A Brief Overview
1. CREATION OF A CONTRACT
o 4 elements
Offer and acceptance
Intention to create legal relations (ICLR)
Consideration
o Problems with creation of contract
Is there a LACK OF CERTAINTY?
PRIVITY: Are the players attempting to give RIGHTS TO THIRD PARTIES?
2. TERMS OF THE CONTRACT
o EXPRESS TERMS
IDENTIFYING TERMS OF THE CONTRACT
TERMS TO INCLUDE AS PART OF CONTRACT:
o Are the things said or done TERMS or MERE
REPRESENTATIONS?
o Successfully INCORPORATED into the contract?
TERMS TO REMOVE FROM THE CONTRACT:
o UCTA 1977
o CRA 2015
o Common law
INTERPRETATION of the term
o IMPLIED TERMS
Implied in fact
Implied at law
3. VITIATING FACTORS
o Mistake
o Misrepresentation
o Duress
o Undue influence
o Unconscionability
o Frustration and Force Majeure
,OUTLINE for formation
OFFERS
o Has an offer been made?
Advertisements
Displays for goods for sale in a shop
Tenders
Auctions
o Termination of offer
ACCEPTANCE – contentious areas
o Postal rule
o Electronic communication
o Acceptance by silence
o Battle of the forms
CONSIDERATION
o Past consideration not good consideration
o Consideration moves from promisor (privity problem)
o Legally sufficient consideration
Performance of an existing duty
Statutory duty
Contractual duty to a third party
VARIATIONS: Increasing vs decreasing pacts
o Doctrine of P.E.
When does it apply?
Existing debts?
How does it operate?
3 elements in High Trees
What are its EFFECTS?
Suspensory or extinctive?
INTENTION TO CREATE LEGAL RELATIONS
o Domestic/social context
o Commercial context
o ‘in-between’ contexts
, Offer and Acceptance
Offers
Definition: An offer is an expression of willingness to contract on specified terms, made with the
intention that it is to become binding as soon as it is accepted by the person to whom it is addressed
(Treitel)
General OBJECTIVE TEST: Does a person in the position of B (having the knowledge of the relevant
circumstances which B had), acting reasonably, would understand that A was making a proposal to
which he intended to be bound in the event of an unequivocal acceptance: Crest Nicholson v. Akaria
[2010]
Evidence of the objective nature of the test – Maple Leaf Macro Volatility Master Fund v
Rouvroy [2009] CA - in this case, the fact that BOTH parties subjectively did not intend the
creation of a contract was not material
Objective principle:
o Gives effect to REASONABLE interpretation of the language and not fanciful or
unrealistic interpretations - eg Thake v Maurice [1986] HC (It was lunacy for claimant
to rely on doctor’s assurance that the vasectomy was “irreversible” to be read as
“irreversible by God or man”. That it was reasonable to know that “medicine is not
an exact science” and that the doctor’s reassurance was “mere therapeutic
comfort”)
o It must be possible to work out what the apparent intent of A was - Raffles v
Wichelhaus (1864), the parties agreed a sale of bales of cotton, to be delivered from
Bombay on the Peerless, two Peerless, ambiguous, no contract
o It must not be B’s fault that A appeared to agree to something that he did not
actually intend to - Scriven Brothers [1913] HC (auction, misleading display of bale
and hay, no contract)
Differentiating between Offers and Invitations to Treat (ITT) (ie has an offer been made)
1. Goods on display and advertisements
GENERAL RULE: The display of goods for sale (Fisher v Bell [1961] – CA, sale of a flick knife policeman
contented this contravened some Act, where goods display with a price label, such a display is
treated as an ITT. Offer is made by customer when presents item at the till. Acceptance occurs when
, cashier takes payment) and advertisements (Partridge v Crittenden [1968] HC, where advertisement
of bird in newspaper WITH PRICE, therefore doesn’t breach protection of wildlife act) constitute ITT
EXCEPTION: Rule can be displaced if, applying the objective test above, there is an intention
to be bound by the terms:
o E.g. Advertisements: Carlill v Carbolic Smoke Ball where the intention was evinced by
the fact that the advert said that 1000 pounds had been deposited with the bank,
indicating the seriousness of their willingness to pay the money
o Chitty (2012) notes that courts are less willing to hold that it was an offer in bilateral
contracts, since this sort of advertisement is intended to lead to further bargaining
2. Tenders
NOTE about definition -> SEALED BIDS vs Auctions – the former is a tender since it generally allows
only ONE bid to be made (so sealed bids = tenders)
GENERAL rule: constitutes only ITT: Spencer v Harding [1870]
EXCEPTION: Displaced if appears objectively that maker of the statement intended to make
an offer
o E.g. Sealed bid context: a legal obligation to award the contract to the bidder with
the highest bid
COMPLICATION #1: In LIMITED CIRCUMSTANCES, a collateral offer to consider bids properly
submitted might be created: Blackpool Aero Club v Blackpool B. C (tenderer successfully sued
auctioner for not considering bid as tender submitted tender by hand 1 hour before the
deadline and the council’s janitor failed to clear the letter box the next day. That tender was
struck out)
o Obligations upon the invitor that were minimum standards of fair dealing:
1. The invitor must ‘consider’ each valid tender
2. The invitor must ignore invalid tenders eg Fairclough Building v Port Talbot BC
(1992) CA held that invitor had not acted wrongly when refusing to consider a
tender because a member of the tender committee was married to a director of
the relevant tendering company
3. The invitor must not award the contract ahead of the deadline for submission of
tenders
o NOTE reasons given for creation of the collateral offer:
1. CREATION OF A CONTRACT
o 4 elements
Offer and acceptance
Intention to create legal relations (ICLR)
Consideration
o Problems with creation of contract
Is there a LACK OF CERTAINTY?
