Invitation to bid by an Auctioneer is an invitation to treat. The offer is accepted when the Auctioner strike the table with his hammer - British Car Auction Ltd v Wright (1972). Advertisement is generally an invitation to treat - Harris v Nickerson (1873). Leaflet is also an invitation to treat. In the case of advert for reward for doing certain thing and taking certain steps, accetance is by doing those things and taking those steps - Carlill v Carbolic Smoke Ball Co.
In Auction without reserve price, the offer is accepted by the highest bidder (orbiter) - Wars;pw v Harson. In Aution there is a collateral contract between the Auctioneer and the bidder. Once the reserve price is reached, the actioneer cannot withdraw the offer and the last bidder wins where there is no reserve bid.
Tender is generally regarded to as an invitation to treat. An exception to this is Harvella Investments Ltd v Royal Trust Co of Canada (1196), Blackpool and Fylde Aero Club Ltd v Blackpool Borough.
Contract law adopt an objective rather than a subjective approach to agreement R v Clarke (1927), Gibbons v Proctor (1891). Hyde v Wrench (1846) - Law of contract adopt mirrow image rule i.e. the offer and acceptance must be exactly the same thing, any difference is a counter offer which can be acceted by conduct Brigden v Metropolitan Railway Company. Request for information is neither rejection no acceptance - Stevenson, Jacques & Co. v Mclean (1880). In the battle of form the last shot will win Butler Machine Tools Co. Ltd v Excello Corporation (England) Ltd (1979) Lawton J.A (CA).
R v Clarke - Australian Case
Gibbons v Proctor (1891) - Police reward case
Williams v Carwardine (1853) - Old widow who give required information due to guilty conscience
Bridgen v Metropolitan Railway - Coal contract, name of arbitor as the final shot
Adams v Lindsell (1818)
Household Fire Insr4nace v Grant (1879) - Postal rule
Hoden Securities v Hughes (1974) - where postal rule is not intended
Rules for the Postal Rule"
It must be reasonable - Henthon v Frazer. The offeror can state when the leter reaches him.
It does not apply to instantaneous communication - Entoress v Miles Far East Corporation.
It does not apply where it would lead to manifest inconvenience and absurdity - Holwell Securities Ltd v Hughes (1974)
The better approach for postal rule is tha the acceptance take place when the acceptance is received by the offeror subject to the qualification that the offeror cannot revoke the offer once the acceptance has been posted.
METHOD OFACCEPTANCE
Elianson v Henshaw (1899), Manchester Diocesan Council for Education v Comercial and General Investments (1970): The offeror may stipulate that acceptance is to be made using specific method. Quennerduaine v Cole (1983) - Communicating acceptance may be inferrred.
General rule - if the offeree uses another methods it creates contract if the other method is less advantageous except a method is specified as the only method.
METHOD OF TERMINATING AN OFFER
Withdrawal could be at any time before acceptance, but notice must be given to the offereee either by the offeror or through another - Darly Dickson v Dodds (1876), but me brought to the attention of the office - Byrne v Van Tienhoven (1880).
Offer could also be terminated by:
the rejection of the offer - Hyde v Wrenth
Lapse of time when specific time is stated
When offer came to an end after certain event
Death of the offeror - immediately after death or knowledge of death
Isssues are every day transactions, boarding of bus, buying of goods in the supermarket, battle of forms.
Article 19 of Vienna Convention, addition, limitation or modification is a rejecion of offer and a counter offer.
Acceptance with additional or different term which do not materially alter the term of offer constitute an acceptance, unless the offeror without delay object orally or dispatchs notices.
Revocation - Henthon v Frazer (1892) CA. Postal rule does not appl to withdrawal but acceptance of offer. Byrne & Co v Van Tienhove & Co (1856); Stevenson, Jacques & Co. V McLean (1880) set the same principle
Dickson v Dodds (1876) - revocation must be communicated - sale of house withdrawn before acceptance unless the promise to keep an offer open for a stated period is supported by consideration, the offeror is free to revoke the offer at any time before acceptance - Routledge v Grant (1828)
Because there is no legal commitment until a contract has been formed either party mat change their mind and withdrew from negotiation oxford v Davies (1862)
Re McArdle (1951) - Past consideration is no consideration. Exception in Pao On v Lau Yiu Long(179) Lord Scarman gave the following exceptions:
a) Done at the promisors request - Lampleight v Braithwait (1965)
b) Understood that payment must be made one way (Re Casey Patents (1892)
Promise would be enforceable when made prior to the Act.
