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1st Class Contract Law Notes
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Comprehensive 1st class notes covering the entire module
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ContractLaw
Most
Important
Principles
Freedom
of
Contract
Sanctity
of
Contract
(that
it
is
binding)
1. Issue-Who/What/Why
2. Principle/Law
(any
exceptions)
3. Application
of
it
(all
possibilities)
4. Conclusion
Agreement
• The
test
for
whether
or
not
an
agreement
has
been
made
is
objective
rather
than
subjective
to
encourage
certainty
in
commercial
transactions
and
to
avoid
difficulties
in
trying
to
inquire
into
the
state
of
mind
of
the
party
to
a
contract.
• Doctrine
of
Mistake-If
the
offeree
wrongly
assumes
he
is
getting
something
that
the
offeror
did
not
promise,
he
cannot
end
the
contract
when
he
doesn’t
get
this..
It
is
all
down
to
what
the
reasonable
man
would
expect
from
a
contract.
Smith
v
Hughes-selling
of
oats.
• The
law
does
not
allow
a
party
to
snatch
at
a
bargain
which
he
knew
was
not
intended.
Harthog-mistake
in
offer
“price
for
piece/pound”.
• Role
of
Fault
o Denny
v
Hancock
o Wanted
to
buy
property
with
misleading
place
for
it.
o Refused
to
buy
when
he
found
out
the
mistake
which
was
upheld
by
the
courts.
WHEN
LOOKING
AT
WHETHER
A
CONTRACT
HAS
BEEN
MADE
OR
NOT
YOU
HAVE
TO
LOOK
FOR:
1. Agreement
2. Consideration
3. Certainty
4. Intention
Unilateral/Bilateral
Contract
• Bilateral-‐A
contract
with
promises
on
both
sides.
• Unilateral-One
where
only
one
party
makes
a
promise
and
requests
an
act
form
the
other
party
in
return.
Here
the
performance
of
the
contract
is
both
acceptance
and
consideration.
Offer
, • Whether
something
is
an
offer
or
not
depends
on
the
intention
of
the
offeror
as
it
appears
from
his
behaviour
to
a
reasonable
offeree.
• The
word
“offer”
is
not
necessary
for
an
offer
to
actually
arise
in
law,
even
if
contained
in
an
advertisement.
• Invitation
to
treat-goods
on
display
in
a
shop,
adverts
for
goods
and
even
menus
are
not
generally
treated
as
offers-‐this
is
because
the
demand
for
the
goods
might
end
up
exceeding
the
supply.
Partridge
• A
shop
can
only
refuse
to
sell
to
individuals
not
groups.
• Offers
can
be
withdrawn
at
any
time
before
it
is
accepted.
• Whether
it
is
an
offer
or
not
depends
on
the
intention
of
the
seller
as
it
would
appear
to
a
reasonable
buyer.
• If
an
offer
says
“subject
to
contract”,
there
will
be
no
contract
until
this
restriction
is
removed.
• Gibson
v
Manchester
City
Council-This
case
which
dealt
with
the
sale
of
council
houses
held
that
there
was
no
contract
as
although
one
had
decided
to
sell
and
the
other
decided
to
buy,
due
to
the
language
used
by
both
(the
word
“may”
was
used),
there
was
no
formal
agreement
(meeting
of
the
minds)
• Once
the
performance
has
begun,
the
offer
cannot
be
revoked
but
instead
allows
the
offeree
to
complete
the
performance.
• Offers
for
rewards-‐notifications
for
acceptance
is
waved.
• Consideration-does
not
always
have
to
be
money
or
goods-‐can
also
be
the
following
of
instructions
e.g.
offering
someone
money
to
walk
backwards
to
York
Tenders
• A
tender
is
an
invitation
to
negotiate
and
not
an
offer-Spencer
v
Harding
• An
example
is
someone
who
invites
many
builders
to
come
and
build
something
for
them.
They
are
not
obliged
to
accept
the
lowest
or
highest
offer.
• Depending
on
the
case
they
are
obliged
to
at
least
consider
all
of
the
tenders.
Sometimes
damages
can
be
awarded
for
a
loss
of
chance
when
it
comes
to
tenders.
Blackpool
and
Fylde
Aero
Club
Ltd
v
Blackpool
Borough
Council-tender
to
operate
pleasure
flights.
Tenders
had
to
arrive
no
later
than
noon
on
March
17th.
By
mistake
D
thought
C’s
tender
was
late
and
discounted
it.
C
sued
and
won
for
loss
of
chance.
• An
invitation
to
tender
is
not
generally
an
offer
but
the
tenders
themselves
are.
(unless
you
state
the
goods
will
be
sold
to
the
highest
tender
etc)
This
is
because
if
their
was
only
one
tender,
the
seller
would
be
bound
to
sell
which
is
quite
unreasonable.
• Referential
Bids-only
allowed
if
the
invitation
clearly
allows
referential
bids
as
opposed
to
fixed
bids.
Problem
is
that
two
people
may
make
exact
same
bid-‐no
way
of
deciding
which
is
the
highest
bid-‐need
a
certain
mechanism.
Harvela
Investments
v
Royal
Trust
Co
of
Canada
Auctions
• The
highest
bid
on
an
auction
cannot
be
rejected
simply
because
it
is
considered
not
high
enough.
In
Barry
v
Davies
we
see
this
when
the
, auctioneer
refused
bids
at
auction
because
they
were
too
low
and
ended
up
selling
to
another
party.
• A
sale
by
auction
is
complete
when
the
auctioneer
announces
its
completion-‐this
is
the
agreement
to
the
bidder’s
offer.
