OCR Contract law overview
Topics:
- Formation/Essential contract requirements
- General terms
- CRA 2015 implied terms
- Exclusion clauses
- Discharge of contract
- Vitiating factors
- Remedies
- Internal guidance for scenario questions
Formation/Essential contract requirements
,For a contract to exist and be legally enforceable, the following four things must
be satisfied:
1. Offer
2. Acceptance
3. Consideration
4. Intention to create legal relations
Types of contract:
- Verbal or written (except land and property sale contracts which need to
be in writing).
- Bilateral (contracts formed from the exchange of promises between two
parties) or unilateral (contracts formed upon performances of acts in
exchange for promises).
The contracting parties can be individuals, businesses and any other legally
recognised entities.
Offer
Definition: a state of terms upon which a party is willing to enter into a formal
legal contract with the alternate party.
A statement of certain terms communicated clearly in writing, verbally or implied
by conduct by the offeror to the offeree (Taylor v Laird). These can exist
indefinitely, or have a set time period as specified in the offer (Stevenson v
Mclean).
Offers are not:
- Requests for information and corresponding answers.
- Invitations to treat, which are statements that indicate readiness to enter
into contractual negotiations to result in an offer being made. Examples:
o Online shopping
o Advertisements if they do not contain clearly communicated,
certain terms (Carlill v Carbolic Smoke Ball). Generally, terms
like ‘may’, ‘subject to availability’, and ‘under some circumstances
will’ indicate invitations to treat. Affirmative, sincere and certain
words like ‘will’, ‘does’, and ‘guarantees’ indicate offers.
o Goods displayed in shops (Fisher v Bell). Goods displayed in
vending machines are conversely offers.
o Auction listings and catalogues (the offers are made by the bidders)
(Harris v Nickerson). This includes other types of catalogues, like
food menus.
Offers can be terminated by any of the following:
- Acceptance.
- Rejection.
- Counter-offers (Jones v Daniel).
- Revocation – offeror can revoke offer, even before stated time period if this
is just a mere promise (Dickinson v Dodds). Offeree needs to find out
about this, but doesn’t need to come from the offeror.
- Reasonable commencement of time – this is subjective.
, - Offer condition is not met.
- Offeree death and offeror death at the point the offeree becomes aware of
the death.
Acceptance
Definition: the moment of contractual formation, the agreement of contractual
terms offered that is positive, unequivocal and communicated.
Acceptance must be:
- Positive – offeree must accept via words, acts or conduct. Omissions and
silence do not suffice positive acceptance (Northern Foods v Focal
Foods). Unilateral contracts usually end in acts.
- Unconditional – the ‘mirror-image’ rule, where acceptance must be
unequivocal to the offer.
- Communicated – must be communicated to the offeror in some way
(except when specified).
o If specified but is merely a preference and not legally required, is
not mandatory (Yates v Pulleyn).
o If communicated by post, acceptance occurs at the point of posting
if the letter is properly addressed and stamped and proof of postage
is evidenced (Household Fire v Grant).
o If communicated electronically, acceptance occurs generally at the
point the offeror could have reasonably received and accessed it
(Brinkibon v Stahag Stahl).
Consideration
Definition: (Currie v Misa) things of value offered in exchange, like promises to
pay, do, perform, give, provide or undertake; both parties must offer
consideration for a valid contract.
Consideration must confer practical benefits.
An evidence of exchange/a bargain – not a gift (Dunlop Tyres v Selfridge).
Types of valid consideration:
- Executory – yet to be performed at the point of contract formation, usually
in bilateral contracts.
- Executed – performed at the point of contract formation, usually in
unilateral contracts. This is not past consideration, which is invalid and
performed prior to contract formation (Lady Manor v Fat Cat Bars).
Rules:
- Must be sufficient:
o Positive actions or forbearance to act that confers a benefit (R v
HM Attorney).
o Must be factually evident with some economic value) but need not
be adequate nor large (Thomas v Thomas, Chappell v Nestle).
- Performing existing contractual duties is not valid (Stilk v Myrick).
Exceptions:
