overview of contract law
TRANSCRIPT
Law and Ethics
Overview of Contract Law
Definition of Contract
Bilateral Contracts
- Both parties are bound
from beginning. Eg.
housepainting
Unilateral Contract
- One party bound: offer
made to world at large
e.g. dog lost poster.
4 Essential Elements
1.?
2.?
3.?
4.?
4 Essential Elements
1.Agreement
2.Intention
3.Consideration
4.Certainty
Agreement: Offer and Acceptance
What is an offer?
Who are the offeror and offeree?
What are types of offers?
1st element: Agreement: Offer and Acceptance
What is an offer?
Who are the offeror and offeree?
What are types of offers?
Distinguishing offers from invitations to treat
What is the difference between
them?
Distinguishing offers from invitations to treat
An offer can be converted into
contract by acceptance but an
invitation to treat can be
acceptance or rejection.
How do we determine that?
1.Is the statement clear,
definitive, and unambiguous?
2.Is it complete?
Types of invitations to treat
1. Advertisements - Partridge bird case / Grainger winelist
case
2. Display of goods for sale - Boots case / Fisher knife
case / Pimm coat case
3. Quotations / Price lists - Norgren copyright case
4. Auctions - Harris and Nickerson case
Advertisement:
Carlill v Carbolic
Smoke Co.
Exception to the
rule.
Can you recall
the facts of the
case?
Rules of acceptance
1. Acceptance must be unqualified / Counter-offers create a
new term (Neale v Merrett)
2. Acceptance must be communicated - Silence not acceptance
(Russell v Baird oatmeal case) also contained in S.47 of
Sale of Goods and Supply of Services Act 1980.
3. Silent acceptance permissible in existing arrangement eg.
Netflix
Unilateral contracts - offer accepted by performance (eg.
reward for information) Billings v Arnotts case
Acceptance and Postal Rule
When does the acceptance take place?
a) Is it when the person signs the contract?
a) Is it when they post it?
a) Is it when the other party receives it in the post?
Acceptance takes
place on date,
time and posting
of the contract
- Adams v
Lindsell
Two
prerequisite
conditionsPostal Acceptance
1) Postal acceptance must
either be a reasonable
or agreed method of
comms at the time
2) The acceptance letter
must have the correct
postage and be properly
addressed
This only applies to acceptance, not
revocation.
Termination of an Offer
1) Rejection or counter-offer made by
offeree
2) Unreasonable lapse of time between
the offer being made and accepted
3) Revocation or withdrawal of the
offer by the offeror
4) Death of one party
5) Before performance in unilateral
contract
1. Rejection and Counter-Offer
Rejection may be express or implied
Implied rejection = counter offer
Hyde v Wrench - farm selling case / price drop
2. Lapse of Time
Offer may state expiry date
Ramsgate Hotel v Montefiore - Share purchase case
Also remember offer of price change if you leave shops.
3. Revocation
Bilateral contract, offeror can revoke before acceptance
Offer can be revoked by performance (e.g. for sale sign in
garden)
Routledge v Grant - house sale 6 week case
Dickinson v Dodds - house sale / sold house to other party
4. Death
Re: Whelan
Offeree dies then offer is automatically terminated
Offeror dies, offer terminated unless accepted by the offeree
before hand - except where they knew of death occurring.
5. Before performance in Unilateral Contract
Can be terminated any time before performance takes place
Pavey v Matthews builder renovations reasonable pay case
ALSO
Offers to world at large must be withdrawn from world at
large eg. Shuey case.
2nd Element: Intention to Create Legal Relations
Strong presumption by courts that businesses entering
contract intend to be legally binding.
The opposite is the case for domestic and social
arrangements.
Domestic and Social Agreements
1. Contracts between husbands and wives
Balfour v Balfour - Ceylon - health case
Merritt v Merritt - note family home legal sep / diff outcome
1. Parents and children
Jones v Padavatton
Commercial Agreements
Automatic presumption legally binding
Rose and Frank Co v JR Compton Bros - clause didn’t intend to
be legally binding
Edwards v Skyways - pilot redundancy case - ex gratia
Capacity - Who cannot sign a contract?
