Summary
Summary GDL Contract Law Revision Notes
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This is a full set of revision notes prepared for the 2022 Contract Law GDL exam. Scored 82%. It covers all topics tested in the GDL exam.
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Topics 1. Offer and acceptance
2. Consideration (and contractual intention / agency)
a. (note: may be linked with duress)
3. Contents of a contract
4. Damages
5. Discharge of a contract by performance and breach
a. (note: discharge by breach may be linked with classification of terms and/or frustration)
6. Frustration
7. False preliminary statements
a. (note: may be linked with contents of a contract and/or remedies for breach of contract)
8. Duress (and consideration and damages)
9. Undue influence
Possible essay questions
- Consideration
- Remedies for breach of contract
- Performance and discharge of a contract
- Duress and undue influence
1
,AGREEMENT AND CONTRACTUAL INTENTION (remember to look at all the MEANS of communication –
probs will be a letter somewhere!)
1. Who is seeking to show a contract exists?
The four elements needed for a contract to exist are:
(a) An intention to create legal relations
(b) Offer
(c) Acceptance, and
(d) Consideration
Define the terms and point to which one is the current issue in the cases you are discussing.
2. State and define the elements needed to form a contract
a. Offer
- An offer is defined by Professor Treitel as an “expression of willingness to contract on specified
terms made with the intention that it is to become legally binding as soon as it is accepted.” This is an
objective test (Smith v Hughes).
Note: a quote is contractual language intending for the party to be bound
b. Acceptance
A final and unqualified expression of assent to the terms of the offer. It must be an
unequivocal acceptance (Allied Marine Transport)
There must be a communication of that acceptance
c. Consideration
Look for an exchange of value (Curry v Misa – defined as a right, interest, profit or benefit
accruing to the party for some forbearance, detriment, loss or responsibility given, suffered or
undertaken by the other)
Consideration need not be adequate, but must be sufficient
A promise to do something can be considered as consideration (provided it has value) – a sons
promise to stop drinking alcohol, smoking, swearing and gambling was held to be consideration
(Haymer v Sidway)
Past consideration is no consideration (Roscorla v Thomas)
d. Intention to create legal relations
For courts to treat an agreement as binding, the parties themselves must have intended it to be
legally enforceable
Commercial agreements
o There is a presumption of intention with commercial agreements (Edwards v
Skyways)
o The presumption can be rebutted but only with very clear words demonstrating that there
was not a formal or legal agreement (Rose and Frank Co)
Domestic or social agreements
o There is a presumption that in domestic and social agreements there is no intention to
create legal relations (Balfour v Balfour)
o Factors might rebut the domestic presumption such as if they are separated and seen as
‘bargaining at arm’s length’ or if it is a formal agreement in writing (Merritt v Merritt)
o An informal sort of syndicate (a mutual understanding of legal entitlement to lottery ticket
winnings) was held to have intention (Simpkins v Pays)
o The drastic step of a young couple selling their house to move in with elderly relatives, on
the understanding they would leave them their house and contents, was held to be legally
enforceable (Parker v Clark)
3. Chronological step-by-step factual analysis
Take each event chronologically and discuss what is relevant from the below options.
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, a. Offer
Might it be an invitation to treat?
o An offer is a definite promise to be bound by specified terms and must be distinguished from an
invitation to treat which is a preliminary statement that simply invites negotiation
o Goods on display
Goods on display in supermarkets and self-service shops are generally regarded as invitation
to treat and not offers (Pharmaceutical Society of Great Britain v Boots Cash Chemists)
The customer offers to buy the goods when he presents them at the payment point and
acceptance takes place when the shop takes payment for goods
Display of goods in a shop window is an invitation to treat (Fisher v Bell)
o Advertisements
Advertisements are generally regarded as invitations to treat (Partridge v Critteden)
An advertisement of a reward has traditionally been treated as an offer as there is an intention
to be bound as soon as information is given (Williams v Carwardine)
An advertisement may be a unilateral offer. A unliteral offer prescribes an act, the
performance of which constitutes acceptances (Carlill v Carbolic Smoke Ball Co)
If the advert states more than just the price and is sufficient to show an
intention to be bound to sell to the persons who respond then consider
whether a unilateral offer; there must be a clear intention to be bound by
acceptance
Auctions
o A sale by auction is complete on the fall of the auctioneer’s hammer (S 57(2) Sale of Goods Act
1979)
o Bids are offers which can be withdrawn any time for acceptance
o An auctioneer’s call for bids is an ITT
o A ‘reserve price’ is a price agreed between the auctioneer and the seller as the lowest price the
auctioneer may accept (S 57(3) Sale of Goods Act 1979)
o Items put up with no reserve constitute unilateral offers. The auctioneer is bound to accept the highest
bid and if they do not, the highest bidder can sue for damages (but not the item(s) themselves as the
bidder has no contract with the seller, only the auctioneer) (Barry v Davis)
Tenders
o In general, an invitation to tender is an ITT, not an offer
