Law of contract is consist of these elements/procedural

Laws of contract 1st session

• Difference between contract (business productivity/ economic
benefit) and law of contracts (jurisdictions, boundaries, remedies,
relief ,penalties)
• One general rule for law of contract
• Concept-------rule------exception to rule----controversial rule

Case law Case law

Relationship b/t contract and the law

•Every contract is an
agreement but every
agreement is not a contract
in terms of law.
• It means those agreements are enforceable by law they are
contracts others not.
• For example, an agreement to sell a bike may be a contract,
but an agreement to go to the movie may be a mere agreement
not enforceable by law. To go to a movie is a social agreement
and social agreements are not enforceable by law
• Law transform an agreement into contract , to make it legally
acceptable
• Law interpret and implement the promise called contract
 What is an offer

Counter offer

invitation to offer ------ Offer ----- --- ---- acceptance------ consideration ------------

Further information

Law of Contract is a timeline piece of art

Offer
• Offer is a statement by one party of a willingness to enter into a
contract on stated terms, provided that (not just say I want to sell my
pen but also stated the price)
• these terms( financial/ duration; time/ mode/ delivery ) are in turn
accepted by the other party or parties to whom the offer is addressed
as in the case of Storer v MCC
Dear objectivity in making offer
• The subjective intentions of the parties does not determine the legal
effect of word and actions of the parties but what was the
communicated between them by words or conduct and whether that
leads objectively to a conclusion.
• Smith V Hughes, Centrovincial v MIA, The Amazonia, Mathieson V
Quigley and RTS Flexible Systems V Molkerei.
• However, just because the word offer has been used in the terms
does not mean that it is actually an offer as in Clifton v Palumbo
What is an Offer
• An offer must always be communicated. Fitch v Snedaker Taylor v
Laird99 (dream/ hallucinate)
• There has to be a meeting of the minds. R v Clarke, Gibbons v
Proctor (expectation v reality)
• An offer can be communicated directly or via a reliable third party
Dickinson v Dodds (amazon/valid without any doubt)
• Where one party state that they intend to do something is known as
statement of intention as per Harris v Nickerson is not offer
What is not an offer
• Where one party state that they intend to do something is known as
statement of intention as per
• Harris v Nickerson
• A request for information has no legal significance as in Stevenson v
McLean
• No legal significance is given to supply of information as in Harvey v
Facey
 What is not an offer /comes before offer
• INVITATION TO TREAT( to avoid the uncertainty)
• Invitation to treat is simply an expression of willingness to enter into
negotiations(without terms /flexibility) with hope that they will lead
to the conclusion of a contract at a later date: hoping bright future
 What is not an offer
• 1. Display of Goods for Sale ( 50% off first come first find)
• General Rule – the display of goods for sale is an invitation to treat.
• Fisher v Bell ,PSGB v Boot, LEfkowitz v GMSS
• it has been argued that a shop is a place for bargaining and not for
compulsory sales, and that to hold that the display of goods is an offer
will take away the shopkeeper’s freedom to bargain/ if there is shortage
(back theory) (Winfield, 1939).
• Exception – Chappleton v Barry concludes that the display of goods can
be considered as an offer when the courts find it unfair to leave the
claimant without a remedy.( sweet will of the court)
What is Not an offer
• 2. Advertisements General Rule –
• it is an invitation to treat rather than an offer as in Patridge v
Crittenden. Parker CJ said that it makes business sense to make
advertisements an invitation to treat.
• Exception – Carlill v Carbolic Smoke Ball Co. states that
advertisements which have a unilateral nature are offers.
• Come first , give first basis( I had lost only one puppy )
• Bowerman V Association of british travel agents.
• 3. Auction Sales General Rule –
• an auctioneer by inviting bids makes an invitation to treat as in British
Car Auctions v Wright.
• The advertisement of an auction sale is generally an invitation to treat
as in Harris v Nickerson.
• Exception – they are considered to be offers when the words ‘highest
bidder’ or ‘without reserve’ (conditional/ implied) are added Warlow
v Harrison/Barry v Davies In Warlow v Harrison, Martin B stated obiter
that advertisements can only be considered offers if the auctioneer
states terms which makes the invitation to treat a unilateral offer and
this was then applied in Barry v Davies. If the hammer is not brought
down then the highest bidder will be determined at the time the
auction comes to an end.
What is not offer( invitation to treat)
• If there is a reserve price and it is exceeded then the same analysis as
Barry should be adopted.(higher bidder rule)
• 4. Tenders General Rule – invitation to tender{written/ sealed} is
simply an invitation to treat.
• Request for Tenders is an invitation to treat, and the Tender is the
Offer. Harvela v Royal Trust of Canada
• In cases such as Blackpool v Blackpool where an invitation to tender
can be interpreted as both an invitation to treat and a unilateral offer,
it is held that there is only an implied duty to consider the tenders.
Exception – they can be considered as an offer. Harvela v Royal Trust of
Canada
Offers accepted by the machine
• 5. Timetables(buying tickets) and Vending Machines General Rule for
Timetables –
• Lord Greene in Willkie v London Transport Board stated that
timetables and vending machines are offers.
• General Rule for Vending Machines – Thornton v Shoe Lane Parking
concluded that vending machines are a unilateral offer.
Communication of the offer
-No “meeting of the minds” without communication

