Common Law – Taha

Business Agreement
Q1.Using decided case law, discuss whether or not John has any contractual claim on the reward advertised by Alina. Ans. The problem arises two issues of whether Alina had made an offer or
was it an invitation to treat? It depends on the precise time at which each contract in the case was formed. This in turn depends on the point at which communication between the parties had taken effect. John had sent a letter and sends a telex message to Alina confirming his acceptance and asking for reward by him giving the required information. He posts the letter on 29th April and it arrives at Alina’s house on 1st May. Since this case appears to be a case of a “unilateral contract” we shall have a look on what exactly does it mean. In spite of the advertisement, this does not constitute to an invitation to treat, it is a legal offer. In one case, Hubbs v. Black, 1918, agreeing not to take a certain plot in a cemetery was considered to be sufficient consideration. Giving a right to sue on a "bona fide" claim has been deemed to be adequate consideration. Also, the courts don't really work on the adequacy of the consideration. This is the business of the parties and not a matter for judicial interference. Some other notes on consideration:
• •

The consideration must be reciprocal, each party offering consideration. Motive is different from consideration. Your motive for contracting is your

personal reason for contracting. It may not coincide with the consideration you are giving, or receiving, as part of the contract.

If a consideration is already "spent" in a prior contract, a new contract

using that same consideration would be valid. In the words of one law professor (The Law of Contract in Canada, G. Fridman): "where a contractual duty already exists, it may be vary the original agreement without necessarily establishing a whole new contract with fresh


If a certain act is punishable by some law. An example would be a work contract to an unlicensed electrician. the original promise only becomes enforceable when the offeree has actually performed the required act. immoral or contrary to public policy. 3. is the price for which the promise of the other is bought. thus making the promise for which it was performed enforceable. Dunlop Pneumatic Tyre Co V Selfridge And Co Ltd defines it as “an act of forbearance of one party. It is important to note that it is necessary for both elements in the definition to be present to support a legally enforceable agreement. 2 . then it is "illegal". • The consideration cannot be something or some act which is illegal. So basically in this case Alina is liable to give the reward to John since he had the essential information regarding her vase. Executory consideration means that the consideration is in the form on an act carried out at the time the contract was made." In fact. or the promise thereof. The action requested does not have to be performed but once it is done then the original promise becomes legally enforceable. Consideration can be divided into the following categories: 1.Common Law – Taha consideration on both sides. and the promise thus given got value is enforceable”. Executed consideration: as may be gathered from the term. Taking this example of Alina and the two parties. in case of unilateral contract where the offeror promises something in return of the offeree doing something. refers to consideration that has actually been carried out. Past consideration: does not actually constitute valid consideration therefore no agreement resting on past consideration is legally unenforceable. Executory consideration: is given where there is an exchange of promises to do something in the future. refreshing a commitment to do something for a third party is consideration under common law. Taking the same example of Alina rewarding for her lost vase. the reward only becomes enforceable once when the information has been conveyed to Alina. An alternative and shorter definition of consideration is “some benefit to the promisor or detriment to the promise”. 2.

for a limited period thereafter. the Carbolic Smoke Ball Co as appellants raised a number of legal points relevant to contract law: (1) The advertisement was not an offer. as promised. had not used it properly. In the High Court. but an invitation to treat. the proprietor of a medical preparation called “The Carbolic Smoke Ball’. It was only at the end of this time that the promise became legally binding. and had never actually caught influenza and. (4) There was no consideration for the promise (whether the plaintiff herself had actually bought the smoke ball). In commercial contract practice and litigation. or arbitration over disputes. The defendant. the defenses of the Smoke Ball Company. appear to have been about the facts rather than the law. Louise Carlill did both and sued to recover her $100. In other words. contracted influenza. there was no intention of making an offer. (5) Where was the acceptance of the offer? In a bilateral contract the acceptance is normally communicated. Carbolic Smoke Ball Co Ltd. never reported it to the defendant. (6) The advertisement was a bet or wagering contract. The court found for the plaintiff. indeed most of the arguments. (3) An offer could not be made to the whole world. In the Court of Appeal. Consideration and acceptance could be found in Mrs. Carlill taking and using the Smoke Ball for the full two weeks. if she did. The plaintiff had not relied on it in any case.Common Law – Taha The concept of a unilateral contract is illustrated by reference to a classic contract law case:Carlill v. placed an advertisement in “The Pall Mall Gazette” Promising to pay $100 to anyone who used the Carbolic Smoke Ball for two weeks and who. And that was not done here. (2) The advertisement was too vague to be an offer. Frederick Roe. Mrs. The Court of Appeal rejected most of these arguments and held that there was a contract. The Smoke Ball Company’s offer 3 . In Carlill some of the factual arguments were that the advertisement was not accurately reported. in which case it would be void as contrary to public policy. the facts are indeed often more complicated and relevant to the final outcome than the law in question.

