CONTRACT LAW

WHAT IS A CONTRACT?   BREACH OF CONTRACT?   FORMATION OF CONTRACTS?   CONSIDERATIONS?

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  • Created by: Louise
  • Created on: 07-05-11 16:19

WHAT IS A CONTRACT?

  • defined as a "legally binding agreement" an agreement must fulfil certain requirements.
  • a contract can be made: verbally, body language and written.

 

  • two or more parties can make a contract
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OFFER & ACCEPTANCE.

OFFER & ACCEPTANCE - requires one party to make an offer and the other to accept.

  • it can be specific - to one person/group therefore accepted by that one person/group
  • it can be general and not limited in who its directed at e.g. a reward

offer has been defined as an expression of willingness to contract & made with the intention of being binding

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INVITATION TO TREAT

INVITATION TO TREAT - "invitation for someone to make an offer"

Goods in a shop window - Fisher v Bell. 

Goods on a supermarket shelf - Boots case 1953 (contract is made when goods are presented at the till). 

Small Advertisements - Partridge v Crittenden (LCJ Parker said the offers the seller might have contracts for more than he could supply).  

Price lists, catalogues.  Responses to requests for info - Harvey v Facey (1893) Bumper Hall pen for £900.  Court held it as merely statement of price not an offer.  

Reward posters/advertisements - Carbolic Smoke Ball Co. (1893) THIS WAS MORE OF AN OFFER THAN AN INVITATION because 1. promised to pay 2. clear, unmistakeable language 3. money been made avaliable 

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RULES ABOUT OFFERS

MADE TO ANYONE - individual, group, company, world

MUST BE COMMUNICATED - cant accept what you dont know i.e return a missing pet without knowing about the reward.

CAN BE MADE BY ANY METHOD - verbal, conduct or written

CERTAIN - terms must be clear and definate.  Guthing v Lynn (1831) promise to pay if 'horse was lucky', too vague for an offer

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TERMINATION OF OFFERS

Acceptance/Refusal - writing, verbally, conduct.  Cannot be accepted later if there is a change of mind.

Counter-Offer - terms must be accepted, attempt to change them becomes counter-offer. 

Hyde v Wrench (1840) Wrench offered £1000 for farm, Hyde offered £950, Wrench rejected, Hyde tried to accept £1000 but counter-offer ended that offer

Revocation - withdrawal of offer - must be communicated, third party (Dickinson v Dodds) 

Must be recieved before acceptance is made

(Byrne v Van Tisenhowen) Van made an offer, but changed his mind.  Byrne accepted before he received revocation - acceptance is valid

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TERMINATION OF OFFERS

Lapse of time - no time limit - open for a reasonable time 'reasonable'- depends on circumstances. 

Ramsgate Victoria Hotel v Montefore (1866) offer to buy shares in June, had lapsed in November

Death of a Person making offer - terminates offer (suggestion) HOWEVER as long as the contract does not involve personal services - the death should not necessarily end the offer

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ACCEPTANCE

Acceptance - unqualified and unconditional agreement to all the terms of the offer.

Must be communicated to accept offer - Felhouse v Bindley - acceptance must be clearly communicated, not presumed

Can be inferred from conduct - implement what is in the offer - provided acceptance

Acceptance must be effective, terms must be complied with.

Tinn v Hoffman (1873) - if acceptance by past is requested, you can still accept verbally if in same time frame as the post

Postal rule - Acceptance of offer is made when the letter is sent, not when it is recieved.  this is the case even if the letter is lost.

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CONSIDERATION

Something of value must be given by both parties = White v Bluett promise not to complain about will in return for debt considered intangible and not consideration

Consideration does not have to be adequateChappell v Nestle case (1960) special offer wrappers held to be sufficent consideration

Consideration must not be past = Lampleigh v Braithwaite asked to secure a King's pardon, unspoken expectation would be paid

Must not be an existing duty = Stilk v Myrick (1809) 2/11 deserted ship, promised to pay extra to return, no contract formed

Hartley v Ponsonby (1857) 19/36 deserted ship, sufficent enough to change contract

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INTENTION TO CREATE LEGAL RELATIONS

Jones v Padavatton - mum (Jones) bought house for daughter to come home from US.  Fell out and sought repossession.  Held no intention to create legal relations and get house back.

