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Lecture notes - Contract Law
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Full, and concise notes on contract law, which includes both modules taught at Queen Mary.
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OFFER AND ACCEPTANCEOFFERS:
- A contract: agreement giving rise to legal obligations, enforced/ recognised by law
- Requirement one: offer must be present!!! -> diff between offer and invitation to treat
(offer to enter negotiations), intention of the offeror is most important essentially
- In order for it to be an offer -> person offering needs to say he regards himself as legally
bound to deliver if it is accepted by the other
- Gibson/ Storer v. Manchester city council: regarding council house sales -> “may be
prepared to sell” - “may” means that it is an invitation to treat as opposed to an offer!
(they haven't said they will sell, only that they’ll enter negotiations, aka not a contract)
- Supply of information: literally that. E.g. how much is X? Y - not invitation for further
negotiations
- Statement of intention: “I intend to do X” - not an invitation for further negotiations
- Invitation to treat, Supply of information, Statement of intention. None of these are offers.
- Goods on display in a shop are not offers, they are actually invitations to treat,
(pharmaceutical society of GB v. Boots, 1953) -> Customer is making the offer, not the
shop
- (as long as you put some wording indicating you don’t plan on entering into a contract,
the court will usually accept this and you are not forced to enter said contract) e.g.
subject to contract, this does not constitute a contract etc.
- A free trial e.g. Netflix and Spotify, is an invitation to treat? Customer actually paying for
something and not cancelling the subscription constitutes the offeror
- Revocation is key to who is making the offer in a shop, life, etc.
- Think about where the contract has been concluded, and where the sale can no longer
be revoked without breaking initial contract
- Fisher v. Bell, 1960, owner of shop with Flick Knife on display cannot be criminally
charged as it was not an offer of sale, it was an invitation to treat
- Advertisements are generally seen as invitations to treat, not offers.
- Partridge v. Crittenden, 1969, advertised endangered birds, but once again not an offer
so couldn’t be criminally charged
- Display is not always an invitation to treat.
- Thornton v. Shoe Lane Parking, 1970, parking machine makes offer, thornton putting
money in is acceptance of said offer due to lack of possibility of revocation, issue is that
there was no negotiation, terms and conditions invalid as they were displayed following
initial offer and acceptance
- Statement can simply be a statement of information, not an invitation to treat
- Simply being told price, is not a legally binding contract. Harvey v. Facey 1893,
essentially you need indication there is intent to enter negotiations/ contractual relations
- Statement of intention, Harris v. Nickerson, 1873
- Bilateral contract: both parties have a contractual obligation
, - Unilateral: only one party has an obligation (rare), e.g. reward offer for lost pet, no
obligation to look for pet but obligation to pay if found
- Carlill v. Carbolic Smoke Ball Co., 1893, (exception to general rule that adverts are
invitations to treat) (here its treated as an offer) -> CSBC says they will pay each person
who uses product and gets ill, as they claim to have deposited money, this is seen as an
offer -> the deposit shows severity of their intentions. Therefore csbc must pay.
