LPC NOTES
[CONTRACT LAW]
(2019-2020)
, CONTRACT LAW
Chapter 1 – INTRODUCTION TO THE COURSE
Cases:
-Case names are important
-What is the case? Some cases are uniformly shortened
-is it a court of appeal or supreme court decision? What other legal points come from each case – what
is the ratio of the case? (Key point is to understand what the ratio is)
-Ratio of the case, why did the court reach that decision based on the facts – RATIO IS NOT THE
RESULT OF THE CASE BUT WHY THAT IS THE RESULT OF THE CASE
Themes to consider:
-Contract is the basis of commercial agreements
-Freedom of contract or paternalism
-Holistic approach
Exams:
-Look at past papers and this will help you to know how to answer questions
-Themes of the exams will be the same though the exam may be different
-Read the facts carefully and plan your answer
-what’s the law and how ill it be applied?
-is the law correct?
-you need to be critical and aware of things behind contract law and whether you believe the
court was correct in their position based on legal points
-problem questions and essays
Additional Materials:
-Use the VLE
-Further reading from chapters, only if you are happy you understand the essential reading
-be realistic
-set additional time aside and have clear study time
-have a clear understanding of your foundations
-set realistic targets
-be self disciplined
Chapter 2 – IDENTIFYING THE POINT OF AGREEMENT
Intro
Law of contract defines the circumstances when a promise or promises are enforceable
-Not all promises are enforced by courts
-for a promise or promises to be initially enforceable as a contract certain elements must present such
as:
1) Agreement, constituted by a corresponding offer and acceptance, supported by
2) consideration, being the mutual exchange of something which the law recognises as having
a value and
3) an intention to create legal relations
^These are the cumulative requirements – each must be present for a contract to exist BUT,
sometimes court will find that some agreements look like contracts and they reason backward
and find the elements necessary to form a contract
-Process of agreement begins with an offer
,-Offer can be addressed to a single person or many people – for a contract to be formed, the offer
must be accepted
-once there is a valid communication of an acceptance, the law requires:
-consideration
-intention to create legal relations (covered along side other sometimes applicable
requirements)
^If THESE elements are not present, court will not find that a contract exists between the
parties
-if there is no contract, neither party will be bound to the promises or agreements they have
made
Identify the Offer:
Offer = An offer is an expression of willingness to contract on certain terms.
-It must be made with the intention that it will become binding upon acceptance
-there must be no negotiations or discussions required
Example: In two cases, the council decided to sell houses that it owned to sitting tenants. The
claimants entered into agreement with the council. The council then resolved NOT to sell
housing unless it was contractually bound to do so. In the two cases, the question arose
whether or not the council had entered into a contract or not.
-In Storer v. Manchester city council (1974), the court of appeal found that there was
a binding contract – the council had sent storer a COMMUNICATION that they
intended would be binding upon his acceptance
-In Gibson V. Manchester City of council (1979), the council sent Gibson a document
which asked him to make a formal invitation to buy and stated that the council ‘may
be prepared to sell’ the house to him – Gibson had signed the document and returned
it. – The House of Lords held that a contract had not been concluded because the
council had not made an offer capable of being accepted
-Distinction between the two cases: In Storer’s case, there was an agreement as to
price, but in Gibson’s case there was not as the important terms still needed to be
determined
-It is important to know that not all communications will be offers – they will lack the requisite
intention to be bound upon acceptance
-IF it is not an offer, then it still remains a negotiation process which can include a statement of
intention, a supply of information or an invitation to treat
A Statement of Intention:
-one party states that he intends to do something
-differs from an offer as he is not stating that, he WILL do something
-Case of Harris V. Nickerson illustrates this point
-The auctioneer’s advertisement was a statement that he INTENDED to sell items, it was
NOT AN OFFER that he WILL sell the items
A Supply if information:
-One party provides information to another party to enlighten them
-The statement is not intended to be acted upon
-Harvey V. Facey (1893)
-one party telegraphed, in response to the query of the other – what the lowest price was that
he would accept for his property, IF HE WERE TO SELL IT
-This did not imply an assurance that he WOULD sell at this price
An Invitation to Treat:
-Indication of a willingness to do business
-An invitation to make an offer or to commerce negotiations
, -Courts have considered whether or not communication was an offer or an invitation to treat in a wide
variety of circumstances such as the following…
1) A Display of goods
-this is an invitation to treat
-BUT, if the display is made by a machine, it will probably be an offer (ex. Vending machine)
-However, an advertisement (ex. TOMORROW ONLY, ORANGES AT LOW PRICE) is an
invitation to treat where a bilateral contract is anticipated
-An auctioneer’s request for bids is an invitation to treat
-the bid is an offer, when the auctioneer brings his hammer down, he has accepted the
offer
Cases to be referred: Partridge V Crittenden or Carlill V. Carbolic Smoke Ball
-a store mistakenly advertised Sony televisions for sale on its website for $2.99 each rather
than the $299 they intended. Has the store entered a contract to supply the televisions at the
mistaken price with consumers who purported to ‘buy’ the TVs online?
