Introduction to Contract Law
Agreement between two or more parties intended to be legally binding.
Simple Contract- Not required by law to be in any particular form, like writing. Obviously, this is
preferable but not required. Most contracts. However, a contract for sale of land/property must be
in writing always- although this is rare.
Elements of a Contract- Offer & Acceptance (Agreement), Consideration, Intention (to create legal
relations) and Capacity. All must be present otherwise no contract.
Origins- Comes from hundreds of years of common law and its main aims are to ensure consistency
and certainty, particularly in business’ transactions. Most cases are old as this is when trade and
business first emerged majorly.
Doctrine of Privacy- Only a person/party to the contract can sue. However, exceptions include a
third party, who would have benefited from the contract, suing (Third Parties Act 1999)
Offeror- Makes the offer Offeree- Receives and accepts the offer.
Offer- Invitation to Treat & Validity
Offer- An expression of willingness to contract on clear terms, acceptance amounts to contract.
Specific- Made to one group/person- only they can accept. General- Made to world.
Invitation To Treat- An invitation to others to make an offer, not an offer itself open to acceptance.
Uncertainty- ‘might be/ may be able’ does not indicate an offer, but an invitation. Gibson v
Manchester City Council 1979. ‘Council may be able to sell you your house’, not an offer but
invitation to treat, his application could be ignored.
Wider Circumstances- Court will look at status of statements that were made and standard practise
in the field. Harvey v Facey 1893- Saying the lowest cash price you’d accept is not an offer, but an
ITT. No contract
Advertisements- ITT and not offers. Partridge v Crittenden 1968- Advertisement of hens in paper an
ITT, not offer to sale. Not liable on Protection of Birds Act 1954 for unlawfully selling wild bird.
Gibbons v Proctor, ad. with a reward is an offer.
Carlill v Carbolic Smoke Ball 1893- Claimed to ‘positively cure’ influenza. Said £100 reward if got ill.
Manufacturer placed £100 in bank as a guarantee. No contract if just brough product. Amounted to
offer as she met the acceptance criteria by buying it AND getting flu. Called ‘Unilateral Contract’.
Shop Displays- Fisher v Bell 1961, not liable for Restriction of Offensive Weapons Act 1959 as display
of flick knives was an ITT.
PS of GB v Boots 1953- Display of goods was ITT and consumer made offer by taking them to cashier
and the cashier accepting action was acceptance. Pharmacist was at register. Not liable for selling
goods without supervision, Pharmacy & Poisons Act 1933.
Auctions- Auctioneer calling for bids is ITT. Bids are offers and he accepts/rejects them. Bidder can
retract bid (offer) before it is accepted as seen in Payne v Cave 1789. British Car Auctions v Wright
1972- Auctioneers prosecuted for offering to sell unfit vehicle. Failed as no offer only ITT. Reserve-
ITT and agreed when auctioneer brings down hammer. No Reserve- Auctioneer makes offer and this
is accepted when bid is made, Warlow v Harrison 1859
,Information- Harvey & Facey 1893- Request for information and a subsequent reply is not an offer.
Offer Validity- Offer is subject to the requirements set out.
Offeree- Can be made by anyone, company, employee or even machine. Thornton v Shoe Lane
Parking 1971- Offer is made by parking machine. Acceptance is putting money into it. Terms of
contract displayed on screen/ ticket.
Awareness- Taylor v Laird 1856- Gave up captaincy of ship, returned working as crew member but
not paid. Owner did not know he made an offer to work as ordinary member so no contract or
payment.
Timing- Only while it is open. Stenson v McLean 1880- Inquiry made just as offer duration closed.
Still valid even though offered to accept normal terms after. Binding contract as offer originally made
when it was just closing.
Offer- Ending an Offer
Acceptance- This will end the offer and replace it with a contract.
Revocation- Offer is revoked as soon as the revocation is communicated to the offeree.
Payne v Cave 1789, can withdraw even if they have promised to keep it open for specific time unless
specific promise made. Routledge v Grant 1828- Unless they have contracted an option (buying
something for specific price at specific time).
Must be Expressed Clearly- Dickson v Dodds 1876- Reliable person between them told Dodds offer
was withdraw. To be effective must be comminated before acceptance.
