Contract Law Lectures
Intro to Contract Law
The great misconception about contracts is that they are necessarily tangible. This is not the case,
rather they can, and in most cases, are not. A contract is just a legally enforceable agreement. This
agreement is often made by word, or most commonly by action.
Ascertaining agreement
How do we ascertain agreement?
Did they agree? We look at the situation from an objective basis, i.e. from the words and
actions of the parties involved, and not what was going on in the heads of those involved.
o Storer v Manchester City Council (1974): Lord Denning says ‘in contracts you do not
look into the actual intent in a man’s mind. You look at what he said and did. A man
cannot get out of a contract by saying ‘I did not intend to contract’, if by his words
he has done so.
What are the terms? A contract includes both express terms, specified, and implied terms,
which are not specified, yet implied by other terms and the circumstances, that are also a
part of the contract.
What are the sources of evidence? We can use written and spoken words, and actions. We
do not need to concern ourselves with whether something would be provable or not – if it
happened, we assume it was provable.
Jones vs Associated Tunnelling (1981)
A miner started work in one pit, before voluntarily relocating to another. The company
issued a fresh statement of terms, giving the company the right to send workers to any
location in the UK. Later, when his company tried to move him to another pit, in a similar
location, he claimed he ought to be made redundant, because he said his place of work was
his current pit, and nowhere else.
The tribunal ruled that Jones had already agreed to move locally once before, so on an
objective basis, it was an implied term that he had agreed local geographical mobility, and
hence his place of work was not just the second pit, but any local one. Hence he could not
claim redundancy.
The fact that Jones continued to work after the fresh terms were issued does not constitute
agreement with the fresh terms (agreement cannot be inferred from non-performance, in
most situations).
Agreements vs Contracts
All contracts are agreements, but not all agreements are contracts. What is needed above and
beyond an agreement to make it a contract? What agreements are not contracts?
Social/domestic agreements are very rarely contractually binding
Commercial agreements are capable of being binding
Some contracts are required to be put in writing, for example consumer credit agreements,
contracts by way of deed, contracts of guarantee.
Statutory terms
S.12 SGA 1979: in order to sell something, you have to own it.
,Contract Law Lectures
Rowland vs Divall (1923)
Rowland, a car dealer, offers to buy Divall’s car, paying £334. Rowland puts it on sale, and a
member of the public buys it. A couple of weeks later, the police come and take the car
away, and give it back to the true owner. Rowland refunds the customer, and then asks
Divall for his money back.
Divall claimed there was no breach of contract, because Rowland had accepted to take the
car from him, and that was what he had done.
The courts ruled that it was an implied term of the contract of sale that Divall was able to
pass on the title. In the SGA it became a statutory term.
Formation of Contract
Has an offer been made? It might alternatively just be an invitation to treat.
An invitation to treat has no legal consequences
If so, has it been accepted? The response might just be a request for information, or a counter-offer.
A counter-offer kills the offer. There is no requirement that they continue the conversation.
The courts have consistently upheld the classical principle that an offer must first be identified
before we can look for acceptance.
Where the courts are more relaxed about finding agreement, is where the consequences of
agreement have taken place, i.e. the agreed upon outcome has taken place.
The courts try hard to find agreement, and sometimes have to somewhat force things, and
find offer and acceptance where they perhaps were not quite there.
,Contract Law Lectures
Offer
Classical contract law – find clearly defined offer, and then look for clearly defined acceptance of
that offer. Denning departed from this in trying to look at the entire set of facts to find agreement,
but the senior courts were not sympathetic to this approach.
Gibson v Manchester City Council
Offer – a clear, definite, initiating proposal. An expression of willingness to contract on certain terms
with the intention to be bound should an acceptance be received.
This is to be contrasted with an invitation to treat, which is an attempt to start bargaining. For
example if I say to someone I am thinking about selling my car, and will be looking for £2000, this is
not an offer with intention to be bound.
