EML - (Law pt.2)

120 flashcards · Law · by Meg b

A contract is a bargain between two or more persons
is legally binding rules that do not follow common sense
Contract agreement is: written, oral or inferred by conduct
What is the importance of contracts in the commercial world?
What are the essentials of a valid contract?
What is the nature of statements?
Bilateral Contracts - exchange of promises
Unilateral - one party promises something the other party does not promise, but if they do the contract is completed
eg like a reward
Carlill v carbolic smoke ball (1893) - advert offer to world at large - promise made by one party in return for act by another -pay £100 if someone caught the flu - which is a unilateral contract
Contract offer must be certain
Fisher v Bell (1961) - flick knife in shop window - offence to 'offer for sale' and offensive weapon - display in window was not an offer but an invitation to make an offer
Partridge v Crittenden (1965) - advert for sale of wild bird not contrary to protection of wild birds act - offering a wild bird for sale because advert = invitation to treat
Harris v Nickerson (1873) - e was an auctioneer liable to a man who had attended an auction to buy good that were advertised fro sale after the goods were withdrawn from the sale
Pharmaceutical Society of GB v Boots Cash Chemist (1953) - display on supermarket shelves is an intimation to treat - customer makes an offer to buy the goos at the cash desk contract completed when chair accepts the offer
Lefkowitz v GreatMinneapolis Surplus Stores (1957) -somthing bout three fur coats - first come first serve - when male wanted to buy said only women could
Must distinguish offer from statement giving information or expressing an intention Harvey v Facey (1893) - H to F sell bumper hall pen? F to H - lowest price for bumper hall pen £900 H to F - we agree to buy bumper hall pen for £900
second telegram = statement of price not offer to sell
Invitation to treat: Requesting information is not an offer - (Gibson V Manchester CC)
Termination of Offer: offer may be accepted at any point until it is terminated or revoked (Dickinson v Dodds 1876)
Termination of Offer: can happen by words, or actions, lapse of time, death and acceptance
Hyde v Wrench (1840) - W offered to sell farm to H for £1000, H replied offering to buy it for £950 W refused. H said he would then pay £1000 - decision: no contract as counter offer had the effect of rejection
Routledge V Grant (1828) G offered to buy R's house and gave him 6 weeks to accept G withdrew offer before 6 weeks up decision - G entitled to do so, he can withdraw his offer at any time until it has been accepted
Acceptance of offer only made by person who accepts and must be a positive act - (Alexander Brogden v Metropolitan Railway Co (1877).
Silence will not, usually, constitute a valid acceptance - Felthouse v Bindley (1862)
Where standard form contracts are used, the ‘battle of the forms’ is decided by the ‘first’ or ‘last shot’ approach: Butler Machine Tool v Ex-Cell-O Corp (1979) court will decide which of the party's terms have been incorporated by analysing sequence of offers leading up to the point of irrevocable acceptance
Where standard form contracts are used, the ‘battle of the forms’ is decided by the ‘first’ or ‘last shot’ approach: Pickfords Ltd v Celestica Ltd (2003) - last fax sent was a new offer which had been accepted by the company when they carried out the work
Where standard form contracts are used, the ‘battle of the forms’ is decided by the ‘first’ or ‘last shot’ approach - Tekdata Interconnections v Amphenol Ltd (2009) - The traditional offer and acceptance analysis must be adopted unless the documents passing between the parties and their conduct show that their common intention was that some other terms were intended to prevail.