4 . promises given for no return. which you do not promise to bring about or which is outside of your control. Carlill using the Smoke Ball. The Court of Appeal also found that there was an intention by the parties to treat the arrangements as contractual. Law does not enforce every promise which is made. Q2. so he is obliged to get the reward. Law does not enforce gratuitous promises i.).e. Catching influenza was not the consideration but a “condition” (sometimes called and “if” clause). there is no contract if there is no consideration. The advertisement she made was held to be a promise which was an offer to the whole world and was capable of amounting to an offer of a unilateral contract. Using case law. advice the parties concerned whether a valid contract was formed and whether Phil is liable to pay the three girls. Any discernible detriment to one of the parties could be that party's consideration. Communication of acceptance is not necessary in the case of unilateral contract. One way in which the court limits the type of promise that they have to deal with is through the operation of the doctrine of consideration. The deposit of money was an important indicator of contractual intention. But consideration does not necessarily have to be quantified or quantifiable in monetary terms. Carlill was the first case to explicitly state a requirement of intention to create legal relations. John an ordinary person accepted the offer and was surely in contract with Alina and had the right to claim for the reward advertised by Alina. Conclusion: As per the analysis. John knew about the reward and he posted the letter on 29th April. Consideration was found in Mrs. (I will pay you if a certain event happens. Under contract law. unless such promises are given by way of a formal deed. it is quite clear that this is a similar scenario of Alina’s. The Court of Appeal also dealt with the consideration point.Common Law – Taha could be revoked at any time until she had completed performance.

the intention to create legal relations is expressly stated by the contracting parties. though there are situations where the presumption of the intention can be rebutted. there is no intention to create legal relations and no intention that the agreement should be subject to litigation. • • Social agreement Commercial agreement Supported by consideration is not enough to create a legally binding contract. she sued wife's action failed because no consideration moved from her no intention to create legally binding agreement found 5 . the parties must also have an intention to create legal relations. the law will readily imply the intention. because of the nature of the commercial dealings between the parties. The presence of consideration is often indicative of the intention to create legal relations. Candidates should emphasize the need to distinguish because of presumptions regarding intent. In many domestic agreements. In other situations. Balfour v Balfour [1919] • • • • • • • husband brought wife to England from Sri Lanka husband had to return but wife stayed for medical reasons he promised to pay her £30/month until his return when he failed to pay. thus determining that there is no contract and no legal liability. Often.Common Law – Taha Ans. • • The two possibilities here are:That the agreement made to play at the wedding is taken as a commercial agreement or That it is considered to be merely a social arrangement. for example those made between husbands and wives and parents and children.

