Contract Law: Offer and Acceptance

Week 2 - Introduction to Contracts – Offer and Acceptance

• French Civil Code: Articles 1100-1118 pertain to obligations
• Obligation definition (Art. 1100): A legal bond where one person (debtor) must provide something to another (creditor)
• Sources of obligations (Art. 1101): Obligations arise from contracts, unlawful acts, or other legal facts
• Contractual freedom (Art. 1102): Parties can enter contracts and set terms if they respect legal boundaries
• Conditions (Art. 1104-1106): Obligations can be conditional, depending on a specific event
• Performance (Art. 1107-1108): The debtor must perform as agreed or face liability for damages
• Effects of obligations (Art. 1109-1111): Obligations affect both parties and may include rights like modification or termination under conditions
• Transfer and modification (Art. 1112-1118): Obligations can be transferred or modified by consent, upholding contractual autonomy
• Art 3:33 and German Civil Code Sections 145-150, 241 also relate

Offer

• An offer must be a clear declaration of intent to enter a contract, with definite acceptance terms

Acceptance

• An offer is revoked if the offeree does not accept it and must correspond exactly to the offer for contract formation

Time of Acceptance

• Acceptance timeframe hinges on offer's recipient (specific individual or public)
• Offers to individuals must be accepted promptly upon receipt

Modification of Offer

• The offeror can set an acceptance deadline otherwise acceptance after this deadline is a new offer

Acceptance with Modifications

• An acceptance modifying the initial offer is a counter-offer that rejects the original offer

Offer and Acceptance in Time

• An offer can be revoked before acceptance if the offeror has not indicated that the offer remains open
• A contract exists when an acceptance is made

Duties Arising from the Obligation (§ 241)

• This section underscores the debtor's duty to fulfill agreed obligations once a contract forms

Case Law

• Pharmaceutical Society of GB v Boots Cash Chemists ruling: Displaying non-prescription drugs constituted an offer, accepted upon payment at the till with pharmacist supervision
• Carlill v Carbolic Smokeball Co ruling: Advertisement offering a £100 reward was a unilateral offer accepted by using the smoke balls as directed, establishing that offers can be made to the public
• Gibson v Manchester City Council ruling: A council letter indicating willingness to sell a house was not a binding offer due to lacking essential terms
• Hyde v Wrench ruling: A counter-offer nullifies the original offer, so it is no longer available for acceptance
• Adams v Lindsell ruling: Acceptance is valid when mailed, especially when the offer has been delayed due to the offeror

Week 3: Formalities, Capacity, Intention, & Consideration

• French Civil Code: Articles 1110, 1114, 1128, 1358, 1359, 1100-1118, and Art 3:33 are relevant
• Articles 1110-1118 contain key contractual components

Art. 1110

• Contractual consent is the meeting of minds between parties and essential for contract validity

Art. 1114

• Vices of consent, including error, fraud, and duress, can invalidate a contract

Art. 1128

• Valid contract conditions include consent, lawful object, and cause

Art. 1358

• Outlines the creditor’s burden of proof in contractual obligations where the creditor must prove that the obligation exists

Art. 1359

• Evidence of contracts must be in writing where the law requires this, particularly for obligations over a certain amount

Article 3:33

• This pertains to the scope of contractual obligations, indicating the effects of contracts on third parties with certain conditions

German Civil Code (BGB) Summary

• Sections 104-144 are significant
• Section 104 defines capacity to contract; minors and mentally impaired individuals have limited capacity
• Section 105 states that contracts entered into by those without capacity are void unless they benefit from it
• Section 116 addresses declaration of intent, detailing conditions under which declarations may be ineffective
• Section 123 covers fraudulent misrepresentation, allowing rescission for deception
• Section 124 establishes the period for rescinding contracts due to misrepresentation or duress
• Section 138 states contracts are void for immorality, especially those violating public policy or good morals
• Section 143 discusses the requirements for contractual acceptance, emphasizing clarity and intent
• Section 241 outlines obligations from the contract, including performance duties

§ 145

• This pertains to the binding nature of offers, where it can only be revoked under specific conditions

§ 157

• This addresses the principle of good faith in contractual interpretation and execution