Reconsideration- Pickford v Clestica- Can revoke offer by making a second offer after further
investigation. However, if asked to quote on two different bases then the offeree can choose
between both offers. Byrne v Van Tienhoven 1880- Offer made 1st, open until 20th. Claimant
accepted on 15th, revoked on 8th, only reached C on 20th. Revocation only valid when it is received,
offer still valid.
Lapse of Time- Time limit has passed. RVH v Montefoire 1866- The defendant offered to buy shares
and was only accepted 6 months later when they had fell. D refused to pay, not valid as time had
lapsed.
Death- Either parties death ends the offer. If offeree heard of offeror death before accepting, offer
lapsed. If offeree did not know then the executor would have to arrange for the contract to be
performed. However, if personal, clearly it would lapse.
Counter Offer- Destroys original offer so that it is no longer open for the offeree to accept. Hyde v
Wrench 1840- D offered to sell farm for £1,000. C offered £950 which the D refused. C then sought
to accept the original offer. D refused to sell to the C and C brought action for specific performance.
Not liable as no longer an open offer.
Failure of Condition- A failure to meet an offer’s subjective conditions. Financings v Stimson 1962-
Offered to take car on hire purchase. Before acceptance car was stolen. C signed to agreement. C
couldn’t accept as implied condition of car was not the same as offer.
Acceptance
, General Rule- ‘Unconditional assent, communicated by the offeree to offeror, with intention of
accepting the exact terms of offer with certainty’
No contract unless parties agree together. If offeree proposed counter offer, this makes original
relevant and the counter offer is accepted and valid. Cannot usually revoke acceptance.
Bilateral- Bound to both parties regardless. Unilateral Contract- Imposes obligation of one party,
bound to do something if you do something (therefore accepting offer)
Unilateral Acceptance- Cannot be revoked when 2nd party begins act. Accepted by commencement
of performance, Errington v Errington 1952, or completed performance. In Solsbury v Solsbury
2008, accepted when obligation of 2nd party was commenced.
Acceptance Methods- May be orally, written, mailed, electronic or inferred by conduct.
Acceptance by Conduct- Seen in Carbolic Smoke Company v Carlill 1893. In, Nissan v Nissan 1994,
when they started delivering cars, it was implied acceptance.
Postal Rules- Offer is accepted when letter is sent, Adams v Lindsell 1818. Regardless if received
when offer time passes but only allowed if most reasonable way to communicate- Henthorn v Fraser
1892. Must be adequately labelled and posted into post-box or given to right personnel or invalid,
Transgrain and Re London & Northern Bank.
Postal Discrepancies- If damaged or lost still valid, HFI v Grant. Not applicable for revocation,
Teinhoven. Brinkinbon 1983, if received outside office hours and not seen may not be valid.
Modern Methods- All technological communication is classed as the same as verbal and is valid
when offeror receives it. Unless the acceptance did not go through, Zestafoni v Ronly Holdings 2004
or it would not be read in normal course of business, Brimnes 1875. If disruption in communication,
then not valid, Entores 1955.
Expressions of Reasonable Certainty- Must be reached fairly without pressure and unconditionally.
Silence is NOT acceptance Bindley 1862. In Powell v Lee, only offeree or his representative can
communicate acceptance. Once valid acceptance takes place a contract is formed.
Consideration
Concerned with the exchange of promises. “Must consist in either right, interest, profit or benefit
accruing to one party and loss, responsibility given to the other”- Currie v Misa 1875.
Consideration- Promisor and Promise, each must Receive Benefit an Suffer Detriment
Must be of Value- Thomas v Thomas, excludes promises of Love, Gaming etc. One sided promise/
consideration is a gift.
Valid Consideration- Executed- When entering into contract, IE buying something. OR. When the
action is completed in unilateral contract. Executory- Parties exchange promises to do future act.
Consideration made when agreed, not when act executed. Can be a mix.
Rules- Not be past, Must be sufficient but not be adequate, Must move from promise, An existing
duty will not amount to valid, Existing contractual duty in not valid, Part payment of debt is not valid.