when entry successful. he refused to sign over house Court of Appeal ruled that there was intention to create legally binding agreement Reasoning = agreement took place in response to marital breakdown Simpkins v Pays [1955] • • • • • defendant. the contract is not enforceable. her granddaughter and the plaintiff (paying lodger) regularly took part in newspaper competition all contributed but entered in defendant's name No set arrangement re: payment of postage etc. if contracting parties don't consent to the creation of a legal relationship.Common Law – Taha Court stated in husband/wife cases. The three students need a platform where they can show their talent and gain the attention the public. defendant refused to share with plaintiff plaintiff sued for his share Court ruled legally binding relationship as sufficient 'mutuality in the arrangements between parties' Conclusion According to intention to create legal relationship Law as has been discussed. burden of proof is on plaintiff to prove intention to create legally binding agreement But courts do sometimes find husband/wife agreements binding. that chance or platform provided by their uncle for 6 . Merritt v Merritt [1970] • • • • husband left home to live with another woman agreed in writing to pay wife £40/month maintenance said if she used it to pay mortgage he would sign house over to her when fully paid when fully paid.

3000 is not legal. The various types of details in a business agreement may vary upon the type of agreement:• • • • • • • • • • • • • • • • • Hourly wage to be paid What products will sell for The number of treatments to be applied Total cost of the job When payments are due The amount of time to be covered by the agreement Who is to provide what in the business Work to be performed How work is to be evaluated The cost of using land or equipment that belongs to others Who will supply the feed. It is to prevent the misunderstandings. Who can identify a type of business agreement? A contract to buy a car is a business agreement. that was the best opportunity to get the breakthrough and to commercialize their talent. Discuss various types of business agreements and essential elements of a valid Contract. and to keep the people from going back on their word. seed. Ans. to keep the people from being cheated.Common Law – Taha their publicity. A 7 . fertilizers How the agreement can be voided or renewed Amount of interest to be paid How expenses and income are to be shared or handled Acreage or square feet involved Deadlines for completing the work Are there provisions for overtime? Who will provide insurance? • Given are five examples of business agreements. to protect the rights of everyone. Q3. There are a lot of different types of business agreements. Asking for Dhs. A Business Agreement is a written document signed by two or more people that contain details about the operation of a business venture.

1. rent something. Never sign a contract with blank spaces 8 . .Common Law – Taha promissory note to buy a riding lawnmower is a business agreement. Don't be pressured into signing before you are ready. If there is something you don’t understand. Let’s discuss some of the different types of business agreements. Don’t rush into signing anything. or hire someone to paint your house. Make sure you understand it well before you sign it. rent. Do not rely on spoken promises. Basic rules:         Shop around before you make a decision. You make a contract when you use a credit card. loan. ask for an explanation. You do not need to use special forms or legal language to write a contract. If you have doubts about a purchase. sell. Make sure you are getting a good buy or deal. Understand the contract You have the right to understand a contract before you are asked to sign it. repair or trade involves a contract. Ask for help if needed. buy insurance. Read the contract carefully. It spells out the terms of the agreement. 2. Make sure everything is written into the contract. Make sure to keep a copy of the contract. Do not sign any contract until all the blanks are filled in. Statements that you must purchase today to get a good deal may not be true. But it’s a good idea to put a contract in writing. Almost anything you buy. go home and think it over. Both of you should initial the changes when you sign the contract. A contract is a legal agreement between two or more people. But the other person must agree. A contract can be oral or written. You can make changes in the contract before you sign it. Examples of Types of Business Agreements Suggestions Contracts are part of everyday life. borrow.

Canceling a Contract It can be very difficult to cancel a contract once you sign it. the business must give you a notice that you will be responsible for paying the debt if the other person doesn’t pay. If you co-sign. do it before you sign. Co-Signing a Contract Sometimes. Promises a salesperson makes should be written on the contract. people without good credit may ask you to co-sign a contract so they can buy something or get a loan.Common Law – Taha Cross out any blank spaces and any statements that do not apply to your purchase. 4. 9 . make sure that it is written on the contract. You have a right to cancel a contract in the following situations: • • • The seller lied about the product or service. This means you will have to pay the full amount if the other person doesn’t pay. 5. Make changes on the contract before signing If you want to add or delete something to the contract. The contract. allows you to cancel it within a certain time period. Don't let them tell you that a copy will be mailed to you later. Before you co-sign for someone who is not your spouse. If the seller won’t put it in writing. Get an exact copy Get an exact copy of the contract when you sign it. don't sign. Think twice before you co-sign for someone else. even if you did not receive the goods or services. 3. Get all promises in writing If the seller has promised you something. You never got the product. you are responsible for the entire debt. or the law. unless both parties agree.

