Contract law

Contract

'An agreement giving rise to obligations which are enforced or recognised by law' (Guenter Treitel)
It is an agreement that the parties intend to be legally binding

Why is contract law necessary?

As it gives us a route to a remedy for the injured party.

Do contracts have a specific form? Exemptions?

Generally, there is no specific form
Some must be in writing such as Bills of Exchange which are written instruction from one person to pay a specified sum of money to another (similar to a cheque),
Contracts for the sale or disposal of land/property,
Copyright agreements and agreements regulated by the Consumer Credit Act 1974.

What is the measure of damages in a contract?

They are usually the rewards awarded for breach of terms in a contract, to the injured claimant. Looking to put the injured party into the position they would have been in if the contract had been carried through.

Are you bound by a contractual document you have signed?

Once signed you are hereby bound by the terms of the contract even if you have not read. A signature is an agreement to all of the terms in the contract.

L'Estrange v Graucob (1934)

'Any express or implied condition, statement or warranty, statutory or otherwise not stated herein is hereby excluded' – L'Estrange was unable to exchange cigarette vending machine as Graucob had stated in contract would not replace any damaged goods.

Four essentials of contract

Agreement of offer and acceptance – communication of acceptance of offer whether verbally or written
Intention to be legally bound – a statement which does not indicate commitment to be bound by its terms will not be interpreted as a binding offer
Certainty of terms – acceptance is only binding in law if it is firm and completely reflects the offer terms
The passing of Consideration – consideration must be executionary or executed but not past

What is an offer?

A full clear statement of terms that are offered with the expectation of it being recieved. The offeror is prepared to do business with the person(s) to whom the offer is communicated.

What is an invitation to treat?

Encouragement to make an offer, usually an advertisement – not seen as the intention to form an offer

Promissory Estoppel

Legal doctrine that if you promise something and that changes a person’s course of action in relation to the action

Pharmaceutical Society of GB v Boots Cash Chemist (Southern) Ltd (1953)

The display of goods constitutes an invitation to treat. The customer made the offer by presenting the goods to the cashier and the cashier accepted the offer by taking the customer’s money.

Fisher v Bell (1960)

The defendant displayed a flick knife in his shop window and was convicted under the Offensive Weapons Act 1959, for ‘offering for sale’ an offensive weapon. Yet he was not guilty, and he had not made an offer, goods in the window merely offered an invitation to treat. It would be the customers saying they are prepared to do business and the seller accepting that would constitute as an offer.

Moran v University College Salford (1993)

Shows the difference between invitation to treat and an offer as Moran believe he had accepted an offer to study at the University.

Pharmaceutical Society of GB v Boots Cash Chemist Ltd (1953)

The display of goods constitutes an invitation to treat. The customer made the offer by presenting the goods to the cashier and the cashier accepted the offer by taking the customer’s money.

Fisher v Bell (1960)

The defendant displayed a flick knife in his shop window and was convicted under the Offensive Weapons Act 1959, for ‘offering for sale’ an offensive weapon. Yet he was not guilty, and he had not made an offer, goods in the window merely offered an invitation to treat. It would be the customers saying they are prepared to do business and the seller accepting that would constitute as an offer.

How long will an offer last?

An offer will cease to exist if not accepted within any specified time limit. Otherwise, it will lapse if not accepted within a reasonable time.

Time periods of contract:

If there is no time attached, it will be a time period in which the court deems fit and if If the offeror dies the offer will no longer stand or if a counteroffer is proposed.

How to accept an offer?

You can accept an offer verbally, in written form or by conduct. Acceptance must be communicated to the offeror with some form of positive action.

Rules of acceptance

Must be to all the terms of the offer
In the manner specified in the offer
Express or by conduct
Via a third party or agent
Post or electronic means
Silence is never construed as an acceptance of the offer

Rules of consideration

Past consideration is no consideration
Consideration must have value but need not be commensurate
Consideration must be performed in full
Must be in exchange for consideration promised by other party – not a gift
Consideration cannot be something that you are already contractually bound to do
Consideration must be legal

Intention to be legally bound

To form a valid contract an offer must be made and accepted with the intention to be legally binding. There is an understanding that consequences will flow in a breach of a contract.

What is consideration?

Consideration is the money/goods/services/land representing the bargain element of the contract. Does not have to be of equal value, only has to have some economic value in the consideration.