Valid Contract Formation

Formation of Valid Contracts

• A contract's nature can be agreement, unilateral, bilateral, or collateral.
• Offer and Acceptance are principles and evidence in contract law.
• Key concepts include offers, invitations to treat, counter offers, requests for information, termination, and acceptance.
• Intention is required, with presumption and rebuttal in commercial and social/domestic agreements.
• Consideration involves nature, function, sufficiency, adequacy, past actions, performance of existing duties, and promissory estoppel.
• Capacity has a reason for limitation concerning minors' contracts, necessaries, employment and training, continuing obligations, and the Minors' Act 1987 provisions.
• Corporations, persons of unsound mind, and drunkards are also factors in capacity.

Centrovincial Estates v Merchant Investors Assurance Co

• Claimants bought commercial premises let to defendants for £68,320 pa, subject to review.
• Claimants mistakenly proposed new rent of £65k pa vs. £126k pa; defendants accepted.
• Court of Appeal held defendant argument valid, £65k offer interpreted as exact.

Offers and Invitations to Treat

• An offer is a statement of willingness to contract on specific terms.
• For an offer to be valid, intention for it to become binding upon acceptance is needed.
• Storer v Manchester City Council: Council decided to sell houses to tenants,then council resolved not to sell housing unless legally bound. The Court of Appeal found a binding contract because the council intended communication to be binding upon acceptance.
• Gibson v Manchester City Council: Council decided to sell houses to tenants, then not to sell unless legally bound. Gibson asked him Council sent Gibson a document which asked him to make a formal invitation to buy and said Council which "may be prepared to sell' house. The House of Lords stated that a contract had not been concluded because Council had not made an offer capable of being accepted with 'may be prepared to sell' words are fatal

A Statement of Intention

• Describes a party intending to do something, differing from an offer.
• Harris v Nickerson: An auctioneer advertised a sale in London papers with brewing materials etc. The court dismissed claimant's case stating that advertisement was only a declaration to tell potential purchasers the sale was happening

A Supply of Information

• Occurs when one party gives info to another to enlighten them.
• The statement is not intended to be acted upon.
• Harvey v Facey: A telegraphic exchange determined that providing the lowest price does not imply an assurance to sell at that price.

An Invitation to Treat

• Indicates a willingness to do business, inviting offers or commencing negotiations.
• A display of goods is usually an invitation to treat.
• Pharmaceutical Society v Boots: A self-service shop sold drugs listed under the Pharmacy and Poisons Act 1933. Displaying items on shelves for customer selection was not a breach, as the contract happened upon payment under pharmacist supervision.
• Fisher v Bell: A shopkeeper displayed a flick knife with a price tag resulting in a charge for offering the knife for sale. The court deemed the display as merely an invitation to treat, not an offer.

Exception to Invitation to Treat

• Thornton v Shoe Lane Parking: Display via machine will probably be an offer.
• Facts: Thornton drove into car park with prices/risk notice. Automatic ticket machine gave ticket, barrier raised; Thornton parked. Offer was notice at entrance and accepted when drove in.

Advertisements

• Advertisements are invitations to treat unless a unilateral contract is anticipated.
• Partridge v Crittenden: For sale of Bramblefinch cocks/hens was an invitation to treat, and the tender is the offer. Under the Protection of Birds Act 1954, advertising to offer for sale any wild live bird was unlawful
• Harvela Investments Ltd v Royal Trust Co of Canada Ltd: The court held that the advertisement was not an offer but an invitation to treat, and as such the defendant was not guilty.

Auctioneer’s Request for Bids

• An auctioneer's request for bids functions as an invitation to treat.
• Harris V Nickerson: Facts: The defendant was an auctioneer who had advertised in the London papers that certain brewing materials, plant, and office furniture would be sold by him by auction at Bury St. Edmunds over a period of three specified days - Held: The court held, dismissing the claimant's case, that the advertisement was merely a declaration to inform potential purchasers that the sale was taking place
• “Bary V Davies” Facts: Two brand new engine analyser machines owned by Customs and Exise were put up for auction by the defendant auctioneer. Each could be procured from the manufacturer for £14,521 Held: The Court held that the holding of an auction for sale without reserve is an offer by the auctioneer to sell to the highest bidder

Communication of the Offer

• For an offer to be effective for acceptance, it must be communicated.
• Gibbons v Proctor: Giving info to superindendant must be given to the superindendant. A police offer asked collegue to forward some useful information, but he was not aware of the offer at the time. Before info reached the superintendent, the officer became aware of the offer- Held: The officer was entited to the money
• R v Clarke: Facts: Evan Clarke tried to claim the reward of £1000 for giving information that led to the conviction of a murderer - Held: The High Court held that Clarke could not claim the reward because it was necessary to act in "reliance on" an offer in order to accept it, and therefore create a contract.
• Tinn v Hoffman: FactsThe defendant, Mr Hoffman wrote to the complainant, Mr Tinn of offer sell him 800 tons iron for 69s per ton was on same day as without Knowing of this offer, Mr Tin also wrote to Mr Hoffman. They offered buy the iron on simular terms. The case this concerned validity of these two croos offers . Held: It was held in this case that that the contract between Mr and Hoffiman not valid The croos offers were made simullatneiouly without knowede of one another - this was not a contract - because parties would be bind

Acceptance

• For a contract to be formed, acceptance is required, agreeing with each term of the offer.
• Acceptance must 'mirror image' the offer.