-IT’S THE LOGIC THAT’S IMPORTANT
-a unilateral contract is contemplated the advertisement may be an offer
-it is against the European consumer protection law if in a shop a consumer was refused a
product under the advertised terms
-The different reasoning in the cases
-Anne places an advertisement offering to sell her blue car to 1000 pounds
-if it is an offer and 2 people turn up to buy the car for 1000 pounds, there is only one car so
its best to – best to interpret is an invitation to trade
-Anne places an advertisement offering to sell her blue mini for 1000 pounds to the first person to
arrive at her house on 4th May after 8am
-very precise what you have to do, only one person can be the first person to arrive at my
house at that time
-the logic is very different
-Only if you identify an offer can it be accepted
-there is an offer and the logic is that the offer can be accepted
-Mirror image of the offer Stevenson Jacques V McLean
-have I got to pay cash or not? You are not rejecting the offer but clarifying the offer
-Counter offer Hyde V Wrench (1840) 49 ER 132
-price was offered but it was expensive – there is a change and there is a counteroffer
(extinguish the offer)
-If the offeree tries to add new terms when accepting an offer, this is called a COUNTER-
OFFER and not an acceptance
-Counter-offer implies rejection to the original offer which is thereby destroyed and cannot be
accepted
However, when the offeree queries the offer and seeks more information, this isn’t rejection
or acceptance – it is just an enquiry
-Battle of the forms Butler V Ex-cell-o
-like a game of ping-pong
How this works:
1) Anne tells Bart she will buy his car for 2000 pounds (offer by Anne, she is the offeror)
2) Bart tells Anne he wants 2500 pounds (counter offer, Anne’s offer ends and B is the offeror)
3) Anne says she will pay 2250 pounds (counter offer, Bart’s offer ends and now Anne is the
offeror again) – ping-pong approach
4) A week later Anne contacts Bart and says she will pay 2500 pounds, she is now making
another offer, she is not accepting his offer at point 2) as this ceased to exist when she counter
offered
-important to understand who the offeror is
Objective Theory
[CONTRACT LAW]
(2019-2020)
, CONTRACT LAW
Chapter 1 – INTRODUCTION TO THE COURSE
Cases:
-Case names are important
-What is the case? Some cases are uniformly shortened
-is it a court of appeal or supreme court decision? What other legal points come from each case – what
is the ratio of the case? (Key point is to understand what the ratio is)
-Ratio of the case, why did the court reach that decision based on the facts – RATIO IS NOT THE
RESULT OF THE CASE BUT WHY THAT IS THE RESULT OF THE CASE
Themes to consider:
-Contract is the basis of commercial agreements
-Freedom of contract or paternalism
-Holistic approach
Exams:
-Look at past papers and this will help you to know how to answer questions
-Themes of the exams will be the same though the exam may be different
-Read the facts carefully and plan your answer
-what’s the law and how ill it be applied?
-is the law correct?
-you need to be critical and aware of things behind contract law and whether you believe the
court was correct in their position based on legal points
-problem questions and essays
Additional Materials:
-Use the VLE
-Further reading from chapters, only if you are happy you understand the essential reading
-be realistic
-set additional time aside and have clear study time
-have a clear understanding of your foundations
-set realistic targets
-be self disciplined
Chapter 2 – IDENTIFYING THE POINT OF AGREEMENT
Intro
Law of contract defines the circumstances when a promise or promises are enforceable
-Not all promises are enforced by courts
-for a promise or promises to be initially enforceable as a contract certain elements must present such
as:
1) Agreement, constituted by a corresponding offer and acceptance, supported by
2) consideration, being the mutual exchange of something which the law recognises as having
a value and
3) an intention to create legal relations
^These are the cumulative requirements – each must be present for a contract to exist BUT,
sometimes court will find that some agreements look like contracts and they reason backward
and find the elements necessary to form a contract
-Process of agreement begins with an offer
,-Offer can be addressed to a single person or many people – for a contract to be formed, the offer
must be accepted
-once there is a valid communication of an acceptance, the law requires:
-consideration
-intention to create legal relations (covered along side other sometimes applicable
requirements)
^If THESE elements are not present, court will not find that a contract exists between the
parties
-if there is no contract, neither party will be bound to the promises or agreements they have
made
Identify the Offer:
Offer = An offer is an expression of willingness to contract on certain terms.