§ 311

• This discusses the creation of obligations through contracts and other legal relationships

Case law (English Common Law)

• Balfour v Balfour (1919): Agreements between spouses lack intent to create legal relations and are generally not enforceable
• Merritt v Merritt (1970): A promise between separated spouses can be legally binding if written with clear intention
• Edwards v Skyways Ltd (1964): An agreement to pay redundancy payments between an airline and pilots union was enforceable due to the intention to be legally bound
• Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915): Dunlop could not enforce a retail pricing agreement because they were not a party to the other agreement
• Eastwood v Kenyon (1840): Prior actions do not constitute consideration in a binding contract resulting in no enforceable agreement
• Re McArdle (1951): Actions done already are not valid for a binding contract resulting in no enforceable agreement
• Thomas v Thomas (1842): Nominal consideration, like rent or repairs, is sufficient but even the testator's wishes do not constitute valid consideration
• Chappell & Co Ltd v Nestlé Co Ltd (1960): Chocolate wrappers could constitute consideration for royalties in a promotional offer
• Collins v Godefroy (1831): Promising payment to a witness is unenforceable because of a previous legal requirement to be in court/attend
• Nash v Inman (1908): Contracts with a minor are unenforceable if the goods supplied do not classify as ‘necessities
• Smith v Hughes (1871): A contract exists if the defendant purchased oats, mistakenly believing they were old oats, affirming the principle of caveat emptor
• Couturier v Hastie (1856): The contract is void if the contract is in mutual error and the subject has disappeared beforehand

More Case Law

• Cooper v Phibbs (1867): a mutual mistake about ownership means the lease is unnecessary
• Bell v Lever Bros Ltd (1932): A redundancy agreement is not void with a common mistake, as the behaviour was not essential to the subject matter.
• Derry v Peek (1889): No evidence directors had fraudulent intent to misrepresent tramway permission to use steam trams, tort of deceit clarification
• Hedley Byrne & Co Ltd v Heller & Partners Ltd (1963): There must be a duty of care to provide advise, otherwise negligent misstatements can result in in certain circumstances
• Barton v Armstrong (1976): There was a threat to a shareholders' life to agree, thus making the contract void
• Occidental Worldwide Investment Co v Skibs AIS Avanti. There was coercion of vessels, but this didn't amount to duress.
• Allcard v Skinner (1887): A gift was given as the claimant was in a sisterhood, however the delay barred the claim's influence
• Re Mahmoud and Ispahani (1921): With a statutory licence, the agreement was illegal and void
• Re Moore and Landauer (1921): Goods could be rejected that didn't match description

Last Cases

• Cutter v Powell (1795: Seaman died, so no wages were paid
• Paradine v Jane (1647): rent has to be paid still despite inability to use the land
• Taylor v. Caldwell Contract (Beale et al pp.1107 -1109): was destroyed by fire, meaning hall was impossible.
• Krell v. Henry (Beale et al pp. 1101115): Edward IV's procession was cancelled, contract was discharged due to frustration

Week 4 - Vitiating Factors, Good Faith and Performance

• French Civil Code - Art. 1112(-1 and -2), 1130-1144, 1221

Article 1112

• This focuses on the pre-contractual phase and negotiating in good faith without misleading

Articles 1130-1144

• They detail the conditions for validity of contracts such as consent, capacity, and a lawful object.

Article 1221

• This concerns non-performance of contractual obligations. Stipulates the creditor may request performance or damages when obligations aren't fulfilled

Legal Framework for Consent/Validity

• A legal framework to affect agreement validity from enforcement based on consent, German and German Civil code
• Sections 116-125, 138, 143, 241 discuss this
• French law states to consider 'mistake' English Common law
• In the summary 'declarations' needs to be read as 'declaration'

Termination of Contracts

• Can occur because of breach or other valid reason. May seek termination because of damages.
• Terminations are usually permitted for serious branches. Courts are reluctant to permit minor breaches
• The right is treated under English, French and German law

English Law

• Requires a clear and serious breach

French Law

• French law courts play a significant role in judging. Under the Civil Code, it outlines the process

German Law

• Section 323 of the Civil Code has strict limitations, which requires a second chance to perform