Agreement/contract under lease could not be varied by an agreement by parole (whether in writing or not but only b deed). Equity said if there has been a varioation by a deed or by simply contract evidence in writing, the court could give effect to it. Representation as to the future must be established by a contract or nothing. Equitable consideration would not apply in the absence of consideration
INTENTION TO CREATE LEGAL RELATIONS
In domestic and social agreemens it is presumed that there is not an intention to create legal relation. In the cawse of commercial agreement it is presmed that there us an intention to create legal relation. The fact of the case in both cases may displace the pressumption. Objective approach determines the intention, would reasoble parties posses the intentionb. Rebutable pressumption is a presumption made by the courts as to certain state of fact until contrary is proven.
In Balfour v Balfour (1919) Atkin Lj stated that as a matter of public policy domestic agreement are outside the jurisdiction of the court to avoid overwhelming the court with such cases.
Jones v Padvatton (1969): Mother and Adult child (Law Education)
Coward v MIB (1962) - Agreement to take friend to work in exchange for payment of fuel was considered domestic
Merrit v Merrit (1970) rebutted the presumption in Balfour and Balfourt
Darke v Strout (2003) Divorced couple - maintence agreement rebutted the presumption
Simkins v Rays (1955) Co-habittee enter competion rebuted that presumption
Parke v Clark (1920) - Sold house to move in with a friend and asked to move out later
CLASSIFICATION OF TERMS
A contractual term is a primary obligationa and every breach gives risse to a secondary obligation to pay damages and termination of the contract. For breach, the innocent party may terminnate and claim damages or affirm and claim damages.
Rescission for breach treat contract as discharge from future obligation but past obligation still stands. Rescision for misrepresentation discharge the contract totally. Breach need not cause any loss - Bowes v Shand (1979)
In Common law clearly express term is condition Behn v Burness (1868) Betin v Caye (1876). Innominate terms recognised in Hong Kong fir case (1962) for breach, the court will determine whether to rescind or note Cehave v Bremer (1976). Innominate term introduced anxiety inot contract law - Milato v Angelos (1970), Buyes v Traders (1981), Central Torward Klaneous v Armi, Marine Corp 1994), L Schale v Nickerman Machine Tools/Sales (1974)
Lambard North Central v Butterworh (1987) punctual payment as condition, Umen Eagle v Golden Achievement (1997) 2 ALL ER 215 - 10 minutes delay considered to much.
Constraint of Trade
Esso Petroleum v Harper Garage, Alec Lob v Total Oil
S.13 of Sales of Good Act 1979; s.14(2), s.142)
Fundamental term - Photoproduction v Securicor
s.3(1) of UCTA - Requirement of reasonableness
A purchase wll rely on seller's experience or expertise - Esso Petroleum v Merodon. Purchase is also protected by UCTA 1977 and UTCCR 1999
Innocent of fail - Dick Bently Pr0duction v Harnold Suil
INCORPORATION
LEstrange v Gacoub (1936) signature
Curtis v Chemical v Dajeng go (1951)
Olley v Malborough Court Hotel (1949)
Chapleton v
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CAPACITY TO CONTRACT
Minors do not have capacity to contract, subjec to the following exceptions:
a) Contract for necessary - Nash v Inman (1908) - sufficient clothing, Delers v Flemming (1840) condition in life; Robert v Gray (1913)
b) Beneficial contract of services, apprenticeship, trainign of employment, professional engagement - Doyle v White City Stadium (1935); Chaplin v Lesley Freewish Publisher 1966- Contrasting view De Francesio v Barnum (1880) - Voidable contract.
Important cases:
a) Roberts v Gray (1913) contract of employment where she will benefit
b) s.3 of the Sale of Goods Act
c) Steinber v Scala (Leed) (1923).
Incapacity of minor will act as a defence to a claim by the other party who seek to enforce the contract rather than as the basis for the minor for the restitution of the benefits he has conferred upon the other party.
VITIATING ELEMENT
Mistake, either unilateral or bilateral, is a vitiating element to a contract. These include Common or mutual mistake. Operating mistake renders contract void in common law and in equity it render contract voidable.
Bilateral mistake tantamounts to absence of genuine agreement - Raffles v Wichelhabour
Common mistake Savin v Hunding (1913); Bell v Lever Brothers (1931)
Non-existence of the subject mater - Contuner v Hastle (1959); McRae v Commonwealth Disposal Commission. Future consideration - Galloway v Gallowat (1914)
Mistake as to ownership res sua. You cannot buy what you owe - Cooper v Phibbs (1867); Bligh v Matur (1966).
