Contract law theories

A contract is a legally binding agreement. An agreement occurs when 2 minds meet upon a common purpose. This meeting of mind is called consensus ad idem which means consent to the matter.

As opposed to civil law, where contracts are generally formed simply through offer and acceptance, in the common law, a promise (promesse) becomes an enforceable (capable of being made effective; in the case of agreement, its one in which one party can legally compel the performance of the other party) contract when there is not only an offer by one party ( offeror) that is accepted by the other party (offeree) but also an exchange of legally sufficient consideration; hence the equation : offer+ acceptance+ consideration= contract

For a promise to become an enforceable contract, the parties must also agree on the essential terms of the contract: price and subject matter. Nevertheless, courts will enforce a vague or indefinite contract under certain circumstances (when the conduct of the parties, as opposed to the written instrument, manifests sufficient certainty as to the terms of the agreement)

An enforceable agreement may be manifested in either written or oral words (express contract) or by conduct or some combination of conduct and words (implied contract). Exceptions: Statute of Frauds requires that all contracts involving the sale of real property be in writing. In a contractual dispute, certain defences to the formation of a contract may permit a party to escape his/her obligations under the contract. Example: illegality of the subject matter, fraud in the inducement, duress (violence physique) and the lack of legal capacity (absence of ability of a person to enter into contractual relations, sue or be sued) to contract all enable a party to attack the validity of a contract.Section I: Essential features of contracts

These following elements in a contract to make it legally enforceable (opposable):

The offer: is an expression of willingness to contract on specified terms, is made with intention has to be binding once acceptant by the person to whom it is address, there must be an objective manifestation of intent by the offered to be bound by the offer if acceptant by the other one.

The acceptance (contrepartie) the parties to whom the offer has been made communicate a full and unconditional acceptance of the terms of the contract

The consideration: or the price for which the promise of the other party is bought something of value given by one party to another in order to introduce the other to contract. Necessary element for an enforceable contract. Consideration must be present or future. bargain (marchander) element of the contract or the price of the promise a simple contract must be bargain to be enforceable

The intention: to create legal relations. The parties must intend that the agreement is established a legally binding contract rather than simply social or domestic origins.

Certainty of terms: term of contract must be specifically clear and precise to be enforceable. 2 types of terms:

Express terms (oral or written) must state clearly and precisely the rights and obligations of each party. => Express terms are of two kinds: Conditions which go to the root of the contracts Warranties or terms of the contract, which are collateral or subsidiary to the main purpose of the contract.

=> Implied or innominate terms: the contents of a contract include general rules which are not formulated (commercial, local usages, customs or statutes), but to which the courts will give as much importance as to the express terms. Chapter I: the offer

A) Is there an offer?

2 key features:

The offerer intends to be legally bound providing that the other party takes circumstance.

The contract contains not to do something but also lays down what do the offeree must do in return (invitation to treat)B) Distinction between unilateral/bilateral contract

Undertake = sengager undertake not to

Unilateral contract: a party promises to perform some action in return for a specific act by the other party and the other party is not promising to take any action. The acceptance may take effects through conducts and no need communication.

Bilateral contract are those were one of the partie offers to do something in return of an action by the other party = exchange of consent Acceptance of the offer must be communicated for an agreement to be established.

C) Scope of the offer:

Several consequences arising:

=> As long as the offerer (offrant) shows intention to be legally bound is does not matter how many people he makes the offer to = can do it to the world the company

Facts

Carbolic Smoke Ball Co. (D) manufactured and sold The Carbolic Smoke Ball. The company placed ads in various newspapers offering a reward of 100 pounds to any person who used the smoke ball three times per day as directed and contracted influenza, colds, or any other disease. After seeing the ad Carlill (P) purchased a ball and used it as directed. Carlill contracted influenza and made a claim for the reward. Carbolic Smoke Ball refused to pay and Carlill sued for damages arising from breach of contract. Judgment for 100 pounds was entered for Carlill and Carbolic Smoke Ball appealed, was the owners of many corporation and they sorted advertising in newspaper to any person who contract the economic influenza cold are any desease caused by taking cold after having used the ball 3 times daily or 2 weeks according the provided in each ball. 1000 pounds. mrs carill the plaintiff she believed that ad and bought the ball and she used it for more than 2 weeks when she was attacked by flue but it didnt work and sue them. The company received a lot of complaints like mrs carill and they said that the ad didnt give rise (faire naitre) to any legal liability (responsabilit) if there was a contract with mrs carill it means that the company had contracted with everybody in the world because of the public ad. The court of appeal : it is not a contract made with the entire world its an offer, reasonable member of the public reading of the ad would believe that the company intended to be bound the terms = ad was a valid offer

D) Differences between offer and invitation treat

1 General ruleThere Is a clear distinction between an offer and an invitation to treat:

The Offer

A person who makes an offer is known as an offeror. A person to whom an offer is made is known as an offeree. An offer is made when an offeror proposes a set of terms to an offeree, with the intention that if the proposed terms are accepted they will create a binding contract between the two parties. By accepting the terms proposed, the offeree would also agree to become legally bound by them. This acceptance would therefore form a contract. As a contract is a legally binding agreement, neither an offer nor an acceptance should be made without a willingness to accept the legal consequences.Neither the offer nor the acceptance needs to be made in writing, or even in words. For example, when goods are sold at an auction a contract is formed even though both the offer and the acceptance are made by conduct. Each bidder makes an offer to buy the particular lot being auctioned by making a gesture which the auctioneer recognizes as a bid. The auctioneer accepts the highest bid by banging the gavel on the table. At that moment the contract is created, even though both the offer and acceptance were made without the use of words.

The formers demonstrated an intention on the part of a person making a statement to be automatically legally bound if the other partie accept the term of the statement. (offer) Ex: if I tell you you want my car you say yes = contract

Carlill v The Carbolic Smoke Ball Co (1893) (Court of Appeal)

The defendants manufactured smoke balls. They claimed that the use of these smoke balls cured many illnesses and made it impossible to catch flu. A large advertising campaign stated that if anyone used a smoke ball correctly, but still caught flu, they would be paid 100 reward. One advertisement stated that the defendants had deposited 1,000 in a Regent Street bank to show that they meant what they said. The claimant, Mrs Carlill, was persuaded by this advertisement to buy a smoke ball. Despite using the smoke ball properly, she still caught flu. When Mrs Carlill claimed the 100 reward the defendants refused to pay, arguing that their advertisement was not an offer.

Held The advertisement was an offer of a unilateral contract (see below). The claimant had accepted this offer by using the smoke ball in the correct way and catching flu. She was therefore entitled to the 100 reward.Comment If the advertisement had been held not to have been an offer, this would unfairly have allowed the Smoke Ball Company to break its promise. In reaching their decisions the court considered what the reasonable person would have made of the advertisement.

Carill v carbolic smoke ball

Facts: A Newspaper advert placed by the defendant stated:-

100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball...

1000 is deposited with the Alliance Bank, shewing our sincerity in the matter."

Mrs Carlill purchased some smoke balls and used them according to the directions and caught flu. She sought to claim the stated 100 reward.

The defendant raised the following arguments to demonstrate the advertisement was a mere invitation to treat rather than an offer:

1. The advert was a sales puff and lacked intent to be an offer.2. It is not possible to make an offer to the world.3. There was no notification of acceptance.4. The wording was too vague to constitute an offer since there was no stated time limit as to catching the flu.5. There was no consideration provided since the 'offer' did not specify that the user of the balls must have purchased them.

Held: there was a binding contract plaintif is successful

The Court of Appeal held that Mrs Carlill was entitled to the reward as the advert constituted an offer of a unilateral contract which she had accepted by performing the conditions stated in the offer. The court rejected all the arguments put forward by the defendants for the following reasons:

An offer for a reward (offers that can only be accepted by performance only) becomes binding upon the performance of the conditions requested in the offer. In cases where the offer can be accepted by performance only, notification of acceptance does not need to precede the performance (offeror does not expect and does not require notice of the acceptance apart from notice of the performance).

1. The statement referring to the deposit of 1,000 demonstrated intent and therefore it was not a mere sales puff.2. It is quite possible to make an offer to the world.3. In unilateral contracts there is no requirement that the offeree communicates an intention to accept, since acceptance is through full performance.4. Whilst there may be some ambiguity in the wording this was capable of being resolved by applying a reasonable time limit or confining it to only those who caught flu whilst still using the balls.5. The defendants would have value in people using the balls even if they had not purchased them directly.

