Topic 2

Formation of contracts
 Under Hlllaws whatarethe elements youhaveto
prove in order to claim that a contract contractstated
具法律約束⼒ is legally bindingcontract askpartyto perform what
Four elements of a contract
Offer
If anyone B missing contract
Acceptance
fail to prove it is a legallybndng
Consideration
Intention to create legal relations
 所以⼼ 4mention 去
legallyhnhngagreement
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all
theterms stand in theoffer
e.g.ifBwantstobngathotsllooo
notacceptance
offer
become a counter

the
Consideration a value that is provided by party
the contract to secure the pnmneeg.snesofbookat

l lg.Airahelboo B
valuel looo

If Agnes B the for hee

book notcontract
A raluelbook

Bi no value
thenatureofcontrast
Intention to create legalrelations implied by
commercial contract
eg
guefaeainty
Price

Property
buyerhasto pay a
reasonable
在
price hispurchased goods ifthere
soGo
has not been a spaihedpian 在agreement
withthesupplierhas 在 paya reason
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 1

an offer willturn to ahmhng

Definition of Offer man as men as it Bacupadby
ˊ to have a legally binding agreement. otherparty
The expression of a person’s intention to others
Makethe
Offeror and offeree. gene 嘛 knowtheexistence ofboth
on then A B
An offer can be unilateral (one-sided) or bilateral.
me ⼀ exchange pnomnesimultaneously
A degree of certaintybhhenA to
of try
tail Not an invitation to treat make otter A may not knowwho B the
ds
dntatim to other one awpts theoffer
make anotter onlynhenBmepts the4有 A will haretofnlhll
party to contract
toyou seller egadrestnsmmt

egshopdnplay tenders autims advertisement menu

13
丛
Pharmaceutical Society of Great Britain v
Boots Cash Chemist [1953] 1 QB 401
Is shop display an offer?
Fact:
Self-help shop with a pharmacist at the cashier.
Customers took the drugs from the shop displays.
Issue: When was the contract formed?
Held: Shop display was not an offer, only an invitations to treat.
The customer made the offer to buy at the cashier, the contract was formed when the cashier
accepted the offer.
Rule when sellingthe drug there mustbe a pharmacistpresent
It showdisplay is an oh
contractformed withoutpharmánt
Breakofrule
gi.int sell
Theshopishndngto

invitation 去treat
If shmhplay B not anoffertheisCashier pharmacisthere
an

then what is formedat

Followtherule
intention to bebound theirpnmne
is never havethe by
show display is an invitation to treat
Youare beinginvitedto make an4在去buyhugs
shopkeepercan either aleptlgt youroffer

Rationale If shopkeeperhasmade an Hertosell bydn playing

customers at Hesame time
hisoffer isaccepted byso
hewouldbe
bound to supplyto drugs
If hecouldn'tsupplyenoughcontract
drugs

Hewouldbe in breach of

totreat

notenmgh indication that they

are willing ⼤ be
bound
by
 Carlill v Carbolic Smoke Ball Co. [1893] 1
QB 256

fmnǎmydcug
Can an advertisement be an offer?
Advertisement: ‘anyone who caught influenza after using the smoke ball’ in accordance with the
instruction will be compensated with £100.’
The company also deposited money to the bank for the said compensation.
A customer used the smoke ball but she still caught influenza. Could she have the
compensation?
Held: Yes. The advertisement was an offer. When the customer used the smoke ball, she had
accepted the offer by performing what was stated in the advertisement. A contract was formed.

their own promise

are willingto bebound
約束 by
nnhngs_Depomus
 Criminal case

HKSAR v Wan [2001] 3 HKLRD 283

nnfienputtngpnutagmpndu.it
Fact: offer invitation to treat
The defendant (D) of this case displayed infringing copies of VCDs and DVDs in a shop.
D was later arrested and convicted.
D argued that the he did not “offer” to sell the CDS.

Issue:
Was there an “offer” in this case?
to
Held Not an 嘛 Got enough expression4intentionbinding
show display isnot an4 在 form a legally
agreement
HKSAR v Yu [2002] 2 HKLRD 347
to boundbyha
Fact: sellyouCBIntention tosella CD
on_no
come I willsell
If you
The defendant (D) of this case displayed infringing copies of CDs in a shop.

A
D told passing by passengers that "Feel free to look, feel free to choose, buy while stocks last".
D was later arrested and convicted. D argued that the he did not “offer” to sell the CDS.

Held:
shophphy Ban Her
invitationlmhng
Was there an “offer” in this case?
GBwillingtobe by the agreement
bound
Which of the following is an offer?
A.
Her lmrdngs
HKD$500 as a reward to anyone who finds my luggage case which was left in Tai Po Market
Station on 6 January. Attached the photo of the luggage case for your reference. Contact Josh at
XXXX-XXXX.
B.
X otter
Contract law textbook for sale. HKD$50. Negotiable. Contact Maggie atby
no indicationtobebound the pnmne
XXXX-XXXX.
C.
xotter
Selling a house in Fanling. Friendly community. Good condition. Contact Albert at XXXX-XXXX if
interested.

⼆ Pnunmng bound
If
interested notdirectly bythepromise
not the case can accept offerhere
pl
Definition of Acceptance
All the important terms in a contract must be completed and stated clearly.
Acceptance must be unconditional.
Variance and counter offer are not acceptance.
I want to buyattootaueptauu
onlyappga unilateral
Action can also amount to acceptance. (Carbolic Smoke Ball)
agreement
Words I accept
your 怕
the seated in thad
Mhins ladyperfumed instruction
hdertisements
shopkeeperaccepts your money
Harvey v Facey [1893] AC 552
Fact:
Telegram exchange between buyer and seller.

