Contract Law - Booklet 1

1. 3. Acceptance

1.1. The rules of acceptance: acceptance must be communicated to the offeror. not possible to accept an offer through silence (Felthouse v Bindley 1863) Offer can be in writing (Yates v Pulleyn 1975) Acceptance must be unconditional, if the offeree tries to change some of the terms then it will become a counter offer rather than an acceptance (Hyde v Wrench 1840) Enquiries do not count as rejection

1.2. Problems with communicating the acceptance: The postal rule - offer is accepted at the time the letter is posted not when it is received (Adams v Lindsell 1818) It even applies if the letter is not received at all (Household Fire Insurance v Grant 1879)

1.3. Modern methods of acceptance: When accepting via email, fax, text etc Brinkibon case stated that the court sould simply have regard to the parties intentions. If the acceptance is received during office hours the contract will be formed there and then however if the acceptance is received out of office hours then the contract will be formed once the office is re-opened.

1.4. Basic problems with offer and acceptance: The courts will usually hold that the last counter offer has been accepted and its terms will be binding (Davies & Co Ltd v William Old 1969)

2. 2. Offer

2.1. Have to decide whether there is actually an offer. An invitation to treat cannot be validly accepted. Offer + Acceptance = Agreement. Invitation to treat + Acceptance = No agreement

2.2. Invitation to treat = Goods on shelves in a self- service shop (Pharmaceutical society of Great Britain v Boots Cash Chemists 1953) Goods on display in a shop window (Fisher v Bell 1961) Request for Tenders, Statements of price (Harvey v Facey 1893) Auctions (British Car Auctions v Wright 1972) Advertisements (Partridge v Crittenden 1968) Advertisements making a Unilateral offer (Carlil v The Carbolic Smoke Ball Co Ltd 1893)

2.3. The Rules Of Offer: The offer must be communicated to the offeree and words do not necessarily have to be used (Taylor v Laird 1856) An offer can be made to one person or the whole word. The terms of the offer must be certain (Guthing v Lynn 1831)

2.4. Termination of Offer: Offer is accepted. Offer is revoked and revocation is communicated to offeree (Byrne v Van Tienhoven (1880) Time for acceptance Lapses. Reasonable time has elapsed, One of the contracting parties dies

3. 1. Privity of a contract

3.1. Only the parties to a contract are bound by it. This means a third party cannot bring a court action to enforce the contract (Dunlop Pneumatic Tyre Co Ltd v Selfridge 1915)

3.2. Exceptions to the Privity of a contract rule : the contracts (right of third parties) act 1999 states that they can enforce if the contract states that he/she can or the contract confers a benefit on him/her (Nisshin Shipping Co v Cleaves & Co 2004)

4. 4. Consideration

4.1. The courts have to distinguish between a contract (which is legally binding) and a simple promise (which is not)

4.1.1. Executed consideration: when a party performs his/her part of the contract at the moment they enter into it. the consideration is the thing that he/she does. Executory consideration: when a party promises to perform some future obligation, the consideration is the promise to do the future thing.

4.2. The Rules of Consideration: the consideration need not be adequate but it must be sufficient. had a "good deal" (Thomas v Thomas 1842) the courts want to see what is promised is real and has some value (White v Bluett 1853) can be difficult to find something of value (Ward v Byham 1956) Past consideration is no consideration (Re McArdle 1951) (Lampleigh v Braithwait 1615) Consideration must move from the promisee (Tweddle v Atkinson 1861) Performing an existing duty cannot be the consideration for a new promise (Stilk v Myrick 1809) (Hartley v Pansonby) A promise to accept part payment of an existing debt in place of the whole debt cannot be enforced as there is no consideration for the promise (D&C Builders v Rees 1965) this can be the creditor accepting part payment but earlier than whole payment due or creditor accepting something other than money in settlement of the debt.

5. 5. Intention to create legal relations

5.1. The courts will have to find that the parties intended to create legal relations i.e they intended to be legally bound by the agreement.

5.1.1. Social and Domestic agreements: in these it is assumed that there is no intention to be legally bound by the agreement (Balfour v Balfour 1919) if there is evidence that the parties did intend to be legally bound then the courts will find this as such (Merrit v Merrit 1970)

5.1.2. Commercial and Business Agreements: in these situations it is assumed that the parties do intend to be legally bound unless the facts suggest othewise (McGowan v Radio Buxton 2001)