Formation of agreement- agreement and intention

what does an agreement consist of

·       Offer-clear statement offering willingness to be bound by specific terms. Need an expression of willingness from party, agreement is formed when offer is accepted. Offer has to be unambiguous and very clear.

·       Acceptance- occurs when offeree agrees to exact terms of the offer. When counter offer is made, original offer is destroyed.

·       Consideration- parties agree to exchange values.

what are agreements

·       Agreements are consensual events of a particular type, requiring that the minds of the two parties meet on matters which are the subject of the agreement.

what is the consideration element of a contract

doing or not doing something in the contract

what is a subjective point of view

A subjective point of view looks into the mind of a party. It aims to discover what that party actually intended and understood

what is an objective view

An objective view looks at external factors and describes how the reasonable person would have understood what was said and done

what is an invitation to treat

An invitation to treat falls short of being an offer capable of binding acceptance; instead it is an invitation for the other party to make an offer, which the former party is free to accept or reject.

what is the postal rule

·       The ‘postal rule’ decrees that a posted acceptance is binding from the moment of posting without any communication to the offeror.

when will the postal rule not apply

·       The postal rule will not apply if it would lead to manifest inconvenience and absurdity, The postal rule does not apply to revocations of offers.

what is an option

Option- An irrevocable promise by one party to another, who may call for performance of the promise at any time up to a specified date

what is a guarantee

·       Guarantee- A binding promise made by A to B to perform C’s obligations owed to B if C fails to perform

describe the case of Butler Machine Tools Co v. Ex-cell-o Corp (England)

Parties negotiating for machinery. Butler machine company sent an offer and attached their standard terms- it had price changes in contract. Ex cell accepted original price of machine- attached their own standard terms- they had no price variation clause- they enter into contract not planning on changing price. Machine is delivered- butler machine demands more money based on their own price variation clause. Court found that contract began when butler machine signed contract.

describe the case of Gibson v. Manchester City Council [1979]

The defendant City Council had adopted a policy of selling council houses to its tenants. The claimant was a tenant of such a council house, who had applied for details of the house he was renting and applicable mortgage terms, using the printed form designated and supplied by the defendant for this purpose. In February 1971, the city treasurer responded to this application stating that ‘The [council] may be prepared to sell you the house at the purchase price…’, and providing details of the mortgage. This letter also stated that it did not amount to a ‘firm offer’ of a mortgage, and invited the claimant to make a formal application using an enclosed form. In March 1971, the claimant returned the completed form to the defendant. The issue on appeal was whether the defendant’s letter of February 1971 was properly construed as an offer or as an invitation to treat. The House of Lords held that there was no concluded contract and the defendant was not legally bound to sell the property, as the council’s letter did not state the price and was not an offer but an invitation to treat.

describe the case of Fisher v. Bell [1961]

The defendant shopkeeper displayed in his shop window a flick knife accompanied by a price ticket displayed just behind it. He was charged with offering for sale a flick knife, contrary to s. 1 (1) of the Restriction of Offensive Weapons Act 1959. The issue was whether the display of the knife constituted an offer for sale (in which case the defendant was guilty) or an invitation to treat (in which case he was not). The court held that in accordance with the general principles of contract law, the display of the knife was not an offer of sale but merely an invitation to treat, and as such the defendant had not offered the knife for sale within the meaning.

describe the case of Pharmaceutical Society of GB v. Boots Cash Chemists (Southern) Ltd [1953]

The defendant ran a self-service shop in which non-prescription drugs and medicines, many of which were listed in the Poisons List. The question was whether the contract of sale was concluded when the customer selected the product from the shelves (in which case the defendant was in breach of the Act due to the lack of supervision at this point) or when the items were paid for (in which case there was no breach due to the presence of the pharmacist at the till. The Court of Appeal held that the defendant was not in breach of the Act, as the contract was completed on payment under the supervision of the pharmacist. 

describe the case of Byrne & Co v. Leon Van Tienhoven & Co

The defendants wrote a letter, on October 1, to the plaintiffs offering the sale of 1000 boxes of tin plates. The defendant was based in Cardiff and the plaintiff was based in New York, and letters took around 10-11 days to be delivered. The plaintiffs received this letter on October 11 and accepted it on the same day by telegram, as well as by letter on October 15. However, on October 8, the defendant sent a letter to the plaintiffs which withdrew their offer and this arrived with the plaintiff on October 20. The plaintiffs claimed for damages for the non-delivery of the tin plates. The court held that the withdrawal of the offer was ineffective as a contract had been constructed between the parties on October 11 when the plaintiffs accepted the offer in the letter dated October 1. On this basis, it was held that an offer for the sale of goods cannot be withdrawn by simply posting a secondary letter which does not arrive until after the first letter had been responded to and accepted.

describe the case of Felthouse v. Bindley (1862)

The complainant, Paul Felthouse, had a conversation with his nephew, John Felthouse, about buying his horse. After their discussion, the uncle replied by letter stating that if he didn’t hear anymore from his nephew concerning the horse, he would consider acceptance of the order done and he would own the horse. His nephew did not reply to this letter and was busy at auctions. The defendant, Mr Bindley, ran the auctions and the nephew advised him not to sell the horse. However, by accident he ended up selling the horse to someone else. It was held that there was no contract for the horse between the complainant and his nephew. 