XofferXcertainty
"Will you sell us Bumper Hall Pen? Telegraph lowest cash price” (T1)Question
Ammertodxanoffer
"Lowest price for B. H. P. £900” (T2)
"We agree to buy B. H. P. for £900 asked by you. Please send us your title-deed in order that we
may get early possession” (T3)
offer termsmust becertain mhintimtobebndbypnmne
tract
No reply from the seller.Non
offer isHauntedbyseller
Issue: whether there is a contract? What is the final telegram?
Harvey v Facey [1893] AC 552
Held:
T1 was a question.
T2 was an answer to the T1 question, not an offer.
T3 was an offer to buy the property, not an acceptance.
Was there a contract?
Felthouse v Bindley (1862) 11 CBNS 869
Can silence be an acceptance of offer?
A horse selling deal between uncle and nephew.
offer
Uncle stated in the offer “if I hear no more about [the horse], I shall consider the horse mine”.
Nephew intended to accept, but forgot to reply the offer.
no acceptance_no contrast
It form a contract
The horse was sold to others by mistake. (in an auction)
Issue: whether the was a contract between uncle and nephew.
exphugeply
Held: Silence is not an acceptance of offer.
Yesuncle I accept youroffer
 nature of agreement
Intention to create legal relations
How can intention to create legal relations be established?
Express intention:
stated expressly in the agreement that this is a contract in law and carries legal effect
Implied intention:
Is estraigerswht
ynom.IT depend on
Commercial agreements = contracts
⼀ socialrelationshiptransactions
Or me relationship
Social and domestic agreements such as those between husband and wife, parent, and child and
friends are presumed not to have a legal effect, but this is rebuttable

But it Yhāniānue effect express term

this contact is intended to create legal
rebuttuassumption
 relationship damaged
Thetime at makingthepromise
Merritt v Merritt [1970] 1 WLR 1211
An exception of creating legal relations in social and domestic agreements
A husband was living with another woman.
He told his wife that if she could pay off all the remaining mortgages, then the matrimonial
property would be exclusively owned under the name of the wife.
The wife achieved it, but the husband refused to honor his promise.
Husband argue that there was no intention to create legal relations. social dmesticagguemn
Held: There was an intention to create legal relations in this case.
husband wife
Nolonger hannghrebewem
Nolongerhàtnentbeueen
husband wit
Morelikelybecommunalnature
 relationship in goodterms
The time Hmakmgapnmse normal dmesenlagguenenes
Sun v Lo [1996] 1 HKC 1
A 90 years old mother, who graduated from PKU, sued her three children.
She gave all the money to her children and the children kept the money for her and paid for her
mom he likedonation
expenses.
Later, the old mother requested the children to return the money to her, but the children
refused. Therefore, she sued all her children.
Issue: whether there was an intention to create legal relations between the old mother and the
children.
Held: There was no intention to create legal relations. At the time she gave her money to her
children, they were in good terms.
 代價
Definition of Consideration
The price given for the promise in the agreement by its parties.
One must pay for the benefit or promise which one wishes to secure.

oh
Example:
A bought some shares from B
A’s consideration = his money paid for the shares
B’s consideration = the shares

eg
Consideration may or may not be money. serviceaction
Combe v Combe [1951] 1 All ER 767
Are promises of gifts valid at law?
Husband promised to pay 100GBP per year as maintenance.
Husband failed to pay.
The wife sued the husband.

Issue: Whether the promise is enforceable.

Held: Not enforceable. Because there is no consideration. Wife consideration is missing

Roscorla v Thomas (1842) 3 QB 234, 114
ER 496
Past consideration is not a good consideration

hntrmtz hn
A bought a horse from B for £30.
After the purchase, B made a promise that the horse was in good condition, but it was not. true2
Issue: whether there was any consideration for the promise Mtwnsideratim
Held: B mnsmg
£30 was a past consideration.
hntrut I
The original contract (£30 for a horse) did not include the promise.
There was no consideration to support the promise.

If condition Bmchdedmantrwn
forthegood 7 A's consideration
pay
Thomas v Thomas (1842) 2 QB 851
Must the consideration be equal to the value of the promise?
There was an agreement that so far as two conditions were met, the lady could stay in the
property
consideration tosecurethe
1) One pound per year was paid; and Therewas not enough
2) Keep the house in good repair. promise
sexpenǘianzpoundpergr
It was argued that there was not enough consideration to secure the promise.
Held:
Considerationneeds nottobeequaltothevalue ofpromise
These were sufficient consideration for living in a cottage. Nominal value can be accepted as
sufficient consideration.
 Buy it
tsdyhhg嘉 吼 AfterCNY

Tutorial Question
fsthgfrertr
You are browsing an online-shopping website and you find a gaming chair, with an ergonomic chair
back, attractive. As you like playing computer games you want to purchase this chair.
1) There is a page showing you the chair and the details of the chair.
expressionofintention seller

Ǖx willbeboundby
agreement
2) You click the button “buy it” and then it takes you to a cart page.
3) Then you click “proceed to check out.”
legallybound
4) There is a page that asks you to confirm your order.to be
email
natureof

nn_nz.in
5) You confirm the order and input the payment details. Depends on
automaedemailx
if it's
6) A confirmation email is sent to your account.

悠鼠7) The product is dispatched and an email is sent to you as confirmation.

Discuss how the contract is formed in this case.

 䯗 只 2 accept

川的
i ane
Gales of goods contract
once
有⽅intention
Buyeis promise
anuutstrmeg
must pay
seller's must 恢 thegd to you