Exam revision notes covering the entire Contract Law course on the GDL at the University of Law. These notes contain everything you need to know for the exams summarised onto 1-3 pages per topic. Tables, flowcharts, and very short case summaries make revising very easy.
, WS1 Agreement & Contractual Intentions
Offer
- Offer defined by Prof Treital as ‘an expression of willingness to contract on certain terms, made with the intention
that it shall become binding as soon as it is accepted’.
- Smith v Hughes: Courts use primarily objective test to decide if agreement has been made, considering what a
reasonable person would have thought.
- Allied Marine Transport v The Leonidas: while test is primarily objective as to offeror’s conduct, court ruled that the
offeree must believe that the offeror actually intended to make an offer (subjective).
Invitation to Treat
- A preliminary statement which invites negotiation.
- Pharmaceutical Society of Great Britain v Boots Cash Chemists and Fisher v Bell: Goods on display in supermarkets
and self-service shops are regarded as invitations to treat, not offers. Customer offers to buy the goods when he
presents them at the payment point.
- Partridge v Crittenden: Adverts are generally considered invitations to treat
- Williams v Carwadine: Adverts involving a reward are offers, as there is an intention to be bound by the reward as
soon as the information is given
- Carlill v Carbolic Smoke Ball: Advertisements constitute an offer to the world if there is a clear intention to be bound
- Requests for tenders are usually invitations to treat but there are exceptions to this.
- Harvela Investments Ltd v Royal Trust Company of Canada Ltd: parties invited to tender (i.e. put in offers) for shares
and were promised that the highest bid/offer would be accepted. This was held to be an offer of unilateral contract to
sell to highest bidder.
- Blackpool & Fylde Aero Club v Blackpool Borough Council: council had impliedly promised to consider all tenders,
creating a unilateral contract
Bilateral Contract
- arises when one party makes a promise in return for a promise from the other party
Unilateral Contract
- Promise in return for an act and is one sided, eg. an offer of a reward (Williams v Cawardine) and ‘without reserve’
auctions
Auctions
- s57(2) Sale of Goods Act 1979: sale by auction complete on the fall of the hammer (the acceptance). The bids are
offers which can be withdrawn at any time before acceptance. Call for bids by auctioneer is invitation to treat.
- Auctioneer acts as an agent for the owner so when the auctioneer accepts the bid, it forms a bilateral contract
between the owner and bidder.
- s57(3) SGA 1979 refers to ‘reserve price’, the lowest price which the auctioneer may accept, agreed with owner.
- Barry v Davies: if a lot is advertised as being ‘without reserve’ then the auctioneer is promising to sell to the highest
bidder (a unilateral contract).
Termination of Offer
- May be terminated by revocation, rejection, or lapse of time.
Revocation
- General rule is offer can be withdrawn any time before acceptance. After acceptance, irrevocable. Exceptions:
- Routledge v Grant: A promise to keep an offer open is not binding if it is a gratuitous promise (given for free)
- Mountford v Scott: promise to keep an offer open is binding if consideration is given (here paid £1)
- Byrne v Van Tienhoven: revocation must be communicated to the offeree. Withdrawal may be effective if offeree
moved address without notifying offeror, or chose not to read the letter (Prof Treital)
- Carlill v Carbolic Smoke Ball: To revoke offers made to the public, the revocation must be through the same channel
the offer was made
- The Brimnes: To revoke offers made to businesses, the court will decided when the revocation was likely to be
effective, depending on reasonable expectations, e.g. if sent during business hours, expectation is that it will be read
immediately
- Dickinson v Dodds: Revocation can be communicated through a reliable third party
, - Errington v Errington & Woods: for revocation of unilateral contracts, generally the offer cannot be revoked once the
offeree has started to perform the act of acceptance. Implied promise not to revoke.
Rejection by Offeree
- Offeree can reject an offer either impliedly or expressly
- Hyde v Wrench: A counter offer impliedly rejects the original offer
- Stevenson Jacques v McLean: A request for more information does not impliedly reject the original offer
Lapse of Time
- offeror can specify that the offer will only stay open for a certain amount of time; if not specified, the offer can still
lapse after a reasonable amount of time
Acceptance
- ‘a final and unqualified expression of assent to the terms of the offer’ (Prof Trietal)
- R v Clarke: The offeree must know of the offer in order to accept it
Battle of the Forms
- arises when two businesses who are in negotiation purport to contract on their own standard terms by exchanging
standard terms.
- Butler Machine Tool v Ex-Cell-O: the contract was on the defendant’s terms as the defendant’s form of acceptance
amounted to a counter-offer, and the claimant impliedly accepts the defendant’s terms by submitting the tear-off slip
- Brogden v Metropolitan Railway: The position on battle of the forms is unclear but many follow the ‘last shot wins
the battle’ rule.
Certainty in Offer and Acceptance
- There has to be certainty in offer and acceptance for there to be a binding contract
- Scammell v Ouston: There is no contract if the terms are too vague
- Entores v Miles Far East: General rule is acceptance must be communicated either by offeree or duly authorised
agent (Powell v Lee), NOT just any 3rd party as in withdrawal of offer.
- Carlill v Carbolic Smoke Ball: possible for offeror to waive the need for communication of acceptance, e.g. in a
unilateral contract.
- Felthouse v Bindley: silence is not acceptance BUT an offeree can choose to bind themselves by silence (Re
Selectmove)
Postal Rule
- General rule is that acceptance must be communicated (Entores). Postal rule is an exception.
- Adams v Linsell: in certain circs, a letter of acceptance which is posted is complete on posting (and contract formed
at that point).
- Household Fire v Grant: Offeror can always exclude the rule, and can contact the offeree to check if they’ve accepted
- For the postal rule to apply:
i) it must be reasonable to use post as a means of communication
ii) the letter must be properly posted (on time, with a stamp etc)
iii) offeror must not have excluded the postal rule either expressly or impliedly (Holwell v Hughes)
iv) it only applies to acceptances
- Words which may impliedly exclude the postal rule include ‘I need to know whether you accept’ since they show
acceptance only valid if/when it reaches offeror.
Intention to Create Legal Relations
- for an agreement to be binding, the parties themselves must have intended it to be legally enforceable
Domestic/Social Agreements
- Presumption is that there is no intention to create legal relations (Balfour v Balfour)
- Policy reasons; to prevent court being inundated/opening floodgates
- Merrit v Merrit: the presumption is rebuttable e.g. if a couple had separated they may not be prepared to rely on
honourable understandings and would want their agreement to create legal relations.
- Parker v Clark: legally enforceable if one party took drastic steps relying on the agreement e.g. selling their house to
move in with elderly relatives on the assumption that they’d inherit the house in return for care work
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