If I instead said my car is for sale for a price of £2000, would you like to buy it, then that
would be an offer, and if they reply yes, I would like to buy it, then there is a contract.
Acceptance must mirror the terms of the offer
If they come back and say they are willing to pay £1900, then this is a counter-offer which
nullifies the initial offer – the offeror can walk away.
o A counter-offer changes the original terms sufficiently to be a different offer.
The difficult area is request for information. A request for information is not an acceptance,
but crucially it does not nullify the offer, rather is has no legal consequence. Sometimes it
might have the appearance of a request for information, but really be an acceptance with a
question added on.
Types of offers
Bilateral offers are made to a specific individual or group.
Unilateral offers go out to the world as a whole, or a large number of parties.
If you are only capable of performing one offer, this does not mean that you can only form
one contract. You might well form multiple contracts, and yet only be able to perform one.
What matters is whether what you sent out to all of those groups was or was not an offer.
Example 1: Carlill v Carbolic Smoke Ball Company (1893)
Example 2: Bowerman v Association of British Travel Agents (1996)
o The ABTA put up notices in all of their travel agents, saying if you book a holiday
here, they guaranteed full refunds should that agent go bankrupt. One did, and
Bowerman made a claim against ABTA, and ABTA tried to claim they were not in
contract, rather saying it was an invitation to treat. The court, applying the objective
test, said that the notice was intended to be read, and would reasonable be read, as
an offer.
Advertisements – Partridge v Crittenden (1968)
For what are essentially policy reasons, the courts established in this case that
advertisements, unless they are blatantly committed proposals, and the marketing team
have fucked it, will be interpreted as invitations to treat.
Display of goods in shops - Pharmaceutical Society of Great Britain v Boots (1953)
, Contract Law Lectures
In the old shopkeeper model, the offer was made by the customer, and the shopkeeper
would accept by taking the money. This is less clearly applicable in supermarkets.
Boots was prosecuted because they were accused of selling drugs without a registered
pharmacist being present (which is against the law). Boots argued that instead, what went
on was that customers selected goods that they wanted to buy, and then only when the
cashier has rung up the price is the contract concluded. There is no contract/sale until then.
Online commerce
Not a lot of case law, but highly likely that it would be just like an advert, of the display of
goods in a shop.
Mistaken special offers
If you see a TV advertised in a shop window for £99, because one of the 9s has fallen off the
board, then you do not have a contract to buy it for £99 (even though you have accepted the
‘offer’).
The advertisement in the window was an invitation to treat, and the shopkeeper has
rejected your offer. That is that.
Auctions: Barry v Davies (2000)
In an auction, the auctioneer invites offers, and when the auctioneer hits his hammer on the
table, that signifies acceptance of the offer.
But Barry v Davies is an exception; if a liquidator of a business is selling the assets of the
business, by law the assets must be sold for whatever is the best price, meaning there is no
reserve. This means the structure of the auction is not inviting bids, rather the auctioneer is
offering it for sale for whatever price the highest bidder bids, and the auction is determining
who is accepting the offer (and hence at what price).
In Barry v Davies, only one bid was received, at an extremely low price. The auctioneer
withdrew the item, and was sued for breach of contract.
The court sided with the bidder.
Tenders
Spencer v Harding (1869)
o The defendants advertised a sale by tender of the stock in trade belonging Eilbeck & co.
The advertisement specified where the goods could be viewed, the time of opening for
tenders and that the goods must be paid for in cash. No reserve was stated. The
claimant submitted the highest tender but the defendant refused to sell to him.
o Held: Unless the advertisement specifies that the highest tender would be accepted
there was no obligation to sell to the person submitting the highest tender. The
advert amounted to an invitation to treat, the tender was an offer, the defendant
could choose whether to accept the offer or not.
Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council (1990)
o Held: Tenders can give rise to legally binding obligations such as the obligation to
consider tenders which conform to the specified conditions, when the tenders have
been solicited, and there are absolute conditions governing submission.