o Spencer v Harding – Harding did not commit to selling to the highest bidder and so was free to
choose which offer to accept or to accept none
o Exception – if the party calling for bids makes a commitment in relation to the tender:
Council committed to considering all tenders received within a specified time period. They did
not check their mailbox, and so failed to consider Aero Club’s offer. Aero Club successfully
claimed for ‘loss of chance’ (Blackpool & Fylde Aero Club v Blackpool BC)
HOL held that the defendant’s use of the wording: “we confirm that if any offer made by you is
the highest offer received by us we bind ourselves to accept such offer,” formed a unilateral
contract. The highest bid was a valid and binding acceptance (Harvela Investments v Royal
Trust Co of Canada)
b. Termination of offer
i. Revocation
The general rule is that an offer can be withdrawn any time before acceptance. Once an offer has been
accepted, it is irrevocable
A promise to keep an offer open for a certain period of time will not be binding if it is a gratuitous promise (i.e.,
the offeree has not given or promised anything in return for the promise to keep the offer open) (Routledge v
Grant)
Exceptions:
o An offer cannot be revoked if the offeree has provided extra consideration to keep it open (Mountford
v Scott)
o If an offeree has begun to accept a unilateral offer and if that offeree would suffer inequity in the
event of revocation, then the offeree must be allowed to try and complete the act and the offeror
meanwhile cannot withdraw the offer (Errington v Errington and Woods)
Communication of revocation
Revocation must be communicated and is only effective upon receipt by:
o The offeree (Bryne v Van Tiehoven); or
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, o A trustworthy 3rd party (Dickinson v Dodds) (can also be communicated by this third party)
o Can argue from Bryne that it is effective if they reasonably assume the offeror would get message
o Exceptions:
A message left at business address during normal office hours is deemed effective as soon as
it is reasonable to have expected it to be read (The Brimnes) (likely to only apply to commercial
setting)
Notice of withdrawal to offeree’s last known address would be effective if he had moved without
notifying the offeror (Treitel)
A withdrawal which the offeree simply chooses not to read might be effective (Treitel)
An offer made to the public at large may be revoked through the same channel as it was
made, provided it is given the same prominence (Shuey v US – persuasive case, not binding)
Revocation of unilateral contracts
The general view is that with unilateral contracts no obligations arise until the specified act is completed as
acceptance only occurs when performance is complete
However, partial performance of a unilateral contract might be sufficient to prevent revocation by the offeror
(Errington v Errington and Woods)
McGovney in Harvard Law Review 644 argues there are two offers: an express offer and implied promise not to
revoke if specified act is started within a reasonable time
ii. Rejection
An offeree may reject an offer either expressly or impliedly. An acceptance must match exactly the terms of
an offer, otherwise there can be no contract
Where a response to an offer suggests something different it will not be acceptance but a ‘counter- offer’ and
so an implied rejection of the original offer (Hyde v Wrench – meaning the original offer is no longer available to
be accepted)
Querying the method of payment is not an implied rejection
A request for information does not affect the offer (Stevenson Jacques and Co v McLean)
iii. Lapse of time
An offer may become incapable of acceptance through lapse of time. If the offer contains an express condition
that it will lapse after a specified time, any acceptance outside of this cannot create a contract. In all other cases,
an offer will lapse after a reasonable time. This will depend on circumstances (e.g. an offer to perishable goods
would terminate after a short time)
c. Acceptance
An acceptance must be a complete and unqualified acceptance of all of the terms of the offer (Treitel)
(distinguish from counteroffer (Hyde v Wrench) or request for information (Stevenson Jacques v McLean)
o In Stevenson Jacques the offeree requested further information in order to decide whether to accept
the offeror’s offer
o An acceptance could be an acceptance coupled with a request for information – if this looks like there
is no intention to introduce any new term, then it is likely to be acceptance
The acceptance must be made by an offeree (Entores v Miles Far East Corp Ltd)
Communication
o The general rule is that acceptance must be communicated (Felthouse v Bindley)
o The acceptance must be communicated either by the offeree or his duly authorised agent (not through
a reliable third party) (Powell v Lee)
o With a unilateral offer, performance of the act will amount to acceptance and the offeror is generally
taken to have impliedly waived the need for communication (Carlil v Carbolic Smoke Ball Co)
o The offeror cannot impose a contract on the offeree by stipulating the offeree’s silence will amount to
acceptance (Felthouse v Bindley)
o However, COA saw no reason in principle why an offeree should not bind himself by silence (e.g. by
saying ‘If you don’t hear from me, assume I accept your offer’) (Re Selectmove Ltd) – note: no
concluded view was expressed
Rewards
o The offeree must know of the offer in order to accept (R v Clarke)
o Having mixed motives is irrelevant (Williams v Carwardine)
Acceptance by post
o The postal rule is that a letter of acceptance which is posted is complete on posting and the contract
will be formed at that point (Adams v Lindsell)
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