A creditor does not have to try to collect from the other person before going after you. a contract is an exchange of promises for the breach of which the law will provide a remedy. 10 . "capacity. you can be sued and your wages and property may be taken. For example when applying for a bank loan. Most people in our society are involved in contractual agreements of some kind. sociological and anthropological terms. litigation and real estate. "mutual assent. or refrain from doing. but oral contracts are valid in many situations. contract is a form of economic ordering common throughout the world. Contracts are involved in family law. If the debt is not paid on time.Common Law – Taha If the transaction is conducted in Spanish. aspects of law contracts can be found. an act. You may also have to pay late fees and collection costs. and customary or local law." or agreement on the terms of a contract. the contract and the notice must also be in Spanish. Some of the basic elements of a contract include: an offer and an acceptance. Contract Ans. and "consideration. An oral contract may be held to exist even in the absence of agreement as to all its terms." or compensation for goods or services rendered." or being of legal age and sound competence. As a means of economic ordering. If the other person does not pay the debt. Islamic law. corporate law. It is a binding legal agreement. if not all. certain types of contracts must be in writing. it will go on your credit report. a contract is "an agreement creating and defining the obligations between two or more parties". socialist legal systems. and different rules apply in jurisdictions applying civil law (derived from Roman law principles). However. In most. By law. A contract is an exchange of promises between two or more parties to do. According to legal scholar Sir John William Salmond. contract relies on the notion of consensual exchange and has been extensively discussed in broader economic. That is to say. employment law. which resulting contract is enforceable in a court of law.

g. 4. Consideration: This refers to whatever is exchanged between the parties. The individual must usually take it or leave it: he does not really ‘agree’ to it.g. Essential Elements of a Valid Contract The law of contract affects every single transaction between buyers and sellers. individuals cannot negotiate discounts. It must be clear and may be implied by conduct e.Common Law – Taha The standard form contract is a standard document prepared by many large organizations and setting out the terms on which they contract with their customers. 1. Acceptance: This is a positive unqualified assent to all terms of the offer e. the staff at the Beckham wedding signed a contract of silence in which the Consideration was agreed at a €1.g.g. 7. 5. there is Said to be an agreement. food 11 . For example. Intention to Contract: The Person must want to create legal relations. Therefore the parties signing a contract must know that they are entering a legal agreement that cannot be broken. 6. -It must be real -It need not be adequate -It must be legal E. a house buyer makes an offer of price for a house and seller is happy to accept. 3. 8. when accepted. This was never paid which means a valid contract did not exist. a customer has to accept his supply of electricity on the electricity board’s terms. Essential Elements of a contract 1. taking Goods to the checkout. Offer Acceptance Consideration Intention to contract Capacity to contract Consent to contract Legality of form Legality of purpose Offer: An offer is a proposal to give or do something and. Minors. It is a legally binding relationship between two or more people that is enforceable by law. The following parties do not have the capacity to enter a contract. 2.people under 18 except for necessities e. Capacity to contract: This is the power of a natural person to enter into a contract.

Consent to Contract: A person must enter into a contract of their own free There should be no use of force or lies.html Free consent Free Consent 12 .aboutsociology.otto-graph.html Contract 5) Legal Elements of a contract 2) consideration 6) E. It can be Oral (simple contract) or Law – Taha Contract 3) when buying a house a contract must be written. E. a judge will not award compensation to a bank robber whose getaway driver did not show up as agreed!! ******************************************************************************** ***** Reference 1) www. Legality of Purpose: This means that legally binding contracts can only be for legal Transactions. Persons of unsound mind.jrank. Legality of Form: This refers to the manner in which the contract is made.html Contract Law 4) http://law. Persons under the influence of alcohol or illegal drugs 3.

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