Advanced Contract Law Lecture 2 07/10/19
Formation
Legal Intent
• Objective test applies- agreement freely entered into
How would the reasonable person consider the promise – would they believe the promisor
had intent to be bound by it at the time the promise was made?
• Context in which promise made- details are important
• Edmonds v Lawson [2000] QB 501- case was not successful but it had its implications
Pupil barrister brought a case- we need to be looked at law because the national min wage
act should apply to us. By Law could not earn for the first 6 months of pupillage then after
they get gradual drifts of wages. At the bar they are self-employed.
Whether or not the pupil barrister is an apprentice or a worker? Found the they were not
apprentices. Contractual issues with consideration and intent. She has already put effort in
by hard work to get a good education and a pupillage. It would be surprising if there was n
intent- you have to show commitment to get where she was.
Presumption of Intent
• Can sometimes be difficult, costly and time consuming to determine intent – therefore
rebuttable presumptions
• Reverses the burden of proof- if in a social situation the presumption is no intent so to
overturn it you would need to bring in the evidence for that
Social and Domestic/Familial
• Assumed no intent -Balfour v Balfour [1919] KB 571- works in sri lanka, he pays her money
each month, he stops, found no intent it is purely social
• But can be rebutted -Merritt v Merritt [1970]1 WLR 1211 286- arrangement of assets on a
signed document
• Policy decision reasons? Pre-nup is a social agreement before marriage to share assets in the
event of a divorce
• Blue v Ashley [2017] unreported- investment banker via sports direct to give consultancy
services, shares valued at £4 per share. Ashley wanted to double the value. Meeting at a
pub, £15m if he doubles share price. No response from sports direct. £1m transferred into
account. £1m was a bonus for work commitments. No it is not £14m should follow. Will
social undermine intent? Claimant dismissed. Purpose of meeting was for a wider discussion
and it was not about remuneration- ‘jokular’ ‘too vague’ if claimant took it seriously he
should have made a record of it.
• Radmacher v Granatino [2010] UKSC 42- prenuptial and postnuptial agreements
Commercial Agreements
• Assumed legal intent applies
o Esso Petroleum v Customs & Excise Commissioners [1976] 1 WLR 1- marketing plan
by esso and build up to world cup. Buy a certain number of gallons of petrol and you
get a world cup coin. Was it a commercial transaction? Customs wanted £2000 in
taxation – it’s a gift to thank customers. Found there was an intent to create legal
relations because it was advertising for commercial advantage in commercial setting.
o Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256- invitation to treat vs an offer,
, Advanced Contract Law Lecture 2 07/10/19
• Express rebuttal – Rose & Frank Co v JR Compton & Bros Ltd [1925] AC 445- an honourable
pledge clause. Contract for the supply of carbonised tissue paper. Should not have formal or
legal consequence and be subject to the courts. This pledge did rebut that presumption.
Different expressions (or not) of intent
• Letters of intent- less legal significance in UK law than other jurisdiction – letter that says
they intend to create legal relations Kleinwort Benson Ltd v Malaysian Mining Corp [1989] 1
WLR 379
• Comfort letter- no guarantee
• Collective Agreements - Ford Motor Co Ltd v AUEFW [1969] 2 QB 303
• Implied commercial agreements – Baird Textile Holdings Ltd v Marks & Spencer Plc [2001]
EWCA Civ 274
• Binding in honour only – Jones v Vernon’s Pools [1938] All ER 626- looking at next Saturdays
fixtures and putting x in box who they think will draw, if you did win and they didn’t give
cash it is binding in honour only
Consideration
• A promise is not enforceable unless it is made in a deed or supported by some form of
“consideration”
• Price for the promise- exchange- highlights ancient ideas of bargain
• Note the position re formalities – make link re the historic drift from formalities to
consideration
• Other jurisdictions- something you have to show that it is not an informal agreement
Definition
A valuable consideration, in the sense of law, may consist either in some right, interest, profit or
benefit accruing to the one party or some forebearance, detriment loss or responsibility, given,
suffered or undertaken by the other
Lush J, Currie v Misa (1875) LR 10 Ex.153 at 162
‘an act or forbearance of one party, or the promise thereof’, being ‘the price for which the promise
of the other is bought’
Sir Frederick Pollock, Pollock’s Principles of Contract
Adopted by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847.
Essential Test
• Whether what is provided by the one party (be it action, inaction, or merely a promise
thereof) induced the action, inaction, or promise of the other.
• A promise to do something
• A promise not to do something
• Performance of a requested act - Carlill v Carbolic Smoke Ball Co [1893] 1QB 256
• Giving up a right of action
= not just cash and product can be a range of activities.