It is important to make a distinction between an offer and an invitation to treat. An invitation to treat is not an offer. It is an invitation to negotiate or an invitation to make an offer.A person who is not fully prepared to take the legal consequences should not make an offerof its being accepted. For example, I should not offer to sell you my car for 100unless I am fully prepared to go through with the deal, because if you accept my offer, I will either have to go through with the contract which will have been created or take the legal consequences. A response to an invitation to treat, however, cannot result in a binding contract.It is quite safe for me to ask you how much you would give me for my car. You might name a price (thereby making an offer) but I would have no obligation to agree to the deal.A court decides whether or not one of the parties has made an offer by looking objectively at what it thinks that both of the parties intended. All the circumstances of the case will be considered in reaching this decision.Advertisements can amount either to offers or to invitations to treat. If an advertisement is an offer then a person who accepts the offer makes a contract with the person who advertised.If an advertisement is only an invitation to treat then it cannot be accepted in such a way that a contract is thereby formed. In the following two cases the court had to decide whether or not an advertisement was merely an invitation to treat or whether it was in fact an offer.

Intention treat: An invitation to treat is the initial stage in a transaction in which one party invites the other to make an offer. Negociations take place before any contract form. Car you want to make an offer = negociations if sy yes Im interested = no contract

Ex: a good into a shop with an open window can be an offer or invitation = the part is intend but also

Partridge v Crittenden (1968) = An advertisement that gives information about goods for sale and their price will generally be an invitation to treat rather than an offer.

Facts: The defendant had advertised bramble finches in a magazine at 1.25 each. A customer sent the defendant 1.25 and a bramble finch was sent to him. The defendant was charged with offering for sale a wild live bird, contrary to the Protection of Birds Act 1964.

Held: The defendant was not guilty because his advertisement was an invitation to treat, not an offer. As the advertisement was not an offer, the defendant had not offered for sale a wild bird. (The defendant had committed a different crime, selling a wild bird. However, he had not been charged with this offence.) Comment This was a criminal case but it was decided upon a point of civil law. Several criminal offences are committed by offering goods for sale. Whether or not an offer has been made is decided by analysing the law of contract.

At first sight it seems as if the defendant in Partridge v Crittenden did make an offer.However, the court reasoned that this could not be the case. If the advertisement had been an offer, then the defendant would have had to supply a bird to everyone who wrote in accepting the offer. The defendant had only a limited supply of birds and so could not have intended that any number of customers would be supplied with one. Therefore, his advertisement was an invitation to treat, not an offer.Although the vast majority of advertisements will amount to no more than invitations to treat, some advertisements do amount to offers. The following case shows that if all advertisements were only invitations to treat then this would lead to unfairness.

Gibson v Manchester Council

Manchester City Council was being run by the Conservative Party, which was running a policy of selling council houses to the occupants. Mr Gibson applied for details of his house price and mortgage terms on a form of the council. In February 1971, the treasurer replied,The corporation may be prepared to sell the house to you at the purchase price of 2,725 less 20% = 2,180 (freehold) This letter should not be regarded as a firm offer of a mortgage. If you would like to make formal application to buy your Council house please complete the enclosed application form and return it to me as soon as possible.In March 1971, Mr Gibson completed the application form, except for the purchase price and returned it to the council. In May, the Labour party came back to power and halted sales. Mr Gibson was told that he could not complete the purchase. So Mr Gibson sued the council, arguing that a binding contract had already come into force.

Court of AppealLord Denning MR held that there was a contract, because one should "look at the correspondence as a whole and at the conduct of the parties and see there from whether the parties have come to an agreement on everything that was material."Geoffrey Lane LJ dissented, and would have held there was no contract. The Council appealed..

House of LordsThe House of Lords unanimously upheld the Council's appeal, so Mr Gibson did not get his house. The court held that the Council's letter was not an offer as the letter stated that "The Corporation may be prepared to sell the house to you" and that "If you would like to make formal application to buy your Council house, please complete the enclosed application form and return it to me as soon as possible." As there was never an offer available to be accepted, no contract had been formed and by extension the council had not been in breach.

2 displace (presentation) of goods for sell

Customers who buy goods in shops make contracts to buy those goods. In the following case the court had to analyse exactly when the offer and acceptance were made when goods were purchased in a self-service shop.

General rule is that it constitutes an invitation treat whether it is expose through a window it is up to the customer to make an offer and shop is free to accept offer =

Pharmaceutical Society of Great Britain v Boots Cash Chemists= involve pharmacy poison act sell poison unless by registered paharm

Facts: On April 13, 1951 two customers took poison from a shelf in pharmacy, put it in their basket and paid at the cash register at the exit. The pharmacist station was near the poisons section so they were able to oversee all transactions but the pharmacist took no part in the transaction. The Pharmaceutical Society, as the organization responsible for enforcing provisions of the Pharmacy and Poisons Act, 1933, brought this action as a test case against this type of retailing. At the lower court they found this type of retailing was not in contravention of the Act and the Society appealed.

Issue: 1- At what stage of a purchase in a self-serve store is there an acceptance of offer? 2- Is the customer bound to a purchase once they place an item in their basket?3- Are Boots liable for selling poisons without a pharmacist's supervision? Appeal dismissed. Reasons: Somervell, writing for the court, makes an analogy to a bookseller; the customer is still browsing while putting items in their basket and there has been no acceptance until completed at the checkout. As a result a shopkeeper's display cannot be an offer and must be an invitation to treat. The logical conclusion of the plaintiff's argument would be that once a customer put an item in their basket they would be committed to the purchase and would not be able to change their mind. Ratio: Goods on a display are invitation not an offer; the customer makes an offer when they take the goods to the register. The cashier is under the shopkeeper's authority to make acceptance, hence a contract has not been made until the cashier accepts the purchase.

A display of goods in a shop window does not amount to an offer to sell the goodsdisplayed. The display is only an invitation to treat.

A shop was not obliged to sell goods marked price

3 advertisement

Same general rule applied to Partridge v Crittenden (1968) 2 All ER 421

the defendant placed an advert in a classified section of a magazine offering some bramble finches for sale. S.6 of the Protection of Birds Act 1954 made it an offence to offer such birds for sale. He was charged and convicted of the offence and appealed against his conviction.

Held: The defendant's conviction was quashed. The advert was an invitation to treat not an offer. The literal rule of statutory interpretation was applied.

lefkowitz vs great mineapolis

Brief Fact Summary. Defendant advertised the sale of three fur coats and three fur stoles for $1.00 a piece. The advertisement said first come, first serve. Plaintiff arrived at Defendants store wishing to buy the garments. Defendant refused, saying the sale was only for women.

Synopsis of Rule of Law. An advertisement may be considered an offer when it promises something in exchange for clear, definite action, and leaves nothing open for negotiation. Otherwise, an advertisement is an invitation for an offer.

Facts. Defendant ran two newspaper advertisements, one stating that Defendant would sell three fur coats, valued at $100.00 a piece, first come, first served, and the other, stating that Defendant would sell three fur stoles, valued between $89.00 and $139.50 for one dollar a piece. Plaintiff arrived first on both occasions, and presented $3.00. Defendant refused to sell the items to Plaintiff, citing a house rule which limited the bargains to women.

Issue. Did Defendants advertisement constitute an offer?Held. Yes.The advertisement clearly stated that Defendant would sell the fur garments at a definite price to the person who came first. Plaintiff arrived first, thus, accepted the offer.The house rule was not mentioned in the advertisement. While offers can be modified, one cannot, after acceptance, impose new, arbitrary conditions.

Discussion. The court held that a newspaper ad could be considered an offer under certain circumstances, particularly when the actions needed to accept the offer are clear. In this case, the advertisement was clear, definite, and leaves nothing to be left open for negotiation.

4 rewardsAn ad offering an reward for doing some act will be construed ( interpreter) construction ( interpretation of a contract) as an offer and gibbons vs 1891

5 tender (appel doffre)If so invites parties to tender for project this indicates that he is inviting a partie to make offers to consider an invitation to treat.

Ex: Spencer v Harding

Facts: The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co. The advertisement specified where the goods could be viewed, the time of opening for tenders and that the goods must be paid for in cash. No reserve was stated. The claimant submitted the highest tender but the defendant refused to sell to him.

