Contract Law and Agency Lecture Review

Vocabulary flashcards covering Contract Law principles (Offer, Acceptance, Consideration) and Law of Agency based on the Contract Act $$1950$$.

Offer (Section $2(a)$ of Contract Act $1950$)

Making a serious offer to someone with the intention of entering into an agreement if they say yes.

General Offer

An offer made to the public at large, as seen in Carlill v Carbolic Smoke Ball Co ($1893$) where an advertisement with a reward was held as a binding obligation.

Specific Offer

An offer made to a specific person; in Boulton v Jones ($1857$), the court held that the defendant was not liable because he intended to contract with a different party.

Communication of Offer (Section $4(1)$ CA $1950$)

The principle that an offer is complete only when it is known by the other party. In R v Clarke ($1927$), a reward could not be claimed because the information was given without knowledge of the offer.

Revocation of Offer (Section $5(1)$ CA $1950$)

An offer can be revoked anytime before the offeree accepts; in Byrne Co v Van Tienhoven ($1880$), revocation was ineffective because the letter reached the party after the contract was concluded.

Invitation To Treat (ITT)

An invitation to the other party to make an offer rather than a binding offer itself.

Display of Goods

A form of ITT where shelf display with a price is not an offer; the offer is made by the customer at the counter and acceptance occurs at payment, as ruled in Pharmaceutical Society of Great Britain v Boots Cash Chemist ($1953$).

Tender

A notice inviting parties to make an offer; the person making the notice is free to accept or reject the submissions.

Auction

An invitation for bidders to make offers by bidding high prices; the auctioneer may accept or reject the bids.

Acceptance (Section $2(b)$ CA $1950$)

Occurs when a proposal transforms into a promise, forming the legal basis of a binding agreement.

Absolute and Unqualified Acceptance (Section $7(a)$ CA $1950$)

The rule that for an offer to become a promise, the acceptance must be identical to the offer without any conditions.

Counter-offer

A new offer made by the offeree that destroys the original offer and changes the status of the parties, as seen in Hyde v Wrench ($1840$).

Consideration (Section $2(d)$ CA $1950$)

When the offeree does something for the offeror, such as providing money for goods or services; it must be sufficient but does not need to be adequate.

Executory Consideration

A type of consideration involving a promise for a promise.

Executed Consideration

A type of consideration where a promise is made before an action is taken.

Past Consideration

An action performed before a promise is made.

General Rule of Consideration (Section $26$)

A contract without consideration is void, except in cases of natural love and affection ($26(a)$) or past voluntary acts ($26(b)$).

Agent (Section $135$)

A person employed to do any act for or represent another person in dealings with a third person.

Principal (Section $135$)

The person for whom an act is done or who is represented by an agent.

Capacity to Employ Agent (Section $136$)

Any person who is of the age of majority and is of sound mind.

Agency by Ratification

A relationship created when a principal accepts a contract after an agent exceeded their power or someone acted without authority as their representative.

Effect of Ratification

Requires that the agent acted for the principal, the principal existed at the time of the contract (Kelner v Baxter), and the principal ratifies the whole contract within a reasonable time.

Agency by Necessity (Section $142$)

Authority granted in an emergency to protect the principal from loss, such as a person trusted with property needing to preserve it (Great Northern Railway v Swaffield).

Agency by Estoppel (Holding Out)

Formed when the principal's words or conduct lead a third party to believe an agency relationship exists.

Duties of Agent to Principal

Includes maintaining confidentiality, rendering proper accounts, paying all sums received, avoiding conflicts of interest, and making no secret profits.

Duties of Principal to Agent

Includes paying commission and agreed remuneration, indemnifying the agent for expenses, and not hindering the agent from earning their commission.

Termination by Operation of Law

The ending of an agency due to death, insanity of principal or agent, bankruptcy of the principal, frustration of contract, or expiration of the agreed period.