- Created by: Hbrandxx
- Created on: 29-12-18 12:06
- A requirement for a valid contract includes an agreement between the parties
- Agreement is found objectively due to Smith v Hughes (1871)
- Objectively finding an agreement is essential as parties can forget their intentions
Types of contract:
1. Unilateral: only one party to the contract makes a promise (e.g. A pays B if B finds dog, B makes no promise to find it but A must pay if B does)
2. Bilateral: both parties make a promise to each other e.g. contract for sale of home
Finding agreement in bilateral contracts:
- Denning in Butler Machine Tool Co Ltd v Ex-Cell Corp Ltd: "look at all the documents passing between the parties and glean from them...whether they have reached agreement"
- Look for legal offer and acceptance as external evidence of agreement
Nature of an offer
- "An offer is an expression of willingness to contract on certain terms with the intention (actual or apparent) that it shall become binding as soon as it is accepted by the person to whom it addressed..expressly or by conduct"- Treitel, The Law of Contract
- Claimant seeking to establish existence of a contract must prove existence of an offer (oral/written/other conduct)
- Must be a promise by offerror e.g. Gibson v Manchester City Council (1979)
- Counter offer: response to offer which makes any variation to proposed terms will be a rejection of the original offer (Hyde v Wrench (1840))
What is it if it's not an offer?
= INVITATION TO TREAT: will remain this until an offer is made e.g. take the product to the till
1. Mirror image rule: offeree's unequivocal expression of intention and assent must be made in response to + match the terms of the offer
2. Communication rule: the matching acceptance must be communicated to the offeror
BUT: offeree can ask for more information and still accept the original offer
Acceptance in bilateral contracts
- Mirror image rule must be communicated to the offeror in order to be effective (est. certainty)
- Offeror can oust the communication rule e.g. If I don't hear from you I'll assume you accept
Variations on acceptance
Can silence amount to acceptance?
- Obiter dicta in Selectmove (1995): yes if offeree himself indicates that his silence should be relied upon as acceptance
- An acceptance is valid at the time of POSTING not at arrival tmime (Adams v Linsell)
- Only ever applies to acceptances not offers or withdrawal of offer
- Onus is on the offeree to get his communication through, if line goes dead he must repeat the attempt
- If offeror knows of attempt and doesn't receive it he must ask for another attempt, if not, he's bound
Revocation of an offer
Withdrawal of an offer
- If actively revoked by offeror, offer lapses (rejected by offeree due to counter-offer), if the offer fixes no time for which it wil remain open it lapses after a reasonable time
- An offer may be made not to an individual, but to a group/world and acceptance need not be communicated (Carlill v Smokeball Co (1893))
- Technically, acceptance is only when you fully perform the task so you can revoke the contract just before the task is fully performed
- Gibbons v Procter (1891) deems you can accept an offer of which you're ignorant
- UNCLEAR: whether a unilateral offer is accepted by the offeree starting to perform/on completion AND whether a postal acceptance can be revoked after it has been sent but before it reaches offeror
Smith v Hughes (1871) LR 6 QB 597
- Complainant, Mr Smith was farmer and D (Huges) was a racehorse trainer.
- Smith brought Hughes a sample of his oats, D ordered 40-50 quarters of oats for 34 shillings per quarter.
- 16 quarters of oats were sent to Hughes, D said they weren't as expected
- Oats sent were green oats, same as the initial sample. Hughes refused to pay for delivery and remaining order
- Held: there was a contract and it wouldn't be avoided
- Objective test revealed that a reasonable test would expext the sale of good quality oats in a similar contract, since there was no express discussion of old oats
- The viewed sample was an example of caveat emptor
Gibson v Manchester City Council (1979) 1 WLR 294
- Gibson filled in a form from the council that he 'may' be able to get a mortgage to buy his house off the council, under a Conservative Party scheme
- Following further negotiation, Gibson asked the council to proceed with the purchase
- Council removed Gibson from their tenant list under new Labour Party= sale halted
- Was a binding contract in place when the sale was halted by the council?
- No contract
- Wording 'may be able to sell' in the original letter didn't constitute an offer capable of acceptance
Hyde v Wrench (1840) 49 ER 132
- D (Wrench) offered to sell farm to Hyde but it was declined
- D sent another offer to which Hyde replied with a counter offer
- D refused counter offer
- Hyde then agreed to buy it for original offer but Wrnech refused
- Complainant brought an action for specific performance, claiming that D refused the sale = breach of contract
- Was there a valid contract and if a counter offer was made in negotiations, does the original offer remain open?
- No binding contract: when a counter offer is made, this supersedes/destroys the original offer
Stevenson v McLean (1880) 5 QBD 346
- Iron merchant (Mclean) offered to sell iron to Stevenson, offer open till Monday.
- Complainant sent a telegram to D asking if he'd accept money over 2 month period.
- McLean didn't respond and sold to another party, without informing Stevenson.
- On Monday, Stevenson sent a telegram to accept the offer, unaware it had been sold
- Complainant sued D for non-delivery for iron: said it was a breach
- Was there a binding contract between the parties and was the telegram an inquiry for info or a counter offer?
- Held: Complainant was inquiring for more info about terms of the offer (not a counter offer/rejection). Second offer formed a binding contract. No revocation had been made.
- In contrast to Hyde v Wrench.
Adams v Linsell (1818) 106 ER 250
- D wrote to claimant offering to sell them some wool and asking for a reply by post.
- Letter was delayed in the post and on receiving the letter, the claimant posted a letter of acceptance on the same day.
- Due to the delay D had assumed the claimant wasn't interested in the wool and sold it to a 3rd party.
- Claimant sued for breach of contract
- There was a valid contract which came into existence the moment the letter of acceptance was placed in the post box.
- This case est. the POSTAL RULE: when post is the agreed form of communication and the letter of acceptance is correctly addressed, the acceptance becomes effective when posted.