Business Law Lecture 2&3: Formation of Contracts: 3Requirements for a…
Business Law Lecture 2&3: Formation of Contracts: 3Requirements for a Contract
Privity of contract
Offer and acceptance
Offer cannot be accepted by silence and offeror may not put a condition in his offer that silence shall constitute acceptance.
Grossner Jens v Raffles Holdings Ltd (2004)
Felthouse v Bindley (1862)
Acceptance must be communicated to the offeror
Mode of Acceptance
Letter of acceptance must be properly stamped and addressed. Effective once letter is posted.
Effective at the time the email is capable of being retrieved
Electronic Transaction Act
Fax is received in offeror's fax machine during office hours, even if message is not read
Offeror must hear the words of acceptance
: Offeree unconditionally agrees to the offer without changing the terms of the offer.
Termination of Offer
Lapse of offer
Rejection by counter-offer
Hyde v Wrench (1840)
Rejection by the offeree
Withdrawal by the offeror
Byrne v Van Tienhoven (1880)
Invitation to treat(ITT) is not an offer
Supply of Information
Circulars and Catalogues
Patridge v Crittenden
Display of goods in a shop window or store
Pharmaceutical Society of Great Britain v Boots Cash Chemist
Offer must be communicated/ made known to the offeree
Offer: Person making the offer
Offeree: Person to whom the offer is made
: Offer is a statement by one party of his willingness to enter into a contract on certain stated terms. It may be made orally or in written or both.
Agreements made by way of deed(signed, sealed and delivered)(exception to consideration )
Rules regarding consideration
Consideration must not be past
Making part payment of a debt cannot be consideration for a promise to forego the balance
Unless the debtor does something that he was not previously required to do, he would have provided consideration for the creditor's promise. Eg. payment at an earlier date.
Performance of an existing obligation(already promised to do sth) cannot be consideration for a further promise
Consideration must be sufficient(economic value) but need not be adequate(equal)
Consideration must have some economic value
Definition: It means that a person will not be required by t eh law to fulfill a promise he had made unless he has obtained something in return.
Intention to create legal relations
Social and Domestic Agreements
Between friends/colleagues and domestic(family) agreements
Commercial Agreements(Exception to legal binding agreements)
Letters of comfort
Indicates that the parties do not intend to be legally bound
Memorandum of Understanding (MOU)
Parties do not intend to be legally bound (cannot be sued)
Agreement stated to be "subject to contract"
Do not intend for their agreement to be legally binding until a formal contract is drawn up and signed.