Consideration- Rules and Exceptions
Agreement between two or more parties intended to be legally binding.
Simple Contract- Not required by law to be in any particular form, like writing. Obviously, this is
preferable but not required. Most contracts. However, a contract for sale of land/property must be
in writing always- although this is rare.
Elements of a Contract- Offer & Acceptance (Agreement), Consideration, Intention (to create legal
relations) and Capacity. All must be present otherwise no contract.
Origins- Comes from hundreds of years of common law and its main aims are to ensure consistency
and certainty, particularly in business’ transactions. Most cases are old as this is when trade and
business first emerged majorly.
Doctrine of Privacy- Only a person/party to the contract can sue. However, exceptions include a
third party, who would have benefited from the contract, suing (Third Parties Act 1999)
Offeror- Makes the offer Offeree- Receives and accepts the offer.
Offer- Invitation to Treat & Validity
Offer- An expression of willingness to contract on clear terms, acceptance amounts to contract.
Specific- Made to one group/person- only they can accept. General- Made to world.
Invitation To Treat- An invitation to others to make an offer, not an offer itself open to acceptance.
Uncertainty- ‘might be/ may be able’ does not indicate an offer, but an invitation. Gibson v
Manchester City Council 1979. ‘Council may be able to sell you your house’, not an offer but
invitation to treat, his application could be ignored.
Wider Circumstances- Court will look at status of statements that were made and standard practise
in the field. Harvey v Facey 1893- Saying the lowest cash price you’d accept is not an offer, but an
ITT. No contract
Advertisements- ITT and not offers. Partridge v Crittenden 1968- Advertisement of hens in paper an
ITT, not offer to sale. Not liable on Protection of Birds Act 1954 for unlawfully selling wild bird.
Gibbons v Proctor, ad. with a reward is an offer.
Carlill v Carbolic Smoke Ball 1893- Claimed to ‘positively cure’ influenza. Said £100 reward if got ill.
Manufacturer placed £100 in bank as a guarantee. No contract if just brough product. Amounted to
offer as she met the acceptance criteria by buying it AND getting flu. Called ‘Unilateral Contract’.
Shop Displays- Fisher v Bell 1961, not liable for Restriction of Offensive Weapons Act 1959 as display
of flick knives was an ITT.
PS of GB v Boots 1953- Display of goods was ITT and consumer made offer by taking them to cashier
and the cashier accepting action was acceptance. Pharmacist was at register. Not liable for selling
goods without supervision, Pharmacy & Poisons Act 1933.
Auctions- Auctioneer calling for bids is ITT. Bids are offers and he accepts/rejects them. Bidder can
retract bid (offer) before it is accepted as seen in Payne v Cave 1789. British Car Auctions v Wright
1972- Auctioneers prosecuted for offering to sell unfit vehicle. Failed as no offer only ITT. Reserve-
ITT and agreed when auctioneer brings down hammer. No Reserve- Auctioneer makes offer and this
is accepted when bid is made, Warlow v Harrison 1859
,Information- Harvey & Facey 1893- Request for information and a subsequent reply is not an offer.
Offer Validity- Offer is subject to the requirements set out.
Offeree- Can be made by anyone, company, employee or even machine. Thornton v Shoe Lane
Parking 1971- Offer is made by parking machine. Acceptance is putting money into it. Terms of
contract displayed on screen/ ticket.
Awareness- Taylor v Laird 1856- Gave up captaincy of ship, returned working as crew member but
not paid. Owner did not know he made an offer to work as ordinary member so no contract or
payment.
Timing- Only while it is open. Stenson v McLean 1880- Inquiry made just as offer duration closed.
Still valid even though offered to accept normal terms after. Binding contract as offer originally made
when it was just closing.
Offer- Ending an Offer
Acceptance- This will end the offer and replace it with a contract.
Revocation- Offer is revoked as soon as the revocation is communicated to the offeree.
Payne v Cave 1789, can withdraw even if they have promised to keep it open for specific time unless
specific promise made. Routledge v Grant 1828- Unless they have contracted an option (buying
something for specific price at specific time).
Must be Expressed Clearly- Dickson v Dodds 1876- Reliable person between them told Dodds offer
was withdraw. To be effective must be comminated before acceptance.
