Contract Law
- A contract is a legally binding agreement that is enforceable by law
o Obligations between the parties
o Remedies for failure to perform
Classification of Contract:
- Types of Parties
o B2B - Business to business
o B2C - Business to Consumer
o C2C - Consumer to Consumer
- Reason for Performance
o Bilateral contract
§ Promise in exchange for a contract (e.g. sale of a bike)
o Unilateral contract
§ Promise in exchange for an act (e.g. promise of a reward for information
about a crime)
- Type of Performance
Sources of Contract Law:
- Party agreement
o Standard form contracts
o General terms
- Formal sources of law
o National law (e.g. civil/common law)
§ Default rules, facilitative rules, mandatory rules
o Regional law (e.g. EU law)
o International law (e.g. CISG)
- International sources of law
o Non-state organisations
o Academics
o Non-binding soft law
§ E.g. principles, restatements, DCFR
Supranational Contract Law:
- European Law (Art. 114 TFEU)
- International Law (UN Convention on Contracts for the International Sale of Goods [CISG])
Principles of Contract Law:
- Freedom of contract
o Autonomy of parties to make the choices they desire on contracting
o Freedom with regard to content (on whatever terms)
o Freedom to contract or not to contract (whenever desired)
o Freedom to choose the other party (with whomever)
- Binding force
o Agreements lawfully entered into have the force of law between the parties
§ Binding (i.e. consequences if the contract is breached)
§ Breaching party must compensate the party not in breach
§ UNLESS terms are unfair or prohibited by law
- Informality
o Generally contracts do not require any particular form
§ HOWEVER certain contracts require a particular form
- Contractual fairness
o A contract should entail procedural fairness
§ Procedural fairness = unequal position between parties should be remedied
§ NOT substantive fairness
,Contract Formation
- Offer
- Acceptance
- Intention
- Formality
- Capacity
- Lack of vitiating factor
è Contract
Agreement:
- Consenus ad idem: to have the same understanding of the terms
o Contracts will only be enforced if the parties have mutual assent
- Mutual Assent
o Agreements between parties
o Agreements is evidence of consensus ad idem
o Promisor/offeror makes offer
o Promisee/offeree receives the offer
è Accepted offer creates legally enforceable agreement -> contract
- Effects of making the promise
o Undertaking that certain affair exists
o Undertaking that something shall (not) happen
o Failure of performance = breach
§ Breach creates a legal light to remedy
Mutual Assent – DCC:
- Article 6:213(1) DCC: Definition of an ‘obligatory agreement’:
o An agreement in the sense of this Section is a more-sided (multilateral) juridical act
under which one or more parties have subjected themselves to an obligation towards
one or more other parties.
- Article 3:33 DCC: Definition of ‘juridical act’:
o A juridical act requires the will (intention) of the acting person to establish a specific
legal effect, which will (intention) has to be expressed through a statement of the
acting person.
- Article 6:217(1) DCC: Creation of agreement:
o An agreement comes to existence by an offer and its acceptance.
Offer:
- Expression of willingness to contract on specified terms
- Intention that expression of willingness is to binding once accepted
- Reasonable person as objective standard
What is an Offer?:
- Article 6:227 DCC:
o The obligations to which parties subject themselves under the agreement, must be
determinable.
- Article 2:201 PECL:
o (1) A proposal amounts to an offer if:
§ (a) it is intended to result in a contract if the other party accepts it, and
§ (b) it contains sufficiently definite terms to form a contract.
- Article 2:103 Sufficient Agreement
o (1) There is sufficient agreement if the terms:
§ (a) have been sufficiently defined by the parties so that the contract can be
enforced, or
§ (b) can be determined under these Principles.
, - Common Law:
o An offer is ‘an expression of willingness to contract on certain terms, made with the
intention that it shall become binding as soon as it is accepted by the person to whom
it is addressed.
o Gibson Case
è Obligations Determinable / Sufficiently Defined / Intended to Be Binding
Offer v. Invitation to threat:
- An invitation to treat is not an offer but an indication that a person is willing to enter into a
negotiation to enter into a contract
- Art 2:201 PECL:
o (1)A proposal amount to an offer if:
§ (a) It is intended to result in a contract if the other party accepts it, and
o (3) A proposal to supply goods or services at stated prices made by a professional
supplier in a public advertisement or a catalogue, or by a display of goods, is
presumed to be an offer to sell or supply at that price until the stock of goods, or the
supplier's capacity to supply the service, is exhausted
- Common Law: Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]:
o Section 18 Pharmacy and Poisons Act 1933, stated that needed a registered
pharmacist for the sale of any goods on poisons list.
