Contract Law Summarised; Explanations, Definitions, Cases

Of the various agreements made some are social or domestic; some others are contracts – legally enforceable.

Jones -v- Padavattan 1969 was about an agreement between a mother and daughter ~the mother had promised to support her daughter during her studies the daughter argued -the judge decided that it had not been intended to be legally binding, so it was a domestic agreement.

But in Simkins -v- Pays 1995, the mother and daughter had intended to be legally bound by jointly entering a competition to share the prize won, it was a contract.

In Jones -v- Vernon Pools Ltd. 1938, and also in Appleson -v- Littlewoods Pools 1939, there was an intention to be bound legally, but it was one-sided; the other had not so intended it to be, for the football pool company showed that the coupon contained the words ‘binding in honour only’, and it was not enforceable.

A Local Authority did not have to sell a house at the price applicable at time of application -which it was to consider; no offer existed to accept but an invitation to treat: Gibson -v- Manchester C. C. 1997.

A reward-poster (if a product did not protect against influenza) was Intention to be legally bound, as Offer, and Acceptance too had Consideration -the essentials of a contract: Carlill -v- Carbolic Smoke Ball Co. 1893.

A Contract is distinguished from other forms of agreement by determining whether it contains those three basic essentials -as matters of fact, oftener of law.

An agreement is a Contract if it contains the three basic elements of Intention to create Legal Relations, Offer & Acceptance, and Consideration; but what constitute these, how, and why, or not, are matters, mostly, of precedent; therefore, it is useful, on each of these, to look at some more of such precedent…

Intention to Create Legal Relations: It is, of course, most unusual when commercial agreements between businesses are made that a legal relationship was not by both parties intended to be created; it is, essentially, more so a different situation than an exclusion clause making it binding in honour only, when, while may have been intended as a matter of fact, that an agreement may not be made the subject of the jurisdiction of the courts -in terms at least of whether it is legally binding, is not capable in law of having been intended; yet a contract in Rose & Frank Co.-v- J P Crompton 1925 was not the agreement -it showed that a legal relationship was not intended to be created.

That the husband would pay his wife £30pm was not intended in Balfour -v – Balfour 1919 to be binding; that he was to repay the mortgage and transfer ownership of the property to her in Merritt -v- Merritt 1970, as she had asked him to be put in writing and he had, was intended as binding ~as meant a travel firm’s sign that failed holidays would be reimbursed for in Bowerman -v-ABTA Ltd. 1995

Offer and Acceptance: An ‘offer’ is not an ‘invitation to treat’ ~an advert. in Partridge -v- Crittenden 1968 was an invitation to treat as the numbers of birds could not be infinite to make it capable of being ad-infinitum accepted -in Pharmaceutical Soc. -v- Boots 1953 drugs in self-service store could not be an offer to sell as a chemist at pay-point could refuse to. Nor is it ‘information’ ~’Will sell? State lowest price’ replied to stating it was information in Harvey -v- Facey 1893; the announcement of the auction cancelled did not in Harris -v- Nickerson 1783 entitle to travel expenses, as in Pane -v- Cane 1789, a bid constituted the offer.

Nor is an offer unwithdrawable if the offeree is informed -by anyone Dickinson -v- Dodds 1876, before acceptance Byrne -v- vanTienhoven 1880 ~and it can lapse eg shares Ramsgate Victoria Hotel -v- Montefoire 1866, or if goods become damaged or destroyed, or by a counter-offer (£950 ok?) Hyde -v- Wrench 1940, or if the offeror rejects it or dies.

A valid offer, therefore, as an expression of a proposition willingly to contract, can be, as by a reward poster in Carlill to any or many persons, if communicated -e.g. by biding by raise of hands, with clear terms, while it exits capably of being accepted.

Acceptance of such a valid offer constitutes contract.

Agreement to the offer is ‘acceptance’ -if communicated.

Generally, the offeree’s silence is not tantamount to acceptance and ‘if I don’t hear from you I’ll deem it so’ in Felthouse -v- Bindley 1862 did not constitute it.

Any effective way will do, Entores -v- Miles Far East 1955, if fax or e-mail, during working hours or the following work day: Brinkbon -v- Stahag Stahi 1982. If acceptance is posted or telegraphed, it is effectively made, even if it is incorrectly addressed and delayed Adams -v- Lindsell 1818, or lost in the post Household Fire -v- Grant 1879 -unless handed to a postal staff not authorised to receive mail; such acceptance is, and the contract is made, at that time -even if before its receipt the offer is withdrawn Byrne -v- vonTienhoven 1876 ~and, Blackpool Aero Club -v- Blackpool C.C. 1990, the offeror must check his mail before closing the offer.