• There can be no acceptance of the offer without knowledge of the offer

• Contract is an agreed bargain there can be no agreement without
knowledge
• An acceptance cannot mirror an offer if the acceptance is made in
ignorance An offer is not “accepted” by doing the required act in
ignorance of the Offer R v Clarke [1927]
•The motive of an individual in accepting the contract offered has
nothing to do with his right to recover under the contract.Neither
mutual consent nor communication of assent is important in case of
reward. Williams v Carwardine
Acceptance of the offer (also establish
objectively)
• It also called mirror image It must be an agreement to an each of the
terms of the offer(not conditional)
• The acceptance can be words or by conduct (performance/conduct)
Brogden v Metropolitan Railway company / continue /
renewal/trust /risky
Acceptance of the offer (also establish
objectively( breach v compliance )
• A counter offer implies a rejection of the original offer. Which is
thereby destroyed and cannot be accepted hyde v wrench
• A request for further information is not a counter offer Stevenson,
Jacques & Co. v McLean [1880]
•Battle of the forms – final form wins – analyze communication
between the parties. The Court of Appeal has held in Butler
Machine Tool v Ex-Cell-O Crop Ltd(1979) that the ‘last shot’ wins
this ‘battle of the forms’. Ping pong approach
•Taylor v Laird must match with the terms of the offer precisely
Communication of the Acceptance -
• Acceptance Needs to be Communicated
• Acceptances cannot be made through silence felthouse v bindley
• Rust v Abbey Life Insurance Co
•Silence can be acceptance if the conduct of the parties deems it
so; a contract can be formed by conduct. Delay in objection
indicated assent to contract.
• (Exceptions to silence : Postal Rule Adams v Lindsell [1818] , Unilateral
Contracts Carlill v Carbolic Smoke Ball Co )
• What is this thing called “Postal Rule”(old history/ mean of
comminication)
• Post office is playing an agent of offeror / receipt of the letter from the
agent is equivalent to receipt by the offeror.(museum piece/not sound )
• For the purpose of negotiation and acceptance/ offeror chosen
• Henthorn v fraser it was held that the postal rule only applies where it is
reasonable to use.
• Once acceptace has posted the offeror can no longer revoke the offer
• Byrne & Co v Leon Van Tien Hoven & Co ( revocation of offer) it was held
that an offer for the sale of goods cannot be withdrawn by simply posting a
secondary letter which does not arrive until after the first letter had been
responded to and accepted.
• Countess of Dunmore v Alexander(1830) Simultaneous Arrival of
Acceptance (post) and retraction (express) – No Contract Concluded –
postal acceptance can be retracted before it reaches the Offeror.
• Holwell Securities Ltd v Hughes [1974] Avoiding the Postal Rule –
offer can explicitly state method of acceptance which ousts the Postal
Rule,
• Tenax Steamship Co v Owners of the Motor Vessel Brimnes If
instantaneous communication received during office hours, it is
“received” (communicated) when machine gets it, not when person
reads it.
• -If a communication is sent outside office hours, it is non-
instantaneous
Communication of the Acceptance -
• Entores Ltd v Miles Far East Corporation Where acceptance is
instantaneous(fax), receipt is required and the postal rule does not
apply When the message read or heard. Hit the server or not
• -Acceptance was instantaneously received in England = jurisdiction is
England( region issues; sent – Dutch law- received – UK law
• -Lord Denning: if I shout acceptance and the other person does not
hear, no contract formed.(time of arrived ) Offeree has to make sure
his acceptance was reached to the offeror
• Difference b/w postal rule and instantaneous in terms of