Reconsideration- Pickford v Clestica- Can revoke offer by making a second offer after further
investigation. However, if asked to quote on two different bases then the offeree can choose
between both offers. Byrne v Van Tienhoven 1880- Offer made 1st, open until 20th. Claimant
accepted on 15th, revoked on 8th, only reached C on 20th. Revocation only valid when it is received,
offer still valid.
Lapse of Time- Time limit has passed. RVH v Montefoire 1866- The defendant offered to buy shares
and was only accepted 6 months later when they had fell. D refused to pay, not valid as time had
lapsed.
Death- Either parties death ends the offer. If offeree heard of offeror death before accepting, offer
lapsed. If offeree did not know then the executor would have to arrange for the contract to be
performed. However, if personal, clearly it would lapse.
Counter Offer- Destroys original offer so that it is no longer open for the offeree to accept. Hyde v
Wrench 1840- D offered to sell farm for £1,000. C offered £950 which the D refused. C then sought
to accept the original offer. D refused to sell to the C and C brought action for specific performance.
Not liable as no longer an open offer.
Failure of Condition- A failure to meet an offer’s subjective conditions. Financings v Stimson 1962-
Offered to take car on hire purchase. Before acceptance car was stolen. C signed to agreement. C
couldn’t accept as implied condition of car was not the same as offer.
Acceptance
, General Rule- ‘Unconditional assent, communicated by the offeree to offeror, with intention of
accepting the exact terms of offer with certainty’
No contract unless parties agree together. If offeree proposed counter offer, this makes original
relevant and the counter offer is accepted and valid. Cannot usually revoke acceptance.
Bilateral- Bound to both parties regardless. Unilateral Contract- Imposes obligation of one party,
bound to do something if you do something (therefore accepting offer)
Unilateral Acceptance- Cannot be revoked when 2nd party begins act. Accepted by commencement
of performance, Errington v Errington 1952, or completed performance. In Solsbury v Solsbury
2008, accepted when obligation of 2nd party was commenced.
Acceptance Methods- May be orally, written, mailed, electronic or inferred by conduct.
Acceptance by Conduct- Seen in Carbolic Smoke Company v Carlill 1893. In, Nissan v Nissan 1994,
when they started delivering cars, it was implied acceptance.
Postal Rules- Offer is accepted when letter is sent, Adams v Lindsell 1818. Regardless if received
when offer time passes but only allowed if most reasonable way to communicate- Henthorn v Fraser
1892. Must be adequately labelled and posted into post-box or given to right personnel or invalid,
Transgrain and Re London & Northern Bank.
Postal Discrepancies- If damaged or lost still valid, HFI v Grant. Not applicable for revocation,
Teinhoven. Brinkinbon 1983, if received outside office hours and not seen may not be valid.
Modern Methods- All technological communication is classed as the same as verbal and is valid
when offeror receives it. Unless the acceptance did not go through, Zestafoni v Ronly Holdings 2004
or it would not be read in normal course of business, Brimnes 1875. If disruption in communication,
then not valid, Entores 1955.
Expressions of Reasonable Certainty- Must be reached fairly without pressure and unconditionally.
Silence is NOT acceptance Bindley 1862. In Powell v Lee, only offeree or his representative can
communicate acceptance. Once valid acceptance takes place a contract is formed.
Consideration
Concerned with the exchange of promises. “Must consist in either right, interest, profit or benefit
accruing to one party and loss, responsibility given to the other”- Currie v Misa 1875.
Consideration- Promisor and Promise, each must Receive Benefit an Suffer Detriment
Must be of Value- Thomas v Thomas, excludes promises of Love, Gaming etc. One sided promise/
consideration is a gift.
Valid Consideration- Executed- When entering into contract, IE buying something. OR. When the
action is completed in unilateral contract. Executory- Parties exchange promises to do future act.
Consideration made when agreed, not when act executed. Can be a mix.
Rules- Not be past, Must be sufficient but not be adequate, Must move from promise, An existing
duty will not amount to valid, Existing contractual duty in not valid, Part payment of debt is not valid.
Consideration- Rules and Exceptions
