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Contact Law 2 LLB Law
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Lecture notes of 109 pages for the course Contract Law at CF (Contact Law)
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Contract law: semester one:Lectures > Txbk > further reading
Textbook reading: descriptive and for understanding concepts - to expand notes
Further reading: opinion and journal articles - EXAM MARKS - viewpoints for critical analysis and opinion - pick key
3/4 authors to study out of each list - These sources may include primary sources, academic commentaries and
articles, and official reports (including reform proposals by the Law Commission)
A contract is a legally binding promise or agreement. The objective of this course is to introduce students to the core legal
principles and concepts governing contract law, and the issues which arise when there is a contractual dispute. Students
will be introduced to the nature and role of contract law, and the basic principles surrounding the formation of a contract.
The course will deal with issues concerning the performance of the contract, including the interpretation of contract terms
and the regulation of unfair terms. Finally, it will look at the remedies available if somebody breaks (breaches) a contract.
1. Identify and discuss the core legal principles in contract law
2. Find, refer to and discuss a range of legal source on contract law, including cases, legislation and academic
commentary
3. Apply principles of contract law to everyday situations and problems affecting consumers and enterprises.
4. Compare and contrast different contract law cases which deal with similar aspects of law.
5. Discuss the policy behind contract law regulation by the courts and legislature.
6. Discuss options of the reform of contract law.
O’Sullivan and Hilliard The Law of Contract (9th ed. OUP 2020),
Naidoo, Complete Contract Law: Text, Cases, and Materials (1st ed. OUP 2021)
key information/ words
case examples
academics
,1. Introduction to contract law:
-an agreement between the parties, usually indicated by the acceptance of an offer;
-it must appear that the parties intended to enter a legal relationship and the terms must be sufficiently certain;
-the agreement must represent an exchange of value between the parties (consideration)
-there is law relating to the interpretation of terms, the sources of terms, and how certain terms can be challenged and there
are legal rules on what is required for performance of a contract and the options following a breach.
-the primary remedy following a breach is compensatory damages and the amount awarded will be limited by the
remoteness principle and where relevant, the duty to mitigate (non-compensatory damages are exceptional, as are the
remedies from equity)
-it is possible for a contract to be enforced by a third party.
-pre-contractual wrongdoing such as misrepresentation, duress and undue influence are vitiating factors that impair the
consent to the contract= contract being rendered void.
-a party can also escape from the contract following an agreement mistake or a mistake that made the contract impossible
to perform from the start.
-a contract can also be ended on the basis of frustration which is where the performance of the contract becomes
impossible (the principles of mistake and frustration are exceptional)
-the parties’ intentions are determined by an objective approach which results in more certainty and predictability.
-the standard of objectivity to be applied is that of the reasonable person in the position of the parties.
-contract law is mainly common law-based and makes use of principles from equity, tort, and unjust enrichment.
-the legislation that applies to contracts exists to either solve a problem with the common law or to initially implement EU
objectives
-under the classical model, disputes were resolved based on what the parties agreed at the time of contracting only.
-such intentions were assessed on the assumption of freedom of contract, the sanctity of contract and parties being self-
interested market actors.
-later cases show a more interventionist approach in which rules or standards were imposed.
-many cases are still explained by the values of the classical model.
-a lot of contract law can be described as default rules that only apply when the parties have not been clear enough about
their intentions.
-the recent recognition of relational contracts is a significant departure from the classical approach of focussing on what was
agreed at the time of contracting.
-the recent cases show that an obligation of good faith is implied into relational contracts unless it appears to be excluded by
the parties, either from the terms or impliedly from the circumstances (a further shift away from the classical model)
Ai. What is a contract?
-there is no legislative or case law definition of a contract
-contract: an agreement giving rise to obligations enforced or recognised by law (a legally enforceable obligation between
parties) - exchange of promises - can be taken to a court - based on a specific agreement of the contracting parties (so
distinguished from other legal obligations
*this status of being legally enforceable means if a party to the contract fails to perform its obligations, the other party
could enforce the agreement and be awarded compensation for losses from the failure to perform
-formed by one party making an offer which is then accepted by the
other
-legally enforceable=
1. it must appear that the parties intended for the agreement to
be legally enforceable
2. ‘consideration’ requires the agreement to reflect an exchange
of value between the parties
Aii. Overview of contract law:
-general part of contract is determined by common law
-primary sources of law are the judgements of the courts (cases e.g. misrepresentation)
-secondary sources e.g. textbooks (not the law - do not quote)
-not many types of contract are closely regulated by statute e.g. sale of goods, landlord and tenant
,-common la thinking: what is the reasonable approach in all the circumstances? But liability for breach of contract is strict
-risk should be allocated by who’s in the best position to access the type and level of risk involved in the transaction and
take appropriate precautions
-public interest angle: Should there be complete freedom of contract or is there a person/ group of people? State interest
etc. needs to be protected?
