Contract Law
Consideration 😃
- Benefit given by the promisee in exchange for the promise
✏Intention to create legal relations
- Intention of parties to be bound to a binding contract
🖊Agreement
Offer
Acceptance
Offeror #
Offeree
Rules ⚠
1. Must be unqualified
- no conditions attached
2. If method of acceptance is specified, acceptance can only be made in method specified
3. Acceptance must be communicated to offeror
Postal Rule:
If acceptance is to be made by post, acceptance takes place at time of posting
If acceptance is intended to be communicated to third-party (e.g. agent)
Definition:
Intimation of willingness to enter into a legally binding contract
Versus: Invitation to treat
- Advertisement
- Items display for sale
- Notice of tender
- Auction
Rules ⚠
1. Communicated to one or more parties
2. Clear and certain
- Price
- Item for sale
3. Termination
a) Withdrawal
- Communicate to all parties - before acceptance
b) Rejection
- Offer automatically terminated
c) Lapse / Expiry
d) Death of Offeror
- Personal service
- Does not involve personal service, but offeree knew of death of offeror
Promisor Promise
Promisee
Rules ⚠
1. Has to have some value
- Capable of monetary value
2. Must be fresh
- Something the promisor was not originally entitled to receive
3. Must be made in exchange for the promise
Scenarios
1. D&C Builder vs. Rees
- A lends $482 to B
- A promises that B only needs to pay $300
- B paid $300
- However, A sues B
Is this something the Promisor was originally entitled to receive?
c) Pay $300 + provided extra benefit:
- No
- Fresh consideration
- Contract
d) Pay $300 + avoid penalty:
- No
- Fresh consideration
- Contract
b) Pay $300 at an earlier date:
- No
- Fresh consideration
- Contract
a) Pay $300 only:
- Yes
- No fresh consideration
- No contract
2. Williams vs. Roffey
- Main contractor (A) is responsible of a project given by Developer
- A pays $20,000 to Sub-contractor (B) to do carpenting work
- B faces financial problem and need time extension
- A promises B to pay bonus if B completes the project on time
- B completed the carpenting work of the project on time
- A refuses to pay the bonus A avoids penalty from Developer
3. Driving Lessons Promisory Estoppel
- A teaches driving with a rate of $45
- B would like to cancel as he has financial trouble
- A promises B that he only needs to pay $15
- B agrees and takes the driving lessons, pays $15
- A sues B
Promisory Estoppel (PE) must prove:
- Promise
- Reliance on promise
- Suffered detriment / change of position
Note:
If there is PE, promisor cannot go back on promise
(*can only be used as a defence)
Yes, there is PE because:
- There were promise made by A to B
- B relied on the promise because he took the lesson
- B suffered detriment because he paid $15
Court held that completing existing obligation + avoiding a penalty/disbenefit is a Fresh Consideration
If an agreement is made in a domestic OR social context
- It is presumed that parties do not intend to create legal relation
Note: Unless there is an MOU (Memorandum of Understanding)
If an agreement is made in a business OR commercial context
- It is presumed that parties do intend to create legal relations
4. Acceptance requires a positive act
- verbal, writing, conduct
- silence is insufficient