formulation of the contract.
• Brinkibon v Stahag Meeting of mind , communication actually reach
the other party.. The appeal was dismissed and the courts held that
the contract was formed in Austria and the breach of contract would
have to go through Austrian courts. where the contract was formed,
The court reaffirmed Entores v Miles Far East Co, which stated that
the postal rule did not apply to instantaneous forms of
communication, which would include Telex.
• Acceptances in ignorance of the offer
• Gibbons v Proctor [1891 ]exception)here should be a definite offer
and a definite acceptance from both parties (Acceptance can be made
without knowledge of the offer (but this is doubtful/ weak athority)
Did not know of the offer when he started, but knew of it by the time
the conditions were fulfilled – acceptance. Colleagues acted as
agents.
• Williams v CarwardineThe claimant’s reason for accepting an offer
makes no difference to whether their acceptance is valid (absent a
defense such as duress). Neither mutual consent nor communication
of assent is important in case of reward.
• Prescribed method acceptance
• Manchester Diocesan v Commercial The court held that there was no
prescribed or mandatory method for acceptance of a tender. If the
offeror wanted to create a mandatory acceptance method, this would
need to be made clearly and explicitly to the other parties. An equally
effective method of acceptance would be enough to form a valid
contract.
• The End of an Unaccepted Offer
• -Either party may change their mind and withdraw from negotiations
before a contract is concluded
• Change of Mind
• If a condition in the offer is not fulfilled(state of affair that did not
occure)
• Death(in personal service contract
• Lapse of time
• If time is not given the offer will end within a reasonable
time(depend on the circumstances of the case.
• Payne v Cave [1789] Change of mind – no legal commitment until a
contract has been formed, therefore either party may withdraw from
negotiations any time before there is acceptance
• Scamland dicker 2001 Offeror may Withdrawal his offer even if it is
expressively stated that it would remained open for fix
period ,withdrawal must be communicated
• Bern and vantanoven 1880 Change of mind is not sufficient, withdrawal
should be communicated/ not like postal rule. offere must know
• Henthorn v Fraser [1892] Revocation must be received by the offeree in
order to take effect. Postal Rule applies only to acceptances and not to
revocations.
• -Acceptance posted at 3:50 PM (Postal Rule = valid contract)
• -Revocation had been sent but was not received until 5 PM, after
contract
• Stevenson, Jacques & Co. v McLean Offeror is free to revoke offer at
any time, even if he says he will hold it open for a period, however the
revocation does not have effect until it reaches the offeree. Seeking
further information from the offeror is not rejection of the offer
• Dickinson v Dodds -An offeror is free to withdraw their offer at any
point until the offeree has accepted it, so long as the offeree has not
provided any sort of consideration.
• -An offeree must have knowledge of a revocation, but explicit
communication is not required. third party must be a valid party.
Third party communicate for you
• Errington v Errington & Woods Revocation of a unilateral offer –
revocation cannot happen while offeree is in performance of the
stipulated act
• Financings Ltd v Stimson(chain of supply) Where the offer is made
subject to a condition which is not fulfilled, the offer terminates
• Bradbury v Morgan [1862] Death can stop a contract, however if
there is no notice of the death, therefore no attempt to end the
contract, then the contract can continue and the estate was liable .
This was an ongoing contract.
Offer and acceptance