Contract Law: Offers and Agreements

• Contract law defines when promises become legally enforceable. To be enforceable certain elements are required.
• Requirements include: agreement (offer and acceptance), consideration (mutual exchange of value), and intention to create legal relations.
• Agreement begins with an offer, which can be to one person or many, and requires unconditional acceptance to form a contract.

Types of Contracts

• Unilateral contracts involve an exchange of a promise for an act, creating an obligation for only one party.
• Bilateral contracts involve promises from both parties to perform actions or fulfill obligations in exchange for each other's promise.

What Constitutes an Offer

• An offer is a clear statement of obligations the offeror is willing to be bound by.
• The "objective theory" determines a contract's legal effect based on objective evidence, such as written words and conduct, rather than subjective intentions.
• Smith v Hughes (1871) illustrates objective theory: a contract existed because a reasonable person would expect good quality oats, as there was no explicit discussion of "old oats".
• "Snapping up" doctrine: an offeree cannot accept an offer if they know it contains a mistake in its terms.
• Hartog v Collins and Shields (1939) supports the “snapping up” doctrine : no contract existed because the complainant knew the hare skins were mistakenly offered at a price per pound instead of per piece.

Offers vs. Invitation to Treat

• An offer expresses willingness to contract on specific terms, intending to be binding upon acceptance without further negotiation.
• Storer v Manchester City Council (1974): a binding contract existed because the Council's conduct indicated intent to be bound upon acceptance, despite some terms remaining to be agreed.
• Gibson v Manchester City Council (1979): no contract existed as the Council's letter was an invitation to treat, not an offer, because it did not state the price and indicated the council "may be prepared to sell".

Statement of Intention

• Differs from an offer; it indicates what one intends to do rather than stating what one will do.
• Harris v Nickerson (1873): an advertisement for an auction was a declaration of intent, not a binding offer to sell advertised items.

Invitation to Treat Explained

• Invitation to treat indicates a willingness to do business and invites offers or negotiations.
• Display of goods is generally an invitation to treat: the offer occurs when a customer takes goods to the counter.
• Pharmaceutical Society v Boots (1953): displaying goods on shelves was an invitation to treat, offer occurs when customer presents items at the till, acceptance occurs when payment is taken under pharmacist supervision.
• Patridge v Crittenden (1968): ads are invitations to treat. An advertisement for birds for sale was an invitation to treat, not an offer.
• Carlill v Carbolic Smoke Ball Company (1893): advertisement for a unilateral contract can be an offer that gets accepted by the performance of the act.

Communication of the Offer

• An offer must be communicated to be effective; acceptance requires knowledge of the offer.
• Gibbons v Proctor (1891): a police officer was allowed to recover a reward even though he sent information in ignorance of the offer of reward.

Acceptance of the Offer

• Acceptance requires agreeing to each term of the offer, forming a "mirror image" of the offer.
• Contractual acceptance is determined objectively, based on words or conduct indicating assent to the offeror's terms.
• Brogden v Metropolitan Railway Company (1877): a contract was valid because the parties' conduct (delivering and paying for coal) indicated acceptance of the amended draft contract.
• Counter-offer: adding new terms constitutes a counter-offer, rejecting and destroying the original offer.
• Hyde v Wrench (1840): offering a different price (£950 instead of £1,000) was a counter-offer that nullified the original offer, so the offeree could not later accept the original offer.

Communication of Acceptance

• Acceptance is generally effective when communicated to the offeror and cannot be made through silence.

Unilateral Offers

• Acceptance occurs through performance of the act, without needing advance communication.
• Example: offering a reward for a lost cat's return.

The Postal Acceptance Rule

• States acceptance is complete when the acceptance is posted, shifting the risk of delay or loss to the offeror.
• Household Fire Insurance v Grant (1879): acceptance occurred when the company posted the allotment letter.
• The rule applies if the post was reasonably contemplated or stipulated by the offeror.
• The postal rule does not apply if the letter is incorrectly addressed by the offeree.

Method of Acceptance

• An offer may specify a particular method of acceptance.

Termination of Unaccepted Offers

• Offers do not remain open indefinitely and can be withdrawn before acceptance.
• Revocation is effective upon actual communication of the change of mind.

Consideration in Contract Law

• Consideration is something of value exchanged by each party
• It is an indicator that the parties intended the agreement to be legally binding.
• A promise to make a gift is generally not legally binding without consideration.

Definition of Consideration

• Currie v Misa (1875): Consideration consists of some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.

Sufficiency vs Adequacy of Consideration

• Consideration must be "sufficient" (recognized by courts) but need not be "adequate" (proportional in value).

Types of Existing Obligations & Consideration:

• Obligations under the law: A promise to pay a public official for performing their duties isn't enforceable due to lack of consideration/public policy (firefighters or police officers).
• Obligations under a contract with a third party: Performance or promise to perform can provide good consideration for a new promise.
• Existing contractual obligation to the same party: Most difficult to employ as consideration.

Performance of Existing Obligation

• Stilk v Myrick (1809) says agreements cannot be altered without fresh consideration.

