount to an offer?
Offer: a definite promise to be bound, without more, if the offeree agrees to the offer terms – if the offer is
accepted then an agreement will be the result. An offer can be direct, or it can be to the world at large -
(Carlill v Carbolic Smoke Ball Co. (1893)
Invitation to treat: an invitation to others to make offers as part of the negotiating process.
Mere “puff’: a promotional statement not to be taken seriously
How to distinguish between an offer and an invitation to treat?
Ask yourself….
Is it possible to respond to If so then this is likely to be an offer
the communication by saying If not, it is likely to be an invitation to treat
‘yes’ so that a concluded
agreement will result?
Look at the language used – e.g. Gibson v Manchester City Council (1979): the Council had
is it firm enough to constitute replied that it ‘may be prepared to sell’ the council house and
an offer? had invited the plaintiff to complete an application form.
Are the parties still Then it is likely that this is just an invitation to treat as opposed
negotiating? to a firm offer and acceptance – Harvey v Facey [1893]
Just because the word ‘offer’ Datec Electronics Holdings v United Parcels Service Ltd [2007] – it
is used that does not mean it is still up to the courts to make a decision as to whether there is
is an offer in a legal sense an offer or not
Recognised instances of invitations to treat – see if the facts come under any of these:
Instance Explanation
Advertisements, Partridge v Crittenden (1968) – confirms this on the basis that the supplier
circulars, and should have control over the making of the agreement. This is because if an
brochures advertisement constituted an offer, then the supplier would have to provide
the goods – this is difficult if stock if limited. (‘Limited stocks argument')
o In this case, there was an advertisement for a bird in a magazine, the
person was prosecuted for selling birds under a particular act, but the
judge decided in the case that they shouldn’t stand because they
weren’t offering to sell the birds, it was simply an invitation to treat
An advertisement that goods will be sold on a particular date is not binding
since it is just an invitation to treat – Harris v Nickerson (1873)
BE CAREFUL – ensure that the advertisement or brochure requests a promise
(bilateral) as opposed to an act (unilateral) – because rules for each are
different.
2
, Displays of goods Shop windows - Fisher v Bell (1961)
in shop windows Supermarket shelves - Pharmaceutical Society of Great Britain v Boots Cash
or on Chemists (1953)
supermarket The offer is made by the customer who brings the goods to the cashier and
shelves the cashier accepts the offer by scanning the goods.
Retailers’ No definite authority but its likely that these are invitations to treat
websites Regulation 12 of the E-Commerce (EC Directive) Regulations 2002 suggests
that the customer’s order may well be the offer so that the website would be
an invitation to treat.
Requests for bids Spencer v Harding (1870)
or tenders These are invitations to treat
The bid organiser remains in control and decides whose offer they wish to
accept.
Then, where the person makes a bid, that is an offer which is accepted by the
auctioneer when he bangs his hammer – Payne v Cave (1789)
Requests for bids Harris v Nickerson (1873)
at an auction or It is the auctioneer or advertiser who controls agreement by determining
an advertisement acceptance. The goods can be withdrawn from sale at a general auction, or
that an auction is an advertised auction can be cancelled, without incurring any liability
to be held
Step 2: Was the offer communicated to the offeree(s)?
An offer must actually be communicated to the offeree(s) in order to be effective
Step 3: Did the offeree accept that offer or was the offer withdrawn before acceptance?
Acceptance: the final and unqualified agreement to all the terms contained in the offer
Step 4: Can the response to the offer constitute an acceptance in law?
The following 3 requirements must be fulfilled:
The response must correspond with the If an offeree either introduces a new term or
exact terms of the offer (mirror-image amends a term in the offer then the response will
rule) be a counter-offer as opposed to an acceptance –
Hyde v Wrench (1840) – a piece of land was going to
be sold for £1000 and the other party said how
about £950 instead. That counter offer destroyed
the original offer to sell the property for £1000.
And the original offer will therefore be destroyed
Battle of the forms:
Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation
(England) Ltd (1979)
Battle of the forms occurs when both parties try to
use their own formats
The party that presents its terms last without
provoking objection from the recipient who acts on
3
, the ‘contract’, succeeds in binding the recipient on
its terms
It must be a response to the offer – so the Cross offers made in disregard of one another do
response must be made with knowledge not comprise of a contract on either of the terms,
of the offer except if one such contract is agreed
Tinn v Hoffman [1873] – it was agreed in this case
that there must be an element of causation with
one party making the offer and the other party
accepting that very offer
The response must follow any method for Any reasonable method of acceptance will do
acceptance which has been proscribed in (orally, in writing, by conduct –
the offer (prescribed method) o Conduct - Brogden v Metropolitan Rly Co.
(1877)
If the offeror requires a particular method of
acceptance then the offeree must use that method.
The offeror – master of the offer
o Simply prescribing the method of acceptance
will not have this effect – need to make it
clear that this method MUST be followed
and that no other method will be permitted
as an acceptance
Counter-offer: purports to be an acceptance but has either added a new term or, more usually,
amended an existing term – original offer is destroyed
Request for further information: asking for more information or whether a particular means of
performance will be possible before finally committing via acceptance – original offer is not
destroyed (Stevenson Jacques & Co. v McLean (1880))
Step 5: Was this acceptance communicated to the offeror? When was it communicated?
The acceptance must be ‘received’ by the offeror (‘receipt rule’)
Silence will not normally constitute acceptance for a bilateral contract (Felthouse v Bindley (1862))
However, in Re Selectmove Ltd [1995], the Court of Appeal recognized, obiter, that if an offeree agrees to
silence being a means of acceptance, then failure to communicate with the offeror is equivalent to
acceptance.
The postal rule of acceptance:
This is an exception to the receipt rule
If post is a proper method to communicated acceptance then the acceptance is complete as soon as
the letter is posted
Acceptance is complete as soon as the letter is posted Adams v Lindsell (1818)
And it is irrelevant that the acceptance letter is lost in the post and never arrives (Household Fire
and Carriage Accident Insurance Co. (Ltd) v Grant (1879)
NOTE – postal rule only applies to acceptances, nothing else such as revocation of an offer
ALSO – the postal acceptance rule does not apply if it is inconsistent with the nature of the offer
e.g. the offeror requires ‘notice in writing’ (Holwell Securities Ltd v Hughes (1974)
Postal rule may also be inapplicable depending on the facts:
4
