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CONTRACT LAW - Coggle Diagram
CONTRACT LAW
RULES AND PRINCIPLES OF CONTRACT LAW
CONTRACT: an agreement that the law will enforce
FORMATION OF A CONTRACT: making an agreement to do something, for example buying a car
TERMS OF THE CONTRACT: obligations and the rights of each party to the contract. Example: paying the agreed price of the car. Some terms are specifically agreed by the parties while others are implied
IMPLIED TERMS ARE DEFAULT TERMS: In contracts for the sales of goods and the supply of services, both for businesses and consumers, there are a number of implied terms. Examples include good corresponding with description, care and skill in carrying out a service and the inability to exclude liability for death of personal injury
Liverpool City Council v Irwin (1977)
The term either must be so obvious as to go without saying, or must be necessary to give business efficacy to the contract
Marks and Spencer plc v BNP Paribas Securities Services Trust Company (2015)
Court considered the Privy Councils decision in Attorney General of Belize v Belize Telecome
In the process of implying terms, the only question was wherever a reasonable reader of the contract, with the relevant background knowledge, would understand the term to be implied
VITILATING FACTORS: factors that may make the contract invalid. The law of misrepresentation and economic duress. Misrepresentation: where the seller of the car stated its mileage was 20,000 when it was in fact 80,000
DISCHARGE OF THE CONTRACT: examining exactly what amounts to performance of a contract, when there is a breach of contract through non- or part-performance, and what happens when performance of the contract is prevented by events outside of the parties control of the parties of the contract
REMEDIES: what legal remedies a party to the contract can seek when the contract has been breached or the contract been affected by a vitalizing factor
ESSENTIAL REQUIREMENTS OF CONTRACT
OFFER
Starting point of a contract
OFFER: A PROPOSAL (A PROMISE) SHOWING A WILLINGNESS TO CONTRACT ON FIRM AND DEFINITE TERMS
OFFEROR: THE PERSON WHO MAKES THE OFFER
OFFERER: THE PERSON TO WHOM THE OFFE IS MADE
The offer must be definite in terms. the words "might be" or "could" indicate uncertainty. therefore, it is likely that the statement would be an invitation rather than an offer
Gibson v Manchester City Council
An acceptance of the offer forms the basis of a valid contract
AN OFFER OR AN INVITATION TO TREAT
An invitation of treat is not an offer and therefore it cannot be accepted to make a contract. It is an invitation of one party to another to make an offer
ADVERTISMENTS - generally an advertisements cannot be an offer, and is thus only an invitation to treat
Partridge v Crittenden (1968)
If an advertisements contains a clear indication that there is an offer because it is expected to be taken seriously, then the court may decide that it is an offer
This often occurs in unilateral contract rather than a bilateral contract
UNILATERAL CONTRACT: where only one party of the contract has a promise made to them. Such as a flyer that says there is an award for a missing pet. The offeror, the person that made the flyer, is promising the offeree, anyone who sees the flyer, money in return for his lost pet. The offeree is no obligated to find this missing pet, and the offeror is legally obligated to pay the money
Carlill v Carbolic Smokeball Co. (1893)
BILATERAL CONTRACT: There is an exchange of mutual promises. An example is a contract to buy a loaf of bread for £1. Both parties have an obligation - to provide the bread on one party, to pay £1 on the other party
Fisher v Bell (1961)
GOODS IN A SHOP WINDOW OR ON A SHOP SHELF
The goods on a shelf are an invitation to treat and remain so when put in the customer's basket. The contents of the basket became an offer when the customer presents them to the checkout operator. The shop then accepts or declines the customer's offer through their checkout operator or assistant at the self-service scanner
LOTS AT AN AUCTION
At an action the bidder makes the offer that the auctioneer then accepts by banging his or her hammer. This means that the lots available at an auction are an invitation to treat
British Car Auctions v Wright
A REQUEST FOR INFORMATION
A request for information and a reply to such is not an offer. This must just be a general enquiry such as when an item displayed for sale does not have a price on it. Example, where a person enquires about the price of an item.
Harvey v Facey
WHO CAN MAKE AN OFFER?
An offer can be made by a named individual, to a group of people at an auction, or to the world at large. Can be targeted at a specific individual and may be conditional on another contract being made
CONDITIONAL ON ANOTHER CONTRACT BEING MADE: Hoover free flight fiasco
HOW LONG DOES AN OFFER LAST?
