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30 Cards in this Set

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What is the difference between unilateral and a bilateral contract?
Bilateral – parties assume obligation to each other.

Unilateral – 1 party makes offer for act to be performed by other party / parties.
What constitutes a valid offer?
Treitel “expression of willingness to contract on specified terms with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed (the offeree).”

Clear, certain, unequivocal.
Gibson v Manchester City Council
Council wrote letter to tenant saying that it may be prepared to sell house at certain price – tenant filled in app and returned – Council changed policy.


HELD by HL – there was no binding contract, offer was never made by Council. Council’s letter was merely invitation to treat.
Storer v Manchester City Council
Similar facts to Gibson, but clerk wrote letter to S, asking to sign agreement in completion for change.


Lord Denning – offer was certain and Storer had bound himself by accepting.
What is the difference between an offer and an invitation to treat?
Invitation to treat is first step in negotiations. Not legally binding. E.g. adverts (Partridge v Crittenden), displays in shop windows (Fisher v Bell), tenders (Spencer v Harding), circulars (Grainger v Gough).

Offer - offeror is prepared to become legally bound by acceptance by offeree.
Pharmaceutical Society of GB v Boots
Boots – self-service shop, P contented that selling poisons when customers put item in baskets.


HELD by CA – customer makes offer at till which is accepted or rejected. Policy reason that shopkeeper can ensure that appropriate customer is purchasing the item.
Carlill v Carbolic Smoke Ball Co
Unilateral offers – if intention to bound is sufficiently clear (as it was in the case), any advert may take on guise of offer.

Here, offer to world at large which is acceptance by performance.
Blackpool & Fylde Aero Club v Blackpool BC
HELD - Invitation to tender can give rise to obligation to consider tenders (exception of gen. rule) if plain within invitation & terms.

On the facts it was.
Payne v Cave
Auctions:
(reserve price)

Bidder makes offer which is accepted by the auctioneer’s hammer falling. Auctioneer can reject any bids made.
Barry v Davies
Auctions:
(without reserve)

Auctioneer must accept offer from highest bona fide due to second unilateral contract that auction will be without reserve.
What is the effect of a counter offer and a request for further information?
Counter offer – the original offer is rejected and cannot be subsequently accepted (Hyde v Wrench).



Request for more info – attempt to clarify extent and terms of offer, or to ascertain if offeror would consent to making certain changes in offer. Original offer remains open, not counter offer (Stevenson v McLean).
What are the rules in relation to the communication of offers?
Can be communicated orally, in writing, or implied from conduct. Partly expressed and partly implied. Must be communicated to offeree (Taylor v Laird).
What are the rules in relation to the termination of bilateral offers?
Rejection, revocation or lapse.

Rejection must be communicated to offeror also counter-offer.

Revocation – can happen before acceptance (Routledge v Grant).

Must be communicated (Byrne v Van Tienhoven).
Indirect communication can be OK if clear intention to revoke reached offeree (Dickinson v Dodds).
What are the rules in relation to the termination of unilateral offers?
Must be ‘Same notoriety’ as offer – Shuey v USA

Can be done prior to complete performance (GNR V Witham).

However, part performance and can complete. Hardship to offeree to withdraw (Errington v Errington & Wood – promise of house in return for paying instalments.)
Daulia v Four Mill Bank Nominees – must be implied obligation of part of offeror not to prevent condition becoming satisfied, arises when offeree starts to perform.
What constitutes a valid acceptance?
Must mirror the terms of the offer (Hyde v Wrench).

Must be in response to the offer (Gibson v Proctor, R v Clarke – rescue cases).
What are the rules in relation to communication of acceptance?
Bilateral – must be communicated to the offeror,
Silence gen. not valid (Felthouse v Bindley)

Can be communicated by 3rd party if authorised by offeree (Powell v Lee)

Instantaneous – must be communicated/received (The Entores)
Must be received within office hours to be valid (The Brimnes)
What are the exceptions to the general rule that acceptance must be communicated?
Can be by conduct (Rust v Abbey Life Assurance).

The postal rule (Adams v Lindsell – valid on posting if addressed and posted correctly)
However, Holwell Securities v Hughes – if not expected and ‘manifest inconvenience and absurdity’, postal rule can also be excluded.
Revocation of posted acceptance may be possible (Dunmore v Alexander) but this Scottish case disapproved by Thomson v James.
Also, unilateral offers (Carlill).
What about prescribed modes of acceptance?
Case = Manchester Diocesan Council v Commercial & General Investments, if offeror has specified particular mode, but must be extremely clear).

However, if another method is ‘no less advantageous’, may be OK (Tinn v Hoffman)
What are the presumptions relating to domestic and commercial agreements?
Domestic – no presumption of ICLR (Balfour v Balfour – case where husband left wife but before had agreed to pay maintenance for wife as he was overseas).
Jones v Padavatton – daughter studying for bar, ‘agreement’ about getting mum’s house.
However, Merritt v Merritt – was ICLR because they were already separated and was husband wrote about maintenance on written note.