Held: Unless the advertisement specifies that the highest tender would be accepted there was no obligation to sell to the person submitting the highest tender. The advert amounted to an invitation to treat, the tender was an offer, the defendant could choose whether to accept the offer or not

6 AUctions Auctions with reserve: A minimum dollar amount that the owner of an item up for auction will accept as the winning bid in the auction. The reserve price prevents the auction from being won at a price that is lower than the item's owner will accept. Reserved price is stated and inviting bids constitutes an invitation to treat and the bider ares the one making offers.

british car options vs wright 1972 : Invitation to bid by an Auctioneer is an invitation to treat. The offer is accepted when the Auctioner strike the table with his hammer -

Facts: def put up car for sale at a public auction. Car was defective. He was charged with "offering for sale an unroadworthy vehicle ctry to the road traffic act"Decision: Putting something up at an auction (UNLESS it says w/o reserve) is an offer to treat. Not guilty.

Auctions without reserve: an auction process in which a sale item is sold to the highest, without regard to a minimum price.

=> No reserve price stated Warlow vs Harrison 1889 action here who make the offer to sell the goods to the highest bider this offer is accepted as soon as the highest bid is made.

Facts: A public auction of a horse, without reserve, was advertised by the defendant, an auctioneer. The plaintiff bid 60 guineas and the owner of the horse bid 61 guineas. There were no further bids and the defendant put down his hammer on the bid for 61 guineas. The plaintiff claimed the horse should be his as he was the highest bona fide bidder.Issue: Was there a contract for sale?

Held: The advertisement , as it included the words without reserve, was an offer to sell to the highest bona fide bidder. The defendant was in breach of that promise. It was an offer of a unilateral contract as the defendant bound himself to sell to the highest bidder. The plaintiff had performed the required act (made the highest bid). However, because the hammer had not been put down on the plaintiff's bid there was no acceptance of his offer. Therefore, there was no contract for the sale.The plaintiff was only entitled to sue the defendant for the loss of the opportunity to buy the horse.

SELL OF GOODS ACT 1979

S57(2): A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner; and until the announcement is made any bidder may retract his bid.

The Sale of Goods Act 1979 provides four main protections for buyers:

1. The seller must have the right to sell the goods ( S.12)

2. Goods sold by description must correspond to the description (S.13)

3. Goods must be of satisfactory quality (s.14)

4. Goods sold by sample; the goods must correspond to the sample in quality (s.15)

The Sale of Goods Act applies to all contracts for the sale of goods; however, s.14 is more limited in its scope in that it only applies where goods are sold in the course of a business. Also where the goods are sold in the course of a business the provisions of the Sale of Goods Act are reinforced with the protection offered by the Unfair Contract Terms Act 1977 which prohibits their exclusion. See further here.

These protections are in the form of statutory implied terms. This means that the Sale of Goods Act will put these terms into all contracts for the sale of goods no matter what the parties themselves have agreed in the terms and conditions of sale. A contract is for the sale of goods provided it is a contract to transfer ownership of goods (as opposed to a hire agreement) and the goods are exchanged for money. This excludes contracts of barter unless money is also given.

E) Termination by the offeror

Firstly an offer can be terminated by rejection by the offeree. It can lapse on the expiration of fixed period within which it was meant to be accepted. If there is no such fixed period within which an offer should be accepted an offer lapse after the expiry of some (reasonable time).

As soon as an offer is accepted, a contract is created. However, an offer which has been made might cease to exist in various ways, and once an offer has ceased to exist it can no longer be accepted.

AN OFFER MAY BE TERMINATED BY

=> Revocation (Revocation is the formal withdrawal of the offer by the offeror. Before acceptance, an offer can be freely revoked)

If an offer is revoked, it is called off by the offeror. Once an offer has been revoked it can no longer be accepted. A revocation is effective when it is received rather than when it is sent.We have already seen that acceptance of an offer is also effective when received. Therefore, cases involving revocation often amount to discovering which of the parties managed to communicate with the other first. Was the acceptance communicated before the revocation was communicated? If so, there will be a contract. Or was the revocation communicated before the acceptance was communicated? If so, there will be no contract. The following case provides an example of this type of dispute and also demonstrates that revocation can be communicated by an unauthorised third party, if he can be regarded as reliable.

Offeror can withdraw the offer, before it accepts Dickinsonv dodds 1875

On Wednesday 10 June the defendant wrote a letter to the claimant offering to sell hishouse. The letter stated that the offer would be kept open until 9 a.m. on Friday 12 June.On Thursday the defendant sold the house to a third party, Allen. Yet another person, Berry,found out about this and told the claimant. At 7 a.m. on Friday 12 June the claimantaccepted the defendants offer. The defendant told the claimant that he was too late toaccept. The claimant sued for breach of contract.Held There was no contract because the offer to sell had been revoked by Berry when hetold the claimant that the house had been sold to Allen. Therefore, the offer no longerexisted when the claimant attempted to accept it.Comment It might seem unfair that the offer could be revoked before the deadline. Thiswas allowed because no consideration was given in return for the promise to keep the offeropen, that is to say nothing of any value was given in return. Synopsis of Rule of Law. Promises to keep an offer open until a certain time will be only a promise unless made by binding by consideration and acceptance necessary to form a binding agreement.

Unless there is a promise, supported by consideration or under seal, by the offeror to keep it open for a fixed period.

Routledge v Grant

Rejection by the offeree: if the offeree rejects an offer this will terminate not be able to accept the offer later.

Rejected by the offeree The rejection must be communicated to the offeror before it is effective. Once rejected, an offer cannot be later accepted. If an offeree attempts to accept the offer but introduces new terms, the offeree is rejected the offer and is deemed to be making a counter offerStevenson Jaques & Co v McLean

=> Lapse of time

An offeror may stipulate that his or her offer must be accepted within a certain period of time, and if the offeree fails to accept, the offer will lapse. If no time is prescribed, the offer must be accepted within a reasonable time.

Ramsgate Victoria Hotel Co v Montefiore

=> Failure of a condition subject to which the offer was made

If a condition upon which the offer is made is not fulfilled the offer will lapseMcCaul Pty Ltd v Pitt Club Ltd

=> Death

If the offeror dies and the offeree has not been notified of that death, it is still possible for the offeree to accept the offer, thus binding the offerors estate. If the offeree has been notified of the death he/she cannot accept the offer.

Coulthart v Clementson

Nor can a representative of the offerors estate accept the offer on their behalf therefore the offer lapses

Reynolds v Atherton

3 offer methods passage of time explicit early termination if the offer is stated last only for this period it will terminate on the expiration, if not specified terminate after reasonable time. Ramsddy victoria hotel v montefifiori 1866

Death of the partie terminate the offer Dickenson if the offer provides this thing arrive, contrat suis generis depend de la personne coulthlt v clementson 1870

OptionsThe standing offer may be revoked at anytime before acceptance by the offeree. However, if the offeree provides consideration (eg paying money) to the offeror to keep the offer open for some period, the offer cannot be withdrawn during this period.Routledge v Grant

D) Communication of an Offer

For an offer to be valid it must be communicated to the offeree by the offeror, or someone authorised by the offeror.Cole v Cottingham

An offer becomes effective once it is communicated to the offeree Taylor vLaird

Acceptance must take place in reliance upon an offer. If the offeree performs a particular act that corresponds to the terms of the offer without knowledge of the offer, there is no agreement, and no contract comes into existence. Tinn v Hoffman & Co

If it is an offer to the world at large, the offer could be accepted by any fulfilling the requirements of the offer.Carlill v Carbolic Smoke Company

Chapter II: The acceptance

A) principleclear indication of the offeree and qualified agreements to the term of the offer in the matter st out in the offer.

Acceptance of an offer is the expression, by words or conduct, of assent to the terms of the offer in the manner prescribed or indicated by the offer. Thus acceptance may be expressed or implied

HBF Dalgety v Morton

There are two requirements to satisfy for valid acceptance to occur:

1.The offeree must agree to accept the terms of the offer2.This information must be communicated to the offeror.

