-No formal definition of a contract
- “A promise or agreement which is enforced and recognised by
law” – Chen Wishart
- “An agreement giving rise to obligations which are enforced or
recognised by law” – Treitel
HOWEVER…
- “contracts are not things that can exist outside the law… (or)
physical objects that can be perceived by the senses. They
are themselves abstract concepts, just as much as the
concept of contract itself” - Atiyah
*people bargain in the shadow of the law*
Why are contracts important?
- Determines responsibilities/ standard of performance of parties
- Establish value of the exchange
- Allocates risk and deals with what happens when something goes
wrong
- Contract law is based on common law and legislation/statutes
- The state provides the legal apparatus to enforce contracts (courts)
- If not for this, contracts would be less numerous between
strangers
Contract: a combination of (specific) rules and (general) principles
- Freedom of contract
- Objective principle
Core tension in the law
Classic law v. modern law
- More contracts are better v. consumer protection
- Freedom v. Fairness
- Market individualism v. consumer welfarism
Historical Development of tension
- Classic contract law - established during the industrial revolution
- Products for sale dominated the economy rather than land
- Modern contract law – based more on the principle that services are
more important within the economy
Classical approach to contracts
- Facilitates and encourages free and voluntary exchanges
- Emphasis on individual autonomy
- Courts should respect contractual autonomy
, - Reflects dominance of laissez-faire economics of the 19th century
- Personal freedom and wealth creation are maximised
- Assumptions of the classical approach
- Contract parties are sovereign
- Can decide on terms of contract
- Parties act out of self-interest and adopt an adversarial stance
- Competitive bargaining
- Primary function of the law is to give effect to the parties’
agreement
- Hence contract rules should be few, clear and consistent
with commercial expectations
- Contracts should be interpreted without reference to external
context
- The law has a non-interventionist approach
- Procedural fairness in enforcing the parties’ agreement
- Courts should not protect parties from their own mistakes
- Therefore in the future will not make the same mistake
twice
Modern law of contract
- More fairness and flexibility
- More recognition that inequalities in…
- Resources
- Knowledge
- Competence
- … can result in oppressive and undesirable outcomes
- Procedural fairness is not enough
- Substantive fairness
- Format of contracts may be classical but content is modern
- Parliament looks to protect consumers from unreasonable terms in
contracts where there is little bargaining power and understanding
- No systematic response to substantive unfairness
- Certain contracts attract more legal regulation
Overall:
- Facilitates and regulates
- Large margin of tolerance observed before the law intervenes
- Leaves room for eccentricity and foolishness
- Evolving compromise of conflicting ideas about contract’s role in
society
The law rests on the assumption of freedom and choice
LECTURE 2
Formation of a contract
- No set form – could be purely verbal
- Meeting of the minds between parties
, - Offer and acceptance
- Usually, courts deal with the disputes between parties as to whether
a contract was formed
- Courts cannot ask what was in the minds of the parties at the
time
- Too subjective
- Judicial task – not to discover the actual intentions of each
party but what is reasonably entitled to them
Offer
- Indication by one party that they are prepared to contract with one
or more others on certain terms
Offer: a clear indication of an unequivocal willingness to be bound upon
the offeree’s acceptance
- Offers are different to preliminary communications (not intended to
be open to acceptance)
Gibson v. Manchester City Council (1979)
- G wished to buy a council house
- Council sent letter “the corporation may be prepared to sell the
house to you”
- Local election – council became Labour
- Sale was refused to G
- Lord Denning – contract was formed as seen by looking at the whole
correspondence
- HoL rejected Denning’s approach
- Despite all terms having been agreed between parties, no
contract had formed
Stover v. Manchester City Council (1974)
- Letter entitled “Agreement for sale”
- Therefore contract had been formed
Pharmaceutical Society of Great Britain v. Boots Cash Chemist
(1953) 1 QB 401
- Self-service displays
- PSGB: a pharmacist needed to supervise at the point where “the
sale is effected”
- Boots: the customer made the offer when picking up the good,
which would then be accepted at the till
- Self-service displays were inviting customers to begin the
negotiation process
- Invitation to treat
Fisher v. Bell (1961)
- Shop display windows
- Put an illegal flick-knife in the window
- Prosecuted under the Offensive Weapons Act
- However, not a contract, merely an invitation to treat
, Advertisements are invitations to treat, NOT offers
- Considered “mere puffs”
Partridge v. Crittenden (1968)
- Offered protected finches for sale
- Under Protection of Birds Act 1954
- Advertisement – invitation to treat therefore committed no offense
Carlill v. Carbolic Smokeball Co.
- Promised £100 for anyone who contracted influenza whilst using the
smokeball for a set period of time
- C contracted influenza
- CSC argued that they were not being serious about the
advertisement
- However showed their true intents in the advertisement
by saying that they had deposited £1000 for such claims
- Court of Appeal rejected the company’s claims
- Held there was a binding contract made
- Acceptance through conduct
- £1000 deposit showed intent of the company to
uphold the contract
LECTURE 3
Acceptance
Acceptance: the final and unequivocal expression of assent to another’s
offer of contract
- Needs to be distinguished from a counter-offer
- Where there is a counter offer, the original offeror can:
- Accept
- Reject
Hyde v. Wrench (1840)
- A counter offer is the same as a rejection
Requests for information
- Can be confused for counter-offers
- However, no new/alternative contract terms are proposed
Stevenson v. McClean (1880)
- Telegram gave a request for information therefore D’s offer survived
and hence could be accepted by P
Cross-Offers
Tinn v. Hoffman (1873)
KEY QUESTION: ARE TWO NEAR-IDENTICAL OFFERS A CONTRACT
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