Contract

An agreement which is legally binding

4 main elements:
Offer Acceptance Intention Consideration
Offer
Offer must be intentional:
Ian (offerer): Ill sell you my 3.5 litre Jaguar for 3000
Kalumba (offeree): Ok, its a deal
Offer v Invitation to treat
Invitation to treat means Frank invites Cherry to make an offer. Cherry then considers whether or
not to accept Franks offer
Examples:
i)Articles for sale in a shop window/ on a shelf
Fisher v Bell, Pharmaceutical Society of GB v Boots
Important for self-service stores
ii)Advertisements in newspapers/catalogues/internet
Partridge v Crittenden
Important if demand exceeds supply
iii)Reward posters
Carlill v Carbolic Smoke Ball Co
iv)Auction sales
Payne v Cave
Offer can be withdrawn up to acceptance
Communication can be in writing (business), spoken (Morrisons checkout) or by conduct (auction)
Offer can be specific (Do you?) or open (Do any of you? Does anyone?)
Offer must be communicated: you cannot claim a reward if you did not know about it
Postal offers are communicated on arrival (see Acceptance)
Duration: if no time limit set then open for a reasonable time
Ramsgate Victoria Hotel Co Ltd v Montefiore (shares)
Revocation
Offeror can revoke acceptance, but offeree must be informed
Byrne v Tienhoven
1 Oct: wrote to make offer to sell
8 Oct: wrote to say Dont want to sell now
11 Oct: 1
st
letter arrives.
11 Oct: telegraph acceptance
20 Oct: 2
nd
letter arrives. Too late, contract exists
Rejection of offer
If you say No then you cannot change your mind and accept later if the offeror no longer wants to
Counter-offer
If Kalumba says Ill give you 3000 it is a counter-offer and the original one no longer exists
Hyde v Wrench
Acceptance
Must accept all the terms, otherwise counter- offer
Asking for more information is not counter-offer
Stevenson v McLean
Method of acceptance: Unless a particular method has been specified any effective method will do
Silence not enforceable If I do not hear from you then we have a contract not sufficient
Felthouse v Brindley
Postal Rule
Acceptance is ruled to take place the moment the acceptance letter is posted
2 Sept: Abby writes to Rebecca offering to sell her printer, but the letter does not arrive until 5 Sept
5 Sept: Rebecca writes back accepting the offer
8 Sept: Abby sells the printer to Cedric as she thinks that if Rebecca wanted it she would have
written by now
9 Sept: Rebeccas acceptance letter arrives.
Held: Abby was in breach of contract
Adams v Lindsell
Even if the letter is lost in the post the contract is still effective
Household Fire insurance v Grant
Modern communication methods
Telex, fax, emails etc are considered to be communicated when they arrive, unless this happens out
of office hours, in which case it is at the beginning of the next working day.
Brinkibon v Stahag Stahl
Intention to create legal relations
Although there may be a valid offer, acceptance and consideration the court will not enforce it if
they think it was not intended to be legally binding
Commercial cases: presumption of intention
McGowan v Radio Buxton
Need to state This agreement is not legally binding
Social cases: presumption of non-intention
Balfour v Balfour
But
Merritt v Merritt
Consideration
Both parties must contribute something tangible, eg money, goods, service, stopping an action
The consideration must be of some value, but does not have to be of the same value
In Thomas v Thomas a rent of 1 was held sufficient
Past Consideration: you cannot claim that something you have already done is good consideration.
1 March: Ha paints the flat and buys new curtains etc
2 March: Mai comes home and says she will pay half the money
31 March: Ha sues Mai for breach of contract
Ha loses as she had already done the work
Re McArdle
Exception: when one party asks the other to act, even if no consideration was mentioned at the time
of performance, a later promise can be enforced
Lampleigh v Braithwaite (1615)