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Summary contract law
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consolidation and negotiation
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Contract 2 - ConsolidationRecap from semester 1
Some preliminary issues;
1. Contract law is based on rules, many of which are very old
2. They come from the common law and from equity
3. Judges interpret the rules and decide cases
4. There is an increasing amount of legislation which ‘interferes’ with freedom of contract
1; Offers
- They are different from invitations to treat [Harvey v Facey is an example of an ITT].
- Adverts – Partridge v Crittenden or Carlill v Carbolic Smoke Ball? Bilateral or unilateral? What is the
supply limit? How would the public see it?
- Price Indicators – Invariably ITT – shopkeeper must be able to refuse to sell items which are dangerous
or offensive [Pharmaceutical Society of Great Britain v Boots; Fisher v Bell].
- Direct communications – offers if ‘clear, definite and explicit and leaving nothing left for negotiation’
[Lefkowitz v Great Minneapolis]
What if offer is withdrawn before acceptance?
- It may be a ‘unilateral collateral contract’.
- Chen Wishart describes this as a procedural contract allowing the court to impute a contractual
obligation on a party before the contract is complete.
- When is it used? Auctions, tenders and after steps taken to try and accept the main contract. Usually if
a party has given rise to a ‘legitimate expectation’ that the offer will be accepted.
- [e.g. Compare Daulia v Four Millbank Nominees with Luxor v Cooper. Also consider case law on
‘auctions without reserve’].
The death of an offer
- An offer can ‘die’ if it is;
- 1. Rejected
- 2. ‘Killed’ by a counter offer [Hyde v Wrench] and watch out for ‘battle of the forms’ [Butler Machine
Tool]
- 3. It expires through lack of time.
- That is why it is a good idea to be only seen to be enquiring as to terms [Stevenson Jaques & Co v
Maclean] which keeps the offer alive.
2; Acceptance. It creates agreement
1. This is not necessarily (yet) a contract
2. It is a meeting of minds
3. But a court can only look at outward appearances
4. EXAM TIP - once we have agreement it is too late to change your mind
The postal acceptance rule;
- It comes from Adams v Lindsell and is still good law even though few people use the post these days!
- It is based on standard use of the post when the rule book was developed and is based on agency
- It only applies to acceptance of an offer – nothing else. It also only applies to a properly addressed
letter put into a GPO post box
- (Exam Tip – It rarely applies these days – Henthorn v Fraser limits use to when objectively reasonable
and subjectively expected)
There are other forms of acceptance
- Silence – not imposed on others [Felthouse v Bindley] but can impose on yourself [Re Selectmove]
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