Contract Law
What is Contract Law?
A written or spoken agreement,
especially one concerning
employment, sales, or tenancy,
that is intended to be enforceable
by law.
Elements of a Contract
Offer
Acceptance
Consideration and
Intention to create legal relations.
Offer
An expression of willingness to contract made
with the intention that it shall be binding on
the offeror as soon as it is accepted by the
person to whom it is addressed.
Who- one person, a group of persons or to
the world at large.
How- in writing, by words or conduct.
Types of Offer
Unilaterial- one sided
Bilateral- made to one person or a small
group of interested parties
Invitation to Treat or an Offer
An invitation to treat is made at a preliminary
stage in the making of an agreement where one
party seeks to ascertain whether the other will be
willing to enter into a contract and, if so upon
what terms. It is an invitation extended by one
party to the other to enter into negotiations or to
make an offer. An invitation to treat cannot be
accepted so as to form a binding contract, since it
is nearly always the invitee who is being asked to
make the offer.
An invitation to treat cannot be accepted so as
to form a binding contract, since it is nearly
always the invitee who is being asked to make
the offer.
It is an invitation extended by one party to the
other to enter into negotiations or to make an
offer. An invitation to treat cannot be accepted
so as to form a binding contract, since it is
nearly always the invitee who is being asked
to make the offer.
Examples of Invitation to Treat
• Display of Goods- (Fisher v. Bell) a display of
an article in a shop window with a price is
merely an invitation to treat.
• Advertisements
- Bilateral Advertisements:
o Advertisement in a newspaper for the sale of goods
(Patridge v. Crittenden)- The advertisement for the sale of
birds was an invitation to treat and not an offer.
Circulation of Catalogs – Grainger & Son v.
Gough – An attempt to induce offers by
recipients not an offer itself.
• Unilaterial advertisement:Carlill v. Carbolic Smokeball Company Limited.- the
Defendant issued an advertisement promising to pay 100
pounds to any person who used as prescribed carbolic
smoke balls made by them and then caught influenza. The
Claimant used the smoke balls caught influenza and
claimed her 100 pounds.
The Defendant claimed that the Claimant was not entitled
to the payment because its advertisement did not amount
to an offer. It was held that it did amount to an offer and
that the defendants did indicate their intention to be bound
by the deposit to its banker.
Tickets
In some cases it is clear that tickets are a
contractual document and that the request
for a ticket is an offer and the issue of that
ticket is an acceptance. This would appear
to be the case with tickets such as cinema
and raffle tickets.
• Auction Sales:-
(Payne v. Cave) – a call for bids is an invitation to treat, a
request for offers. The bids made by persons at the auction are
offers which the auctioneer can accept or reject.
Tenders:- where goods are advertised for sale by tender are
not offers but invitations to treat that is it is a request by
the owner of the goods for offers to purchase them. It is not
an offer to sell to the person who makes the highest offer.
Likewise, where a building contract is put out for tender,
this is a request for offers by contractors which can then be
accepted or rejected. (Harvela v. Royal Trust of Canada.)
DURATION AND TERMINATION OF AN OFFER
• Revocation
• Rejection by Offeree
• Lapse of Time
• Occurance of a terminating condition
• Death
• Insanity, incapacity, insolvency and
impossibility: eg. Insane, under
medication etc.
ACCEPTANCE
The final and unqualified acceptance of the
terms of an offer.
Unless it can be shown that there was such
an acceptance then there is no contract.
• Acceptance by Conduct:-
-Bilateral
-Unilateral
Communication of Acceptance:-
The general rule is that an acceptance must be
communicated to the offeror. Until and unless the
acceptance is communicated no contract comes into
existence.
Exceptions to the General Rule:-
-The offeror expressly or impliedly waives the requirement
that acceptance be communicated.
-The offeror is estopped from denying that the
acceptance was communicated. This will be the case if
it was in fact sent or spoken by the offeree but was not
received or heard by the offeror as a result of his own
fault or omission.
-Acceptance is communicated to the offeror’s
agent and that agent has authority to receive
that acceptance on behalf of the principal.
- The postal rule applies in which case the
acceptance can be effective before it is in fact
received by the offeror.
CONSIDERATION:(Currie v. Misa [1875]):-
“…some right interest, profit or benefit accuring
to one party, or some forebearance, deteriment,
loss or responsibility given, suffered or
undertaken by the other.”
TYPES OF CONSIDERATION
Executory Consideration
-Bilateral
Executed Consideration
-Unilateral
PRINCIPLES OF CONSIDERATION
Consideration must move from the
promisee;
Consideration need not move to the
promisor;
Past consideration is not good
consideration; and
Consideration must be sufficient but need
not be considerate.
INTENTION TO CREATE LEGAL
RELATIONS
An intention by parties to enter into a
legally binding agreement or contract. In
other words all parties to an agreement
must intend to create legal relations.
Agreements
Domestic and Social Agreements
-(Balfour v Balfour [1919]).
Commercial Agreements.
WAYS IN WHICH A CONTRACT CAN BE
BROUGHT TO AN END.
Frustration
An event that occurs outside of the parties’
control which prevents the contract from being
performed. The contract is then discharged. Eg.
A promises to buy B’s car but B’s car explode
the contract is frustrated and will be discharged.
Termination
Performance
Breach of Contract
-Actual breach
- Anticipatory breach
• Impossibility
-Pre-Contractual
-Post - Contractual
•
Operation of Law
-Death
-Insolvency
-Lunacy
-Right and liability going into the hands of same
party
• Lapse of Time
• Mutual understanding or by Agreement
-Alterations
-Renewal
-Recession
Vitiation:- factors which make a contract void
or voidable.
-Misrepresentation: False statement
- Mistake:
o Common mistake - both parties hold a similar
misguided belief.
o Mutual mistake – both parties are mistaken of the
same material fact.
o Unilateral mistake - only one party is mistaken
-Duress:threat
-Undue influence: Advantage
-Illegality
Expiration