The offeror may prescribe a way of acceptance -then only that, or possibly one more advantageous to the offeror, will do; in Ediason -v- Henshaw 1819 postal acceptance was not as specified -giving it to the driver; if unspecified conduct may imply it -e.g. purchasing aware of the offer, Carlill.-v- Carbolic Smokeball Co. 1893.

Acceptance must be unqualified, ‘subject to contract’, or Neale -v- Merrett 1930 ‘the rest later’, is not so; unless it is capable itself of acceptance, Hyde -v- Wench 1840, requesting information is not a counter offer barring later acceptance, Stevenson -v- McLean 1880.

Consideration: A contract’s point is consideration: ‘executed’ -something done because of which another has to also; or ‘executors’-to be done because of which a contract will exist that another will have too ~it is the benefit or the detriment involved: Currie -v- Misa 1875.

What is contributed to the bargain must be of some value – not necessarily adequately matching the other’s: in Thomas -v- Thomas 1842 £1pa rent was so; and in Chappel & Co.-v- Nestle Ltd. 1960 chocolate wrappers were the stipulated consideration for a music record.

Consideration is owed in return for pre-agreement considerations: the King’s favour was got upon the other’s request, not for £100 overjoyed promised later in Lampleigh -v- Braithwaite 1615; the children’s promise to pay was after repairs were begun in Re. McArdle 1951; also not for a duty: in Glassbrook Bros. -v- Glamorgan C.C. 1925 it was more than the job of the police, in Hartley -v- Ponsonby 1857 more than the sailor’s, but in Stilk -v- Myrick 1809 it was the sailor’s job -his duty. Nor, in is it owed to thirds parties -in Tweedle -v- Akinson 1861 the bridegroom was not a party to the parents’ agreement to give the couple £500 ~unless since Contracts (Rights of Third Parties) Act 1999 named in or identifiable from a contract as beneficiary.

Consideration less than agreed is not good -Pinnel 1602 -except in settling debts, but is if fair commercially -more funds to complete job: William -v- Roffley 1990.

Terms: Those conditions which, if breached, entitle to remedies (depending on their status and the type) are ‘terms’.

Express Terms, subject only to judicial interpretation, as a rule, cannot be argued, if in writing, to have misstated intentions: Jacobs -v- Batavia etc. Trust 1924 -unless unreasonably creating an inequity ~where oral, parole evidence is allowed: Hanish -v- Bank of Montreal 1969.

Implied Terms, unless by statute so, if customary or not occurring to the parties (‘the bystander test’) disregards business efficacy, are deemed so: In The Moorcock 1889 safety of the anchorage did not have to be express, nor in Liverpool CC -v- Irwin 1977 that dwellings must habitable. In Rowland -v- Divall 1923 that seller transfers ownership, Microbeads -v- Vinehurst Road Markings 1975 buyer’s right to quiet possession, Priest -v- Last 1903 (scalding hot water bottle) merchantable quality and Grant -v- Australian Knitting Mills 1936 (underpants -dermatitis) fitness for the purpose, Beale -v- Taylor 1967 that sale is by description also when upon inspection, are, respectively, ss. 12 & 12(1), 12(2), 15, Sale of Goods Act 1979 ~in s. 15 the bulk must be as the sample in quality, ss. 1(2) & 1(2B) Sale & Supply of Goods Act 1994 limited fitness to ‘satisfactory’, s. 1(2C) quality if defect not told of or where examined could not have been reasonably noticed ~they must not be serious: Frost -v- Aylsbury Diaries 1905 (contaminated milk -death), ss. 13, 14 Supply of Goods & Services Act 1982 imply reasonable care-skill-time; interpretation is strict: Re. Moore & Landau 1921.

Conditions are terms entitling to withdraw from the contract and sue if breached. A singer’s partly not turning up to perform breached a condition: Poussard -v- Spiers & Pond 1976. In e.g. the Sale of Goods Act 1979 s. 12(1), seller transfers ownership, s. 15, bulk must correspond to sample, are implied conditions.

