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UoL CL Slides PDF
UoL CL Slides PDF
Dr Graham Melling
March 2014
What is a contract?
A contract is a legally binding agreement between
the parties to the contract which confers some
benefit to each other.
A person cannot become liable unless it can be
shown that he entered into the contract willingly.
Contractual liability is strict.
Damages for breach of contract is designed to
compensate for all foreseeable losses flowing
naturally from the breach.
Starting point: Is there a
contract?
1. Agreement
2. Consideration
3. Intention to create legal relations
1. An agreement
For an agreement to be valid there has to be
an offer and acceptance.
The offeror makes an offer by establishing
terms by which he is willing to form a
binding agreement.
The offeree by accepting the terms agrees to
be similarly bound.
An offer can be written, spoken, of inferred
by conduct.
A) Offer
The person making the offer is called the offeror,
and the person to whom the offer is made is called
the offeree.
A communication will be treated as an offer if it
indicates the terms which the offeror is prepared to
make a contract; and
Gives a clear indication that the offeror intends to
be bound by those terms if they are accepted by the
offeree. Storer v Manchester City Council Cf
Gibson v Manchester City Council
(i) When is an offer not an
offer?
Invitations to treat
Advertisements - Partridge v Crittenden
A bilateral contract
Contrast:
Carlill v Carbolic Smoke Ball Company A
unilateral contract.
When is an offer not an offer?
Goods in shops - Pharmaceutical
Society of Great Britain v Boots Cash
Chemists (Southern) Ltd A contract is
not completed until, the customer having
indicated the articles which he needs, the
shopkeeper, or someone on behalf,
accepts that offer.
B) Points about Acceptance
Acceptance of an offer means unconditional
agreement to all the terms of that offer. Tinn v
Hoffman
An acceptance can be made by words or conduct
and must be a mirror image without adding
anything new. Brogden v Metropolitan Railway
Company; Day Morris Associates v Voyce; Hyde v
Wrench For a bi-lateral contract, the acceptance
must be positive, i.e. you cannot accept a contract
by omission, even if the offeror says so.
Points about Acceptance:
Queries and requests for further information is not
acceptance or rejection Stevenson, Jacques & Co
v McLean
Differing standard forms battle of the forms
last shot wins Butler Machine Tool v Ex-Cell-O;
Tekdata Interconnections Ltd v Amphenol Ltd
Unless the offer was unilateral, the acceptance
must be communicated. Entores Ltd v Miles Far
East Corporation (1955) A must be able to hear
Bs acceptance before it can take effect.
Exceptions to the
communication rule
Unilateral contracts Carlill v Carbolic Smoke Ball
Company performance is acceptance. No need to
communicate attempt to perform.
Conduct of the offeror. An offeror who fails to receive an
acceptance through their own fault may be prevented from
claiming that the non-communication means they should not
be bound by the contract.
In Entores Ltd v Miles Far East Corporation (1955); The
Brimnes (1975)
Postal acceptance Adams v Lindsell; Household Fire
Insurance v Grant
Exceptions to the
communication rule
Conduct of the offeror. An offeror who fails to
receive an acceptance through their own fault may
be prevented from claiming that the non communication
means they should not be bound by the contract.
In Entores Ltd v Miles Far East Corporation (1955) it
was suggested that this principle could apply where an offer
was accepted by telephone, and the offeror did not catch the
words of acceptance, but failed to ask for them to be
repeated.
In The Brimnes (1975) where the acceptance is sent by
telex during business hours, but is simply not read by
anyone in the offerors office acceptance was effective.
Termination of offers:
Counter offer -A counter offer terminates
the original offer. Hyde v Wrench (1840)
Withdrawal of offer/Revocation:
Errington v Errington & Woods
Lapse of time reasonable length
Condition not fulfilled
Death of offeror or offeree
Withdrawal of Offer/
Revocation
Withdrawal must be communicated Byrne & Co v Leon
Van Tienhoven (1880).
The revocation of an offer does not have to be
communicated by the offeror. Dickinson v Dodds (1876)
Withdrawal of an offer to enter into a unilateral contract
An offer to enter into a unilateral contract cannot be
revoked once the offeree has commenced performance.
Errington v Errington and Woods (1952) See also: Daulia
Ltd v Four Millbank Nominees Ltd (1978) Luxor
(Eastborne) Ltd v Cooper (1941).
2. Consideration
In bilateral contracts, the consideration takes the
form of promising to do something in the future.
Illegality:
Contracts unenforceable for public
policy reasons:
Statute
Gambling
Public policy at common law
Breach of Contract
Expectation Loss: