Contract Unit 1 Cases

Offer definition

An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed -Professor Treitel

What is needed for a contract

Offer, Intention, Consideration, Acceptance (sometimes, offer and acceptance combined makes agreement)

What is the basis of intention

presumption

What is a domestic agreement

no intention to create legal relations unless the facts show otherwise.

Example of domestic case

-No intention to create legal relations unless facts show otherwise

-Balfour v Balfour [1919]

-Agreement between husband and wife

Atkin LJ quote

'the parties in the inception of the arrangement, never intended that they should be sued upon'.

Merritt v Merritt [1970]

-Husband and wife separated

-He signed a written agreement to the effect that he would pay his wife £40 a month and, in consideration of her repaying the mortgage on the jointly owned matrimonial home, he would transfer it to her sole ownership

-Intended to be legally binding

Edwards v Skyways [1964]

-If the commercial/business agreement is ambiguous an intention to create legal relations will be presumed.

-in a commercial context, very clear words are needed to rebut the presumption of an intention to create legal relations.

Rose and Frank Co v Crompton Bros [1925]

-agreement between the two companies included an 'Honourable Pledge Clause'

-not entered into as a 'formal or legal agreement' but was only a definite expression and record of the intention of the parties.

Intention case

Smith v Hughes (1871)

Offer case

-Allied Marine Transport v Vale do Rio Doce Navegacao SA (The Leonidas) [1985]

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]

Goods on display in supermarkets and self-service shops are generally regarded as invitations to treat and not offers.

Fisher v Bell [1961]

-court held that the display of the knife was simply an invitation to treat and acquitted the defendant of the charge.

Partridge v Crittenden [1968]

court held that the defendant was not guilty of the offence, as the advertisement was simply an invitation to treat

Carlill v Carbolic Smoke Ball Company [1893]

-formation of a unilateral contract

-authority for the proposition that an advertisement can constitute an offer to 'the world' (that is anyone who learns of it).

Williams v Carwardine (1833)

-Advertisements of reward will normally be offers of unilateral contracts

-offer of reward for information, only provided because claimant dying

57(2) of the Sale of Goods Act 1979

-sale by auction is complete on the fall of the auctioneer's hammer, in which case that is the acceptance

Section 57(3) of the Sale of Goods Act 1979

Reserve price agreed between auctioneer and seller

Barry v Davies (t/a Heathcote Ball & Co) [2000]

-Mr Barry made the highest bid for the machines

-auctioneer did not accept it as he knew he could get a much higher price for them elsewhere

- Mr Barry successfully sued the auctioneer for breach of contract; more specifically for breach of a unilateral contract.

Harvela Investments Ltd v Royal Trust Company of Canada Ltd [1986]

-Two parties invited to tender (put in offer) for company shares

-sent identical telexes stating, 'We confirm that if any offer made by you is the highest offer received by us we bind ourselves to accept such offer'

-House of Lords held that the telexes were offers of a unilateral contract to sell to the highest bidder, which would be followed by a bilateral contract for the sale of the shares.

Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990]

-court held that there was an implied promise which the Club had accepted by submitting a conforming tender. As the council had not considered the Club's tender, it was liable to the Club in damages for loss of opportunity.

-he council had entered into a bilateral contract with the person whose tender had been accepted, but also had a separate implied unilateral contract with Blackpool & Fylde Aero Club.

How can an offer be terminated?

Revocation, rejection by offeree, lapse of time

Routledge v Grant (1828)

-Promises not binding if they are gratuitous (offeree not given or promised anything in return for the promise to keep the offer open)

-The offeror can revoke the offer within the specified time as long as it has not been accepted.

Mountford v Scott [1975]

-exception to promises not being binding

-The court held that the offer was irrevocable as the claimant had paid for the option (albeit a nominal amount £1).

Byrne & Co v Van Tienhoven & Co (1880)

-Notice of withdrawal of the offer must be given and must be communicated to the offeree to be effective

-withdrawal of an offer by telegram was held to take effect only on receipt.

Exceptions to rule that revocation must be communicated

-Professor Treitel, The Law of Contract

-notice of withdrawal sent to the offeree's last known address would be effective if they had moved without notifying the offeror

-a withdrawal which reaches the offeree may be effective if the offeree simply chooses not to read it

The Brimnes [1975]

-notice will be effective on receipt where it is reasonable to expect a member of staff to be available to read a notice of revocation.

Dickinson v Dodds (1876)

-revocation can be communicated by a reliable third party

Errington v Errington and Woods [1952]

-revocation of unilateral offer

-offer of a unilateral contract as the couple did not promise to repay the mortgage; they simply did so

-father's promise was irrevocable so long as the couple continued to pay the instalments.

Hyde v Wrench (1840)

-an implied rejection of the original offer and as such destroys it

Hussey v Horne-Payne (1878)

-letters passed previously but not come to conclusion about contract and payment

-two letters looked like they had

-decided that no contract had to look at previous correspondence

Gibson v Manchester City Council

a contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first are in reply to one another, is not.- Lord Diplock

Butler Machine Tool Co. Ltd. v Ex-Cell-O Corporation (England) Ltd. [1979]

-battle of forms about machine tool, price and delivery

-all three judges found a contract on the buyer's terms, formed on the basis that the seller's reply to the buyer's counter offer was an acceptance of it.

Lidl UK Gmbh v Hertford Foods Ltd. & Anor. [2001]

-they hadn't agreed to contract on either party's terms and conditions.

-So they must've agreed to contract on neither party's terms.

Spencer v Harding [1870

soliciting a tender is, without more, a "mere proclamation" that a person is seeking offers.

Cons of implied promise by developer to accept the best tender

goes counter to spencer v harding

pros and cons of getting developer to promise expressly to accept on or other tender- say the cheapest one

pros-If the developer, expressly commits to accepting one of the tenders, say, then we may have a unilateral contract. These are often called 'if' contracts.

cons-getting the developer to make that commitment.

pros/cons of imply promise by developer to consider conforming tenders

pros- successful in blackpool & flyde aero club v blackpool borough council

cons- Whether such a promise can properly be implied, and what sort of commitment it involves, will always depend on the facts and circumstances of the case.

pros/cons of getting developer to promise expressly to consider conforming bids

pros- better than implication

cons-would need to be sure that our unilateral contract is certain enough.

Pros/cons of an express promise from the subcontractor not to revoke their offer

pros- none

cons- unenforceable for want of consideration

pros/cons of an express agreement in which the main contractor agrees to pay the sub-contractor a fee if the sub-contractor agrees not to revoke their offer

pros- enforceable as promise is supported by consideration

cons- leaves main contractor free to decide whether it wants to accept bid, sub contractor may not be prepare to deal on these terms

pros/cons An express agreement in which the main contractor undertakes to accept the sub contract bid if successful on the main contract bid, so long as the subcontractor agrees not to revoke their offer

pros- enforceable as promise is supported by consideration, sub-contractor more likely to deal on these terms

cons- sub contractor is then obliged to deal with subcontractor

Stevenson Jacques and Co v McLean (1880)

request for information does not affect the offer

Australian case of R v Clarke (1927)

An acceptance must be a complete and unqualified acceptance of all of the terms of the offer.

Professor Treitel definition of acceptance

a final and unqualified expression of assent to the terms of the offer

TRW Ltd v Panasonic Industry Europe GmbH and another company [2021]

-no guarantee that 'last shot' will win battle of the forms

-TRW responded with a purchase order, along with its own Ts & Cs, which was effectively the 'last shot'.

Felthouse v Bindley (1862)

- It would be unfair on the offeree if they had to go to the trouble of contacting the offeror in order to reject the offer

-no contract for sale of the horse

Re Selectmove Ltd (1995)

no reason in principle why offerees should not bind themselves by silence

Adams v Lindsell (1818)

a letter of acceptance which is posted is complete on posting and the contract will be formed at that point.

Household Fire and Carriage Accident Insurance Co v Grant (1879)

-acceptance posted but never arrived

-postal rule applied and acceptance valid on posting

What are the limitations to the postal rule?

-Only applies to acceptances

-Where reasonable for the acceptance to be sent by post

-Must be properly stamped, addressed and posted

-Can always be excluded by the offerer, expressly or by implication

Holwell Securities Ltd v Hughes [1974]

-offer said 'notice in writing'

-'notice', the offeror had impliedly excluded the postal rule.

-So whilst it might have been appropriate to accept by post, the acceptance actually had to arrive with the defendant to be effective.

Entores v Miles Far East Corporation (1955)

-for an acceptance to be effective it must have been communicated

-It provides no direct authority on the issue of exactly when a telexed acceptance takes effect. Clearly the postal rule does not apply as Entores v Miles Far East Corp requires the acceptance to have arrived.

Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelgesellschaft GmbH [1983]

Lord Wilberforce said: 'No universal rule can cover such cases'