GDL Contract Law Revision Notes(Distinction Level) 2023
GRADED A
Contract Law Notes
Agreement and Contractual Intention
Agreement:
In order for parties to reach an agreement, one party must make an offer which is acceptedby the
other.
‘Offer’: Professor Treitel: ‘an expression of willingness to contract on certain terms, madewith the
intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.’
‘Offeror’: Person who makes the offer. ‘Offeree’:
Person to whom the offer is made.
‘Expression’: May take different forms, e.g. a letter, newspaper advertisement, fax and conduct, as
long as it communicates the basis on which the offeror is prepared to contract.
‘Intention’: Does not necessarily mean the offeror’s actual intention. Smith v Hughes: Objective test.
Courts look at what was said and done between the parties, from the pointof view of a ‘reasonable
person’, and try to decide what a reasonable person would have thought was going on.
Allied Marine Transport: If the offeror so acts that his conduct, objectively considered, constitutes an
offer, and the offeree, believing the conduct of the offeror represents hisactual intention, accepts the
offer, then a contract will come into existence. Subjective element of the offeree must believe the
offeror intended to make an offer.
Offer or Invitation to Treat:
Offers are distinct from inviting negotiation E.g. ‘I am thinking of selling my car, £7,000 would be a
realistic asking price, would you be interested in buying it?’ – An ‘invitation totreat’ is where there is no
such intention to be bound.
Goods on display are invitations to treat, as otherwise as soon as the customer put selectedthe goods
and put them in the trolley they might be regarded as accepting the offer. The customer offers to buy
the goods when presenting them at the payment point, and acceptance takes place when the shop
takes payment. (Pharmaceutical Society of Great Britain v Boots Cash Chemists).
,Advertisements: Generally regarded as invitations to treat. Partridge v Crittenden: Defendant not
guilty with ‘offering for sale’ a live wild bird contrary to law, by placing an advertisement in a periodical.
Seen as an invitation to treat, as if it was an offer anyone asking for the advertised goods would be
accepting an offer which would be problematic ifthey had run out of stock.
Advertisements of rewards traditionally treated as an offer, as there is intention to be bound as soon as
the information is given (Williams v Carwadine). Payment has to be madeonce information supplied,
no negotiation is involved – Encouraging people to come forward.
In exceptional circumstances, advertisements may be an offer if there is a clear intention to be bound.
Carlill v Carbolic Smoke Co: Company manufactured a product designed to prevent flu. Their
advertisement in the newspaper stated a reward of £100 would be paid toanyone who contracted flu or
a cold after using the smoke ball 3 times per day for 2 weeks according to supplied directions.
Advertisement also stated company had deposited £1,000 with a named bank to show the sincerity of
its offer. Claimant contracted flue whilst using it.Company raised 3 defences: (a) Advertisement was
mere puff sales (dismissed, as £1,000 had been deposited as evidence of sincerity – meaning a
reasonable person would treat
£100 promise seriously); (b) No offer to any particular person (dismissed, as offer was to anyone who
fulfilled conditions stated); (c) Claimant gave no notice of acceptance (dismissed, as held that
company could not have been expected every user of product to contact them). Case is the authority
for the proposition that an advertisement can constitute an offer to ‘the world’, and that it may, by the
way in which it is stated, waive theneed for communication of acceptance prior to a claim under it.
Unilateral and Bilateral Contracts:
Bilateral Contract: Arises where one party makes a promise in return for a promise from theother
party. Both parties are immediately bound.
Unilateral Contract: A promise in return for an act – Commitment is one-sided. The promisor is
bound to perform if, and only if, the person(s) to whom the promise is madeperforms the specified act.
E.g. An offer of reward.
Auctions: s.57(2) Sale of Goods Act 1979: A sale by auction is complete on the fall of the
auctioneer’s hammer. Bids are offers which can be withdrawn at any time before acceptance.
Auctioneers calling for bids is an invitation to treat.
Sale in auction ‘without reserve’: Barry v Davies: Refusal of auctioneer to sell due to bid price being
exceptionally low. Claimant could sue as there was a contract between auctioneer and bidder if good
advertised ‘without reserve’ – Auctioneer is promising to sell to the highest bidder (unilateral contract).
