TEXTO 1: Introduction to the Law of Contract Fuente: http:// www.lawteacher.net/contract-law /introduction.php Introduction to the Law of Contract DEFINITION Acontract may be defined as a legally binding agreement or, in the words of Sir Frederick Pollock: A promise or set of promises which the law will enforce" The agreement will create rights and obligations that may be enforced in the courts. The normal method of enforcement is an action for damages for breach of contract, though in some cases the court may order performance by the party in default. CLASSIFICATION Contracts may be divided into two broad classes: 1. Contracts by deed A deed is a formal legal document signed, witnessed and delivered to effect a conveyance or transfer of property or to create a legal obligation or contract. 2. Simple contracts Contracts which are not deeds are known as simple contracts. They are informal contracts and may be made in any way - in writing, orally or they may be implied from conduct, Another way of classifying contracts is according to whether they are “bilateral” or “unilateral 1. Bilateral contracts A bilateral contract is one where a promise by one party is exchanged for a promise by the other. The exchange of promises is enough to render them both enforceable, Thus, in a contract for the sale of goods, the buyer promises to pay the price and the seller promises to deliver the goods. 2. Unilateral contracts 50A unilateral contract is one where one party promises to do something in return for an act of the other party, as opposed to a promise, e.g, where X promises a reward to anyone who will find his lost wallet. The essence of the unilateral contract is that only ‘one party, X, is bound to do anything. No one is bound to search for the lost wallet, but if Y, having seen the offer, recovers the wallet and returns it, he/she is entitled to the reward. ELEMENTS The essential elements of a contract are: 1. Agreement An agreement is formed when one party accepts the offer of another and involves a "meeting of the minds’. 2. Consideration Both parties must have provided consideration, i.e,, each side must promise to give or do something for the other. 3. Intention to create legal relations The parties must have intended their agreement to have legal consequences, The law will not concern itself with purely domestic or social agreements. In some cases, certain formalities (that is, writing) must be observed, Capacity The parties must be legally capable of entering into a contract. 6. Consent ‘The agreement must have been entered into freely. Consent may be vitiated by duress or undue influence. 7. Legality The purpose of the agreement must not be illegal or contrary to public policy. A contract which possesses all these requirements is said to be valid. The absence of an. essential element will render the contract either void, voidable or unenforceable (as to which see below), 51In addition, a contract consists of various terms, both express and implied. A term may be inserted into the contract to exclude or limit one party's liability (the so-called "smail print"), A term may also be regarded as unfair. A contract may be invalidated by a mistake and, where the contract has been induced by misrepresentation, the innocent party may have the right to set it aside. Asa general rule, third parties have no rights under a contract but there are exceptions to the doctrine of privity, ‘There are different ways of discharging a contract and remedies are available for breach of contract at common law and in equity. ENFORCEABILITY 1. Void contracts A “void contract" is one where the whole transaction is regarded as a nullity, It means that at no time has there been a contract between the parties. Any goods or money obtained under the agreement must be returned. Where items have been resold to a third party, they may be recovered by the original owner, 2. Voidable contracts A contract which is voidable operates in every respect as a valid contract unless and until one of the parties takes steps to avoid it. Anything obtained under the contract must be returned, insofar as this is possible. If goods have been resold before the contract was avoided, the original owner will not be able to reclaim them. 3. Unenforceable contracts An unenforceable contract is a valid contract but it cannot be enforced in the courts if one of the parties refuses to carry out its terms. Items received under the contract cannot generally be reclaimed. 52TEXTO 2: Contractual Agreement - Offer and Acceptance Contractual Agreement ~ Offer and Acceptance Fuente: hitp:/ /www.e-lawresources.co.uk/Offer-and-acceptance-contract.phj Contractual agreement has traditionally been analysed in terms of offer and acceptance. (One party, the offeror, makes an offer which once accepted by another party, the offeree, creates a binding contract. Key concepts that you need to familiarise yourself with in relation to offer and acceptance include the distinction between an offer and an. invitation to treat - you need to be able to identify specific examples of where an offer or an invitation to treat exists. Also it is important to know the difference between bilateral and unilateral contracts. The case of Carlill v Carbolic Smoke ball co. is the leading case in both these areas so it is worth concentrating your efforts in obtaining a good understanding of this case. Offer In order to amount to an offer it must be shown that the offeror had the intention to be bound. Invitation to treat, ‘An offer needs to be distinguished from an invitation to treat. Whereas an offer will ead to a binding contract on acceptance, an invitation to treat cannot be accepted; it is merely an invitation for offers. Goods on display in shops are generally not offers but an invitation to treat, The customer makes an offer to purchase the goods. The trader will decide whether to accept the offer. Advertisements Advertisements are also generally invitations to treat. However, in some instances an advert can amount to an offer. 54Termination of offers An offer may be terminated by: 1, Death of offeror or offeree 2. Lapse of time An offer will terminate after a reasonable lapse of time. What amounts to a reasonable period will depend on the circumstances, 3, Revocation The offeror may revoke an offer at any time before acceptance takes place. This may not apply in unilateral offers where acceptance requires full performance. 4, Counter offer A counter offer is where an offeree responds to an offer by making an offer on different terms. This has the effect of destroying the original offer so that it is no longer open for the offeree to accept. Acceptance Once a valid acceptance takes place, a binding contract is formed. Itis therefore important to know what constitutes a valid acceptance in order to establish if the parties are bound by the agreement. There are three main rules relating to acceptance: 1, The acceptance must be communicated to the offeree. 2. The terms of the acceptance must exactly match the terms of the offer. 3, The agreement must be certain, 1, Communication ‘The general rule is that the offeror must receive the acceptance before it is effective. Silence will not generally amount to an acceptance. Acceptance can be through conduct. The postal rule Where it is agreed that the parties will use the post as a means of communication, the postal rule will apply. The postal rule states that where a letter is properly addressed and stamped, the acceptance takes place when the letter is placed in the post box. It is relatively easy for the parties to exclude the postal rule. 552. The terms of the acceptance must exactly match the terms of the offer. If the terms differ this will amount to a counter offer and no contract will exist 3. The agreement must be certain When viewed objectively it must be possible to determine exactly what the parties have agreed to. 56TEXTO 4: Carlill v Carbolic Smoke Ball Co. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal Fuente: hitpy/e-lawresources.co.uk/Carlill-v-Carbolic-Smoke-Ball-Co.php 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, showing 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. Ibis 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: 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: 1, The statement referring to the deposit of £1,000 demonstrated intent and therefore it ‘was not a mere sales puff. 2. Itis 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. 615. The defendants would have value in people using the balls even if they had not been purchased by them directly. 62