describe the case of Brinkibon v Stahag Stahl und Stahlwarenhandels GmbH [1983]

The complainants, Brinkibon Ltd, were a company that was based in London. They were buying steel from the defendants, Stahag Stahl, who were sellers based in Austria. The complainants sent their acceptance of the offer by Telex, which was to the defendants in Vienna. Brinkibon Ltd later wanted to sue Stahag Stahl for breach of contract and applied to serve an out of jurisdiction party. The appeal was dismissed and the courts held that the contract was formed in Austria and the breach of contract would have to go through Austrian courts.

describe the case of Hyde v. Wrench (1840)

sale of a farm. Wrench said 1000 for farm, Hyde offered 9500- declined. Hyde took it to court, but court argued that when an original offer is made and a counter offer is then offered, the original offer is no longer available.

 

describe the case of Carlill v Carbolic Smoke Ball

UNILATERAL contract: 1893 plastic ball has carbolic acid- company said that if you inhale this,  it will prevent you from getting the flu. The company said if you used this product and still caught the flu, you would be given £100. The company  said that they had deposited 8000 in a bank for those people. Mrs Carlill used  this product and caught the flu, she took it to court.  Court found that the companies offer was clear- offered to pay and deposited money. Court trated this advertisement as an offer.

what are the different types of ways of terminating an offer

·       Refusal

·       Revocation- party withdraws offer- only if this is communicated to offeree. Byrne v leon van tienhoven- made offer to sell tin plates- sends telegram- takes 10 days for letter to arrive. They then change their minds and send another letter revoking the letter. Court found that even tho revocation letter was sent before offer was accepted, revocation can only be successful once it is communicated to the offeree. Dickinson v Dodds: Dodds wants to sell- was told he was given till Friday to decide.  Dodds has however already sold house before Dickinson accepted offer. Court said that offeror can revoke offer any time prior to acceptance. Offeree has to be informed- and Dickinson was in fact informed by third party.

·       Death or insanity- Bradbury v morgan: morgans brother entered into contract where Bradbury would give goods. But then, morgan passes away and Bradbury passes away- Bradbury stops getting paid so sues- court found that contract continued as the family of Morgan did not inform Bradbury.

·       Counter offer- hyde v Wrench-

·       Lapse of time- Ramsgate hotel v Montefiore-  put forward offer for some shares for hotel and placed a hotel- hotel issued shares after a few months- Montefiore did not accept shares as ht said hotel took too long to give shares. Court held that an offer will only remain open for a limited amount of time.

describe the case of felthouse v Bindley

sale of horse. Uncle sent a letter to nephew saying he wanted his horse- uncle said if he did not hear from him within 2 weeks, he would assume the horse as his. The nephew does not respond but wants to sell the horse to his uncle. The nephews agent sells  the horse anyway and uncle sues the agent. Court held nephew did not communicate acceptance- contract was not formed.

describe the case of Robophone Facilities v Blank

fees payed for installation- Blank wanted to cancel contract- he was asked to pay nearly 50% of fee to withdraw from contract- he signed contract so therefore accepted what was within the contract.

describe the case of Rust v Abbey Life Assurance:

Rust was told what this life assurance entailed- she signs agreement- she then regrets decision and the life assurance wanted 25% penalty clause- goes to court. Court said that she accepted contract and the terms were communicated.

describe the case of Mondial shipping and chartering v Adtarte Shipping:

charterer pays money to use ship for a while. If payment was delayed by tow weeks, ship owner would send notice to charterer to make the payment, if failed, ship owner had right to take ship back. Payment was not made one time so ship owner sent notice, but the notice arrives on Friday night, charterers did not see notice till Monday morning. Court said: where acceptance is communicated outside office hours, notice period can communicated by a reasonable time.

describe the case of DAZN limited v Coupang Corp 2025:

for Fifa game 2025. Coupang company entered into negotiations for game to be broadcasted in Asia- Coupang offers 1.7 million for exclusive licencing rights- this is accepted. However, another company offered more money which they accept. Court sided with Coupang, other party had intention to form contract via emails.

describe the case of Adams V Lindsell 1818

offer made for sale of some goods. However, letter took several days to reach offeror. Therefore, goods were sold to someone else- third party. Court found that the offer begins as soon as letter is posted.

describe the case of Stevenson Jacques v Maclean

request for information. Maclean offered to sell metal scraps for 40 shillings. Stevenson sends a telegraph asking if Maclean would accept payment instalments over a two month period. Maclean ignored telegraph and instead, sends scrap metal to third party. Stevenson sends another telegraph but Stevenson argues that Maclean has breached contract.

describe the case of Jones V Padavatton

law student and her mum. Mum tells her that she will support her financially through uni, their relationship breaks down- daughter sues mum. But court argued that social agreements do not create intention to create legal relations.

describe the case of Rose and Frank v J.R Crompton:

parties had honour clause. If terms are not followed-  shame on you- bound in honour only. Since parties stated it was honour only agreement, intention to be legally bound by terms of the contract.