1. Minors
Under 18s
To protect the minor from inexperience and those who
unknowingly enter contracts
EXCEPTIONS
- Contracts for necessaries (Nash v Inman)
- Beneficial contracts for service (Chaplin case)
Contracts always considered void
Infants Relief Act 1874
- Contract for repayment of money or loan
- Contract for goods other than necessaries
- All accounts, bills / invoices stating money is owed
Contracts valid unless repudiated
- Taking a lease out on property
- Offering to buy shares
- Entering into a partnership
- Taking out an insurance policy
- Marriage settlement
2. Persons of Unsound Mind
Contracts valid unless person can demonstrate
- He was unable to understand the nature of the contract
- Other party knew of his incapacity
Where person has permanent mental incapacity, contract law
treats the the same as minors;
Permitted to create contract for necessaries and beneficial
contracts of service
3. Drunkards
Contracts valid unless person who was intoxicated can show
- They were so drunk they didn’t understand
- The other party knew of drunken incapacity
White v McCooey case - Galway Races - verbal - pub case
No evidence to suggest plaintiff was drunk
4. Convicts
Forfeiture Act 1870 - historically not possible
O’Conor v. Coleman - solicitor couldn’t recover fees
This changed in Criminal Law Act 1997 so convicts have full
contractual rights subject to normal prison rules
5. Companies
Designated activity companies and PLCs have limited
contractual capacity
Can create contracts w/ objectives of company stated in MOA
Otherwise ultra-vires
Private companies limited by shares has unlimited contractual
capacity
3rd Element: Consideration
QUID PRO QUO - something for something
Exchange of consideration - groceries customer’s
consideration is money, grocer’s is providing the goods
Executed - defined promise eg. coffee is £3
Executory - promise in return for a promise - that is perform
acts in future (eg. Tesco delivery).
Rules of Consideration
Consideration must be sufficient not adequate
- Thomas v Thomas / house rent £1 a year dead husband case
/ consideration has economic value
- Chapell v Nestle / record chocolate bar case wrappers
were consideration
Consideration must not be past
- Re McArdle / house repairs, dead husband, children not
obliged to pay
- Morgan v Rainsford
Rules of Consideration
Consideration must be more than what the party already has to
do.
- Collins v Godfroy case / solicitor providing expert
testimony
Contents of a Contract Terms - doctrine of freedom to contract
Express
- written or oral
Implied
- custom O’Connaill v Gaelic Echo journo’s hols case
- legislation / employment law
- courts (The Moorcok) - constitution (Glover employment
case)
Contents of a Contract Conditions and Warranties
Conditions: very important terms, if breached party can
terminate without notice e.g. Arcos wood length case,
Poussard v Spiers operetta case missed opening night
Warranties: less vital terms, nreach doesn’t entitle to
repudiation
Bettini v Gye opera case missed rehersals
Schuler AG v Wickman sales rep tool case
Contents of a Contract Innominate Terms
Not always easy to determine
IF breached, injured party may claim damages and depending on
nature may be able to repudiate.
Hong Kong Fir v Kawasaki - vessel hired ready to go, wasn’t
ready, took 4 months, court said damage wasn’t seriuos enough
Irish Telephone Rentals v Irish Civil Service Building Soc.
Phones case - court ruled innominate term
Exemption Clauses - Exclusion and Limitation
Clauses
Exemption clauses attempts to exempt or restrict ability
under the contract
E.g. accountant example
Use of exemption clauses subject to disapproval by the courts
b/c used by more powerful party
Rules determined by the Court to keep an eye on this
Incorporation of Exemption Clauses
Only valid where
1) Signature - L’Estrange v Graucob - cigs vending machine V
2) Valid notice - Chapelton v Barry UCD deckchairs case
3) In course of dealing - J Spurling v Bradshaw; no explicit
clauses but still valid orange juice case
Construction of Exemption Clauses
1. Contra Proferentum Rule
Where meaning is unclear, they will interpret meaning to be
least ambitious for party taking case. // Houghton v
Trafalgafr Insurance Co. car insured to carry load for that
which it was constructed
2. Main Purpose Rule
Exemption clause can’t be used for anything other than main
purpose // Sze Hai Tong case.
Construction of Exemption Clauses
3. Fundamental Breach Rule
Exemption invalid if party seeking has committed breach of
contract. Clayton Love v B&! Transport
4. Exclusionary Rule
Exemption clause that attempts to exclude consumer liability
is invalid. Ronan v Mindland Railway Company - cattle
delivery company - damage.
Legislation restricting exemption clauses
Sale of Goods and Supply of Services Act 1980 S. 12-15
Business can’t exempt liability where goods not fit for
purpose or merchantable quality
Contract two businesses can exempt provided they’re fair and
reasonable
Burden of reasonableness falls on person seeking to benefit
Legislation restricting exemption clauses
European Communities (Unfair Terms in Consumer Contracts)
Regulations 1995- 2013
EC Directive obliged Ireland to provide protection for
consumers
Regs define unfair term that causes “significant imbalance in
parties.”
If court determines the clause to be unfair, it will be void
and incapable of enforcement.
Question:
Explain the
differences, with
references to case law
between offers and
invitations to treat.
Question:
List four ways in
which an offer
can be terminated
and provide
examples.
Question:
Explain the
differences between
conditions,
warranties,
innominate terms.