Counter-Offer

• Introducing new terms constitutes a counter-offer, rejecting the original offer, so it cannot be accepted later.
• Hyde v Wrench: Wrench offered to sell farm to Hyde for £1,200 but Hyde declined. Wrench wrote again to sell farm for £1,000. Made a counter offer, is what supersedes and destroy's original offer
• Stevenson, Jaques & Co v McLean: - McLean, offer sell iron at 40s and offered to keep it open until monday - The complainant then sent telegram askeing if he will accept 40 for a 2 month period - Held: court is just inquring more so if terms are able to be chagned
• Butler Machine Tool v Ex-Cell-o: Fact: Ex-Cell-O wished to purchase a machine from Butler.- Butler sent out a quotation of £75,535 along with a copy of their standard terms of sale.The terms included a price variation clause and a term that the seller's terms would prevail over anyterms submitted by a purchaser - ex cell o was willing to perchasde but put them under there own terms - Held: The offer to sell the machine on terms provided by Butler was destroyed by the counter offer made by Ex-Cell-O. Therefore the pricevariation clause was not part of the contract.

Communication of Acceptance

• Generally, for acceptance to be effective, it must be communicated to the offeror.
• Acceptance cannot be assumed through silence.
• Felthouse v Bindley: Fact: that Complanaint had asked him before about how to buy the horse The Complant inturn responded via letter about the horse price, and states to john fel that so if there is no response about buying it at a certain price then consider it the sale to the buyer) - Held- There had no been acceptance with nephew and compliante -There had not been acceptence of the offer - - Since no one spoke about the horse since then

Exceptions to Communication Needs

• If the offeror waives communication necessity in certain scenarios, the offeror can waive communication - Fact : Carbolic smokeball said it will be a cure to all kinds of dieses - flu ) the smokeball was a ballon filled with ( cabolic acid ) the tube waill go into a users nose to realse the vapours. Held. This offer was restricted for all to terms
• Carlill v Carbolic Smoke Ball Company: Fact: Carbolic smokeball facts are simular . But made it a cure for influenza . The smokeball facts are simular - Held: that the advertisement was not a unilateral offer to all the world but an offer restricted to those who acted upon the terms contained in the advertisement
• A unilateral contract exists when one party offers payment if another performs or refrains from action. No promise to act or refrain needs to be made. Acceptance arises from performance;no advanced communication is needed. E.g., reward for a lost cat's return.

The Postal Acceptance Rule

• This addresses issues from postal communication. An offer is posted, accepted, and acceptance is posted, but it takes days for the letter to arrive
• the courts devised the acceptance of all which have been communicated - Fact;Adams v Lindsell - that defendants wrote letter saying they are selling 2 tons of wool but and requested reply on the wool. .The letter said that the offer offerer was wrongly addressed. Held: Court said offer had been accepted letter has been posted
• Facts:Household Fire and Carriage Accident Insurance Co Ltd v Grant That mr grant for appllly sharess in inusred The complaints allotted sharess and but to this a letter . letter there was a the for the

Method of acceptance

• Sometimes, an offeror can pick how they want acceptance to be made
• Manchester Diocesan Council for Education v Commercial and General Investments: The complaints decided to commerical property and gave the offer and But the said the docucment - The court stated that must have a precsribe method or acceptance
• Queervadine cole - offer in a is a a accept via the method ?

Change of Mind

• There is no legal Commitment - before the the acpect can before aceptence is made
• Payne v Cave - made then mind to for
• Routledge v Grant- can offer with period

Consideration

• "badge of enforceability" in agreements, important with promises for future action. Immediate exchanges (goods for money) consideration applies theoretically but is rarely a problem.
• Currie v Misa: Lizardi & Co sold exchange bills to and were to on next day. Lizardi was in debt to Currie's and being pressed for. Upon paying the check, Mirsa learned of Lizardi's debts and stop the cheque.A valuable consideration may consist in right, interest, profit on party plus benefit etc by the other Is where part . as the other promise

Currie V Misa

• Thomas v Thomas, wishing it but he with rent a in rent

Existing obligations as good consideration

• There are 3 aspects to the topic = dealign with 3 diffrent to argue consistuation - ar under law
• there is no public official is carrying out an exisisting duty
• Where, however, the official does more than is required by the existing obligation, then the promise of payment will be enforceable
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Exceptions to communication needs

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Hughes v Metropolitan Railway

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Central London Property Trust Ltd v High Trees House Ltd

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