Mistake as to the possibility of Performance - Physical - Sheik Brother Ltd v Ochsman (1957)
Legal impossibility - Cooper v Phibbs (1867)
Commercial impossibility - Grifill v Brymer (1903)
Where a person assume responsibility, such a person will be in breach for impossibility.
The rule for necessary is governed by s.3 of the Sales of Goods Act 1979
UNILATERAL MISTAKECourt will only find a contract void for unilateral mistake only if
a) If the non mistaken party is aware of the mistake but proceed to take advantate
b) Non-mistaking party created the mistake - Smith v Hughes (1871); Shogun Finance v Hudson (2003).
In most mistaken identity mistake the policy arguments will favour the protection of the innocent party.
MISTAKE IN EQUITY
Some of the key issues are:
1) Whether or not the contract has allocated the particular risk in question
2) If it has not, is there operative mistake at common law, if there is no provision for equitable relief
3) If the contract stand, operative mistake does equity provide relief.
4) Is there in substantial doctrine of mistake in equity.
Remedies
Rectification - correct the mistake
Specific performance
Rescision - Soller v Butcher (1950); Great Peace (2002)
Mistake Question:
The wrong painting has been exhibited and there is no contract based on Rafflest Wichellys (parties at cross purposes). Snapping at mistaken offer would void the contract - Harvey v Collen and Shield (1939)
The contract cannot be voided because of common mistake - Bell v Lever
MISREPRESENTATION
Statement of fact as to the subject matter is misrepresentation, while statement of opinion is not. Misrepresentation is in the following categories:
a) Fraudulent
b) Negligent at common law - Hedley Byrne v Heller (1964)
c) Negligent at statute - Misrepresentation Act 1967
You can rescind throug third parties Some of the relevant cases are:
a) Universal Finance Co v Caldwwll (1965)
b) Leef v Internation Galleries (1950) - Lapse of time
c) Long v Lloyd (1958) - aware but continues
d) Clark Dickson (1857) use of consumer index
Affect right of third party
Howard Marine & Dredging Co. v Orgen & sone (1978)
Royson Trust Ltd v Roggerson (1991)
EXCLUSION OF LIABILITY
Misrepresentation Act 1967 s.3 exclusion or limitation for liability subject to requiremetn of reasonableness set out in UCTA 1977.
For misrepresentation, you need to show a that the respondent has made a false statement of fact which induced him to contract and indentify the statement. Confirm if the statement of true both when made and when the contract signed - O'Flanagan. Keeping quiet when aware of a contract fact is misrepresentation - Dimmock v Halletl; Spice Girls v Aprilla. The Company is sound - expression of opinion (Bisset v Wilkinson) or statement of fact - Smith v Land House Corporation. Reliance on News Margazine is that a solid based for forming opinion for investment adviser and a reasonable ground for making recommendation (H0ward Marine v Ogden)
Opinion will only give remedy in misrepresentation if Ian did not genuinely hold the opinion. Edmington v Fitzmaurice. Negligent mistatement - Hedley Byrne v Heller.
Expression of opinion is no liability, but there could be if additional fact is known - Edmington v Fitzmaurice. Advertisement, flier is mere puff. Statement made by one contracting parties to another - O'Flanagen - change of circumstance. For Fraudulent misrepresentation, the decision in Daye v Olley meant that all direct losses are recoveravle, without any consideration for remoteness.
Misrepresentation Act of 1967 - Royscot v Regers. In Contraact the loss of the claimant is more predominant, whereas in tort culpability of the claimant is the issue .
DURESS
Illegitimate pressure render a contrac voidable - Paon on v Lau Yiu Long (1980). Duress could be to person, goods, economic, etc.
Alec Lobb Ltd v Total Oil (1985) - acceptable duress
North Ocean Shipping v Hyandai Construction (1979)
Universal Tank Ship v ITF (1982)
Bands Contract v Green (1984)
Lord Scarman in Pau On v Lao Yiu Long gave the following conditions:
a) Was he co-ersed?
b) Is there alternative course open to him
c) Did he receive independent advise
d) Did he take step to avoid the contract when the duress was lifted?
Decision of the court in B&S Contracts & Design Ltd v Victor Green Publication indicates a shift away from overborne theory. Statute protect most people from economic duress, but commercial firms are still exposed to duress from large corporation (take it or leave it contract).