-It must be made with the intention that it will become binding upon acceptance
-there must be no negotiations or discussions required
Example: In two cases, the council decided to sell houses that it owned to sitting tenants. The
claimants entered into agreement with the council. The council then resolved NOT to sell
housing unless it was contractually bound to do so. In the two cases, the question arose
whether or not the council had entered into a contract or not.
-In Storer v. Manchester city council (1974), the court of appeal found that there was
a binding contract – the council had sent storer a COMMUNICATION that they
intended would be binding upon his acceptance
-In Gibson V. Manchester City of council (1979), the council sent Gibson a document
which asked him to make a formal invitation to buy and stated that the council ‘may
be prepared to sell’ the house to him – Gibson had signed the document and returned
it. – The House of Lords held that a contract had not been concluded because the
council had not made an offer capable of being accepted
-Distinction between the two cases: In Storer’s case, there was an agreement as to
price, but in Gibson’s case there was not as the important terms still needed to be
determined
-It is important to know that not all communications will be offers – they will lack the requisite
intention to be bound upon acceptance
-IF it is not an offer, then it still remains a negotiation process which can include a statement of
intention, a supply of information or an invitation to treat
A Statement of Intention:
-one party states that he intends to do something
-differs from an offer as he is not stating that, he WILL do something
-Case of Harris V. Nickerson illustrates this point
-The auctioneer’s advertisement was a statement that he INTENDED to sell items, it was
NOT AN OFFER that he WILL sell the items
A Supply if information:
-One party provides information to another party to enlighten them
-The statement is not intended to be acted upon
-Harvey V. Facey (1893)
-one party telegraphed, in response to the query of the other – what the lowest price was that
he would accept for his property, IF HE WERE TO SELL IT
-This did not imply an assurance that he WOULD sell at this price
An Invitation to Treat:
-Indication of a willingness to do business
-An invitation to make an offer or to commerce negotiations
, -Courts have considered whether or not communication was an offer or an invitation to treat in a wide
variety of circumstances such as the following…
1) A Display of goods
-this is an invitation to treat
-BUT, if the display is made by a machine, it will probably be an offer (ex. Vending machine)
-However, an advertisement (ex. TOMORROW ONLY, ORANGES AT LOW PRICE) is an
invitation to treat where a bilateral contract is anticipated
-An auctioneer’s request for bids is an invitation to treat
-the bid is an offer, when the auctioneer brings his hammer down, he has accepted the
offer
Cases to be referred: Partridge V Crittenden or Carlill V. Carbolic Smoke Ball
-a store mistakenly advertised Sony televisions for sale on its website for $2.99 each rather
than the $299 they intended. Has the store entered a contract to supply the televisions at the
mistaken price with consumers who purported to ‘buy’ the TVs online?
-IT’S THE LOGIC THAT’S IMPORTANT
-a unilateral contract is contemplated the advertisement may be an offer
-it is against the European consumer protection law if in a shop a consumer was refused a
product under the advertised terms
-The different reasoning in the cases
-Anne places an advertisement offering to sell her blue car to 1000 pounds
-if it is an offer and 2 people turn up to buy the car for 1000 pounds, there is only one car so
its best to – best to interpret is an invitation to trade
-Anne places an advertisement offering to sell her blue mini for 1000 pounds to the first person to
arrive at her house on 4th May after 8am
-very precise what you have to do, only one person can be the first person to arrive at my
house at that time
-the logic is very different
-Only if you identify an offer can it be accepted
-there is an offer and the logic is that the offer can be accepted
-Mirror image of the offer Stevenson Jacques V McLean
-have I got to pay cash or not? You are not rejecting the offer but clarifying the offer
-Counter offer Hyde V Wrench (1840) 49 ER 132
-price was offered but it was expensive – there is a change and there is a counteroffer
(extinguish the offer)
-If the offeree tries to add new terms when accepting an offer, this is called a COUNTER-
OFFER and not an acceptance
-Counter-offer implies rejection to the original offer which is thereby destroyed and cannot be
accepted
However, when the offeree queries the offer and seeks more information, this isn’t rejection
or acceptance – it is just an enquiry
-Battle of the forms Butler V Ex-cell-o
-like a game of ping-pong
How this works:
1) Anne tells Bart she will buy his car for 2000 pounds (offer by Anne, she is the offeror)
2) Bart tells Anne he wants 2500 pounds (counter offer, Anne’s offer ends and B is the offeror)
3) Anne says she will pay 2250 pounds (counter offer, Bart’s offer ends and now Anne is the
offeror again) – ping-pong approach
4) A week later Anne contacts Bart and says she will pay 2500 pounds, she is now making
another offer, she is not accepting his offer at point 2) as this ceased to exist when she counter
offered
-important to understand who the offeror is
Objective Theory
