Topic Page
Formation of Contracts 2
Consideration Problem Structure 6
Consideration Essay 10
Contents of a Contract & 12
Exemption Clauses
Remedies for Breach of Contract - 20
Damages
Remedies Essay 24
Termination and Remedies 26
Frustration 32
Frustration Essay 39
False Preliminary Statements 41
Duress 47
Undue Influence 48
Character names in problem questions will always begin with different letters so that
after first stating a name it can be abbreviated to the initial letter.
Exemption Clause Essay:
- What’s an exemption clause?
- In what way may exclusion clauses produce unfair results?
- How have the courts intervened?
o Incorporation – use all cases
o Construction – use all cases
Limitation clauses are construed more leniently, reasonable
- UCTA –
o s.7 & 6
o s. 3 Misrepresentaion Act – any exclusion of liability for misrep is
subject to reasonableness test. Possible to exclude liability for other
loss/damage too if reasonable
o s.11, Sch 2, s.2 (negligence), s.3 (express); s.6 – SGA exclusión;
s.12 statutory implied term as to title, liability can’t be excluded
Reasonableness – Stewart Gill etc
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, FORMATION OF CONTRACTS STRUCTURE
Who is alleging a contract?
What are the 3 elements of a contract?
For a contract to be binding, 3 elements are required: agreement (offer and
acceptance), contractual intention and consideration.
A bilateral contract occurs when one party makes a promise in return for a
promise from the other party.
A unilateral contract is a promise in return for an act, it’s one-sided.
o An offer of a reward (Williams v Cawardine)
o ‘without reserve’ auctions
Auctions
Auctions are bilateral, unless ‘without reserve’
A sale by auction is complete when the hammer falls (acceptance; s.57(2)
Sale of Goods Act 1979).
Bids are offers which can be withdrawn at any time before acceptance.
Call for bids by the auctioneer are invitations to treat.
Auctioneers act as agents for the owners. When they accept the bid, it forms
a bilateral contract between owner and bidder.
A ‘reserve price’ is the lowest price which the auctioneer may accept, agreed
previously with the owner (s.57(3) SGA).
If a lot is advertised as being ‘without reserve’, the auctioneer is promising to
sell to the highest bidder in a unilateral contract (Barry v Davies).
Has an offer been made? Invitation to treat?
OFFER
An offer is “an expression of willingness to contract (to be bound) on certain terms,
with the intention it will become binding once accepted” (Professor Treitel).
Assessing a parties’ intention to make an offer is an objective test: would a
reasonable person consider it an offer? (Smith v Hughes)
While the test is primarily objective as to the offeror’s conduct, courts have ruled
that the offeree must believe that the offeror actually intended to make an offer
which is subjective (Allied Marine Transport v The Leonidas).
‘may be prepared to sell’ was too uncertain to be an offer (Gibson v Manchester
City Council)
‘I’ll take it off your hands’ indicates a willingness to be bound
Are the subject matter and price clearly identified?
INVITATION TO TREAT
An offer is different to an invitation to treat which only initiates negotiations but
doesn’t indicate a willingness to be bound at this stage. Acceptance here isn’t
contractual.
Pharmaceutical Society of GB v Goods on display in supermarkets and self-service
Boots Cash Chemists shops are invitations to treat. Customers offer to buy
Fisher v Bell goods when they present them at payment.
Partridge v Crittenden Adverts are generally invitations to treat
Williams v Carwadine Adverts involving a reward are offers because there’s an
intention to be bound by the reward when the invitation
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, is given
Carlill v Carbolic Smoke Ball Adverts are offers if there’s a clear intention to be
bound. Requests for tenders (formal process where
business bid for contracts in public or private sector) are
usually invitations to treat but there are exceptions.
Harvela Investments Ltd v Royal Parties invited to tender for shares and promised that
Trust Company of Canada Ltd the highest bid would be accepted. Held to be an offer
of unilateral contract to sell to the highest bidder.
Spencer v Harding Putting a matter out to tender doesn’t imply an intention
to accept the tender. Tender is an offer, invitation to
tender is an invitation to treat.
Blackpool v Fylde Aero Club v Exception to Spencer v Harding. Council impliedly
Blackpool Borough Council promised to consider all tenders (offer), creating a
unilateral contract.