Duration
of
Offers
• If
no
time
limit
is
specified,
there
is
still
a
reasonable
time
limit
in
play.
This
varies
according
to
the
subject-‐in
a
volatile
situation
(stock
market)
there
would
be
much
shorter
time
limit
than
in
the
sale
of
a
car.
• Even
if
someone
specifies
a
time
limit
within
which
acceptances
can
be
made,
the
offer
can
still
be
revoked
the
next
day
unless
someone
has
already
accepted-Routledge
v
Grant.
• Byrne
v
Van
Tienhoven
(1880)
5
CPD
344-In
Byrne
v
Van
Tienhoven,
there
was
a
contract
even
though
the
two
parties
were
in
disagreement.
This
is
because
the
offeror
had
made
an
offer
but
then
changed
their
mind
and
sent
a
revocation.
However,
the
other
party
had
received
the
offer
before
the
revocation
reached
them
and
they
sent
their
acceptance.
Acceptance
• Contracts
are
legally
binding
as
soon
as
the
offer
has
been
accepted
regardless
of
whether
the
actions
of
the
contract
have
been
performed.
• If
an
acceptance
attempts
to
vary
the
terms
of
an
offer,
it
is
seen
as
a
rejection
of
that
offer
and
a
counter-offer.
• Acceptance
also
requires
knowledge
of
the
offer
beforehand.
(German
Law
is
the
opposite
of
the
previous
two
points).
Communications
of
Acceptance
(Non-postal)
• Acceptance
is
only
affected
when
the
offeree
communicates
with
the
offeror.
• With
instantaneous
communication-‐the
acceptance
is
regarded
as
affected
when
it
is
heard.
• Sometimes
it’s
uncertain
whether
the
offeror
has
actually
received
the
acceptance
e.g.
whether
the
fax
was
actually
read
or
not.
When
fax
or
telex
is
used
it
is
treated
as
received
when
it
has
arrived
in
the
building.
The
Brimnes
• Silence-you
cannot
force
a
contract
on
someone
and
silence
cannot
be
a
method
of
acceptance
unless
the
offeree
has
accepted
by
conduct
that
isn’t
communicated
to
the
offerror
(such
as
misdirected
post)
or
unless
the
offeree
cheerfully
accepts
the
silence.
o Felthouse
v
Bindly-transaction
between
uncle
and
nephew
for
a
horse.
The
uncle
who
was
the
buyer
tried
to
use
silence
in
his
offer.
• Eaglehill
Ltd
v
Needham
Builders.
Here
it
was
held
that
a
notice
is
received
when
it
is
opened
in
the
ordinary
course
of
business
or
when
it
would
be
opened
if
the
ordinary
course
of
business
was
followed
, • Which
Jurisidiction?-Entores
v
Miles
Far
East
Corporation-Here
the
claimants
made
an
offer
by
telex
to
defendants
in
Amsterdam
who
accepted
by
telex.
However,
disagreements
came
about
as
to
where
the
contract
was
made
and
therefore
which
jurisdiction
was
in
play.
It
was
held
that
the
contract
was
formed
when
the
acceptance
was
received
in
England
and
therefore
English
Courts
had
jurisdiction.
Battle
of
Forms
• Sellers
and
buyers
both
want
to
do
contract
in
their
own
terms.
• A
seller
might
include
an
invoice
with
goods
containing
a
price
escalation
clause
(their
terms).
• The
buyer
might
stamp
it
stating
that
the
goods
were
received
on
their
terms.
• Generally,
contracts
favour
the
seller.
• A
reply
to
an
offer
with
additions
or
modifications
is
a
rejection
of
the
offer
and
constitutes
a
counter
offer.
• A
basic
rule
is
that
the
offeror
is
“master
of
his
offer”
and
can
specify
any
method
of
acceptance.
• Butler
Machine
Tool
Co.
Ltd
v
Ex-Cell-O
Corporation
Ltd
o Claimants
had
quoted
a
price
of
a
machine
tool
with
delivery
to
be
given
in
10
months.
Included
was
a
price
variation
clause
which
provided
for
rise
in
price
is
there
was
a
rise
in
costs.
o The
buyers
rejected
this
and
relied
on
their
own
terms
and
conditions
which
they
had
set
out
which
ended
up
being
different
to
those
contained
in
the
offer.
o Tool
not
delivered
for
16
months
and
costs
had
increased
that
the
sellers
claimed
an
extra
£2892.
o Held
that
the
buyers
had
rejected
the
original
offer
and
made
a
counter
offer
which
the
sellers
subsequently
accepted
by
signing
an
acknowledgement.
Contracts
by
Post
• Once
the
letter
is
posted
the
contract
comes
into
effect
(only
applies
to
acceptances).
This
is
unless
the
offeror
states
specifically
that
the
acceptance
is
not
counted
until
the
letter
is
received.
However
revocation
is
not
counted
until
receipt.
• This
was
affirmed
in
Household
Fire
Insurance
Co
Ltd
v
Grant.
• This
rule
also
does
not
apply
if
the
letter
is
misaddressed
(Korbetis)
or
if
there
is
a
postal
strike
on
at
the
time
that
the
letter
was
sent
(Holwell
v
Hughes)
• If
there
is
a
daft
situation
the
postal
rule
does
not
apply.
• The
reception
rule
is
seen
to
hinder
the
offeree
in
his
expectation
that
a
contract
has
been
formed
but
that
the
postal
rule
can
lead
to
the
offeror
getting
into
a
contract
that
he
didn’t
know
about.
• E-mail-It
is
generally
accepted
that
emails
are
an
instant
form
of
communication
and
so
the
postal
rule
does
not
apply-‐the
contract
is
made
when
and
where
the
arrives.
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