UNDUE INFLUENCE
Royal Bank of Scotland v Etridge (No. 2) (2001); CIBC Mortages v Puff (1998) - leading cases. You need to prove presumed undue influence. Lord Brown Wilkenson in RBoS said spouse you be accorded tender treatment - Backlays Bankk v O'Briend (1993); Trust Llyods Banks v Bindly - reposed confidence, underbid and snapped at the offer. Unilateral mistake, Williams v Roffrey Brother. Economic duress was recognised in Universal Tankship Inc of Monrovia v International Transpot Workers Federation. Critical is the scope of the duress and the normal commercial pressure could be accommodated. The absence of advantage stress the presumption that the contract was enter into due to pressure. Economic duress is a legal doctrine.
PRIVITY OF CONTRACT
Only party to contract are bound by it and only party to contract can derive benefit from the contract - Tweddle v Atkinson (1861); Dunlop Pneumatic Tyre v Selfridge Co. (1915) These decisions were based large on the absence of consideration, which is the bedrock of English law of contract. Consideration must move from the promisor to the promissee. For example in Scrultton v Midland Silicone (1962) Steedoeers - a stranger cannot benefit from a contract.
Beswick v Beswick (1965)
Contract (Right of Third Party) Act 1999 allows the parties to a contract to provide the third party with enforceable contract. The purpose of the Act is to:
a) Give effect to the intention of the parties
b) Allow positive benefits, but no negative burden
c) protection of an exclusive of limitation clause - Nishing Shipping Company Ltd v Cleaves & Co. Ltd (2003) s.1(1); s(5) appropriate damages; s.2(1) contract can be ammended.
Enforcement by promisee
a) Jackson v Horizon Holidays (1975) Multiple bookings
b) Alberzero (1977) Sellers contract with buyers goods for delivery
c) Linden Garden Trust v Lenester Slidge (1993) - Contract where the subject matter will be acquired by the third party
d) Panatown v Alfred McAlpine Construction Ltd (2002) - Limited application
AGENCY
Agency - The Euromedon, New Zealand Shipping v Scatterwaite (1975). The Mahkaai (1996) - Lord Goff made excellent summary on the development of law in this area. Consumer Credit Act (1974) s.56. .57, Law of Property Act 1925, s.56.
Agency might be successful if:
a) The contract made it clear that the stevedorees were intended to receive the benefit
b) The contract made it clear that the carrier in addition to contracting on his own behalf was also contracting on behalf of the stevedorees
c) The carrier had authortiy from the stevedore to enter into the contract on his behalf (or possibly a later ratification of the contract by the stevedores would suffice and any difficulties about how the stevedores would provide consideration for this contract were overcome. The agency argument was not successful
Argument in favour of Privity
1) Clearly define the ambit and enforceability of contract
2) Ensure court do not create a contractual obligation
3) Operate in tandem with the requirement that consideration must move from the promisee
4) It would not be desirable for the promisor to face actions for breach of contract from both the promisee and the third party
5) If the third party could enforce the contract, this would affect the ability of the parties to vary or rescind contract.
Argument Against Privity
1) It leads to commercial inconvenience
2) It can opereate to create great injustice
3) Defeats the intention of parties
4) Put English contract law in an anomolous position in that contract law of other countries does recognise the right of third party.
5) It creates uncertainty in law given the number of decisions which exist to circumvent teh application of the doctrine.
ILLEGALITY
Illegality will affect contract to commit murder; promote immorality; perform illegality; not formed in accordance with procedure prescribed by statute. The court will not enforce illegal contract to act as deterence, purnish wrongdoers and preserve the dignity of the court and in line with public policy. The types of illegality are
a) Common law illegality
b) Statutory illegality either illegality as formed or illegality as performed.
Mahmoud v Ispahabu (1921) - unenforceavke
Mohammed v Alaga & Co (a firm) 2000 - illegal as formed, but court allowed benefit on quantum merit
St John Shipping Corporation v Joseph Rank Ltd (1957) - illegal as performed. Overloaded ship
COMMON LAW ILLEGALITY
Commission of legal wrong - Alexander v Rayson (1936); Baresford v Royal Exchange Assurance (1938); Peace v Brooks (1866); France v Boston (1797)
Lowe v Peers (1768) - prejudicial to family life; Hermann v Charlesworth (1905)
R v Andrew (1979) - Restraint administration of justice Ellinot v Richardson (1870)
EFFECT OF ILLEGALITY
Strongman (1945) Ltd v Sinecock (1955) - Remedy for innocent party
Holman v Johnson (1775) No partial recovery of benefit; exception in recovery of money Kirini Cotton Co. Ltd v Dewani (1960)
Taylor v Bowens (1876); Tribe v Tribe (1976) Bowmaker Ltd v Barnet Instrument Ltd (1945) - withdrawal before commission of illegality allows for recovery
Tinslay v Milligan (1994) Equitable proprietary.