Has the offer been accepted?
ACCEPTANCE
Acceptance is “a final and unqualified expression of assent to the terms of the offer”
(Professor Treitel). Acceptance must be communicated by X or their authorised
agent (Entores), unless it’s a unilateral contract, or it’s specified that silence is
deemed as acceptance. The offeree must know of the offer to accept it (R v
Clarke). Having mixed motivations is irrelevant to acceptance (Williams v
Carwardine).
Pump on forecourt is offer, syphoning the fuel is acceptance.
CERTAINTY IN OFFER AND ACCEPTANCE
There must be certainty of offer and acceptance, if the terms are too vague there’s
no contract (Scammel v Ouston). The offer can’t be revoked or lapsed otherwise a
contract isn’t there. An apparently vague phrase may be given specific content by
the courts, if, looking at all the circumstances they’re satisfied that the phrase does
mean something to the parties (Hillas v Arcos).
Acceptance must be communicated and is effective when and where it’s received
(Entores v Miles Far East) by the offeree or duly authorised agent (Powell v
Lee).
In a unilateral contract, it’s possible for the offeror to waive the need for
communication of acceptance (Carlill v Carbolic Smoke Ball).
Silence isn’t acceptance (Felthouse v Bindley), but an offeree can choose to
bind themselves by silence (cases of stipulation by offeror, not offeree’s
undertaking; Re Selectmove).
Battle of Forms happens when 2 businesses negotiating intend to contract on their
own standard terms by exchanging standard terms. Contract was on D’s terms as
D’s form of acceptance was a counter-offer, and C impliedly accepts D’s terms by
submitting the tear-off slip (Butler Machine Tool v Ex-Cell-O). Battle of forms is
unclear but many follow ‘last shot wins’ rule (accepted by implied conduct; no formal
acceptance, contract performance was enough Brogden v Metropolitan Railway).
COMMUNICATION OF ACCEPTANCE
Postal Rule
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, Generally, acceptance must be communicated, and is effective when and where it’s
received (Entores). However, the postal rule is the exception.
Adams v Lindsell In certain situations, letters of acceptance posted are complete on
posting. The contract is formed at that point.
Household Fire v Offerors can always exclude the rule and can contact offerees to check
Grant if they’ve accepted. Postal rule can apply if the letter is lost or delayed
in the post.
For the postal rule to apply:
1. Must be reasonable to use post to communicate
2. The letter must be properly posted (on time, stamped etc)
3. Offeror mustn’t have excluded the postal rule either expressly or impliedly
(Holwell v Hughes: ‘by notice in writing’ impliedly excluded postal rule)
a. Holwell also said it shouldn’t apply if it would produce manifest
absurdity and inconvenience.
4. 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. “Reply”
is more neutral than “notice” over whether it covers “sent” or “received”.
Electronic Communication
Entores v Miles Far East Corp provides no direct authority on the issue of exactly
when a telexed acceptance takes effect, but the postal rule doesn’t apply as
Entores requires acceptance to have arrived. ‘No universal rule can cover such
cases’ so courts will consider party intention, business practices and judging the
risks involved (The Brinkibon).
INTENTION TO CREATE LEGAL RELATIONS
For an agreement to be binding, the parties must intend for it to be legally
enforceable. Contractual intention encompasses both commercial and non-
commercial agreements.
COMMERCIAL AGREEMENTS
Edwards v Skyways There’s a presumption of intention to create legal relations.
Rose & Frank v Crompton Bros This can be rebutted if there’s specific wording. Here, the
contract contained an honourable pledge saying it wasn’t
legal.
NON-COMMERCIAL, SOCIAL, DOMESTIC AGREEMENTS
Balfour v Balfour It’s presumed there’s no intention to create legal relations between family
members.
Merritt v Merritt However, this may be rebutted in specific circumstances (Merritt v Merritt)
Exercising professional skill
Distances of relation (cousins)
There’s substantial consideration
Limited negotiation timescale
Product/service being agreed for business purposes
It’s a substantial task taking several days
Is the task one which would usually be commercial/formal arrangement?
Are they on good terms?
BUT informal communication may suggest no intention.
Parker v Clark Might be legally enforceable if one party took drastic steps to rely on the
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