1 whether or not acceptance has been made principle of objective intention, could have appeared to a reasonable person in the offerer that the offeree accepted the offer 2 you can only accept an offer that has been made to you 3 requirement that the acceptance be qualified (sans reserve) means if the offerres statement seeks any other terms of the offer cant constitute a valuable acceptance, must correspond to the term of the offer. Ex: hyde v ranch 1840 The "mirror image rule" states that if you are to accept an offer, you must accept an offer exactly, without modifications; if you change the offer in any way, this is a counter-offer that kills the original offer and the original offer cannot be accepted at a future time: Hyde v. Wrenchthe offeror will only made a contra offer if he puts forward terms that are different to those in the general offer, if he merely inquires what the details of the offer are, he will taken to be exploring the term of the contractdoctrine; unilateral contract the offeree should be able to claim that there is a contract even tho he head no knowledge of the offer at the relevant time. Arson Arguments : the offereror would have whatever he wanted and will to give return he would be prepared to give = undeversed benefit to him to fringe him from his legal obligationHe would be contrary the offerer own expections to deny the offeree Lowing even if will encourage or at least discourage those socialy valuable axe who which rewards

B) Communication of the acceptance 1 ground rule

a) General Rule

When the mode of acceptance is instantaneous communication, the general rule of law is that the contract will be formed when acceptance of the offer is communicated to the offeror and that communication is received.

Entores L D v Miles Far East CorporationBrinkibon Ltd v Stahag Stahl und Stahlwarenhandels-Gesellshaft mbH

b) Meaning of instantaneous Communication

Face to face communication, telephone conversations and telex messages are all considered forms of instantaneous communication.

Entores L D v Miles Far East CorporationReese Bros Plastics Ltd v Hammon-Sabelco Australia Pty Ltd

Stike a balance vet the interst of the offeror and the offeree require the offeree to take la reasonable steps using whatever communication mode is permited by the offeror to bring the acceptance to the attention of the offeror

Offerror can increase his protection by stating in his offer that the accept must be actually he brought to his attention but even if doesnt the law will take into account interest by imposing

2 POSTAL acceptances Postal Acceptance Rule

The postal acceptance rule is the exception to the general rule that acceptance occurs when it is communicated to the offeror.

a) Statement of the rule

Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is completed as soon as it is posted.

Henthorn v Fraser

The rule operates only where the post is an acceptable method of communication between the two parties (eg. the offer was made by post or it is stipulated in the offer that the post is an acceptable method of communication)

Adams v Lindsell

b) Policy behind the rule

The postal rule promotes contractual certainty.

c) To what communication does the rule extend

The postal acceptance rule applies to forms of communication that are akin to mail but does not extend to any form of instantaneous communication, even if that communication bears some similarities to communication by post.

Coot Pty Ltd v Admin Management Pty Ltd

d) Where is the rule displaced?

The rule is displaced if the court decides that it was not within the contemplation of the parties that the post was an accepted method of communication. Whether the postal rule is displaced turns the intention of the offeror. If the offeror says or implies that actual notification is required before an agreement if formed the postal acceptance rule will be displaced.

Bressan v Squires

e) Revocation of the acceptance prior to receipt

The offer is formed when the letter of acceptance is posted. A subsequent purported withdrawal of that acceptance will be ineffective.

If the postal acceptance rule applies, the contract is formed when, and at the place that, the letter of acceptance is posted.

Henthorn v Fraser

The Postal Rule can be excluded {Covered earlier in The postal Acceptance Rule at (d)}

Holwell Securities Ltd v HughesBressan v Squires

if the offeree accept by post the garal rul is that the ooffer will be accepted when offer is posted almdsi v 1888 postal rule if both parties contemplates that the post may be used on posting letter the offeree has done all he can reasonably expect to do to bring the acceptance to the offeror stimes tha accept will never reach the offeror, When does this rule apply?

Amfort v freaisel 1992 = claimant sought specific performance (execution force) of the contract claiming he had accepted the offer bf it had been withdraw, judege ; when the post is used to communicate acceptance of an offer acceptance= is communicated/completed as soon as it is posted The accept would be written because

3 other ways of communicationpostal rule do not apply to lower incentenious form of communication, 1995 telexes : a partie who try to send mess by telex can tell if his message has not been received on the others partie machine whereas the offerror would not know even unsuccessful attempt had been made to send acceptance to him. = for the offeree he would know that his acceptance hasnt been successfully send to the offeror.

Telephone acceptance: if the offeror and offeree are talking on the phone the oferor would be accepted at the moment that it reasonably appears to the offeree that the oeffor has heard and understood the acceptance. ( destinataire offer doit faire tout son pouvoir you cant reach the offerror but the answering machine: acceptance will take effects when would have been reasonably for the offerror to check his phone= if the offeror is in business = message 10 pm on Sunday = would be held the offer was accepted on Monday morning when the business opened doctrine: no universal rule can cover all such cases result by references to the intention of the parties by sound business practise and in some cases by a judgement where the risk should lie = des que reasonable ( on ne sait plus trop quoi faire) qd laisse message 1 heures du soir= acceptation pas instantannee seulement quand Entreprise rouvre

Faxes : the acceptance should be valid unless the offeree knows that it has not got through properly. If fax has not got through = Expected that he resends the faxTime in which the offer should be accepted = same way as in her phone exam reasonable time Emails

When the offeror and offeree cannot or chose not to deal face to face, acceptance is effective when communicated by the offeree to the offeror by an authorized means.The Mailbox Rule: An acceptance becomes effective upon being placed in the mailbox by the offeree.Note that, whereas a revocation becomes effective upon its receipt by the offeree, an acceptance becomes effective upon its dispatch by the offeree to the offeror.In addition to any modes of acceptance expressly stated in the offer, common law recognizes the following impliedly authorized methods:(1)Any means that is as fast or faster than the method identified as acceptable by the offeror; and(2)U.S. Mail is always impliedly acceptable when the parties are bargaining at a distance.N.B.: An acceptance communicated by means not expressly or impliedly authorized is not effective until it is received by the offeror.

Acceptance valid unless the offeree to realise that the meail has failed to be received properly by the offeror; 2011 commentor hill : if the email is sent to incorrect address or serveur indisponible the message will bounce back to the sendor who will receive a certification that the message has not been delivered in such circumtances the offeror not accepted = offeree = resend email ecceptance take effects at the time when the offeror could reasonably able to check his inbox Offerors fault should not effect whether a valid acceptance = offerror fail to check email=> no effect on the moment consider to be accepeted the offeror dont matter at all only the offeree ( destinataire )

C) Unilateral contacts

1 communication of the acceptance

Acceptance commonly by conductAn offeror may stipulate the manner of acceptance by advising the offeree that if he/she wishes to accept the offer, the offeree should perform stipulated acts waiving the need to communicate acceptance. Acceptance can be express or implied.

Carlill v Carbollic Smoke Ball Company

Withdrawal of an offer after acceptance has commenced

Generally, once an offeree has begun to accept the offer by performing the acts stipulated, it is likely to be too late for the offeror to withdraw the offer and claim there has been no contract formation. harrighton v harington 1952

Perform obligation = executer obligation

The offer accepted when terms are fully complied (respectes) with

The offer is accepted when completed performance but when you start performing implied obligation not to revoke the offer marathon= when finish line = get euros unilateral comes contract into force when finishing the line

morrison shipping v the crown summary

If an offer is made to the public at large it can sometimes be accepted by a number of people. In Carlills Case the offer was capable of acceptance by anyone who qualified under the terms of their offer (eg. anyone who purchased a smoke ball, however, in the case of a reward, while many people may have the information which qualifies them for the reward, only the first person to come forth will be eligible).

Carlills case

Solsbury ( 2008) husband promises to give 1000 pounds if he dies in his will instead of continue paying alimony ( pension ). The husband stops paying the alimony and his x wife accepted the situation for a while didnt sue the husband but after a while she decided to sue him.The judge applied = smoke ball he told that since the wife didnt sue the husband when he started to cut off the alimony she accepted the unilateral contract; commencement of performance not possible to revoke the offer , but legally the judge said the woman had totally accepted the situation. She didnt get anything but get 1000 when he died

C) Prescribe (moyens) of the acceptance statute of limitation = prescription Contractual freedom up to the offeror to set in out the offer = free to stipulate his acceptance can only be communicated by the manner he indicated Frank v knight (1937) acceptance valid when the offeror achieves the same requirement he promised Tinn v Hoffman 1873

D) Acceptance by silence

Offeree to take steps to show offeror that he is accepting the offerSILENCE DIDNT CONSTITUTE ACCEPTANCE Siilence is not supposed to be a valid acceptance, the offeree has the freedom to choose mode of communication of his acceptance. Felthouse v biaindly 1862 family matter Claimant (the uncle) offer to sell horse to his nephew for 3 pounds, told him that if he heard no more from him the nephew has accepted to buy the horse, nephew accepted and didnt tell he decided to accept the offer. Horse was sold to the buyer. Legal issue? Does he consider that the acceptance of nephew was given before the dat of the auction? It was not valid bc nephew had not communicated his acceptance. Silence is not acceptance must communicate acceptance. A party must make a positive act to constitute acceptance. Cant impose an obligation on another party to accept or refuse

too easy for the offeree to accept offer you dont want to accept (protection for offerees) Silence is often equivocal and that intention is a part of formation of a contract difficult for silence to determine the parties.