REFORM
Court to consider whether to enforce or not contract; to recognise whether property right has been transferred or not and to allow benefit conferred to be recovered or not.
Exam Advise.
Determine the extent to which court will enforce contract tainted by illegality which considertion to the purpose of the act - St John Shipping v Rank. Is the statute intended to penalise conduct or prohibit contract. Pari delicito where both are aware of the illegality. Peace v Brooks (high moral standard); Tinslay v Milligan (relaxed moral standard)
RESTRAINT OF TRADE
Employment contract and Sale of business to another. Restraint is to protect legitimate interest. Court will only enforce a restraint of trade to the extent of its reasonabless between party and public policy. Statutory control upon anti-competition.
Scope of reasonableness
a) Clause must protect legitimate interest and must not be used to prevent competition with employer
b) Employer must be free to excise the general skills and knowledge he possesws - Herbert Morris Limited v Saxelby (1916)
c) The restriction must be reasonable with regards three elements - duration, subject matter, area - Mason v Provident Clothing & Supply Company Ltd (1913)
Once the clause if found to be reasonable between party, it is unlikely that the court will find it contrary to public policy - Wyatt v Kregliger and Fernaid (1933)
SALE OF BUSINESS
Modern law in this area is established by Nordernfelt v Maxim Nordebfelt (1894). The courts are much more likely to uphold a restrain of trade clause found in contract for the sale of business than a contract of employment. Cost paid is important in determining reasonableness. In some case the court will find not to compete in any future business as unreasonable and may accept worldwide restriction reasonable because of the low number of manufacturer in certain area.
OTHER AGREEMENTS
Restraing of trade sometimes apply in 'solus' or exclusive dealing agreement - Esso Petroleum Co. Ltd v Harpers Garage (Stourport) Ltd (1968) HL 4 yrs, 5 months agreement considered reasonable and 21 year was considered as beyond requirement to protect interest.
Exclusive agreement - A. Schroeder Music Publishing v Macaulay (1974).
Nordernfeilt v Maxim Nordenfelt
Contract of Employment
Establish that there is legitimate interest to protect
DISCHARGE OF CONTRACT
Contract would be discharged through performance, breach and frustration.
Principle of substantial performance
Cutter v Powell (1975); - No payment for the performance of an existing obligatio. Simpton v Hedges (1895) the wife of the dead vice captain of a ship was unable to claim for what her husband before he died. Very harsh principle
Exceptions:
Contracts could be established as series of obligation or stages of performance - Heeny v Isaacs (1952)
Repudiatory Breach - where one party refuses to continue performance or commit an act which prevent performance. To establish repudiatory breach it is important to consider the standard of performance to be met and type of term breach.
Standard performance - strict liability and a standard of reasoable care 100% measurement. Contract for the supply of goods imposes strict liability - Arcos v Ronenson (1937) AC 1/2 inch difference to the size of a barrel was found to be a breach. Some are imposed by legislation. Sales of Goods Act 1979.
Only a breach of condition or sufficient important intermediate/innominate term gives rise to a right to terminate contract.
CONSEQUENCE OF BREACH
Breach give rise to right to terminate, receive damages, order performance etc. Innocent party must communicate to party in breach - Vitol SA v Norelf Ltd (1996). For rescission for breach, there is no future for the contract, but the contract has a past. Lord Porter speech in Johnson v Agnew (1980) AC 367, Heyman v Davinds Ltd (1947)
Anticipatory is breach that occures before performance - Universal Cargo Carrier Loop v Cutati. Carter & Coward Ltd v McGregor (1963). He cannot continue where he needs the cooperation of the party in breach. When there is no legitimate interest the innocent ought not th saddle the other party with additional burden Lord Reid White v Carter (1971); Clear Shipping v Bulk Oil (1984)
ESSAY
Breach depend largely on particular terms. If breach does not justify termination and the innocent party purports to d do, he may be liable for breach - Great Peace; Decrowall International SA v Practitioner on Marketing Ltd (1971). Hong Kong Fir shipping Co. Ltd v Kawasaki Kize Kabshe Ltd (1962). The question is would legislation be helpful or give rigidity, should court attempt to give great to the manners in which the parties clasify term.
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