Formation of a contract

Why is not every agreement a contract?

Because parties must intend to be legally bound and meet required elements.

What test do courts use to assess agreement?

Objective test (what a reasonable person would think)

Why is the subjective test rejected?

Intentions are hidden and unreliable.

What are the two types of objectivity?

• Promisee/promisor (in one party’s position)

• Detached (neutral “fly on the wall”)

What did The Hannah Blumenthal (1983) establish?

Contract depends on whether conduct suggests agreement was abandoned.

What did Upton-on-Severn v Powell (1942) show?

Contract can exist even if both parties thought service was free.

What is an offer?

Clear, definite promise to be bound on specific terms.

What is acceptance?

Unqualified agreement to the exact terms.

What is required for contract formation?

Offer + acceptance.

What is the effect of a counter-offer?

It destroys the original offer.

Case: What happened in Hyde v Wrench?

Counter-offer killed the original; later acceptance invalid.

What is an invitation to treat?

Invitation to make an offer (not binding).

Are advertisements offers?

Generally no — invitations to treat.

Case: Partridge v Crittenden rule?

Advertisements are invitations, not offers.

Is displaying goods in shops an offer?

No — invitation to treat.

What is a unilateral contract?

Offer to the world accepted by performance

Case: Carlill v Carbolic Smoke Ball rule?

Advertisement can be an offer if clear and definite.

What is the “last shot” rule?

Final set of terms accepted = binding contract.

When can an offer be revoked?

: Anytime before acceptance.

Requirement for valid revocation?

Must be communicated.

Can revocation be communicated indirectly?

Yes, via reliable third party.

What happens if acceptance is delayed too long?

Offer lapses.

Does asking a question reject an offer?

No.

What does outright rejection do?

Terminates the offer.

Must acceptance be communicated?

Yes.

Is silence acceptance?

No

Can conduct amount to acceptance?

Yes

When is acceptance effective by post?

When posted.

Who does the postal rule protect

Offerree

When is acceptance effective (email/phone)?

When is acceptance effective (email/phone)?

Is order confirmation acceptance?

No — usually just acknowledgment.

When is contract formed online?

When seller confirms dispatch.

What is required for certainty?

Clear, complete terms.

What is an “agreement to agree”?

Not enforceable.

What intention to create legal relations in Presumption in social/domestic agreements?

no intention

Auction with reserve = ?

Invitation to treat.

Auction without reserve = ?

Binding promise to highest bidder.

What did the answering machine case establish?

Signing and acting on an agreement = acceptance, even if labelled “provisional”.

Can courts fill gaps in contracts?

Sometimes (e.g. reasonable price under statute).

In Fisher v Bell (1961) and Pharmaceutical Society v Boots (1953), are shop displays offers or invitations to treat?

Invitation to treat.

In Partridge v Crittenden (1968), are advertisements offers?

: No, they are invitations to treat.

In Carlill v Carbolic Smoke Ball (1893), when can an advertisement be an offer?

When it is clear, definite, and shows intention to be bound

In Gibson v Manchester City Council (1979), do negotiations amount to a contract?

No, there must be a clear offer and acceptance.

In Hyde v Wrench (1840), what is the effect of a counter-offer?

It destroys the original offer.

In Butler Machine Tool v Ex-Cell-O (1979), which terms govern the contract?

The last counter-offer accepted (“last shot” rule).

In Felthouse v Bindley (1862), must acceptance be communicated?

Yes

In Felthouse v Bindley (1862), can silence amount to acceptance?

No.

In Rust v Abbey Life (1979) and Robophone v Blank (1966), can acceptance be by conduct?

: Yes.

In Entores v Miles (1955) and Brinkibon v Stahag (1983), when is acceptance effective for instantaneous communication?

When it is received.

In The Pamela (1995), when is acceptance effective if sent outside business hours?

When business hours resume.

In Adams v Lindsell (1818), when is acceptance effective by post?

When it is posted.

In Byrne v Van Tienhoven (1880), when is revocation effective?

When it is communicated to the offeree.

In Dickinson v Dodds (1876), can revocation be communicated indirectly?

Yes, via a reliable third party.

In Stevenson v McLean (1880), does an inquiry reject an offer?

No.

In Ramsgate Victoria Hotel v Montefiore (1866), when does an offer lapse?

After a reasonable time.

In Thornton v Shoe Lane Parking (1971), when must terms be communicated?

Before or at the time the contract is formed.

In Jones v Padavatton (1969), are family agreements legally binding?

Presumed not to be.

In Rose & Frank v Crompton (1925), can parties exclude legal intention?

Yes, if clearly stated (e.g. “honourable pledge”).

In Bradbury v Morgan (1862), does a guarantee continue after death?

Yes, unless notice of termination is given.