Commercial - there is a presumption (Rose & Frank v Crompton Bros, Bowerman v ABTA).
When and why will these presumptions be rebutted?
Domestic – Family business, mutual obligations (Simpkins v Pays), previous conduct (Peck v Lateau – bingo winnings, had to share cos of ICLR)

Commercial – statements made in jest (Leonard v Pepsico) or anger, ‘mere puff’ i.e. adverts (Carlill)

Words ‘subject to contract’ (Chillingworth v Esche)

Honour clause/comfort letters (Kleinwort Benson v Malaysia Mining Corp).
What are the principles relating to capacity to contract?
Insane people have no legal capacity if on Mental Health Act 1983. If not, binding unless he didn’t know what he was doing and other person knew (Imperial Loan v Stone).

Drunk – similar app to mental people (Gore v Gibson)
Again, reasonable price for ‘necessaries’.

Minors have no legal capacity, however, exception for contract for necessaries (Nash v Inman) and must be at ‘reasonable price’ SOGA 1979 – s3(2), (3).
Minor can ratify contract at 18 (Steinberg v Scala), contracts have to be for their benefit (Aylesbury FC v Watford).
What is consideration?
‘An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.’
Dunlop v Selfridge.
What is executory, executed and past consideration?
Executory – where parties make promises to each other to perform something in the future after contract has been formed e.g. sales and delivery contract.

Executed – where at time of formation of contract, consideration has already been performed (unilateral contracts)

Consideration must not be past – must be given in response to the promise of the other party (Eastwood v Kenyon – promise to release debt on marriage – marriage was past consideration). Roscorla v Thomas – promise after sale that hrse was not viscious – no consideration in return for promise.
What are the exceptions to the past consideration rule?
Pao On v Lau Yiu Long:
1. Act must have been done at promisor’s request.
2. Parties must have understood that the act was to be rewarded either by payment/conferment of some other benefit.
3. Payment/benefit, must have been legally enforceable if it had been promised in advance.

Note, commercial practice – e.g. payment after repairs done.
Tweddle v Atkinson
Consideration must move from the promisee.

Facts – marriage arrangement where both fathers of couple promised money. Groom sought to enforce arrangement from father-in-law – couldn’t he as hadn’t given any consideration in response to the father-in-law’s promise.
Sufficiency of consideration
Need not be adequate – courts won’t enquire if agreement is freely reached (Chappell v Nestle) – wrappers were consideration, even tho no furher value once received by company.

Must be sufficient – have some value, however small:
White v Bluett – son had not given any consideration for father’s promise to discharge him from debt by not complaining about distribution of property among children.

But Hamer v Sidway – enforceable cos nephew had provided consideration by not drinking, smoking etc.
Existing obligations within a contract:Stilk v Myrick, Hartley v Ponsonby, Williams v Roffey Bros
Stilk – seamen deserted boat, rest of the men were already contractually bound to do any extra work to complete the voyage – link with economic duress as the remaining sailors could pressurise masters to make extra payments.
Constrast with Hartley – promise to pay extra to complete voyage – was binding as dangerous to sail boat so seriously undermanned. Therefore, entered into fresh contract.
Williams – has a ‘practical benefit’ been conferred? Case concerned completion of flats – already delayed, and there was a penalty clause for not completing on time + cost and inconvenience of finding an alternative contractor. Important to consideration any evidence of economic duress.
Existing obligations under public duty
Collins v Godefroy – duty to attend court was not consideration for payment – was existing public duty.

Ward v Byham – agreement to keep child ‘well and happy’ was ample consideration and above the essential public duty to maintain the child.

Harris v Sheffield United FC – attendance of police at football match was above their normal duty – the club should pay for it.
Existing obligations to 3rd party
Scotson v Pegg – existing contract to deliver coal to 3rd party. This party then ordered them to deliver to P. P promised to S that they would unload coal at stated rated – didn’t and S sued for breach of contract. There was consideration because of the benefit of the delivery to P and detriment to S which was that they couldn’t breach their contract with the 3rd party. P could enforce contract against S.

Affirmed in The Eurymedon and Pan On v Lau Yiu Long.
Part payment of a debt
Is not good consideration but exception in Pinnel’s Case ‘Horse, a hawk or a robe – may be good consideration.
Promise to pay less Foakes v Beer (B claimed interest on debt, no fresh consideration was given by F i.e. Pinnel’s Case. Arguable that part payment of debt was factual benefit to her.
Promise to pay more – Williams v Roffey Bros (see other card). Re Selectmove confining Williams to goods and services, and not money.
Fresh consideration is needed to accept lesser sum (Pinnel’s Case). Payment in different form, place, earlier may be consideration. However, D&C Builders v Rees – part payment by cheque was not sufficient – also element of economic duress.
Where lesser sum has been paid by 3rd party, can’t recover difference (Welby v Drake).