Contract Law

● A set of promises which the law will enforce

● An agreement giving rise to obligations which are enforced or recognised by law
● The breach of it the law gives a remedy
● The performance of which the law in some way recognizes as a duty
*side note: there is no formal definition of contract, what is provided is only provisional, indicative and
illustrative but not party of the law itself (the suggested general principle is developed around the action
of assumpsit)

Breach of contract
● The failure to perform an obligation under the contract without a lawful excuse is breach of
contract
Solutions:
● The innocent party shall claim damages to remain in the same position had the contract been
normally performed and should normally be entitled to terminate the contract without incurring
any liabilities for doing so
● The law is committed to give money as a substitute for the performance of contract but not the
performance itself

Contract
● An offer made by one party is accepted by the party to whom the offer was made
● Writing or orally (letter, fax, email, negotiation, exchange of promises, conduct (no words
involved))
● Bilateral (exchange promises, binding) or unilateral (only one party makes a promise to
another)
● Whether the statement made by a party intends to bind to the terms that he has proposed to the
other party, and would be qualified by the following 2 aspects:
1. Focus on the objective intention of the parties
2. If the statement made cannot be distinguished between an offer and an expression of a
willingness to negotiate when making his statement, the court should ascertain the
intention of the party who made the statement (Harvey v. Facey, Gibson v Manchester
City Council)

Offer
● statement by one party of a willingness to enter into a contract on the terms that he has put
forward
● Prima facie rules of law are evolved by courts to apply to certain standard types of transaction in
order to determine whether an offer or an invitation to treat is made, courts look at:
1. Definiteness
2. Specificity
3. Completeness
a) Advertisements => usually invitation to treat (bilateral) (Partridge v Crittenden), but can be
offers (unilateral) (Carlill v Carbolic Smoke Ball Company)
b) Displays of good for sale in a shop => both
 - Invitation to treat (Pharmaceutical Society of Great Britain v Boots Cash
Chemists)
- Offer (Lefkowitz v Great Minneapolis Surplus Stores Inc)
c) Tenders => both
- Invitation to treat (Spencer v Harding)
- Offer (Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council)
d) Auction sales => both (Barry v Davies)

Invitation to treat
● invitation to the other party to enter into negotiations on the terms proposed

Acceptance
● final and unqualified expression of assent to the terms of an offer
● General rule: a valid acceptance must be communicated to the offeror, otherwise the offeror could
be bound by an acceptance of which he was blissfully unaware (Entores Ltd v Miles Far East
Corporation)

Offeror’s responsibility Offeree’s responsibility

There is a binding contract even though there is no ● There is a binding contract starting from
communication of acceptance except: the time the acceptance should be
● Entores (exceptions of reasonable belief, received
fault and control) ● The letter must be properly addressed
● Brinkibon (exception of risk allocation,
also need to consider intention of parties
and sound business practice)
● Electronic Transactions Ordinance
(designated information system and
knowledge)
● The Postal rule (Holwell Securities Ltd v Hughes) :
- Acceptance takes place upon posting of the letter of acceptance, contract is concluded
when the acceptance reachers the offeror
- An exception made to facilitate commercial transactions where there is a substantial
interval of time between when an acceptance is sent and when it is received
- The rule usually does not apply to telexes or emails (except Chwee Kin Keong v.
Digilandmall.Com Pte Ltd)
- The general rule of requiring communication of the acceptance should apply
- The postal rule does not operate if its application would provide manifest inconvenience
and absurdity

● Instantaneous communication:
- The general rule of requiring communication of the acceptance should apply
- ETO should also be considered
 ● Prescribed method of acceptance:
- Offeror can prescribe a mode of acceptance that must be complied with but unless as a
matter of construction that mode is mandatory another mode of acceptance which is no
less advantageous to the offeror will suffice
- An offeror who fails to do so may be vulnerable to the method of acceptance being valid
as it is equally efficacious from the point of view of the offeror
- It is necessary to ascertain the object that the offeror had in mind when prescribing the
form of acceptance

● Waiver or silence:
- Waiver: acceptance in ignorance of an offer
- The offeror is entitled to require that the offeree perform the requested act in its entirety
- General rule: silence does not amount to an acceptance, may have exceptions but operate
within very narrow limits
- The offeree must demonstrate his acceptance to the offer by committing to some positive
conduct on his part

● Acceptance by ignorance of offer

- Usually not valid as there is no reliance on the offer

● Acceptance by conduct
- Objective intention questionable

● Acceptance in unilateral contract

- Implied on the offeror not to prevent the condition being satisfied (arises as soon as the
offeree starts to perform the act but before that the offer can be revoked)
Counter-offer
● Acceptance of an offer contains new terms which differ from those contained in the original offer

Termination of offer
● Revocation
- General rule: requires communication of revocation to the offeree, only effective when
received by the offeree (Byrne and Co.)
- If the offeree receives the revocation but not read, the time of revocation would be the
time the revocation was received
- Consistent with Entores and Brinkibon
● Rejection
● Lapse of time
● Death

Intention to create legal relations

 Domestic agreement Commercial agreement

Rebuttable presumption of no intent to create legal Rebuttable presumption of intent to create legal
relations relations

Battle of forms
● When two businesses are negotiating the terms of a contract and each party wants to contract on
the basis of its own terms (Butler Machine Tool)

Consideration
● A promisee cannot enforce a promise unless he had given or promised to give something in
exchange for the promise or unless the promisor has obtained or been promised something in
return = bargain between parties (reciprocal transaction)
● Principles:
1. Must be sufficient but need not be adequate
2. Must not be past (Pre-existing duty rule)
- past consideration will not count as consideration for the purposes of the contract
- did not benefit the promisor or pose any risk to the promisee
3. Must move from the promisee
- a person to whom a promise is made can only enforce the promise if they have
provided consideration for it
● The consideration must have some sort of value in order to be good

Good consideration Bad consideration

- Legal claim in which the promisee knows

- the promisee’s relinquishment of a bad or his/her own claim has no basis
invalid claim - Past consideration
- gives up a good legal claim in exchange - Existing duties
for payment—or the promise of it 1. public duty or duty imposed by
law
2. Performance of a contractual duty
owed to the promisor
3. Part payment of debt