Balfour v Balfour - husband promised to pay allowance to wife whilst abroad, marriage broke.  no intention to create legal relations and no consideration for husband's promise

Merritt v Merritt - husband had already left wife & made arrangements.  Agreed to pay mortgage adn then transfer to ex-wife, no longer living together - held to be binding

Simpkins v Pays - couple and lodger entered competition and paid equal shares.  Held presence of outsider removed presumption that it was a family arrangement

Parker v Clarke - yound couple persuaded to sell and move in with older couple - to get in will.  Fell out, sued, legally binding - actions serious

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COMMERCIAL AND BUSINESS AGREEMENTS

McGowan v Radio Buxton - prize for Renault Clio.  Awarded with a model car.  claimed it was not legally binding - not a commerical agreement.  Held that there was and that entrants would expect a real car.

Rose v Crompton Bros - agreement to be a sole agents for sale of paper in USA clause that it was not a legal agreement but 'honourable pledge'

Appleson v Littlewoods, Jones v Vernon Pools - "binding in honour only"

Malaysia Mining Case (1989) - bank agreed a loan to subsidiary of defendant company.  gave a letter of comfort as part of agreement to pay debts.  Company liquidated but held letter of comfort part of company's policy.

Edwards v Skyways - pliot made redundant - ex gratia payment.  Airline failed to pay because ex gratia no intention to create legal relations.  Held that this means does not admit any pre-existing liabilty and should pay

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BREACH OF CONTRACT

BREACH OF CONTRACT - WHEN CONTRACT IS BROKEN - FAILURE TO PERFORM AN OBLIGATION

Breach of Warranty - breach of a minor term - not going to the root of the contract

Breach of Condition - breach of important term - giving the right to terminate the agreement + repudiate the contract

ANTICIPATORY BREACH - a breach before a contract comes into force.

Hochester v De La Tour (1853) - Courier signed on for three months, cancelled before even started, sued for damages, court held entitled to do so.

Vitol v Norelf Ltd - Repudiated must be communicated.  Communicated but no reply - no reply can amount to acceptance of breach

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MITIGATING LOSS

White + Carter v McGregor - agreement to advertise on bins, garage cancelled contract on same day, council went ahead, garage liable for costs, general duty to mitigate loss but burden down to injured party to prove

BURDEN OF PROOF ON GARAGE.

British Westinghouse v London Underground - contract to supply turbines - those supplied less efficent, replaced with efficent ones, no duty to mitigate by buying new ones but once they had take this into account.

 THE INJURED PARTY USUALLY HAD A GENERAL DUTY TO TAKE REASONABLE STEPS TO MITIGATE HIS OR HER LOSS

  • claimant cannot recover for loss that could've been avoided by taking reasonable steps
  • claimant cannot recover for loss that has been avoided
  • C can recover loss from steps take to mitigate losses
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REMEDIES FOR BREACH OF CONTRACT

REPUDATION

DAMAGES: - LIQUIDATED - agree reasonable compensation

                     UNLIQUIDATED - not agreed - determined by the court

                     SUBSTANTIAL - designed to compensate actual losses

                     NOMINAL - award small amount - actual compensation not appropiate

                     EXTEMPLARY - award larger amount than needed

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Comments

Smith E

This is a good resource. The range of cases is impressive; for example, Guthing v Lynn (1831) isn't commonly cited and therefore will attract strong marks, showing the student has moved beyond the core material. Note that there is a distinction between commercial and domestic arrangements, with respect to inanition to create legal relations (this is not made entirely clear in slides 9 and 10), and more detail is required on remedies than provided for in slide 13. 

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