Are goods on display in a shop an offer?:
- Netherlands
o Hofland v. Hennis: as long as stocks last: yes
- PECL
o Art. 2:201(3): as long as stocks last: yes
- England
o Pharmaceutical Society Case, Fisher v. Bell: no
Is a public advert an offer?:
- Netherlands
o Hofland v. Hennis: as long as stocks last: yes
- PECL
o Art. 2:201(3): as long as stocks last: yes
- England
o Partridge v. Crittenden: No, unless there is a condition or reward (Carbolic Smoke
Case)
Offer v. Invitation to treat:
- Offer:
o Sufficiently definite as to relevant terms
o Clear intention to be bound by terms immediately upon acceptance
o Certainty regarding the substance contract (benefit concerned/subject matter/time,
place or manner of performance
è The terms of the offer = the terms of the contract
- Invitation to treat:
o Still room for negotiation or request for information
o Invitation to negotiate the terms
o Lack of certainty
Terminating an offer :
- Rejection
- Counter-offer
- Lapsed
- Revocation
- Death of party
- Condition of acceptance not met
è There cannot be an acceptance because the offer does not exist anymore
- A contract is a legally binding agreement that is enforceable by law
o Obligations between the parties
o Remedies for failure to perform
Classification of Contract:
- Types of Parties
o B2B - Business to business
o B2C - Business to Consumer
o C2C - Consumer to Consumer
- Reason for Performance
o Bilateral contract
§ Promise in exchange for a contract (e.g. sale of a bike)
o Unilateral contract
§ Promise in exchange for an act (e.g. promise of a reward for information
about a crime)
- Type of Performance
Sources of Contract Law:
- Party agreement
o Standard form contracts
o General terms
- Formal sources of law
o National law (e.g. civil/common law)
§ Default rules, facilitative rules, mandatory rules
o Regional law (e.g. EU law)
o International law (e.g. CISG)
- International sources of law
o Non-state organisations
o Academics
o Non-binding soft law
§ E.g. principles, restatements, DCFR
Supranational Contract Law:
- European Law (Art. 114 TFEU)
- International Law (UN Convention on Contracts for the International Sale of Goods [CISG])
Principles of Contract Law:
- Freedom of contract
o Autonomy of parties to make the choices they desire on contracting
o Freedom with regard to content (on whatever terms)
o Freedom to contract or not to contract (whenever desired)
o Freedom to choose the other party (with whomever)
- Binding force
o Agreements lawfully entered into have the force of law between the parties
§ Binding (i.e. consequences if the contract is breached)
§ Breaching party must compensate the party not in breach
§ UNLESS terms are unfair or prohibited by law
- Informality
o Generally contracts do not require any particular form
§ HOWEVER certain contracts require a particular form
- Contractual fairness
o A contract should entail procedural fairness
§ Procedural fairness = unequal position between parties should be remedied
§ NOT substantive fairness
,Contract Formation
- Offer
- Acceptance
- Intention
- Formality
- Capacity
- Lack of vitiating factor
è Contract
Agreement:
- Consenus ad idem: to have the same understanding of the terms
o Contracts will only be enforced if the parties have mutual assent
- Mutual Assent
o Agreements between parties
o Agreements is evidence of consensus ad idem
o Promisor/offeror makes offer
o Promisee/offeree receives the offer
è Accepted offer creates legally enforceable agreement -> contract
- Effects of making the promise
o Undertaking that certain affair exists
o Undertaking that something shall (not) happen
o Failure of performance = breach
§ Breach creates a legal light to remedy
Mutual Assent – DCC:
- Article 6:213(1) DCC: Definition of an ‘obligatory agreement’:
o An agreement in the sense of this Section is a more-sided (multilateral) juridical act
under which one or more parties have subjected themselves to an obligation towards
one or more other parties.
- Article 3:33 DCC: Definition of ‘juridical act’:
o A juridical act requires the will (intention) of the acting person to establish a specific
legal effect, which will (intention) has to be expressed through a statement of the
acting person.
- Article 6:217(1) DCC: Creation of agreement:
o An agreement comes to existence by an offer and its acceptance.
Offer:
- Expression of willingness to contract on specified terms
- Intention that expression of willingness is to binding once accepted
- Reasonable person as objective standard
What is an Offer?:
- Article 6:227 DCC:
o The obligations to which parties subject themselves under the agreement, must be
determinable.
- Article 2:201 PECL:
o (1) A proposal amounts to an offer if:
§ (a) it is intended to result in a contract if the other party accepts it, and
§ (b) it contains sufficiently definite terms to form a contract.
- Article 2:103 Sufficient Agreement
o (1) There is sufficient agreement if the terms:
§ (a) have been sufficiently defined by the parties so that the contract can be
enforced, or
§ (b) can be determined under these Principles.
, - Common Law:
o An offer is ‘an expression of willingness to contract on certain terms, made with the
intention that it shall become binding as soon as it is accepted by the person to whom
it is addressed.
o Gibson Case
è Obligations Determinable / Sufficiently Defined / Intended to Be Binding
Offer v. Invitation to threat:
- An invitation to treat is not an offer but an indication that a person is willing to enter into a
negotiation to enter into a contract
- Art 2:201 PECL:
o (1)A proposal amount to an offer if:
§ (a) It is intended to result in a contract if the other party accepts it, and
o (3) A proposal to supply goods or services at stated prices made by a professional
supplier in a public advertisement or a catalogue, or by a display of goods, is
presumed to be an offer to sell or supply at that price until the stock of goods, or the
supplier's capacity to supply the service, is exhausted
- Common Law: Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]:
o Section 18 Pharmacy and Poisons Act 1933, stated that needed a registered
pharmacist for the sale of any goods on poisons list.
Are goods on display in a shop an offer?:
- Netherlands
o Hofland v. Hennis: as long as stocks last: yes
- PECL
o Art. 2:201(3): as long as stocks last: yes
- England
o Pharmaceutical Society Case, Fisher v. Bell: no
Is a public advert an offer?:
- Netherlands
o Hofland v. Hennis: as long as stocks last: yes
- PECL
o Art. 2:201(3): as long as stocks last: yes
- England
o Partridge v. Crittenden: No, unless there is a condition or reward (Carbolic Smoke
Case)
Offer v. Invitation to treat:
- Offer:
o Sufficiently definite as to relevant terms
o Clear intention to be bound by terms immediately upon acceptance
o Certainty regarding the substance contract (benefit concerned/subject matter/time,
place or manner of performance
è The terms of the offer = the terms of the contract
- Invitation to treat:
o Still room for negotiation or request for information
o Invitation to negotiate the terms
o Lack of certainty
Terminating an offer :
- Rejection
- Counter-offer
- Lapsed
- Revocation
- Death of party
- Condition of acceptance not met
è There cannot be an acceptance because the offer does not exist anymore
