1. terms of a contract + privity
2. formation of a contract
2.1. offer - a definite promise or firm undertaking to be bound by terms of an offer in the even other party accepts the offer Offers must be final,certain and unambigious
2.1.1. must be distinguished from invitations to treat - merely a stage in the proccess of reaching an agreement; inviting the other party to make an offer, Types of invitation to treat: 1.Display of goods Fisher V Bell, PSGB V Boots cash chemist Ltd 2.Advertisments Patridge V Crittenden: exceptions exist Carlil V Carbolic Smokeball Company(1892) 3. Auctions it is the bidder who makes the offer and auctioneer accepts by fall of hammer; Payne V Cave 4.
2.2. acceptance - unqualified assent to terms of an offer
2.2.1. if terms of an offer are qualified it will be a counter offer; Hyde v Wrench(1840) held that counter offer had the effect of destroying the original offer
2.2.2. however, mere request for information is not a counter offer hence acceptance will be vaild; Stevenson v McLean(1880)
2.2.3. General rule is acceptance of offer must be communicated either by certain way stipulated by the offeror or any method not disadvantageous to the offeror
2.2.3.1. However exceptions to the general rule exist: 1. In unilateral contracts acceptance need not be communicated + accepted by performance of action ; Errington V Errington and Woods
2.2.3.2. 2. By the use of the postal rule established in ;Adam V Lindsell(1818) States that the moment the post is posted acceptance is duly communicated and a contract comes into being
2.2.3.2.1. however its use is limited since it can lead to injustices: 1. Postal rule will only apply if offeree can prove he has properly stamped, addressed and posted the letter; Re London & Northern Bank Ex parte Jones(1900) 2.Offeror can exlude the postal rule; Holwell securities V Hughes(1974) 3. Courts refused to extend it to instantaneous methods of communication like emails + fax; Entores Ltd V Far East Miles Corporation (1955)
2.3. consideration - An act,forberance or a promise thereof is the price of which anothers promise is brought hence the value enforceable.
2.3.1. Rules on consideration;
2.3.1.1. 1. Consideration can be executory,executed BUT NOT PAST; Roscola V Thomas, Re McArdle
2.3.1.1.1. however exception created due to injustices caused, therefore it has been modified for past consideration be valid if; a)If act was done at request of promisor b)the work was done anticipating payments c)Work for which payment is usually made d)Upon completion of the work a promise should have been made to the other to pay for the work Promise then will be enforecable; Lampleigh V Braithwaithe(1815)
2.3.1.2. 2. Consideration need not be financially adequate(fair exchange) but legally sufficient and real Chappel & Co V Nestle Co Ltd chocolate wrapper constituted as sufficient consideration to supply a record and in Thomas V Thomas(1842) Peppercorn rent of $1 per annum was sufficient consideration
2.3.1.2.1. what is sufficient consideration? doing something over and above what you are already bound to do. use Stilk V Myrich(1809) and Hartly V Ponsonby(1857), in former there was no consideration but there was in the latter since half the desserted the case(unlike the first case where only 2 desserted) performance of existing duty is not good consideration and pre- existing obligations; Collins V Godefroy
2.3.1.2.2. Pinnels case 1602 says payment of a lesser sum on the day the debt is due will not discharge the whole debt. However, it will not apply if debtor does or gives something in addition eg; payment of lesser sum before due date or accord and satisfaction i.e substituted performance
2.3.2. Doctrine of promissory estoppel
2.3.2.1. . Established in Central London Property Trust V High Trees House Ltd (1947) - prevents a party from going back on a promise made to another party if the latter has relied on that promise to their detriment. was not applied in D & C Builders Ltd V Ree since defendent has taken advantage of plaintiffs financial situation
2.4. intention to create legal relationships
2.4.1. social agreements
2.4.2. domestic agreements
2.5. capacity
2.5.1. minors
2.5.1.1. valid contracts
2.5.1.1.1. contracts for necessaries Necessaries are goods suitable to condition in life and lifestyle of the minor (Peter V Fleming 1840) AND to his actual requirement at the time of sale and delivery(Nash V Inman 1908)
2.5.1.1.2. beneficial contracts of service - a contract under which a minor obtains a service of beneficial value that enables him to progress eg: Clements V London & Noth Western Railways Co(employment contract), Doyle V White city stadium
2.5.1.2. voidable contracts
2.5.1.2.1. Contracts which are binding the minor UNLESS he or she repudiates the contract before reaching age of 18 or within a reasonable time thereafter a. Contracts under which minor acquires an interest on land b. A contract under which a minor becomes a partner in a business c. Contract to buy shares in a company d.Marriage settlements (Edwards V Carter 1893 was not able to avoid the marriage settlement as he was a majority) Money paid out by the minor on a contract which is later repudiated can ONLY be recovered IF there was a TOTAL FAILURE OF CONSIDERATION eg:Corpe V Overton(1883) in contrast to Steinberg V scala Ltd(1923)
2.5.2. persons of unsound mind
2.5.2.1. necessaries - bound to pay a reasonable price under SoG1979
2.5.2.2. for any other contract - it is voidable if incapable of understanding nature of contract and the other party to the contract was aware
2.5.3. companies have capacity to enter into various transactions unless they choose to limit themselves