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Summary Contract Law notes
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Contract Law notes for SQE 1 FLK exams
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CONTRACTFORMATION
Agreement
Offers and Invitations to Treat
- Offer- is an expression of willingness to contract a certain terms, made with
the intention that it shall become binding as soon as it is accepted by the
person to whom it is addressed – Treitel
- Intention –
o Courts adopt a objective approach
- Invitation to treat – statement which invites negotiation
o Goods on display are an invitation to trat
o Advertisements are invitation to treat
But adverts of a reward are offers as this means that the money
has to be paid over the offer is accepted e.g by the supply of
info
- Formation of unilateral contract in Carlill v Carbolic Smoke Ball Company –
o The companys promise to pay £100 was an offer of a unilateral
contract i.e. a promise in return for the specified act that the claimant
has performed
- Auctions
o Offer is accepted when the auctioneer’s gavel goes down which is the
acceptance of the last bid which is the offer
o The auctioneer inviting bids is an invitation to treat
o Barry v Davies –
Machines being sold without reserve.
Barry made highest bid but auctioneer did not accept as he
knew he could get a higher price elsewear.
Barry successfully sued for breach of unilateral contract.
As selling without a reserve means the highest bidder will
win.
Therefore the auctioneer made a promise – a promise to
sell the machines to whoever made the highest bid
- Tenders
o If invite a number of companies to submit tenders for work this is
simply an invitation to treat and no tenders have to be accepted.
o However if invite tenders for work and you state that you promise to
accept the lowest tender then this is a offer of a unilateral contract
o Blackpool & Flyde Aero Club Ltd v Blackpool Borough Council –
Invitation said that the tenders had to be received not later than
noon on 17 Mary 1983. The claimant submitted at 11am through
, post box. The post box was not checked that day and the tender
was deemed late.
However claimant successfully sued for breach of implied
promise that a tender returned on time would at least be
considered. Council therefore in breach of an implied unilateral
contract to consider any conforming tenders and so was liable
for loss of opportunity.
Acceptance
- Acceptance is an unqualified expression of assent to the terms of an offer.
So to be acceptance there must be:
o an expression of assent
o which is unqualified
- acceptance must be communicated by the offeree or their authorised agent
- Acceptance has to be unqualified
o So if you put a condition on your acceptance, then this is a counter-
offer not an acceptance
- When companies attach their terms & conditions this can be seen as a battle
of forms and essentially a counter-offer
o The last set of terms sent and agreed to usually wins
- Butler Machine Tool v Ex-Cell-O Corp –
o Buyers accepted the offer of the supply of machines on the buyers Ts
& Cs
o At the end of the order was a tear-off acknowledgement of order form
that said we accept your order on the Ts & Cs stated therein. The
sellers returned the tear-off slip and in doing so accepted the buyers
last shot
- By Post
o Postal rule is that the letter of acceptance will be effective when posted
even if the letter is lost in the post. Following conditions must be
satisfied:
It was reasonable in all the circumstances to use the post
The letter was properly addressed, stamped and posted and
The postal rule had not been excluded by the offeror.
o Holwell Securities Ltd v Hughes –
Offer to buy a house expressed as being exercisable by notice
in writing to the defendant.
Court held by using the word ‘notice’ the offeror had impliedly
excluded the postal rule
So the acceptance had to arrive with the defendant to be
effective.
, Termination of Offers
- An offer cannot be accepted once it has been terminated.
- Can be terminated by:
o Rejection by the offeree
o Revocation (withdrawal) of the offer by the offeror
o Lapse of Time
Rejection
- Can be rejected expressly or impliedly
- If offeree make counter-offer
Revocation
- Offer can be revoked anytime before acceptance even if the offeror promised
to keep the offer open for a certain period of time
o Only exception is if the offeree gave something in return for the
promise to keep the offer open
- Mountford v Scott-
o Court held that the offer was irrevocable as the claimant had paid for
the option to keep offer open for 6 months
- With unilateral contracts no obligations arise until the specified act is
completed – so acceptance is when the performance is completed.
o However it has been suggested that there is an implied promise not to
revoke if the specified act is started within a reasonable time
- Revocation must be communicated to the offeree.
o Revocation in regard to electronic communications sent to a business
will be effective when it should have been read
The Brimnes – notice of withdrawl sent by telex and received
during office hours but notice not read until the next morning
which would have been too late
COA held that it was communicated when it was received
if it was communication by such means that it would in
the normal course of business come to the attention of
the person on its arrival but for their failure to act in a
normal business-like manner
- Publish a notice of revocation in the same place as the offer and with the
same prominence
Lapse of Time
- offer will lapse after specified time or a reasonable time
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