Bidder had accepted auctioneer’s unilateral offerby making the highest bid. Claimant could not sue
owner of goods as there was no contractbetween them.
,Tenders: Businesses outsourcing work will invite contractors to submit tenders for the job(invitations to treat).
The tenders will be offers which may or may not be accepted by the businesses.
In certain situations, tenders can constitute offers. Blackpool & Fylde Aero Club: Council invited
tenders to operate pleasure flights from Blackpool airport (invitations sent to 7 interested parties).
Invitation stated that tenders had to be received not later than 12 noon 17th March. The Aero Club
posted their tender at 11am 17th March, however due to an oversight the letterbox was not emptied at
noon on 17th March and therefore tender was recorded as late and not considered. Held, that invitation
had laid down a ‘clear, orderly andfamiliar procedure’ so that the tenderers obviously would assume
that if they submitted a conforming tender they would have the right to have it considered along with
the rest. The council should have specified the terms on which tenders would be considered, but they
had not done so, and accordingly were bound by the reasonable expectation of the tenderers. Council
had a contract with the accepted tender, but also a unilateral contract with the Aero Club (to consider
all tenders submitted on time). The Club had accepted this offer by submitting such a tender, and
therefore the Council was liable for damages for loss of opportunity.
Termination of Offer:
An offer may be terminated in 3 ways:
- Revocation;
- Rejection by the offeree;
- Lapse of time.
Revocation:
General Rule: Offer can be withdrawn at any time before acceptance. Once an offer hasbeen accepted
it is irrevocable (Routledge v Grant).
Routledge v Grant: Promises to Keep offers open for a certain period of time are not bindingif they are
gratuitous promises (in the sense that the offeree has not given, or promised anything in return for the
promise to keep the offer open).
Offeror can revoke the offer within the specified time as long as it has not been accepted.
Exception to the rule in Mountford v Scott: Claimant paid £1 for the option to buy Vs housefor
£10,000. Option was exercisable within 6 months. V purported to revoke the offer.
Claimant subsequently sought to exercise the option. Held, that the offer was irrevocable as the
Claimant had paid for the option. In paying, the Claimant had given consideration for theOfferor’s
promise to leave the offer open for 6 months. Offeree has given (or promised) something to the Offeror
in return for keeping the offer open.
, Revocation must be communicated to the Offeree in order to be effective (not when it isposted)
(Byrne & Co.).
Professor Treitel: Some exceptions to the general rule that a revocation must be communicated.
Examples include: Withdrawal sent to Offeree’s last known address if they have moved without
notifying Offeror, or a withdrawal that reaches the Offeree who simplychooses not to read it.
Revocation of offers made to the public should be at least as prominent as the original
advertisement in the same format/section/publication etc. (Shuey v United States – USAuthority,
therefore not binding on English Courts).
Notice of Revocation Sent to Businesses: Brimnes: ‘if a notice arrives at the address of the person
to be notified, at such a time and by such a means of communication that it would inthe normal course
of business come to the attention of that person on its arrival, that person cannot rely on some failure
of himself or his servants to act in a normal business like manner in respect of taking cognisance of the
communication so as to postpone the effective time of the notice until some later time when it in fact
came to his attention.’ If notice arrives during office hours, it is likely to be effective at that point, even if
not read until the next day – Depends on what is reasonable, bearing in mind the context and the
situation as a whole. Mention in an answer, even if not business situation.
Revocation must be communicated by a reliable third party (Dickinson v Dodds): Need nothave
been authorised by the Offeror to communicate notice of revocation, but he must be objectively
perceived as being reasonable.
Revocation of Offers of Unilateral Contracts: Professor Treitel: With unilateral contracts no
obligations arise until the specified act is completed; Acceptance only occurs when performance is
complete.
Errington v Errington and Woods: Father bought a house in his name, and allowed his Son and
Daughter-in-Law to live in it. He promised them that if they paid the mortgage instalments he would
transfer the house to them (an offer of a unilateral contract, as the couple did not promise to pay the
mortgage, they simply did so). When the father died, his widow sought possession of the property.
Held, that the father’s promise was irrevocable solong as the couple continued to pay the instalments.
Reference to an implied promise not todispossess the couple as long as they paid the mortgage
instalments. Likely that the Offeror cannot revoke once the Offeree has started to perform the act of
acceptance.