Part Payment of Debt

• Creditor isn't required to accept partial debt unless specific conditions are met.
• Foakes v Beer (1884) holds that partial payment of debt doesn't constitute satisfaction of whole, unless there's an independent benefit.

Past Consideration

• Something already given before promise isn't valid consideration for a new contract.
• Re McArdle (1951) says work was already performed before payment promise was made, so it's unenforceable.

Formative Requirements

• Social and domestic agreements

Social & Domestic Agreements

• Balfour v Balfour (1919) established there is no intention to create legal relations in domestic relationships
• Jones v Padavatton (1969) shows lack of formality suggests no legal contract exists.
• Coward v MIB (1963) highlights that informal agreements between colleagues don't equate to legally binding contracts.
• Merrit v Merrit (1970) demonstrates when parties separate and make agreements, intention to create legal relations is more likely.
• Darke v Strout (2003) similar result to Merrit
• Soulsbury v Soulsbury (2007) Spousal agreements.

Pre-Nuptial Agreements

• Radmacher v Granatino (2010) Pre-Nuptial Agreements are valid if entered freely, with full information and without pressure.
• Simpkins v Pays (1955): A formal agreement exists

Commercial Agreements

• Esso Petroleum Ltd v Commissioners of Customs and Excise (1976) highlights courts generally presume intention to create legal relations in commercial agreements.
• Dresdner Kleinwort v Atrill (2013) highlights this is strong inference when it is concerning employment.
• Edmonds v Lawson (2000) highlights court will find contractual intention
• Blue v Ashley Business.
• Macinnes v Gross (2017) Business Agreement.

Certainty of Terms

• Enforceable contract requires certainty of terms, where the terms of the contract are apparent.
• Agreement must be sufficiently certain.
• Scammell v Ouston (1941) says where its too vague to be bindings.
• Durham Tees Valley Airport v bmibaby (2010) demonstrates sufficiently clear terms to determine level of performance.

Courts Inferring Terms

• Hillas v Arcos (1932): courts will find terms to preserve.
• RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Co (2010) : an objective interpretation is implied.
• British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1984): even if completely preformed an dparties have confidence the contract has not been completed if there is no contract that comes into existence.

Vague Agreements

• Courts won't create an agreement between the parties.
• Courts will use what is the agreement from trade.
• Vague and meangless terms.

Complete Agreement

• To create an enforceable contract , parties must reach an agreement on all the major elements of their contract. The agreement must , in other words , be complete.
• Wells v Devani (2016) Rather , a complete bargain must exist which may be supplemented by further implied terms.
• Courtney & Fairbairn Ltd v Tolani Brothers ( Hotels ) Ltd (1975).

Terms of the Contract

• Statements that forms a breach of a term gives to right ti damages and the right to terminate the contract, but if the statement do not from a part it a representation.

False Representations

• Misrepresentation Act 1967 and Hedley Byrne & Co Ltd v Heller & Partners Ltd AC 465 where misrepresentation had to be fraudulent to receive damages.

Finding the intention of the parties

• Objective test where conduct indicate to a reasonable person to be representation or intended to be in a contract.
• Whether the statement maker has special knowledge of the matter in question –this is indicative that the statement is intended to be a term – Dick Bentley v Harold Smith Motors 2 All ER 65
• Whether the maker of the statement accepted responsibility for the soundness of the statement – where such responsibility is assumed, this indicates that the statement was intended to be a term (Shawel v Reade 2 IR 64).
• The importance attached to the statement – the more important the matter, the greater the likelihood that the parties intended the statement to be a term (Bannerman v White 142 ER 685).
• Where the statement is accompanied by a recommendation that its truth be verified – the statement is more likely to be a mere representation (Ecay v Godfrey 80 LI L Rep 286).
• Where one party clearly relied upon the other, this is indicative that the statement was intended to be a term (Esso Petroleum Co Ltd v Mardon QB 801)

The parol evidence rule

• Parol evidence rule that cant provide extrinsic evidence or contradic or add to the writen contract.
• Promotion greater certainty.
• Promotion prevents to thresh remark or statement

Terms of collateral contracts

• Contractual terms and representations based on a contract.
• Contract collateral running besides the main contract.
• Heilbut, Symons & Co v Buckleton AC 30 and Esso Petroleum Co Ltd v Mardon QB 801.

The use of implied terms

• Implied in the duty from Consumer rights.
• Courts are generally reluctant to imply terms into a contract.
• By statute of operation terms.
• By operation of the common law
• Crossley v Faithful & Gould Holdings Ltd EWCA Civ 293 courts must consider reasonable, farness balancing competing policy
• Geys v Societe Generale UKSC 63at these factors.

Terms implied by operation of statute

• By terms of legislation this makes standard terms in certain terms.
• Also protection.

B@B Cntracts

• Business and another business
• Sale of Goods act 1979 and supply of goods 1982
• Sect 12 has a impliesd term where seller has right ot sell goods.
• Sect 13 says that the goods will conform to any discription given.
• Sect 14 has is where it satifactory quality.
• Sect 14 terms are reasonably fit.