Warranties if breached are of trivial consequence, not entitling to withdraw from the contract: 19 out of 24 months could still be worked a ship in Hong Kong Fir Shipping -v- Kawasaki Ltd. 1962; a singer only from rehearsal had been partly absent: Bettini -v- Gye 1876. In s. 12(2) SGA a buyer’s quiet possession is an implied warranty.

Exclusion Clauses limit or disclaim liability, if not inequitably in bargaining power, as in Photo Productions -v- Securicor Transport 1980 for failures of employees -both equal in power and legal advice. In standard contracts, they are binding on who sign them: L’estrange -v- Graucob 1934; but how & when incorporated matter; on a receipt it would not do: Chapelton -v- Barry UDC 1940, it had to be pointed out: Spurling -v- Bradshaw 1956 -‘red hand rule’, it could not be relied on contained in the delivery: Interphoto Picture Library -v- Stiletto Visual Programmes 1988, nor on a sign in a room (theft) -contracted at the reception: Olley -v- Marlborough Court 1949.

They are confined to the matters excluded, strictly interpreted -ambiguity unfavourably to a party seeking enforcement -‘contra-preferentum rule’: Pollock -v- Macrae 1922.

The Unfair Contract Terms Act 1977 makes them void for death, personal injury, loss, damage, negligently caused -reasonableness in circumstances as proof of one relying on it. Supply of Goods & Services Act 1982 & 1984 invalidate suppliers’ exclusion of statutory implied terms; so the Unfair Terms in Consumer Contracts Regulations 1994 any unfair individually unnegotiated -it requires plainness in written consumer contracts, allows consumer organisations to challenge terms.

Discharge of Contracts: Fulfilled or comes to an end.

Performance is when the parties have fulfilled their obligations -not necessarily fully nor all at once. Part performance, if substantial, does not entitle to withdraw: Hoenig -v- Isaacs 1952 (£55 of £750) ~in severable contracts if performance in stages ceases, part performed must be paid -so also if prevented performance: Planche -v- Colburn 1831 (cancelled £100 job done £50 payable on a quantum meriut basis); to accepted part performance ends the contract and any remainders may be contracted for anew.

Agreement to other considerations is new contract: Pinnel 1902.

Breach of a condition frees the other party of obligations; of a warranty, only entitles to sue for damages.

Frustration is when it is, or becomes, due to no fault of either party, not possible to carry out the contract; if so when made, it does not exist: Paradine -v- Jane 1647; else, it is a breach which makes it void: Taylor -v- Caldwell 1863 (destruction of the subject -hall burnt down) and Condor -v- Boron Knights 1966 (incapacity re. personal service -ill) and Re. Shipton, Anderson & Co. 1915 (government intervention or supervening illegality -state requisitioned it) and Krell -v- Henry 1903 (non-occurrence of sole purpose -event cancelled). Under The Law Reform (Frustrated Contracts) Act 1943 money paid before the frustration is irrecoverable, if due is not payable; a party is entitled to expenses, and a valuable benefit has to be paid for: Gamerco -v- ICM Fair Warning Agy. 1995.

Remedies: Breach of one’s contract entitles remedies.

Damages are the actual financial loss of the wronged party that were in the reasonable contemplation of both of the parties, at the time they contracted, as would naturally arise from the wronged party’s normal activity: Hadley -v- Bexendale 1845, and any not so but of which the parties were expressly informed: Victoria Laundry -v- Newman 1945, in loss aiming to put the wronged party in the position that he would have been if the contract had been completed: Jarvis -v- Swan Tours 1973 ~general damages for distress or annoyance being recoverable where comfort or freedom from discomfort (e.g. holiday contracts) is the basis of a normal commercial contract: Alexander -v- Rolls Royce Motor Cars 1995 -but Forthsyth -v- Ruxley Electronics & Construction 1995 did awarded for amenity and disappointment (less deep pool than ordered); but one’s must have taken steps to mitigate his loss: Brace -v- Calder 1895.

Quantum Meruit is piecemeal as an implied term, unless conditional to completion: Sumpter -v- Hedges 1898.

Equitable Remedies may be specific performance if only that would do (e.g. land sale), except for personal services: Lumley -v- Wagner 1852; or injunction if must prevent, also in personal services: Warner Bros. -v- Nelson 1937.

Liquidated Damages as terms in advance agreed which are fair Dunlop Tyre Co. -v- Garage Motors 1915, not tantamount to a penalty: Ford Motor Co. -v- Armstrong 1915 (above list-price).

This is an outline of the English Law of Contract ~laws change, always ascertain current law.

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