Sometimes there are exceptions to the rule: Silence constitutes Acceptation

If offeree has said anything but his conduct shows that he accepts the offer then his intent is not equivocal and that the contract is valid. Nissan uk ltd v Nissan motor manufactory ltd 1994: both parties negotiating delivering of cars, the court decided Nissan manufacturing accepted the contract bc started to deliver the cars = accepted the contract

Commercial relations: Silence of offeree does indicate the intention to accept the offer even without any conducts because of the previous dealings between the parties Rust v baylife insurance 1979 ca: claimant was silent for 7 months and it indicated that she accepted the property bond. Claimant has started negotiations + obvious she had intention to create a contract. Her previous conducts dealings led to an offer being made and also cant consider the contract was unwanted house of lords santa clara 1996 sometimes in the practical world of businessman a mission to act may be as a pregnant with meaning. Inform sur les pratiques ils sont au courant.

Purpose is to protect the offeree.

E) who can communicate the acceptance? Who may accept an offer?

Only the offeree or his or her agent may communicate acceptance Powell v Lee The person to whom it was made can only accept an offer. Reynolds v Atherton

F) Revoking acceptance Offeree shows acceptance in indirect way of communication and realised doesnt want to accept the offer anymore.

Postal rule: contract form once I post the letter too late to back out.

But what happens if manage to communicate revocation of acceptance before the offeror get the letter? We dont know its mostly doctrine. Hudson 1966 argues that he purpose of the postal rule is to protect the offeree. He cant revoke offer after the letter is posted. Strike a balance between the offeree and the offeror.

it allows offeree to cover his bet, if not sure to accept and might be interesting in the other offer can post the letter keep on negotiating and if the second negociation doesnt happen can accept the first one and he can also say if he gets a better deal can revoke the contract before letter received by the offereor.

Hudson: easy for offeror to avoid this problem, stating in the offer cant be revoke once the letter is posted

Chapter 3: contracting in an electronic form Basic legal principal should applied to electronic form,The offer2011 golden ocean rule v salgaocar mining industry = court applied classic principle to series of email making offers and counter-offer . But you cant really applied the classic rule to those contracts. Typical interactive website allows customer to select item enter payment details and conclude the agreement online, in this situation we consider the contract was validly concluded. 2001 => offer No interactive website= items/prices but cant buy them online basically it that you call someone to go to the shop to buy the item. Chrisensen said we should applied the same rule for items place in display => invitation to treat The acceptance: do we applied the postal rule to accept? Accepted when the email is sent or received? Suggested that an email constitute acceptance once its sent as long as its properly addressed unless the offeree should realise immediate he has not received or get a bounce back message. If send email and send to wrong address but the address already exist = acceptance is still valid because offeree didnt get any sign the offeror received the message. Chapter 4: the consideration

A contract is a bargain under which each party must give some benefit, known as consideration to the other. The consideration of one party is given in return for the consideration of the other. For example, let us assume that I visit a garage and agree to buy a new car for 9,999. A contract has been made. My consideration is the promise to pay 9,999 to the garage. The garages consideration is its promise to pass ownership of the car to me. In bilateral contracts, such as the one used in this example, the consideration of both parties consists of a promise to do something. The one promise is given in return for the other.

In unilateral contracts the consideration of only one of the parties consists of a promiseto do something. The consideration of the other party consists of actually performing the actrequested by the promisor. For example, if I offered a 100 reward to anyone who found mylost dog, and you found the dog, a unilateral contract would have been created. My consideration would have been the promise to pay the reward. Your consideration would have been the act of finding the dog.If only one of the parties gives some consideration then a contract will not be created.Instead, any agreement will be a gift. So if a garage offered to give me a car for nothing, andI accepted this offer, there would be no contract. The garage would have provided someconsideration to me, by promising to give me the car. But I would have provided no consideration to the garage. Therefore there would be no contract and the garage would nothave to give me the car.Later in this chapter we shall see that the promise of a gift is not enforceable unless the promise was made by a deed. When an agreement is made by a deed, it is enforceable as a specialty contract even if no consideration was received by one of the parties

Consideration can be defined as a benefit given by one party or a loss suffered by the other. Usually, consideration is both a benefit to one party and a loss to the other. Forexample, if I buy a car from a garage, the garages promise to give me ownership of thecar is a benefit to me and a loss to the garage. Conversely, my promise to pay the money is a benefit to the garage and a loss to me.

A) Definition Given by Currie v misa 1879 a valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing (accorder) to the one party or some forbearance, detriment, loss of responsibility given suffered or undertaken by the other.

Benefit for a person making a promise (promisor) or a detriment to the person to whom the promise is made (the promising). When one party perform its self-agreement this performance is the benefit for the other partie and a determent for him.

Difficulties arising: when the agreement is executory, in executorial contract the making of the promise by each side is consideration for the promise made by the other side. Executory= synallagmatique = detriment et benefice

B) Valid considerationThree conditions must be satisfied:Consideration must be sufficient but need not be adequate.Consideration must not be pastConsideration must move from the promisee but need not move to the promisor.

1 Consideration must be sufficient but need not be adequate

Consideration must be sufficient (means that its something that the court will recognize as legally capable of constituting consideration) but not adequate. (court are not interested in whether there is a match in value between what is being offered by each partie. )

Thomas v Thomas 1842: promise to pay one pound as a rent was clearly sufficient according to the court to support the promise of a right to live in a house and the payment of money will always be treated as being within the category of sufficient consideration. Payer qqchose= contrepartie suffisante? Paiement est toujours suffisant mais pas adequate car ce nest pas trs chre pour ce que cest.

2 The consideration must have some valueThe court is not concerned with the adequacy of the consideration. In the absence of duress or undue influence the court will uphold a contract even where it appears that the consideration, objectively viewed, is not adequate. Chappell & Co v Nestle [1960] Nestle offered a popular record of the day in return for 1/6d and three wrappers from their chocolate bars. The House of Lords HELD that the wrappers were a good consideration despite the fact that the wrappers had little direct value and were in fact thrown away. Atiyah argues that this case illustrates the deficiency of the benefit/detriment analysis of consideration.

What is value?

Treitel argues that the consideration must have some economic value even though the value is not capable of precise quantification.The courts have not been consistent in their definition of value or benefit. In Stilk v Myrick (1809) the court held that no consideration had been provided despite the factual benefit received by the promisor. The analysis of cases below illustrates the difficulty and the point

Chawppo v nestle: term adequacy referrers to freedom of contract and the court states that a contracting party can stipulate of what consideration. Court wont interfere if a good deal was made, sometimes people have personal or undisclosed reasons for accepting consideration that appears inadequate.

Natural love and affection

Natural love and affection is not a sufficient consideration.. Consideration must have economic value.

White v Bluett (1853A son's promise not to bore his father about the distribution of the father's property was HELD not to be a good consideration for the father's promise not to sue his son on a debt owing to him by his son.Pollock CB held there was no consideration for any discharge of the obligation to repay. The son had no right to complain' anyway. Not complaining was therefore an entirely intangible benefit. held that the sons promise to stop complaining is not a sufficient consideration because no economic value.

A different view was taken in the American case of Hamer v Sidway (1891) An uncle promised to pay his nephew $5000 if the nephew refrained from drinking liquour, using tobacco, swearing and playing cards or billiards for money' until he was 21. On the basis that the nephew had a legal right to engage in the aforementioned activities he provided a valuable consideration by refraining.It would not have been a valuable consideration if the nephew had had no intention whatsoever in engaging in any of the prescribed activities.

C) Existing of obligations constitutes consideration Performing an existing dutySometimes, a person claims to have given as consideration a promise to perform an existingduty. Whether or not such a promise amounts to good consideration depends uponhow the duty arose in the first place. Three possibilities must be considered: first, that theduty arose under the general law of the land; second, that the duty arose under a previouscontract with a third party; third, that the duty arose under a previous contract with the same person.

Obligation, which arise under the law independent of any contract.

It is not good consideration to promise to perform a duty which is imposed by the general law of the land.