The offeree must know of the offer before he can accept it - Bloom v American Swiss Watch Co (1915) - reward for information leading to arrest of jewel thief - claimant gave info before he know reward - claimant not entitled to reward
Exceptions for communication of Acceptance include postal rules and unilateral contracts
Entores v Miles Far Eastern Corp. (1955) - C in london made offer to D in amsterdam by telex - D accepted and telexed c in london - instantaneous forms of communication standard use of acceptance being effective when received remains
Adams v Lindsell (1818) - 2nd September D made offer to C but it arrived late and D sold goods to someone else. Decision - 'postal rule' establishes that were acceptance is effective upon posting, not when the letter is received
Byrne v Van Tiehoven (1880) - the revocation, although posted before was received AFTER the acceptance
Agreement Important Point: vast majority of contracts agreements are not and do not need to be in writing
Agreement Important Point: Contracts are formed at the moment of reaching agreement - offer met with an acceptance - (assuming all other requirements are met)
Agreement Important point: Commercial organisations need to make sure that they do not become bound before they intend to
Intention to Create Legal Relations
Social agreements are presumed not to intend to create legal relations (such as between husband and wife – Balfour v Balfour (1919)
Simpkins v Pays (1955) - Mrs Pays, her granddaughter and lodger enter into a competition each week - agree to share any prizes - one week they win £750 - Mrs P refuses to share money with lodger - From facts there was an intention to enter into legal relations - lodger entitled to 1/3rd of winnings
Commercial agreements there is a presumption that legal relations exist, unless the parties expressly state an agreement to the contrary
A party seeking to have agreement set aside can show that at the time the agreement was made there was no intention that it should be legally enforceable. Rose and Frank Company v. J.R. Compton (1925)
If the business agreement is ambiguous an intention to create legal relations will be presumed. Edwards v Skyways (1964).
following groups may lack contractual capacity to enter into certain types of contracts: M - minors Persons with mental disabilities; incapacitated intoxicated persons
Contractual capacity: minors:
Illegality: certain contracts are illegal and are made void due to public polity or that they involve criminal actions
Everet v Williams (1725) (highway men) illegality overlooked in Tinsley v Milligan (1993)
Consideration given before a contract is completed (past consideration) is not adequate for a binding contract. Re McArdle (1951)
Past consideration is not good consideration unless: the act was requested by the promisor - there was contemplation of both parties that payment would be made
Think about getting into a taxi or sitting down to dine in a restaurant
The consideration provided by each party must have some value but need not be of adequate value i.e. the law is not concerned if one party makes a poor bargain.
A party to a contract cannot use what they are required to do as a public duty as consideration in a contract Collins v Godefroy, but if they do more they can amount to good consideration
Part-payment of a debt will not prevent the innocent party seeking the balance owed Foakes v Beer (1884).
if something of value other than money is provided or if the part-payment has been provided at an earlier date than required, this may be good consideration
An exception to the general rule of part-payment of a debt is the doctrine of promissory estoppel
enables the court to stop a party from reneging on a promise that was relied on by the other party if to do so would be unfair Central London Property Trust v High Trees House (1947) Collier v P & MJ Wright (Holdings) Ltd (2007) .
Privity of Contract: General rule in contract is that only those parties to a contract may sue and be sued on it
Collateral contracts, property is transferred in trust to another party
contract has been made under an insurance agreement for the benefit of another; and where restrictive covenants are imposed on property
Contracts (Rights Of Third Parties) Act 1999 - Allows persons who are not party to a contract to sue for their rights under the contract: where the contract expressly permits enforcement by third parties
Pre- contractual and contractual statements:
The provisions of the contract may be viewed as a term or a representation.
Terms may be expressed orally or in writing and these will form part of the contract
Terms are the most significant aspect of an agreement and failure to fulfil the agreement enables a claim under breach of contract.
A statement that induces the other party to enter the contract will be more likely to be held a term.
A representation that has not become a term of the contract may still be a misrepresentation
Distinguishing between Terms and Representations: Terms that are meaningless cannot be enforced • Guthing v Lynn (1831) 2B & AD 232
Distinguishing between Terms and Representations: Importance of the statement • Bannerman v White (1861) 10 CB NS 844
Distinguishing between Terms and Representations: Statement made in an assuring or promissory way Schawel v Reade [1913] 2 IR 81
Distinguishing between Terms and Representations: Verification • Ecay v Godfrey (1947) 80 Lloyd’s Rep 286
Methods of incorporating express terms into a contract: Signature
Notice, Custom – a consistent course of dealing
Customs established by the parties' previous trading relationship; the industry; or the conduct of business in that locality may form part of the contract.
