Contract Law PDF - Part 1

The Law of Contract Part 1 LAW OF Introduction CONTRACT Essential elements © KAREN MURRAY BL 1 WHY IS THE LAW OF CONTRACT RELEVANT TO A BUSINESS? Marketing service agreements Agreements with social media platforms to place advertising. Agreements...

The Law of Contract Part 1 LAW OF Introduction CONTRACT Essential elements © KAREN MURRAY BL 1 WHY IS THE LAW OF CONTRACT RELEVANT TO A BUSINESS? Marketing service agreements Agreements with social media platforms to place advertising. Agreements with suppliers, employees, professional service providers Contracts with consumers (which is the goal of any advertising campaign) Sales and leases of premises Insurance agreements Credit agreements Intellectual property agreements – licences or assignments Contracts between Data Controllers and Data Processors to process personal information (It is a lawful basis for processing personal data in the GPDR) © KAREN MURRAY BL 2  May be verbal or in writing – depends on subject matter of agreement. Essential elements – WHAT IS A 1. The agreement is made by firstly an offer CONTRACT? 2. and secondly acceptance. An offer + acceptance= agreement. 3. There is a bargain, supported by IT’S A 4. consideration. The parties must have an intention to create LEGALLY legal relations. BINDING Other matters may affect validity: parties must have capacity. Content must be clear, might AGREEMENT. need to be in a particular format, must be genuine consent. Otherwise, the contract may be void, voidable or unenforceable. © KAREN MURRAY BL 3 Void contract - No contract. Voidable contracts Unenforceable contracts Attempt is made to enter into An agreement whereby one party All essential elements may exist but agreement but the law will not may withdraw from it. This will make the contract should have been in recognise it e.g. agreement between it void. writing, such as a contract to buy minor and seller about goods that The agreement is valid unless the land, but is not. The contract is are not necessary. innocent party decides to withdraw therefore unenforceable. from it and terminate the agreement e.g. someone enters into a contract at gun point. FOR REFERENCE © KAREN MURRAY BL 4  A promise to be bound provided certain specified terms are accepted. May be made in writing or made orally The terms of the offer must be definite for example in Gunthing v Lynn the statement ‘I will buy your horse if I’m lucky’ is not an offer because it is too vague. An offer may be made: to a particular person, the public at large or to a specific class of persons. But it is not: (a) A declaration of intention 1: WHAT IS (b) The mere supply of information : In Harvey v Facey the plaintiff telegraphed the defendant ‘Will you sell AN OFFER? us Bumper Hall Pen? Telegraph lowest cash price’. The defendant replied ‘Lowest price for Bumper Hall Pen £900’. The plaintiff telegraphed his acceptance of the ‘offer’. But is there an offer to be accepted in the first place? Held: No contract had been made. The defendant’s reply was a statement of his price if a sale were to be agreed. It was not an offer that could be accepted. (c) And an offer is not an invitation to treat © KAREN MURRAY BL 5 AN INVITATION TO TREAT IS NOT AN OFFER E.g. Display of goods, Auction sales, Advertisements, Request for tenders Phamaceutical Society of Great Britain v Boots Chemists There was a law that stated that certain pharmaceutical products could only be sold 'under the supervision of a qualified pharmacist'. Plaintiffs alleged that this rule had been broken by Boots because Boot had put the products out on the open shelves in a self-service shop. But where does the sale take place? Boots successfully argued that there was no sale until a customer pick up the product and brought it to the cash desk. At that point the consumer offered to buy them, and a qualified pharmacist was stationed at this point, accepted their offer. It was therefore held, that the display of goods on the shelves was only an invitation to treat and so Boots was not in breach of any laws. © KAREN MURRAY BL 6 ADVERTISEMENTS – NOT OFFERS Advertisements are generally not offers and are only invitations to treat. (Websites are similarly only invitations to treat and do not amount to offers). Partridge v Crittenden It was a criminal offence to ‘offer for sale’ certain types of birds. The plaintiff placed an advertisement in a journal selling the birds that were specifically prohibited. The advert stated ‘Bramble