An offer can only accepted if it is open. Once an offer is ended, it cannot be accepted and cannot form the basis of a contract. It is therefore essential to establish when an offer starts and when it ends
An offer comes into existence when it is communicated with the offeree. Communication requires the offeree to know of the existence of the offer
Taylor v Laird
Exact timing can be criticial
Stevenson v Mclean
HOW AN OFFER CAN END
An offer can come to an end in the following ways
Revocation
An offer can be revoked at any time before acceptance. The offeree must communicate with the offeree of the revocation before it can take effect
Routledge v Grant
This can have implications where the offer is to the whole world. In these circumstances the offer can end in three ways
by setting a time limit in the offer such as by stating the reward will only be available to be paid until a specific date
By the expiry of a reasonable time as is discussed later
by publishing revocation of the offer in the same way that the original offer was made
Communication of revocation does not have to be from the offeror directly if the person communicating the revocation is reliable. There are no particular categories of "reliable person" but evidence could be given that the communication took place and could be expected to be taken seriously
In Routledge v Grant is was the offeror who communicated the revocation of the offer to the offeree
In Dickinson v Dodds the offeree heard the revocation of the offer from a reliable source. This was effective communication of revocation
An offeree can make a seperate contract with the offeror to keep the offer open, or only to sell to them. This is know as a collateral contract which can be enforced if the offeror refuses to sell within the agreed period or sells the item to someone else
Rejection
Once an offer is rejected, it cannot be accepted by the person rejecting the offer as the rejection ends the offer. If the offer is made to more than one person, rejection by one person does not mean the other offerees can no longer accept the offer. The rejection must be communicated to th eofferor before it takes effect
One way of rejection is simply responding to the offer with "no"
Another way is when a counter offer is made. A counter offer is not just a price negotiation but anything else that makes a significant difference to the terms of a contract, such as a different delivery date. A counter offer is a rejection of an offer
Hyde v Wrench
Sometimes there are enquires during the negotiations, these are generally treated as requests for information and not counter offers. Whereas a counter offer operates as a rejection of the offer, a request for information does not. Thus, the offeree can accept the offer following the request for information
Lapse of time
An offer can end if a fixed period of time for the duration of the offer is stated, then as soon as that expires there is no offer to accept. The problem arises where no time is set. In this situation the time is a reasonable time
Ramsgate Victoria Hotel v Montefiore
Death
The effect of death on either the offeror or the offeree depends on which party died and the type of contract involved. If the offeree dies then the offer ends and those dealing with his estate cannot accept on his behalf. The executors or administrators of his estate can make a new offer as can the offeror
When an offeror dies, acceptance can still take place until the offeree learns of the offerors death. However, this is obviously not the case where the offer is to perform some eprsonal service like personal tuition
Acceptance
Once an offer has been accepted there is an agreement, and assuming that the other essential features of a contract have been fulfilled, there is a legally binding contract
Must be positive and unqualified. it must be an acceptance of the whole offer and all the terms in it. There is no acceptance if the response to the offer is "Yes, if..." or "Yes, but..."
HOW DO YOU ACCEPT AN OFFER
Acceptance can be in any form, provided it is unequivocal and communicated to the offeror. It does not have to be in the same format, so an email can be responded to by a text, letter or telephone. Acceptance cannot be silence; there must be a positive act for acceptance
Felthouse v Bindley
ACCEPTANCE AND SILENCE
The court claim the law of formation of contracts will consider what the parties intended to do. This is a subjective approach. In practise, an objective approach is often applied disguised as a subjective judgement.
Although there can be any form of acceptance, an offeror may request a specific method for acceptance. For example, the acceptance may be made personally. If the offer requires a specific method for acceptance, then this method must be followed if there is to be a valid acceptance.
Yates v Pulleyn
WHEN DOES ACCEPTANCE TAKE PLACE`
The actual time of revocation is critical, this is the same for acceptance. The general rule is that acceptance takes place when the acceptance is communicated with the offeror. There are three ways of accepting an offer
acceptance by conduct
Most common in business contracts - where the job proceeds before the formal contract is agreed in all its details, with numerous offers and counter offers
acceptance by the post
The postal rules were developed in the 19th century to deal with the problem where the a contract came into existence, and, where a letter not be delivered correctly, where the loss should fall. The rule also adapted the idea that one you have posted a letter you cannot get it back
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If the rules apply, the acceptance takes place at the moment the letter is properly posted
Adams v Lindsell
electronic method of communication
The principle is that the acceptance, apart from the postal rules, occurs when the offeror is aware of the acceptance.
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Brinkibon Ltd v Stahag Stahl
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Consumer Protection (Distance Selling) Regulations 2000
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Article 11 of the Electronic Commerce Regulations 2002
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Thomas and Gander v BPE Solicitors
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Points to consider about the ending of an offer
CONSIDERATION AND PRIVITY, INTENTION TO CREATE LEGAL RELATIONS
CONSIDERATION
Consideration is essential for every valid contract because contract law requires bargain and not a gift. This means that both parties to a contract will give something to the other by ways of exchange.
Currie v Misa