Overview of Contracts

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Candace McGee
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1 Overview of Contracts Sources of Contract Law Common law- contracts are primarily derived from principles of common law. Equity- common law principles are supplemented by principles of equity. Historically, equity contributed principles to the general body of law where the common law was defective or deficient. However, this distinction was abolished, and it was established that where these clashed equity would be applied. Statute- statute prevails over both common law and equity. International Law Promissory Intent Bilateral contracts- one in which both parties have obligations to perfor, at the time at which the contract comes into existence. In Union Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 All ER 104, each party undertakes to the other party to do or to refrain from doing something I, and in the event of his failure to perform his undertaking, the law provides the other party with a remedy. Unilateral contracts- one where only one party has obligation to the other party, the classic illustration in Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484, as a contract which arises pursuantto an offer for a reward. Formation Express contracts Implied contracts (Clarke v Dunraven [1897] AC 59) Simple contracts- Formal contracts Enforceability Valid contracts Void contracts- in some cases, will have no effect at all (e.g. result of a mistake). In other cases a void contract may have legal effects (e.g. a contract that is void for illegality may still be enforced if one of the parties is innocent of any illegal intent) Voidable contracts- is one whose validity is called into question because of a defect in the quality of consent given by one of the parties upon entering into it (e.g. misinterpretation, mistake, undue influence) Unenforceable contracts- in all respects valid, but cannot be enforced primarily because of absence of writing where writing is required by statute- contract for sale of land. Illegal contracts- prohibited at statute or contrary to public policy at common law. Performance Executed contracts Executory contracts Common Law Damages

2 Equity Specific Performance Injunction Rescission Rectification Remedies not dependent on contract Tort Statute Offer and Acceptance WHAT IS AN OFFER? Use an Objective test- reasonably intend to be bound Statement upon which maker is prepared to be bound Look at the words (can be oral) made to determine whether there is a preparedness/willingness to be bound- promissory intent. Crest Nicholson (Londinium) Ltd v Akaria Investments Ltd [2010] EWCA Civ In order to establish whether an offer is made, you need to consider the intention of the parties. The correct approach is to ask whether [the offeree] (having the knowledge of the relevant circumstances which[the offeree] had), acting reasonably, would understand that the offeror was making a proposal to which he intended to be bound in the event of an unequivocal acceptance Gibson v Manchester City Council [1979] 1 All ER 972- there must be a clear offer for a valid contract to occur. Council sent letter in relation to purchase of a property that stated that they may be prepared to sell, and asking interested parties to complete paperwork and return it to the council. The question was whether the letter was an offer or an invitation to treat. The House of Lords found this was an invitation to treat, as there was no clear offer. Lord Diplock at 974 the letter was but a step in the negotiation for a contract which never reached fruition Invitation to Treat Comes from the realization of the court system of commercial realities. NOT an offer but an invitation to make an offer.

3 Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953] 1 QB 401- display of goods in a window does not amount to an offer, but an invitation to treat. It was argued that a self-serve pharmacy breached a statutory provision that stipulated that certain drugs could only be sold under the supervision of a registered pharmacy. In the orginal decision It would be wrong to say that the shopkeeper is making an offer to sell every article in the shop to any person who might comei n and that that person can insit on buying any article by saying I accept your offer. Generally, advertisements are classified as invitations to treat- except if it is clear that the seller is limiting his or her liability to the amount of stock in hand. Harris v Nickerson (1873) LR 8 QB 286- advertisement to hold an auction is not an offer to hold the auction. Barry v Davies [2001] 1 All ER 944- the holding of an auction constitutes an offer to sell to the highest bidder and that the acceptance of the offer is made by the highest bidder. The auction was conducted without a reserve price, and the auctioneer refused to sell the machines to the highest bidder, as he thought they were worth more money. [T]here is consideration borth in the form of detriment to the bidder, since his bid can be accepted unless it is withdrawn and benefit to the autctioneer as bidding is driven up. Moreover the attendance at the sale I likely to be increaded if it is known that there is no reserve. Lefkowitz v Great Minneapolis Surplus Store86 NW 2d 689 (1957) - Exception to the general rule where the advertisement shows promissory intent to be bound. First come, first served shows that the Great Minneapolis Surplus prepared to be bound. Where the offer is clear, definite, and explicit, and leaves nothing open for negotiation it constitutes an offer, acceptance of which will complete a contract Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256- a unilateral offer is distinguished from mere puff according to the will or intention. example of a unilateral offer where it was determined that the Carbolic Smoke Ball Co displayed will or intention to make the advertisment an offer rather than a - the company had set up a bank account to meet the claims for the reward. In relation to the acceptance of a unilateral offer- it follows from the nature of the thing that the perfromance of the condition is sufficient acceptance without the notification of it, as a peson who makes an offer in an advertisement of that kind makes an offer which must be read by the light of that common sense reflection.