finch hens, 25s each’. A man ordered a hen and enclosed the money. The advertiser was prosecuted for unlawfully making an ‘offer’ to sell the birds. But have the birds been offered for sale? Held: He did not ‘offer’ the birds. The advertisement is only an invitation to treat, the advertiser did not ‘offer’ the birds for sale. © KAREN MURRAY BL 7 7  THERE IS AN EXCEPTION TO THIS RULE Sometimes an advertisement can constitute an offer if it was intended to bind the advertiser if people relied on it. Carlill v Carbolic Smoke Ball Co The defendant manufactured a medicine and promised to pay £100 reward to anyone who caught influenza after using the ball correctly. To show their intent and sincerity, they lodged the sum of £1,000 into a bank account. Mrs. Carlill purchased and used the ball correctly but caught the flu. She looked for the €1,000 but this was refused. The Carbolic Smoke Ball company argued that the advert was merely an invitation to treat. Held : advertisement was indeed an offer to the whole world. Mrs. Carlill accepted the offer. The lodgment of €1,000 was a sign of sincerity and consideration. © KAREN MURRAY BL 8  If an advertisement states something like ‘out [it] must go, first come first served’ that can amount to an offer. Lefkowitz v Great Minneapolis Surplus Store CONT'D It was held that where something is "clear, definite, explicit and which leaves nothing open for negotiation" then such an advertisement may constitute an offer. © KAREN MURRAY BL 9  TERMINATION OF THE OFFER An offer may only be accepted while the offer is still open. It will terminate (or come to an end): (a) after a period of time (if stated in the offer) or after a reasonable period of time if it is not accepted. (b) Revocation: An offeror can withdraw their offer at any time before it is accepted even if they agreed to leave it open. For example in Routledge v Grant the defendant offered to buy the plaintiff’s house requiring acceptance within 6 weeks. Within that time the defendant withdrew his offer. Routledge sued but Grant was free to withdraw his offer at any time before acceptance. However, Revocation will only be effective if it is communicated to the offeree before acceptance either by the offeror or by a reliable third party. © KAREN MURRAY BL 10  FOR EXAMPLE: Billings v Arnott & Co – The defendants offered to pay employees who joined the Defence Forces half their salary (up to £2) per week. The plaintiff informed his employers that he wanted to take up the offer (or accept it, in other words) but was told that he ‘could not be spared’. Billings sued but Arnotts argued that they had revoked their offer so there was nothing for him to accept. Had they? What is the rule and apply it? _______________________________________________ _______________________________________________ ________________________________ A withdrawl of an offer by post will take effect from the time of receipt. (It is also worth noting that the Equal Status Act, 2000 provides prohibits rejection on grounds such as gender, civil status, disability, family status, sexual orientation, race, religion, age, membership of the travelling community and a claim could be made to the WRC). © KAREN MURRAY BL 11 2. ACCEPTANCE Offer + acceptance = agreement Acceptance takes place when the offeree (the person to whom the offer is made) accepts the offer made by an offeror. Acceptance may be by express words spoken or written or by action The acceptance must be clear and unqualified and must be communicated to and received by the offeror. © KAREN MURRAY BL 12 Effect of Silence Passive inaction is not acceptance; there must be some act undertaken. For example in Felthouse v Bindley The plaintiff offered by letter to buy a horse and stated ‘If I hear no more about him, I'll consider the horse mine at £30’. No acceptance was communicated and the horse was sold. The plaintiff argued that a contract existed between the parties. Held: There was an offer but no acceptance. An offeror cannot impose acceptance merely because the offeree has not rejected the offer. Postal Rule: Where the use of the post is within the contemplation of both the parties, acceptance is effective as soon as a letter is posted. Where a form of instantaneous communications is used the opposite rule applies: the contract is only complete when the acceptance is received by the offeror. What is an instantaneous communication do you think? E-commerce Act 2000 is also relevant here.© KAREN MURRAY BL 13