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Lecture notes Contract Law (LAW1030) Contract Law, ISBN: 9780198855293
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Notes for both semesters of Contract Law in the University of Leeds.
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CONTRACT LAW NOTESWhat is Contract?
Contract is a legally enforceable agreement.
Promises and agreements are made every day, but these are not contracts.
The key of the contract is the legal enforcement.
It is an agreement, so at least there will be two parties to a contract.
There could be multiple parties in a contract as well. Ex: a society.
The essence of the contract is the freedom of contract.
A person is free to decide whether to make a contract.
A person is free with whom to make a contract.
A person is free on what terms the contract is made.
It couldn’t be an imposition to be a contract, must be a personal decision.
Contract is legally enforceable: it creates legal obligations for the parties.
If one party fails to perform his actual contract obligations after making a valid
contract, he will be liable for breach his contract.
Parties assume the legal obligation and sanctions derived from the contract.
Examples:
Tim and Rob agree to have a drink together after the contract law lectures.
o NOT A CONTRACT.
o Not legally enforceable, no legal implications.
You accept an offer made by the University of Leeds to study LLB course at
the School of Law.
o CONTRACT.
Four elements of contract
First question to get a legal contract: is this a valid contract?
Elements of a valid contract:
Offer
Acceptance
Intention to create legal relations
Consideration
,Finding parties intention
Subjective test: it is applied when a non-mistaken party intends to take advantage of
the mistaken party.
What are the parties’ true intention?
This test is applied in exceptional cases
Objective test: the test that is normally applied.
What would a reasonable person in the shoes of the party think?
Lecture 2: Formation of Contract (part one)
Process of formation of contract:
Offer + Acceptance + Consideration + Intention to create legal relation = Contract.
Offer: a proposal made by one party to form a contract on the stated terms to
another party or a group of people.
Party making the offer: offeror.
Party to whom the offer is made: offeree.
o The offeree could also be a group of people.
The offer can be done orally in writing. There is no requirement for form.
Elements of Offer
Element 1: intention.
Clear intention of the offeror to be bound on stated terms.
No need for further negotiation on the terms stated if its ready for acceptance.
Element 2: certainty of key terms.
An offer must contain specific key terms.
o Ex: how much is going to be charge for the item, the item itself.
An offer does need to contain all the terms of the contract.
Key terms must be certain.
Example 1: I send you a letter that I am willing to sell my BMW x5 to you for 40.000.
Intention: yes.
The offeror clearly expressed his intention of the realization of a transaction.
He said that he is willing to sell his car.
Certainty of key terms: yes.
IT IS AN OFFER.
,Example 2: I send you a letter stating that I am considering selling my BMW x 5 you
for £40,000, if you are interested, please get back to me.
It is missing the intention element.
Example 3: I send you a letter stating that I am willing to sell one of my cars to you
for £40,000.
Certainty of key terms: no.
o It is not stating which car is it going to sell you.
What is an invitation to treat?
Invitation to treat: a statement indicating willingness to receive offers or negotiation
from the other party.
The main difference between offer and invitation to treat is the intention of the
party making the statement.
o Invitation to treat lead to an offer.
Gibson v Manchester City Council [1979] 1 WLR 294.
Manchester City Council sent a letter to Gibson stating: “The corporation may be
prepared to sell the house to you for £2,180 (freehold)... If you would like to make a
formal application to buy, please complete the enclosed application form and return
it to me as soon as possible.”
It is an invitation to treat.
o MCC are extending an invitation to do a formal application in case they
want to make a treat.
Filling up the formal application would be the formal treat.
, Harvey v Facey [1893] AC 552.
The dispute is about if the parties have made a contract for the sale of a property in
Jamaica.
“Claimant: “will you sell us Bumper Hall Pen? Telegraph the lowest price.”
Defendant: “lowest price for Bumper Hall Pen £900.”
Claimant: “We agree to buy Bumper Hall Pen for the sum of nine hundred
pounds”.
Defendant does not reply”.
Is it an offer or an invitation to treat?
The defendant never accepted the offer that was proposed.
o It means that there is no contract at all.
o The serious offer was the time in which the claimant expressed his
intention to buy the property for a previously accorded sum.
Intentions are not clear: defendant never expressed that he was willing to sell.
o The first contact of the claimant was not an offer.
Advertisement
Partridge v Crittenden [1968] 2 All ER 421.
“Brambelefinch cocks, Bramblefinch hens 25s each”.
By reading these, there is no clear intentions to sell.
o They’re just promoting a product, but they hadn’t manifested any
particular willing to any offeror to sell their products.
It is an invitation to treat because, no clear intention to be bound on the terms.
General principle: an advertisement itself it’s not considered an offer but an
invitation to treat.
o This was a leading case in terms of this general principle.
Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256.
Advertisement offering to pay £100 to any person who caught influenza after using
the smoke ball remedy in the specified manner. To show its sincerity, the company
deposited £1,000 in its bank.
In this case, there was a clear expression from the company to be bound.
o The company deposited £1,000 in its bank.
o It was a formal movement from them expressing their intentions.
An advertisement is normally an invitation to treat, but if the party has a clear
intention to be bound on the terms, it is an offer.
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