Collins v Godefroy (1831)The claimant was subpoenaed to attend a trial and give evidence. This means that he hada legal duty to attend the trial, this duty having arisen under the general law. The defendantagreed to pay the claimant six guineas (6.30) if he actually did attend the trial.Held The claimant was not entitled to the payment of any money. He could not give asconsideration the promise to attend the trial. The general law of the land already obliged him to do this.

However, it is good consideration to promise to exceed a duty which has arisen under the general law of the land

Glasbrook Bros v Glamorgan CC [1925] Held The defendants had to pay the 2,300. The police had a duty to protect propertyunder the general law of the land. However, the extra protection provided was in excess ofthat which the police were obliged to provide under the general law of the land. Providingthe extra protection therefore amounted to good consideration for the promise to pay the policemens wages.

The duty arose under a previous contract with a different person

The same consideration can be given to two different people, so that two contracts are validly created. The following case provides an example

While the performance of an existing duty owed to a promisor is not a good consideration (Supra) the performance of a contractual duty owed to a third party is a good consideration.

Shadwell v Shadwell (1860) P, engaged to EN, was promised 150 per annum by his uncle if he married EN (a pre-existing contractual obligation). P successfully sued to enforce the promise to pay 150 per annum.Held The claimant was entitled to the allowance which had not been paid. He had alreadymade a contract with Ellen Nicholl that he would marry her. However, he was entitled togive exactly the same consideration (marrying Ellen Nicholl) in a separate contract with his uncle.Lord Scarman in Pao On v. Lau Yiu Long confirmed the point.Powell v lauwiong : contract with a third party= binding consideration peut avoir 2 contrat superposes.

The duty arose under a previous contract with the same personUntil recently it was not possible to create two contracts by giving the same person the same consideration twice. The following case established this principle.

Stilk v. Marick 1809: The claimant signed a contract, agreeing to be a sailor on a ship for wages of 5 a month.The ship had a crew of only eleven men. When two of the crew deserted, the captain promised the remaining nine that if they continued with the voyage, as they had originally agreed to do, they could have the wages of the two deserters shared amongst them. The claimant and the other eight remaining crew agreed to this and completed the voyage. However, the captain refused to pay any more than the 5 a month originally agreed. The claimant sued for his share of the extra money which had been promised.

Held The men were not entitled to the money which they had been promised. At the startof the voyage they had promised the captain that they would do their duty in return for 5 a month. They could not later give the captain the same promise as consideration for a new contract.

William v roffey brothers1991:

The defendants had contracted to refurbish a block of flats. They subcontracted thecarpentry work to the claimant, who was to be paid 20,000 for doing the carpentry on27 flats. Soon after starting work, the claimant realised that he had priced the job too low.He told the defendants that he would not be able to afford to finish the job if he were notpaid more. If all the work on the flats was not finished on time the defendants would havebecome liable to pay huge damages to the owner of the block of flats. The defendants wereso concerned about this that they agreed to pay the claimant an extra 575 per flat if hecarried on and did the carpentry work as originally agreed. Happy with this agreement, theclaimant carried on with the work. The claimant was not paid the extra money which he hadbeen promised and so he sued for breach of contract.

Held The defendants were in breach of contract, and so had to pay the extra 575 per flatwhich they had agreed to pay. By agreeing to complete the carpentry work on time, the claimant had conferred a benefit on the defendants. This was the case even though he had already agreed with the defendants that he would do this work at the original contract price. By agreeing to do the work in return for the extra payment, the claimant had enabled the defendants to avoid paying the damages to the owner of the flats and had saved them the trouble of finding a different carpenter. This was a benefit to the defendants. Therefore, the claimanthad provided fresh consideration for the defendants promise to pay the extra 575 per flat

The CA HELD in the case of bonus payments that these will be enforced if the party agreeing to pay the bonus obtains some new practical benefit or avoided a disadvantage thereby.there is no economic duress or fraud......then the practical benefit constitutes good consideration.

Part payment of a debt

If one person owes a sum of money to another, the debt can be extinguished in two ways.

First, obviously enough, the debt is extinguished if the debtor pays the sum owing in full. Second, the debt is extinguished if the debtor and creditor agree that the creditor will take anything other than money instead of the amount owing.

For example, if Harry owes Bill 10,000, the debt can be extinguished either by Harry paying the full 10,000 or by Harry and Bill agreeing that Bill should take Harrys car in full settlement of the debt. If Harry and Bill do agree that Bill should take the car in full settlement of the debt, the court would not be concerned with how much the car was actually worth. As we have seen, the courts are not concerned with the adequacy of consideration. So no matter what Harrys car might be worth, the full debt would be extinguished.

Difficulties arise where the parties agree that the creditor should take a sum of money which is less than the amount owing, in full settlement of the debt. Let us assume, for example,that Harry owes Bill 10,000 and that Bill agrees that if Harry pays 9,000 the debt willbe extinguished and Bill will never ask for the rest of the money.

Pinnels Case (1602) held that a lesser sum of money cannot be consideration for a greater sum owed. Earlier repayment of the smaller sum or payment on the due date of the smaller sum at a place appointed by the creditor and different from the place originally required under the obligation would constitute a valuable consideration.Payment of less than its due on or after the debt or payment will never provide consideration or promise to forgo (renoncer) the balance.

Bill would therefore be able to sue Harry for the balance of 1,000, even though he had promised that he would not do this. The promise which Bill gave does not create a contract because no consideration was received in return for it. The promise made by Harry, to pay 9,000 in full settlement of the debt, could not be consideration to extinguish the whole debt of 10,000 because a lesser sum cannot be consideration for a greater sum owed.

In this area the law does seem to be concerned with the adequacy of the consideration. It is saying that 9,000 is not enough consideration for a debt of 10,000. The reason for this is that the only thing which can always be given a definite monetary value is money itself. In extreme circumstances,a pen, a bicycle or a car might be worth 10,000. However, in no circumstancescould 9,000 be worth 10,000. The decision in Pinnels Case was directly approved by theHouse of Lords in the following case.

Foakes v Beer (1884) (House of Lords)Mrs Beer had successfully sued Dr Foakes, who had been ordered to pay her 2,090damages. Dr Foakes was unable to pay all of this immediately. Mrs Beer agreed in writingthat if Dr Foakes paid the full amount by instalments she would not take any proceedingswhatever on the judgment in her favour. Dr Foakes paid the full amount in instalments, ashe had agreed to do. Mrs Beer then sued him for 360 interest. (Interest is always payableon a court judgment which is paid in instalments.)Held Dr Foakes had to pay the 360 interest. A lesser sum of money cannot be considerationfor a greater sum owed. Therefore, 2,090 payable by instalments without interest(the lesser sum) could not be consideration for 2,090 payable by instalments with interest(the greater sum owed).

Fox v bear 1884 house of lords : if something extra is done then the dbt can be discharge. HOL held that Bear prmise to forgo the interest on a judgement debt provided that doctor paid debt by doctor was enforceable This rula has been regarded with disfavour and its is sometimes avoided by the court promissory estoppel. Even after debt of payment it could be to the creaPayment of a smaller sum in satisfaction of a larger sum is no satisfaction of that larger sum.

The debtor is already contractually bound to repay the larger sum and provides no consideration by agreeing to pay a smaller sum without more.

2 Consideration must not be Past/ Past consideration= no good consiRooted in the bargain theory of contract the rule that past consideration is not a good consideration stems from the fact that there is no reciprocitythe promisee does not give anything in return for the promise of thepromisor.The Rule

When two parties have entered into a contract and one of them later promises an additional benefit, unsupported by a fresh consideration that promise is not binding on the person making it. The original contract and consideration is in the past. Generally, the consideration must be given after the promise for which it is given to make it enforceable, only when he alleges consideration has been concluded is enforceable

Roscorla v Thomas (1842) 3 QB 234D agreed to sell a horse to P. D then warranted the soundness of the horse. P could not enforce this later promise, the consideration for it, entry into the original contract, was in the past.

Re McArdle [1951] A promise made in consideration ofyour carrying out certain work was unenforceable. The work, despite the wording in the contract suggesting the opposite, had been done and was in the past. Exceptions: Pao On v Lau Yiu Long [1980] 3 conditions the past consideration is operating: The promisee must have performed the original act at the request of the promisor. That it must have been understood that the act would be paid for. The eventual promise to pay must have been one capable of enforcement had it been made just prior toperformance of the act

Eastwood v Kenyon (1840)

A guardian raised a loan to pay for a girl's education. After the marriage the husband promised to pay off the loan taken out by the guardian. The guardian could not enforce the promise. Past consideration is no consideration.

