Contract law
Introduction
A contract is a legally binding promise (oral or in writing) by one person to fulfil an obligation to
another person in return for consideration. A binding contract comprises four elements: offer,
acceptance, consideration and intention to create legal relations.
Or
An agreement the law will enforce
If a party to the contract takes legal action, the burden of proof (the obligation of a party in a legal
dispute to prove their claims or assertions) is on the claimant who must prove their case against the
defendant on the balance of probabilities
Formation: making an agreement to do something, an agreement requires an offer and acceptance,
an intention to create legal relations and the consideration needed for a valid contract
The terms of the contract: the obligations and rights of each party to the contract
Validity of the agreement: this area cover factors that may make a contract invalid (vitiating factors)
Discharge of contract: examining exactly what amounts to performance of a contract, when the
contract is breached through non/part performance.
Remedies: what a party to the contract is entitled to when the contract has been breached or
affected by a vitiating factor
,THEORIES
Freedom of contract theory and inequality of bargaining power
This theory emphasizes that contracts are based on the free will of parties exchanging promises,
but it can create unfairness when one side has much greater bargaining power
Resilience theory
Contractual obligations arise from a party's reliance on another's promise, with remedies focused
on protecting reliance interests rather than guaranteeing specific performance
Certainty of terms and consumer protection
Contracts must have clear terms to be enforceable, and consumer protection laws help prevent
unfair or unclear terms that disadvantage buyers
Good faith
Suggests parties should act honestly and fairly in contracts
Balancing interests and justice
Attempts to balance the freedom of contract with fairness, ensuring that neither party is unjustly
disadvantaged
The principle of fault
The principle of fault involves the degree of responsibility for actions and the liability under the law
Morality and the law of contract
Contacts can be deemed void if they involve immorality or illegality such as bribery, corruption or
contracts for immoral purposes
,FORMATION
, Offer and acceptance
Offer- a proposal showing a willingness to contract on firm and definite terms
Offeror – person who makes the offer
Offeree – the person whom an offer is made
Invitation to treat – an indication that one person is willing to negotiate a contract with another,
but that they are not yet willing to make a legal offer
Gibson- councils letter to selling a house was not a definite and firm proposal
Words such as ‘might be prepared to’ or ‘may be able to’ indicate uncertainty
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Generally, they are not offer, usually invitations to treat
Patridge – not an offer for a wild bird but was invitation to treat
however, in some cases such as in a unilateral contract, the offeror makes a promise in exchange for an act by another
party for example a missing pet reward.
Also, in a bilateral contract there could be an exchange mutual promises for example to buy a loaf of bread for £1, both
parties have an obligation
Carlill – advert stated that if someone used the medicine correctly and still got the flu they would pay them £100
Goods in a shop window or on shop shelf
The goods on the shelf or in the customers basket are an invitation to treat. The contents of the basket become an
offer when the customer presents them to the checkout operator. The shop then accepts or declines the customers
offer through their checkout operator or assistant.
Similarly, the goods in a shop window are like those on the shelves, in that the shop has no obligation to sell the items
to a potential customer
Fisher v bell – displayed a flick knife in shop window yet was only an invitation to treat
Boots – over the counter medication was on the shelf. Boot found not guilty as the offer is only when customer takes
items to till
Auction
Lots at auction are an invitation to treat
Wright – the auctioneers were prosecuted for offering to sell an unfit vehicle at auction. However, the prosecution
failed because there was no offer, only invitation to treat
Introduction
A contract is a legally binding promise (oral or in writing) by one person to fulfil an obligation to
another person in return for consideration. A binding contract comprises four elements: offer,
acceptance, consideration and intention to create legal relations.
Or
An agreement the law will enforce
If a party to the contract takes legal action, the burden of proof (the obligation of a party in a legal
dispute to prove their claims or assertions) is on the claimant who must prove their case against the
defendant on the balance of probabilities
Formation: making an agreement to do something, an agreement requires an offer and acceptance,
an intention to create legal relations and the consideration needed for a valid contract
The terms of the contract: the obligations and rights of each party to the contract
Validity of the agreement: this area cover factors that may make a contract invalid (vitiating factors)
Discharge of contract: examining exactly what amounts to performance of a contract, when the
contract is breached through non/part performance.
Remedies: what a party to the contract is entitled to when the contract has been breached or
affected by a vitiating factor
,THEORIES
Freedom of contract theory and inequality of bargaining power
This theory emphasizes that contracts are based on the free will of parties exchanging promises,
but it can create unfairness when one side has much greater bargaining power
Resilience theory
Contractual obligations arise from a party's reliance on another's promise, with remedies focused
on protecting reliance interests rather than guaranteeing specific performance
Certainty of terms and consumer protection
Contracts must have clear terms to be enforceable, and consumer protection laws help prevent
unfair or unclear terms that disadvantage buyers
Good faith
Suggests parties should act honestly and fairly in contracts
Balancing interests and justice
Attempts to balance the freedom of contract with fairness, ensuring that neither party is unjustly
disadvantaged
The principle of fault
The principle of fault involves the degree of responsibility for actions and the liability under the law
Morality and the law of contract
Contacts can be deemed void if they involve immorality or illegality such as bribery, corruption or
contracts for immoral purposes
,FORMATION
, Offer and acceptance
Offer- a proposal showing a willingness to contract on firm and definite terms
Offeror – person who makes the offer
Offeree – the person whom an offer is made
Invitation to treat – an indication that one person is willing to negotiate a contract with another,
but that they are not yet willing to make a legal offer
Gibson- councils letter to selling a house was not a definite and firm proposal
Words such as ‘might be prepared to’ or ‘may be able to’ indicate uncertainty
Advertisements
Generally, they are not offer, usually invitations to treat
Patridge – not an offer for a wild bird but was invitation to treat
however, in some cases such as in a unilateral contract, the offeror makes a promise in exchange for an act by another
party for example a missing pet reward.
Also, in a bilateral contract there could be an exchange mutual promises for example to buy a loaf of bread for £1, both
parties have an obligation
Carlill – advert stated that if someone used the medicine correctly and still got the flu they would pay them £100
Goods in a shop window or on shop shelf
The goods on the shelf or in the customers basket are an invitation to treat. The contents of the basket become an
offer when the customer presents them to the checkout operator. The shop then accepts or declines the customers
offer through their checkout operator or assistant.
Similarly, the goods in a shop window are like those on the shelves, in that the shop has no obligation to sell the items
to a potential customer
Fisher v bell – displayed a flick knife in shop window yet was only an invitation to treat
Boots – over the counter medication was on the shelf. Boot found not guilty as the offer is only when customer takes
items to till
Auction
Lots at auction are an invitation to treat
Wright – the auctioneers were prosecuted for offering to sell an unfit vehicle at auction. However, the prosecution
failed because there was no offer, only invitation to treat