Contract Models
Formation
Legal Intent
• Objective test applies- agreement freely entered into
How would the reasonable person consider the promise – would they believe the promisor
had intent to be bound by it at the time the promise was made?
• Context in which promise made- details are important
• Edmonds v Lawson [2000] QB 501- case was not successful but it had its implications
Pupil barrister brought a case- we need to be looked at law because the national min wage
act should apply to us. By Law could not earn for the first 6 months of pupillage then after
they get gradual drifts of wages. At the bar they are self-employed.
Whether or not the pupil barrister is an apprentice or a worker? Found the they were not
apprentices. Contractual issues with consideration and intent. She has already put effort in
by hard work to get a good education and a pupillage. It would be surprising if there was n
intent- you have to show commitment to get where she was.
Presumption of Intent
• Can sometimes be difficult, costly and time consuming to determine intent – therefore
rebuttable presumptions
• Reverses the burden of proof- if in a social situation the presumption is no intent so to
overturn it you would need to bring in the evidence for that
Social and Domestic/Familial
• Assumed no intent -Balfour v Balfour [1919] KB 571- works in sri lanka, he pays her money
each month, he stops, found no intent it is purely social
• But can be rebutted -Merritt v Merritt [1970]1 WLR 1211 286- arrangement of assets on a
signed document
• Policy decision reasons? Pre-nup is a social agreement before marriage to share assets in the
event of a divorce
• Blue v Ashley [2017] unreported- investment banker via sports direct to give consultancy
services, shares valued at £4 per share. Ashley wanted to double the value. Meeting at a
pub, £15m if he doubles share price. No response from sports direct. £1m transferred into
account. £1m was a bonus for work commitments. No it is not £14m should follow. Will
social undermine intent? Claimant dismissed. Purpose of meeting was for a wider discussion
and it was not about remuneration- ‘jokular’ ‘too vague’ if claimant took it seriously he
should have made a record of it.
• Radmacher v Granatino [2010] UKSC 42- prenuptial and postnuptial agreements
Commercial Agreements
• Assumed legal intent applies
o Esso Petroleum v Customs & Excise Commissioners [1976] 1 WLR 1- marketing plan
by esso and build up to world cup. Buy a certain number of gallons of petrol and you
get a world cup coin. Was it a commercial transaction? Customs wanted £2000 in
taxation – it’s a gift to thank customers. Found there was an intent to create legal
relations because it was advertising for commercial advantage in commercial setting.
o Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256- invitation to treat vs an offer,
, Advanced Contract Law Lecture 2 07/10/19
• Express rebuttal – Rose & Frank Co v JR Compton & Bros Ltd [1925] AC 445- an honourable
pledge clause. Contract for the supply of carbonised tissue paper. Should not have formal or
legal consequence and be subject to the courts. This pledge did rebut that presumption.
Different expressions (or not) of intent
• Letters of intent- less legal significance in UK law than other jurisdiction – letter that says
they intend to create legal relations Kleinwort Benson Ltd v Malaysian Mining Corp [1989] 1
WLR 379
• Comfort letter- no guarantee
• Collective Agreements - Ford Motor Co Ltd v AUEFW [1969] 2 QB 303
• Implied commercial agreements – Baird Textile Holdings Ltd v Marks & Spencer Plc [2001]
EWCA Civ 274
• Binding in honour only – Jones v Vernon’s Pools [1938] All ER 626- looking at next Saturdays
fixtures and putting x in box who they think will draw, if you did win and they didn’t give
cash it is binding in honour only
Consideration
• A promise is not enforceable unless it is made in a deed or supported by some form of
“consideration”
• Price for the promise- exchange- highlights ancient ideas of bargain
• Note the position re formalities – make link re the historic drift from formalities to
consideration
• Other jurisdictions- something you have to show that it is not an informal agreement
Definition
A valuable consideration, in the sense of law, may consist either in some right, interest, profit or
benefit accruing to the one party or some forebearance, detriment loss or responsibility, given,
suffered or undertaken by the other
Lush J, Currie v Misa (1875) LR 10 Ex.153 at 162
‘an act or forbearance of one party, or the promise thereof’, being ‘the price for which the promise
of the other is bought’
Sir Frederick Pollock, Pollock’s Principles of Contract
Adopted by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847.
Essential Test
• Whether what is provided by the one party (be it action, inaction, or merely a promise
thereof) induced the action, inaction, or promise of the other.
• A promise to do something
• A promise not to do something
• Performance of a requested act - Carlill v Carbolic Smoke Ball Co [1893] 1QB 256
• Giving up a right of action
= not just cash and product can be a range of activities.
Contract Models