D) promissory estoppel 1 concept of promissory estoppelIt concerns the modification of existing contract. The position in cl is that such a modification would only be binding if consideration was supply and a new contract form. Only change possible= new consideration for 2 parties= new contract. Defence to a creditor claim for the remainder of the debt where part payment has been accepted.1rst contract for 5 years at 100 euros, one party wants to negotiate= Other solution: terminate first contract and form new contract with the new price but ne convenient. To ease this process, the doctrine invented the theory of the promissory estoppel, allows in certain circumstances to modify only one side performance of the contract even in the absence of consideration of the other party. Central London property Trust v high trees house 1947In 1937 the defendants took a lease on a block of flats in London at a rent of 2,500 a year.During the Second World War (193945), many people moved away from London as itwas being bombed. In 1940 the defendants found that they could not sublet the flats andcould not therefore pay the claimants the full rent. The claimants accepted that this was theposition and agreed that the defendants should pay a reduced rent of 1,250 a year. It wasnot agreed for how long the reduced rent should be paid. In 1945 the claimants were onceagain able to fully sublet the flats. However, the claimants were still paying a rent of only1,250 a year. In September 1945 the claimants sued for the full rent in the future and thefull rent from the time when the flats had once again become fully sublet.Held The claimants were entitled to the full rent both in the future and from the date onwhich the flats had become fully sublet

Concerns Modification of a rent payable on a bloc of flats during World War 2, principle which the judge set out the decision: a promise intended to be binding and is binding so far as its terms properly applied. The promise to accept lower rent during War years was binding the landlord despite the fact that the tenant had supplied no consideration. Goes against the Classical CL contract. Dennings theory became known as promissory estoppel. It said that if a person made a promise, and the person to whom it was made was intended to rely on the promise and did rely on it, then the promise would be binding. This would be the case even if no consideration was given in return for the promise. However, promissory estoppel will apply only if the following four conditions are satisfied:

There must have been an existing legal relationship between the parties. The promisor must have intended to enter into legal relations, by promising not to insist on his strict legal rights. The promisor must have known that the promisee would act upon this promise. The promisee must actually have acted upon the promise.

Concept of Estoppel by representation: Relation of a statement of existing fact rather than a promise of future action Concept of waiverOne person can waive some right then can rewaived these rights by any notice= peut renoncer a certains droits on peut recuperer ces droits par simple notification In situations such a right can be suspended but then rewaived by property noticea) A need for an existing legal relationshipAccepted that P E operates to modify existing legal relationship rather than to create new one. b) Need for reliance The promisee has relied on the promise cf high trees payed reduced friend in reliance on the promise from the owner that this would be acceptable as a full rent, they organize their budget business on the basis that it would not be accepted to pay the usually rent= would have been fair to lace (bail) and unreasonable to comply with their original contract. This reliance must be detrimental (prjudiciable) but rejected in Allan v 1972 reliance is sufficient

c) a shield not a sword = proteger celui qui a cru a la promsesseit is a shield not a sword and this means that it can only be used as a defence. A claimant cannot use promissory estoppel to sue somebody with. Therefore, the decision in Stilk v Myrick would not be changed by promissory estoppel. In order to get their extra money, the sailors needed to sue the captain for it.RF to need for existing legal relationship, combe v combe 1951; Husband gratuitously promised 2 a week. Lack of consideration but promissory estoppel allowed her to win. Denning: made a promise, to be relied upon and is in fact relied upon, then he who gave the promise cannot afterwards revert to the previous legal relationship. Requirements: existing contract; claimant has agreed to waive; claimant knew defendant would rely; defendant has in fact acted on reliance.

a wife was trying to sue a former husband for a promise to pay her an alimony, she had provided no consideration for this promise First instance she succeeded on the basis of PE but the CA: PE could not be used as the basis of a cause of action In this way bc this doctrine was created to provide protection for the promisee: consideration remains a cardinal necessity of a formation of a contract though

d) Must be inequitable for the promisor to go back on the promiseDoctrine of PE has its origin in equitable waiver. Finally, it is certain that promissory estoppel is an equitable doctrine. It will thereforeonly act so as to prevent a claimant from breaking a promise where it would be inequitable(unfair) of the claimant to break the promise. In the following case promissory estoppel didnot apply because it was not inequitable for the claimants to break the promise to accept alesser sum of money.

The judge is not obliged to apply the principle automatically as soon as its proved that there was a promise modifying an existing contract which has been relied on, there is a residual discretion whereby the judge cant decide whether it is fair to allow the promise to be enforced. It must be inequitable for the promisor to withdraw the promise = situation where the promisee has extracted the promise by taking advantage of the promisor DC builders v Rees 1966:The claimants were a small firm of builders. The defendant owed the claimants 482 forwork which the claimants had properly done. The defendants wife knew that the claimantswere very short of money. She told them that they would have to accept 300 in full settlement of the debt or they would be paid nothing. She knew that if the claimants refused to accept this, and sued for the full amount, they would be bankrupt before the case came tocourt. The claimants reluctantly agreed to take the 300, in full settlement of the debt. Oncethey had received this money, the claimants sued for the remaining 182.Held The claimants were entitled to the remaining 182. Foakes v Beer applied and thelesser sum of money could not be satisfaction for the greater sum owed. The defendantcould not use promissory estoppel as a defence. It was not inequitable for the claimants tobreak their promise to accept 300 in full settlement of the debt because they had beenpressurised into making this promise.didnt want to pay the full price of an apartment but he knew that the company was in a bad financial position, so Rees propose to pay only part of a full sum of the deal and argues this derived contract it was PE before the Court. Held: this promise was extracted by the promisee and he couldnt give rise to the PE = equitable for the promisor to go back on the promise. Soit on force le promettant a modif le contrat= equitable de ratire la promesse Pas de desavantages car le destinataire de la promesse na pas souffert davoir cru = peut retier Post chaser 1942: original promise withdrawn quickly by the promisor, promise didnt suffer from disadvantadge: it was not equitable to allow the promisor to withdraw the promise

e) Doctrine is generally suspensory

wheras a contract modification supported by consideration will generally be of a permanent effect PE the promise would be time limited hight trees: the promise to take a reduced rent was only applicable while the second war continue; and once it came to an end the terms of the contract revives. He was agreed and accepted that the reduced payment made while the estopppel was in operation that this would stand and that the promisor could not recover the balance that it would have been due under the original contract terms. => PE extinguishes right rather than delay the enforcement = on va teindre un epartie des droits du promettant = modif contrat temporaire

On an other case: The promisor was able to withdraw the promise by giving reasonable notice = original contract cant be revise

f) Situations where a promise is prohibited by legislation Evans v amicus healthcare 2003 use of embryos created by ivf prior to the breakdown of the couples relationship, the man whished the embryo to be destroyed and the woman wanted to used it. It was found by the court that the man had not given such insurance to the woman as to create a PE bc the relevant legislation allowed him to withdraw his consent to the storage of the embryo at any time.

Chapter 5: intention to create legal relationship

A) Introduction

Essential that the parties have intention to create a relationship it means that the parties intend that legal circumstances would be attached to the agreement = if he goes wrong the parties intend the agreement would be binding with recourse with some external educator. Necessity for intention is most evident in domestic and social agreements. The law makes a distinction between social/domestic (no intention to create legal relation) agreements en Commercial agreements. (Intention)To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly. Rose and Frank Co v JR Crompton & Bros Ltd

The courts use an objective test in making a determination about the intention of the parties. In making an objective determination of the parties intention, the court looks at the surrounding circumstances and asks if a reasonable person would regard the agreement as intended to be binding. Merritt v Merritt

Termination of whether or not the party intended to enter into legally binding relation is an objective one and the context is fundamental. The judge will examine the state of mind of one party but will ask whether or not reasonable party to such an agreement would poses an intention to create legal relation. Objective approach applies whether the agreement is social/domestic or commercial agreements. Objective Criteria is the position of reasonable person Subjective Criteria: context

B) Social and domestic agreements

The presumption is that domestic and social agreements are not intended to have legal force.