4 Tender- need to distinguish offers from tenders- tenders are invitation to treat. Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] 3 All ER 25- the English Court of Appeal held that the invitation to tender constituted an offer to consider all duly submitted tenders if you consider any. Call for tenders to a closed group of seven persons. Due to an administrative error by the Council, one tender was not considered. [Where] the tenders are solicited from selected parties all of them known to the invitor, and where a local authority s invitation describes a clear, orderly and familiar procedure the invitee is in my judgment protect at least to this extent: if he submits a conforming tender before the deadline he is entitled, not as a matter or mere expectation but of contractual right, to be sure that his tender will after the deadline ve opened and considered in conjunction with all other conforming tenders, or alt least that his tender will be considered if others are. Termination of Offer (i) Lapse of time- either time specified in the offer or lapse of a reasonable time (what is a reasonable time depends on the facts of the case i.e. are the goods on offer perishable?) (ii) Rejection- once an offeree rejects, it cannot be accepted Hyde v Wrench (1840) 49 ER 132- a counter offer amounts to rejection and termination of the original offer. Wrench offered to sell land to Hyde, Hyde counter offered a lower price that amounted to rejection of the original offer. Stevenson Jacques & Co v McLean (1880) 5 QBD 346- Request for information is not a rejection of the original offer. McLean asked whether he could purchase the goods on credit terms. the form of the telegram is one of inquiry. It is not [like] Hyde v Wrench where the negotiation was at an end by the refusal of the [offeree s] counter proposal There is nothing specific by way of offer or rejection, but a mere inquiry which should have been answered and not treated as a rejection of an offer.

5 Revocation of Offer Revocation can be anytime before acceptance Routledge v Grant (1828) 130 ER 920 Instantaneous and Non-instantaneous Instantaneous (face to face, , facsimile)- when the offeree could reasonably be expected to have received the offer. Non-instantaneous- revocation takes place when it is received. Electronic Transactions Acts-depending on whethere the offeree has stipulated an address ; 1. if they have then the revocation takes place when the enters the offeree s information system. 2. Where the offeree has not stipulated an address- it is revoked when the is actually read. Revocation of a Unilateral Offer- by the same method that they put out the offer. It will then be an effective revocation even if the person hasn t actually seen the revocation. Dickinson v Dodds (1876) 2 Ch D 463- Even if you say to someone you will keep the offer open; this is not enforceable unless you give some form of consideration (it is merely a gratuitous offer). N.B. The way to get around this is by way of option contract that gives monetary consideration Dodds offered to sell property to Dickenson, but then sold the property to a third party before Dickenson could accept. After hearing this through another person, Dickenson accepts Dodds offer. Court found that Dickenson could not accept the offer, as there was no longer an offer for him to accept. James LJ at 472 It must to constitute a contract appear that the two minds were at one, at the same moment of time that is, that there was an offer continuing up to the time of acceptance. If there was not such a continuing offer, then the acceptance comes to nothing. Mobil Oil Australia v Lyndel Nominees (1998) 153 ALR 198- it is not always unjust to withdraw the offer once the offeree has already commenced the act of acceptance. In situations where there is infact an implied condition not to withdraw, the offeror could still revoke however could be liable for damages from this breach of the implied contract. Even if there was an offer it is unjust if the offeror is not given the chance to revoke in situations where it is of benefit to the offeree to perform the act regardless of the offer. E.g. increase sales targets- instrinsically of benefit to them. We do not accept that it is universally unjust that the offeror be at liberty to revoke once the offeree has commenced or embarked upon

6 performance of an actwhich is both the sought act of acceptance of the offer and the sought executed consideration for the promise. Financings Ltd v Stimson [1962] 3 All ER 386- an offer can be made subject to a certain state of affairs, and in the event the state of affairs doesn t occur the offer lapses. an offer to purchase a car lapsed after the car was significantly damaged. ACCEPTANCE ACCEPTANCE- when the offeree indicates they will enter the agreement on the offerors term Consensus ad idem (meeting of the minds) Acceptance cannot be conditional R v Clarke (1927) 40 CLR 227- Acceptance must be in reliance on offer there was no acceptance to the unilateral offer, Clarke was not aware of the offer and had given the information to the police for other reasons. Isaacs ACJ said at 234 you need to establish the information was given in Exchange for the offer- in other words given in performance of the bargain which is contemplated by the offer and of which the offer is intended to form part... Acceptance is essential to contractual obligation, because without it there is no agreement and in the absense of agreement, actual or implied there can be no contract Acceptance may be express or implied Felthouse v Bindley (1862) 142 ER silence or a lack of response cannot amount to acceptance. If I don t hear from you I will assume that the horse is mine for 30 pounds Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523- offeree may be taken to have accepted the offer if there is some act that would be consistent with acceptance (eg delivery of goods) Written contract never signed, however the work was carried out as if it had been, and payments were made accordingly. When one party went bankrupt they denied the existence of the contract. The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling that his offer has been accepted.

OFFER 3 ACCEPTANCE.5 CONSIDERATION.6 PROMISSORY ESTOPPEL. 7 INTENTION.7 CERTAINTY/COMPLETENESS. 9 CAPACITY. 11 PRIVITY. 12 FORMALITIES.

OFFER 3 ACCEPTANCE.5 CONSIDERATION.6 PROMISSORY ESTOPPEL. 7 INTENTION.7 CERTAINTY/COMPLETENESS. 9 CAPACITY. 11 PRIVITY. 12 FORMALITIES. CONTRACTS OFFER 3 ACCEPTANCE.....5 CONSIDERATION...6 PROMISSORY ESTOPPEL.... 7 INTENTION..7 CERTAINTY/COMPLETENESS... 9 CAPACITY.. 11 PRIVITY.. 12 FORMALITIES. 13 ILLEGALITY. 14 TERMS.... 16 CONSTRUCTION.....19