C20 Treitel, Cheshire and Fifoot
C19 Anson and Pollock
B. Formation of a legally binding contract:
-intention to create a legal relation
-agreement= offer and acceptance, and certainty:
-consideration: the element of mutuality (doctrine of consideration: both of the parties are offering something)
-any requirements of form e.g. signed docs (requirements of form are limited in most cases oral agreement is a valid
contract) based on what two people say to each other (enforceable: requires proof of what was said and agreed e.g. giving
testimony in court for a judge to weigh alongside other evidence and rule on what was said
-absence of set formalities or format requirements for contracts represents a general position rather than an absolute (final)
one as there are exceptions where legislation does require formalities
e.g. the ownership of a house or land The Law of Property (Miscellaneous Provisions) Act 1989 requires a deed to be
a written, signed by the party and witnessed by two people who also sign - to avoid the requirement of an exchange of value
and pass on rights
C. The concept of ‘intention to create legal relations’:
-ambiguity when forming a binding contract= the law presumes there is no intention to create legal relations
-a mere puff or an offer?
Carbolic Smoke Ball: Carlill v carbolic Smoke Ball Co (1893) 1 QB 256 - selling a cure to the influenza flu and rewarding
any person contracting the illness - how do u prove it? how would an ordinary person reading this document construe it?
Domestic context of intention:
-Balfour v Balfour (1919) 2 KB 571 - presumption that no intention to create legal relations
-contrasting Merritt v Merritt (1970) 1 WLR 1211 - intended to be held to what they agreed to as already separating
Social context of intention:
-Wilson v Burnett (2007) EWCA Civ 1170 - friends querying an agreement to share winnings
-contrasting Blue v Ashley (Rev 1) (2017) EWHC 1928 (Comm) - businessmen discussing initial public offering of shares in
Sports Direct - setting, tone and vagueness and lack of commercial sense - whether the agreement is certain enough
(are important matters left out of an agreement or terms too vague to be enforced= partied did not intend to have a
legal relationship
Commercial context of intention:
-an express agreement means there is an intention to create legal relations
Barbudev v Eurocom Cable Management Bulgaria Eood and Others (2012) EWCA Civ 548 - does not consider their
subjective state of mind - onus on demonstrating lack of intention lie on the party asserting it
-an implied agreement means there is onus on party alleging the existence of a contract to prove intention to create legal
relations
Baird Textiles Holdings Ltd v Marks & Spenser plc (2001) EWCA 274 - no long-term contract was implied but M&S
purchased clothes of the claimant for 30yrs
D. Offer and acceptance:
-has one party made an offer? has the party accepted it (before any revocation of the offer)?
, -offer: an expression of willingness to contract on specified terms with the intention (actual or apparent) that it is to become
binding as soon as it is accepted by the person to whom it is addressed - how far is it necessary to have a separate test
of intention to create legal relations?
-the party intended to be bound by the statement made (offer)
-the statement was just an opening of negotiations (invitation to treat e.g.
commercial contracts: advertisements, display of goods in a shop or
obtaining a ticket from a machine)
-revocation of an offer: an offer can be withdrawn/ revoked at any time
until it is accepted (unless offeree acted to detriment in reliance on the
offer or benefited the offeror - to be valid a revocation must be
communicated
-acceptance: a final and unqualified expression of assent to the terms of
the offer
-unqualified assent:
action effect case
counter offer (proposal changing or destroys original offer Hyde v Wrench (1840) 49 ER 132
adding terms to original offer)
request for further info no effect on offer Stevenson, Jacques & co v McLeon
(1879-80) LR 5 QBD 346
E. Consideration:
-consideration: an act or forbearance of one party, or the promise thereof, is the price for which the promise of the
other is brought, and the promise thus given for value is enforceable - the agreement has to represent the model of
bargain: an exchange/ promise of exchange (getting something in return)
-indication of the seriousness the parties are entering the agreement and what they want out of the agreement
-‘price of the promise’ depends on what is requested e.g. something trivial for something of economic value
-the exchange of promises is binding
1. consideration must be sufficient (value) but it need not to be adequate (the same value as the performance exchanged)
2. consideration must move from the promisee
F. the terms of the contract:
-terms: form part of a contact binding on parties
-express terms: expressly communicated between parties in writing or orally
-implied terms: inserted automatically by implication that parties must have intended these terms - implied in statute
(imposed), in custom and by common law (law or fact) e.g. Consumer Rights Act 2015 (satisfactory quality)
-a party to a contract might benefit from separate additional rights from legislation, e.g. The Consumer Contracts
(Information, Cancellation and Additional Charges) Regulations 2013 (in distance sales the regulations give consumers
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