Balfour v balfour 1919: used to be a couple and the husband left to work oversees, he told his wife he promised her tp pay her each month, when the party separated the woman sue the husband for this monthly amount and the court refused tio allow on the ground that the agreement was not an enforceable contract bc at the time of the formation of the agreement it was not intended by other party to be attended by legal conse= party didnt intend that the agreement was one which could be sued upon. As a matter of public policy domestics agreements entered into are outside of the jurisdiction of the court. Such agreement could be litigated in the court , but it will be overheld

Covered v MID : An agreement to take a friend to work exchange for gas money was arrangement which lacks contractual intention.

Rebutting the presumption ( exceptions)

The presumption can be easily rebutted for example if parties who are in a familial relationship are contracting in a business context or if a husband and wife enter into an agreement in circumstances in which they are no longer living in harmony. Similarly, if the words used in the contract indicate a legal intention, the presumption that may otherwise have arisen may be rebutted.

Case Examples:

a) Husband and WifeParties involved in a domestic relationship, will generally not have intended legal consequences to follow their arrangement thus a contract will not be enforceable. Given many couples now choose to cohabit without marrying, the same presumption should apply where an agreement is entered into between a couple living in a de facto relationship.

Balfour v Balfour

b) Separated husband and wife

Where parties are divorced, separated, or in the process of separating, the negotiation do not take place in the context of natural love and affection therefore there is no room left for the application of such a presumption and the court will generally find that the requisite contract intent existed.

Merrit v Merrit

c) Other familial relationships

Parties in other familial relationships are considered the same as married or de facto couples, and it is presumed that they do not intend to cerate legal relationships as the agreements made in this context are based on natural love and affection. The bond of natural love and affection is likely to weaken according to the remoteness of the tie and will subsequently be easier to rebut.

Jones v Padavatton

In fact, those cases where the court finds that the presumption has been rebutted, one or more of the following factors are often relevant The seriousness of the conduct involved (such as moving countries or giving up full time employment) The expense involved, especially if the relevant party is not wealthy Whether there is or has been a degree of hostility in the relationship The closeness of the family ties Whether the subject matter of the agreement is business or commercial in nature

d) Social Relationships

The presumption of lack of legal intent can extend beyond familial relationships to agreements entered into in a social context, or agreements made between friends. Heslop v Burns

However, a court will not always find that the parties lacked legal intention, even when the arrangement is clearly made between friends or a relative in a social setting. (eg. parties who pool funds to enter a competition in one persons name may intent that arrangement to have legal consequences. Therefore, if the person wins, action can be brought to force that person to share the winnings with the other members of the groups. While this is fair, it is doubtful that parties who participated in syndicate intended their action to have legal consequences). The court may be more likely to uphold such a decision if large amounts of money are involved.

Simpkins v Pays

Domestic arrangements are beginning to take on the basis of contract law balfour establishes a rebuttable (refutable) presumption that domestics agreements are not intended= accord domes nest pas un contrat mais refutable.

Dark v strout 2003: agreement for child maintenance following the breakdown of the couple relationships didnt lack an intention to create legal relation given the formally of the letter. Contract

Slasbury v Salsbury 2007: ca found that there was intention to create lr between two farmers spousers when one agreed to forgo maintenance payment in return for a bequest (leg) in the others willSimpkins v paynes 1955 contract where 3 co-inahibtants entered a competition together

C) Commercial agreement PresumptionWhere parties negotiate and agree in a business setting, it is assumed that the parties intended the agreement to have legal consequences. Therefore, the party alleging that an agreement relating to business matter is of no legal effect has the heavy onus of demonstrating that to be the case. Edwards v Skyways

It can sometimes be difficult determining whether a transaction has taken place in a business setting, a broad approach to what constitutes a business setting must be adopted.Esso Petroleum Co Ltd v Customs & ExciseCourts will presume that an intention to create legal relations is present # balfourd So pertrolium v comisionary of custums 1976: sell of land Agreements are normally made subject to contractIn most cases where the party deals with the arms length they have no existing ties of friendship the court will find a contractual intention. Rebutting the PresumptionThe intention not to create legal relations may be evident in a number of different ways. For example, the agreement may contain an express clause that no legal consequences flow from the document, or the overall tenor of the particular document may indicate that the parties had no intention to enter into legal relations.

Rose and Frank Co v JR Crompton & Bros LtdChapter 6: Certainty of terms and violence Statement of the Rule

Enforceable contract requires certainty of terms, for an agreement to be a contract it must be apparent what the terms of the contract are. If an important term is not sealed the agreement is not a contract

G Scammell and Nephew Ltd v HC and JG Ouston 1961: agreement was not enforceable bc terms were uncertain and required further agreement between the parties. Terms uncertain= no real agreement between the parties. Facets to the principal

There are a number of facets to this principle:

A contract containing language that is so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention will be unenforceable The uncertainty may relate to one of the pivotal terms of the agreement or may go to the very heart of the agreement.G Scammell and Nephew v HC & JG Ouston

Even where uncertain or ambiguous language is not used, if the parties have not agreed on all of the essential terms of the agreement, the contract will be unenforceable. Loftus v Roberts

A contract will be unenforceable if it reserves a discretion for one party not to carry out his or her obligationsThorby v GoldbergSaving Ambiguous, uncertain or meaningless contractsIf the terms are uncertain cant be determined with certainty if there is a dispute no contract to be interpreting by the court. The court will invent the intention of the arties and this is not his role. A clause in a contract, which, on its face, appears uncertain, may be enforceable if a meaning can be given to it by reference to an external standard. The parties may provide for a standard, machinery or formula designed by the parties to take the place of their own agreement. Hawthorn Football Club v HardingIn circumstances when the parties have relied upon an agreement courts will easily imply or infer the term. Hillis v arcos 1932: the parties relied upon agreement and the court was able to infer the intention of the parties base upon the terms on the agreement and the usage of trade. The court may be willing, in some circumstances, to adopt principles of reasonableness to make certain something that, on its face, is not. The implication of what is just and reasonable to be ascertained by the court as a matter of machinery where the contractual intention is clear but the contract is silent on some detailHillas and Co Ltd v Arcos Ltd

The agreement provides a mechanism that helps to establish the terms when there is no real terms but a way to determine them we can consider there is certainty of terms. Theris a # terms consider meaningless and terms which has yet to be agreedMeaningless= can be ignored id terms are uncertain courts wont find a contract exist. Courts are not prompt to find a contractWe can determine the terms using devices or mechanism => trade

Chapter 7: A complete agreement

In order to create enforceable contract parties must reach an agreement on all measures elements of the contract= the agreement must be complete. Nothing left outstanding (laiss en suspend) to be agreed on later. Completeness is an aspect of certainty of terms. Unless an agreement is complete the court is unable to state the certainty what the agreement has been made between the parties.There is an agreement on matters such as price, mere nature of the contract.Agreements to Negotiate

There is also an agreement to agree: If parties do not reach final agreement on essential terms, instead agreeing to finalise such matters at a later time, the contract is an agreement to agree, therefore it is incomplete and will not be enforced. Booker Industries Pty Ltd v Wilson Parking Qld Pty Ltd

If an agreement to negotiate is regarded as an agreement to agree, it to will be unenforceable Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd

Courtney v Fairbairn 1979: no contract were the parties have simply agreed to negotiate, agreement was not enforceable as a contract= peut pas contractuellement que lon va sengager sur un contrat. It lies if the agreement is incomplete = court will have to create a rest for the agreement rather than just interpretation its provisions. The law itself will unable the court to add the necessary terms to the agreement ex: sail of goods act 1959 a provision stipulates where the price of contract for sale of goods hasnt been determined the buyer must pay a reasonable price. Agreement completed by the courts and dimed by the courts =< enforceable. Where the parties has acted relied upon an uncompleted agreement courts able to implied the necessary terms because: The parties are protected by the courts reasonable reliance upon the agreement Bc the parties have relied upon the agreement its easier to imply with certainty what the parties would have originally relied upon as the essential terms.

Agreement must contain all essential terms necessary to execute the agreement with certainty, if not it could not be enforceable contract.

Practical approach of contract law

Chapter 1: introductory files to drafting contractA) What is the goal of contract drafting?

Its to describe with precision the substance of the meeting of 2 minds in a language that would be interpreted by each subsequent reader in exactly the same way. Mandatory prerequisite for precisely written contract is a clear understanding between the parties, which is often achieved only after significant effort.

B) Contractual precisions

A precise contract has 4 elements: Accurate (expresses correctly the deal) Complete (all possibilities have been addressed) clauses prvisibles Exact ( lacks both vagueness and ambiguity) Able to withstand ( resister) hostile or critical review.

4 elements are important because, after the contract is executed by the parties the n