To form a custom the term must be notorious, certain, commonplace, reasonable, and legal.
Incorporation by Signature: L'Estrange v Graucob [1934] Electronic Communications Act 2000, s7
Incorporation by Signature: Limitations to the rule: a) Misrepresentation of document effect / extent – Curtis v Chemical Cleaning & Dyeing [1951]
Incorporation by Signature - Document must be ‘contractual’ Grogan v Robin Meredith Plant Hire [1996]
Incorporation by Signature: Doctrine of Non Est Factum(‘Not my deed’)
Statements made in the negotiations, but that do not appear in the final written contract, will be held to be a representation
Incorporation by Notice: First rule: Terms must be contained in ‘contractual’ document • Chapelton v Barry Council [1940]
Incorporation by Notice: Second rule: reasonable notice of the terms must be given at or before the time the contract is made Parker v South East Railway (1877) 2 CPD 416
Terms of a contract: Due to the problems in attempting to include every term into a written or oral contract, or deduced from conduct, terms are implied.
Terms implied into a contract by statute are often ones that that are aimed at protecting the party with the weaker bargaining power.
Exclusion (exemption) & Limitation Clauses - These clauses seek to limit or exclude (exempt) a liability that would otherwise exist.
Exclusion (exemption) & Limitation Clauses - The clause must be reasonable (assed using Unfair Contract Terms Act 1977) and not contrary to any other statute.
Unfair Contracts Terms Act 1977: specifically governs the use of exclusion clauses in contracts.
Unfair Contracts Terms Act 1977: It prohibits the exclusion of liability for death or personal injury due to the other party's negligence. • Any other exclusion clause is subject to test under the Act's assessment of 'reasonableness.'
Examples of Contracts in Restraint of Trade: Contracts of employment: Employees are required to giveundertakings not to reveal employers’ trade secrets, or notto work for a competing firm when they leave.
Examples of Contracts in Restraint of Trade: Contracts for the sale of business: A seller of a business agrees not to set up in competition with the purchaser.
Examples of Contracts in Restraint of Trade: Solus agreements: A seller of a product agrees with a supplier that he will obtain a product solely from him usually for a special discount
Restraint clauses will only valid, if the person seeking to enforce them can show that in their particular circumstances the restraint is reasonable.
Factors that can invalidate Contracts:
Misrepresentation: false; statement of fact Statement must have been intended to be acted upon and actually acted upon
Made by one party to the other party with a view to induce the other to enter into the contract
Bisset v Wilkinson (1927) something bout sheep
To be a misrepresentation: representation must be a false statement of material fact
To be a misrepresentation: It must be known to the representee
To be a misrepresentation: It must be intended to be acted upon
And must in fact have been acted upon
VOID - there is no contract - a void ‘contract’ is not recognised as a contract and so has no legal effect.
VOIDABLE - the contract is valid, but one party may apply to the court to have it set aside
UNENFORCEABLE - there may be a contract, but it is not a legally recognised
Types of Misrepresentation: F- Fraudulent -if the statement is known to be false or recklessly given not caring if it is true or false.
(Derry v Peek (1889) )
Types of Misrepresentation: N - Negligent - statement is made believing it to be true, but having no reasonable grounds for the belief
Types of Misrepresentation: I - Innocent- a false statement made in the honest, albeit mistaken, belief that it was true
(Oscar Chess v Williams (1957)).
Remedies & Damages for misrepresentation - Fraudulent or negligent may lead to rescission; makes contracts voidable, not void, Damages
Misrepresentation Act 1967 - Where a person has entered into a contract, after a misrepresentation and as a result he has suffered loss
he can claim damages even though the misrepresentation had not been made fraudulently, unless
Mistakes may be: Common: both parties make the same mistake
Mistakes may be: Mutual: parties are at cross purposes
Mistakes may be: Unilateral: one party is mistaken
Common Mistake - The law has been reluctant to hold that a mistake as to quality makes a contract void – unless the mistake makes the contract essentially different