- Until acceptance, the offer remains open, after acceptance however, the contract is
binding, aka in order for a contract to be binding, need offer and acceptance
- Ways an offer can be terminated: revocation, rejection, expiry, lapse
- Payne v. Cave, 1789, (revocation) -> an offer not accepted is non-binding
- Offord v. Davies, 1862, -> even if offer is for specified time period, can be withdrawn
- Revocation must be communicated to the offeree, but not necessarily by the offeror
- Dickinson v. Dodds, 1876 -> if communicated by anyone that offers been revoked it can’t
be accepted by offeree
- Byrne v. Van Tienhoven 1880, -> telegram of acceptance arrives before letter of
revocation, revocation is null as hasn’t been communicated, so there is a binding
contract
- Revocation with unilateral contracts: Luxor Ltd v. Cooper, 1940 -> offer can be revoked
once the act of acceptance has begun (house sales and commission)
- Errington v. Errington, 1952 -> once act of acceptance begins, offer cannot be revoked,
however, the act needs to be completed or contract ceases to be binding
- Daulia Ltd. v. 4 Millbank Nominees, 1978 -> offeror cannot do anything to prevent act of
acceptance from taking place
- Offers can be rejected expressly and by counter offer
- Counter offer tends to kill original offer, so original offer can no longer be accepted
- Financings Ltd v, Stimson, 1962, if condition unfulfilled, offer ends
- Offer can lapse for want of acceptance, Ramsgate Victoria Hotel Co. v. Montefiore 1866
- If offeror dies, offer can lapse, (but estate/ next of kin could fulfil contract instead) ->
generally not the case and in most cases the offer will just lapse instead
ACCEPTANCE:
- For a binding contract acceptance must be communicated -> must be mirror image or no
contract
- Revocation cannot take place after acceptance has been communicated
- Acceptance must be in response to an offer, R v. Clarke 1927 -> clarke was unaware of
offer when ‘accepting’ so can’t claim it
- Need knowledge of the offer to be able to validly accept it
- Acceptance needs to be communicated to the offeror (aka cannot be accepted by
silence), Felthouse v. Bindley 1862, court claims that silence cannot be acceptance of an
offer
- Brogden v. Metropolitan Railway 1877 -> can accept offer by action, case where no
formal contract, but Brogden behaved in accordance to agreement, so accepted the offer
by conduct
, - Communication only applies to classic bilateral contracts, e.g. Carlill v. Carbolic Smoke
Ball Co. -> offeror waives requirement of communication through forming unilateral
contract
- Postal acceptance rules: acceptance by post takes place where and when the letter has
been posted (Despatch rule) -> Exception to general rule of communicated acceptance.
This rule only applies to acceptance of offers, not to revocation.
- Despatch rule also only applies if its reasonable for the offer to be accepted by post
- Postal acceptance rule doesn’t apply to instantaneous communication -> only accepted
once it has been communicated
- General contractual principles are applied to issues raised by electronic correspondence
- J Pereira Fernandes SA v. Mehta 2006 -> email can be a significant thing of contract
formation, however it must be a signed email
- Allianz Insurance Co-Egypt v Aigaion Insurance Co SA 2008
- General rule is has to be validly accepted and communicated (aka email must actually
be delivered -> court must consider if the email has been read, is it reasonable for the
recipient to have read it? (depends on industry)
- Offeror can prescribe that acceptance is communicated in a certain way
- Is this binding? Yes, if offeror states contract isn’t binding unless it is accepted in certain
way
- Manchester Diocesan Council for Education v. Commercial & General Investments
(1970) -> offeror didn’t state he would ONLY accept acceptances to a certain address,
therefore any acceptance is valid
- Butler Machine Tool Corp. v. Ex-Cell-O Corp. (1979)
- Offer said to be on sellers terms -> which prevail over buyers terms
- Buyers order contained different terms and court sided with this -> Buyer’s order was as
counter offer (no mirror image), the fact they returned the tear off slip counted as an
acceptance of this contract, so therefore they accepted the counter offer
- Dissenting judge (Lord Denning): better to look at totality of documents, and to see if the
facts of all the documents lead to an offer/ acceptance
- Tekdata Interconnections Ltd v. Amphenol Ltd (2009) -> still must have mirror image of
offer accepted by the other parties, certainty (this is why they choose english courts a lot
of the time)
EXAM QUESTION:
- “Will consider all offers” -> offer in itself, so it must be analysed separately
- Tom: offered clearly (accepted) by phone, but Gertrude didn’t check her voicemail, so
she might have liabilities to Tom
- Olga: Counter offered (wanted to look first), so no acceptance, but Gertrude didn’t see
emails due to broadband issues, no liabilities
- Arianna: Visits, pays in full, and takes TV -> a valid offer and acceptance so valid
contract
- IRAC:
-> Issue: what are legal issue(s) relevant to the problem
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