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Elements of the Law of
Contract
Contract = [Offer + Acceptance + Consideration]ICLR + Certainty
Lecture 1: Agreement and Contractual Intention
1.1 Offer
🚨 Offer: The expression of willingness to contract on specified terms,
made with the intention to be legally binding as soon as it is accepted
by offeree
Historically, the courts would determine if an agreement was made if there had
been a 'meeting of the minds'. However, today the courts now adopt an
objective approach, using the reasonable person test to determing if the
offeror implied by his words or conduct intended to be bound by this offer,
regardless of his state of mind, then the offer is valid by law. E.g.;
Moran v University College Salford -
a university made an unconditional offer to an applicant in error.
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, OT Africa Line Ltd v Vickers plc -
A solicitor mistakenly offered £150,000 instead of $155,000 which he had
been instructed to offer by his client.
1.1.1 Invitation to treat (ITT)
🚨 ITT A statement made by a party inviting offers which then can be
either accepted or rejected. An ITT always precedes an offer.
Although, it is difficult to distinguish between an Offer and ITT since this will
depend on the intention of the offeror, there are certain situations where the
distinction can be made applying the law;
Advertisements:
Advertisements are generally considered to be an ITT. In the case of
Patridge, Facts: Defendant placed an advertisement in a magazine selling
Bramblefinch Cocks and was prosecuted under the Protection of Birds Act
1954 for "offering the sale of birds") The Court held that the
advertisement was an ITT and not an "offer" so could not be prosecuted.
Also true of catalogues and price lists.
However, an advertisement may be considered as an offer if the
advertisement is a unilateral offer.
🚨 Unilateral Offer: when one party promises to pay the other a sum
of money or do an act, if the other party will do something or not
do something without making any promises to that effect.
🚨 Unilateral Contract: Result from unilateral offers, are different
from bilateral contracts in which a promise is exchanged for a
promise. In a unilateral contract, the offeree does not have to
promise to do anything in return.
If an advertisement indicates that the advertiser promies to pay something
in return for an act then the advertiser is bound by that promise. E.g. "£100
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, will be paid to anyone who finds my Dog" This is a unilateral offer. However,
"I will give you £100 if you find my dog" is a bilateral offer and if accepted
becomes a bilateral contract.
Carlill v Carbolic Smoke Ball Company Ltd - Facts: £100 to anyone who
contracts the flu after using the smoke ball three times daily for 2 weeks
according to the directions given with each ball. The claimant done this but
still contracted the flu. Defendants argued the advertisement was 'mere
puff' and so no offer was made to any particular person, and that is was
impossible to contract with the whole world. Held: CA held that the offer in
the advertisement was a unilateral offer which was accepted by the
claimant. The unilateral offer waived the need to communicate acceptance
by the offeree. Claimant entitled to £100.
Principle of Carlill also applies to advertisements offering rewards,
traditionally viewed to be offers and not ITT since the offeror has the
intention to be legally bound was information is given for the reward.
(Williams v Carwardine)
Self-Service and Shop Window Displays:
Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd - Facts:
Defendants changed from counter service to self service, Pharmacy and
Poisions Act 1933 stated that the sale of certain drugs had to be sold by
a registered pharmacist. Held: CA considered whether the formation of the
contract was formed when the customer picked the goods up
(unsupervised) or when presenting the product at the till (supervised). Held
that the contract was formed when the goods were presented at the till
and the display of goods was an ITT. Meaning that the shop is free to
accept or reject the offer when presented at the till.
Fisher v Bell - Facts: Defendant displayed a flick knife in shop window,
prosecuted under Offensive Weapons Act 1959 stating that the offering
the sale of various offensive weapons, including flick knives, was a criminal
act. Held: Prosecution failed. Court held that the knife in the window was
an ITT rather than an offer, and so defendant was not offering it for sale.
Auctions:
In an auction, the lot of products and the auctioneer's request for bids are
ITTs. Each bid represents and offer to buy the lot at the price offered.
Acceptance occurs at the fall of the auctioneers hammer. Defined in Sale
of Goods Act 1979 S. 572
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, British Car Auctions v Wright - Facts: Defendants prosecuted for offering
an unroadworthy vehicle for sale, the prosecution failed. Held: The car had
not been offered for sale, but was simply an ITT.
However, when it is an auction "without reserve" (no minimum offer that the
lot has to reach before acceptance) then this equates to sell to the highest
bidder which is automatically accepted. (Heathcote Ball v Barry)
Invitations to tender:
Invitations to tender are normally ITT. The person making the invitation to
tender is not bound to accept any of the responses (offers) to the tender.
However, if the person making the tender states they are to accept the
highest offer to buy goods or lowest offer to supply goods/services, then
this tender can be considered to be an offer or an invitation where the offer
is accepted when the best offer is communicated.
Blackpool and Fylde Aero Club v Blackpool Borough Council - The parties
issuing the invitation to tender, are bound to consider, but not accept, a
tender properly submitted before the deadline.
Mere statements of price:
🚨 Mere statements of price: where a party simply states the
minimum price at which they would be willing to sell, this is an ITT
rather than an offer.
Harvey v Facey - Facts: Facey going to sell a property to Kingston, Harvey
telegraphed Facey stating what the lowest he would go, and whatever
number that was he would pay. Facey responded with £900. Harvey
responded saying he agrees to buy at £900. Harvey claimed he had
accepted the offer, and sued for specific performance of the agreement
and an injuction to restrain Kingston from taking the property. Held: There
had been no offer. Facey's statement of £900 was simply a mere statement
of price and not an offer that could be accepted.
Gibson v Manchester City Council - Facts: Local Authority wrote to a tenant
stating that they are "prepared to sell" his council house to him at a stated
price with an application form, tenant agreed and completed the form.
However, a change in council property meant that the sale did not proceed.
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