PRIVITY: Are the players attempting to give RIGHTS TO THIRD PARTIES?
2. TERMS OF THE CONTRACT
o EXPRESS TERMS
IDENTIFYING TERMS OF THE CONTRACT
TERMS TO INCLUDE AS PART OF CONTRACT:
o Are the things said or done TERMS or MERE
REPRESENTATIONS?
o Successfully INCORPORATED into the contract?
TERMS TO REMOVE FROM THE CONTRACT:
o UCTA 1977
o CRA 2015
o Common law
INTERPRETATION of the term
o IMPLIED TERMS
Implied in fact
Implied at law
3. VITIATING FACTORS
o Mistake
o Misrepresentation
o Duress
o Undue influence
o Unconscionability
o Frustration and Force Majeure
,OUTLINE for formation
OFFERS
o Has an offer been made?
Advertisements
Displays for goods for sale in a shop
Tenders
Auctions
o Termination of offer
ACCEPTANCE – contentious areas
o Postal rule
o Electronic communication
o Acceptance by silence
o Battle of the forms
CONSIDERATION
o Past consideration not good consideration
o Consideration moves from promisor (privity problem)
o Legally sufficient consideration
Performance of an existing duty
Statutory duty
Contractual duty to a third party
VARIATIONS: Increasing vs decreasing pacts
o Doctrine of P.E.
When does it apply?
Existing debts?
How does it operate?
3 elements in High Trees
What are its EFFECTS?
Suspensory or extinctive?
INTENTION TO CREATE LEGAL RELATIONS
o Domestic/social context
o Commercial context
o ‘in-between’ contexts
, Offer and Acceptance
Offers
Definition: An offer is an expression of willingness to contract on specified terms, made with the
intention that it is to become binding as soon as it is accepted by the person to whom it is addressed
(Treitel)
General OBJECTIVE TEST: Does a person in the position of B (having the knowledge of the relevant
circumstances which B had), acting reasonably, would understand that A was making a proposal to
which he intended to be bound in the event of an unequivocal acceptance: Crest Nicholson v. Akaria
[2010]
Evidence of the objective nature of the test – Maple Leaf Macro Volatility Master Fund v
Rouvroy [2009] CA - in this case, the fact that BOTH parties subjectively did not intend the
creation of a contract was not material
Objective principle:
o Gives effect to REASONABLE interpretation of the language and not fanciful or
unrealistic interpretations - eg Thake v Maurice [1986] HC (It was lunacy for claimant
to rely on doctor’s assurance that the vasectomy was “irreversible” to be read as
“irreversible by God or man”. That it was reasonable to know that “medicine is not
an exact science” and that the doctor’s reassurance was “mere therapeutic
comfort”)
o It must be possible to work out what the apparent intent of A was - Raffles v
Wichelhaus (1864), the parties agreed a sale of bales of cotton, to be delivered from
Bombay on the Peerless, two Peerless, ambiguous, no contract
o It must not be B’s fault that A appeared to agree to something that he did not
actually intend to - Scriven Brothers [1913] HC (auction, misleading display of bale
and hay, no contract)
Differentiating between Offers and Invitations to Treat (ITT) (ie has an offer been made)
1. Goods on display and advertisements
GENERAL RULE: The display of goods for sale (Fisher v Bell [1961] – CA, sale of a flick knife policeman
contented this contravened some Act, where goods display with a price label, such a display is
treated as an ITT. Offer is made by customer when presents item at the till. Acceptance occurs when
, cashier takes payment) and advertisements (Partridge v Crittenden [1968] HC, where advertisement
of bird in newspaper WITH PRICE, therefore doesn’t breach protection of wildlife act) constitute ITT
EXCEPTION: Rule can be displaced if, applying the objective test above, there is an intention
to be bound by the terms:
o E.g. Advertisements: Carlill v Carbolic Smoke Ball where the intention was evinced by
the fact that the advert said that 1000 pounds had been deposited with the bank,
indicating the seriousness of their willingness to pay the money
o Chitty (2012) notes that courts are less willing to hold that it was an offer in bilateral
contracts, since this sort of advertisement is intended to lead to further bargaining
2. Tenders
NOTE about definition -> SEALED BIDS vs Auctions – the former is a tender since it generally allows
only ONE bid to be made (so sealed bids = tenders)
GENERAL rule: constitutes only ITT: Spencer v Harding [1870]
EXCEPTION: Displaced if appears objectively that maker of the statement intended to make
an offer
o E.g. Sealed bid context: a legal obligation to award the contract to the bidder with
the highest bid
COMPLICATION #1: In LIMITED CIRCUMSTANCES, a collateral offer to consider bids properly
submitted might be created: Blackpool Aero Club v Blackpool B. C (tenderer successfully sued
auctioner for not considering bid as tender submitted tender by hand 1 hour before the
deadline and the council’s janitor failed to clear the letter box the next day. That tender was
struck out)
o Obligations upon the invitor that were minimum standards of fair dealing:
1. The invitor must ‘consider’ each valid tender
2. The invitor must ignore invalid tenders eg Fairclough Building v Port Talbot BC
(1992) CA held that invitor had not acted wrongly when refusing to consider a
tender because a member of the tender committee was married to a director of
the relevant tendering company
3. The invitor must not award the contract ahead of the deadline for submission of
tenders
o NOTE reasons given for creation of the collateral offer:
