Chapter 1: Introduction

Question 1

What is the definition of a contract

Answer 1

A legally binding agreement document

Question 2

What are the 4 roles of a contract

Answer 2

1. Determine the validility of a contract
2. Resolving disputes between parties
3. Identify the breach of the contract
4. Provide remedies

Question 3

What should one determine the nature of a contract, what do we need to look for when starting a contract?

Answer 3

• Determine the offeror and offeree
• Determine the expressed intention instead of actual intention

Question 4

What are the 7 variety of situations does contract law deal with

Answer 4

1. Family relationships
2. Club membership
3. Landlord and tenant
4. Commercial transactions
5. People with equal bargaining powers
6. People with uneqaul bargaining powers
7. International contracts

Question 5

What is the fundamental theory that contract law uses

Answer 5

Contract law is based on the Laissez-faire ideology, that all parties enter into contract by will/choice and in their own terms

Question 6

Are agreements or contracts enforceable by law

Answer 6

Only contracts are enforceable

Question 7

What are the 4 elements/ingredients that create a contract

Answer 7

1. Offer
2. Acceptance
3. Consideration
4. Intention to Create Legal Relationship

Question 8

How can we decide if the parties have reached an agreement

In a normal interaction with a reasonable man

Answer 8

Even if a parties intentions were not real, as long as he made it that a reasonable man would believe him, it would be equally bound to both sides

Question 9

How is an agreement reached? Is it objectively or subjectively decided?

method?

Answer 9

Objectively decided, not subjectively. Meaning there should clearly stated (written/signature) or where intention was made clear

Question 10

What are the 2 ways courts use to find the offer and acceptance

Answer 10

Reasoning Forward
* traditional appraoch: finding the offer and acceptance then lead to conclusion

Reasoning Backward
* Decide on the appropriate solution then move back to find the offer and acceptance to justify the decision

Question 11

How many offers/contracts are there, and what are they

Answer 11

Unilateral contract
* promise for an act
* does not need to be communicated to the offeror

Bilateral contract
* consist of offer & invitation to treat
* Offer is promise for a promise
* ITT is the expression of willingness to enter into a contract to negotiate on terms with the intention to form a new contract at a later stage

Question 12

What are 3 cases that deal with validity of a contract?

Answer 12

1. Centrovincial Estates v Merchant Investors - invalid
2. Gibson v MCC - invalid
3. Storer v MCC - valid & binding

Question 13

Centrovincial Estates v Merchant Investors [1983]

validity of contract

Answer 13

Facts:

1. Claimants (landlord) accidentally wrote $65,000 when supposed to bill $ 126,000.
2. Before they could withdraw the D accepted. C said there’s no legally bidning contract

Held:

• Slade LJ - Offeror under a bilateral contract can withdraw an unambiguous offer.
• Where it was merely a mistake and the offeree would not have known it was a mistake either

Takeaway

• Can withdraw if it was a genuine mistake

Question 14

Gibson V Manchester City Council [1979]

Answer 14

Facts:

1. D selling houses to tenants, handed out brochures to tenants. C filled brchure with purchase price and applicable mortgage terms
2. City council responded that the “may” sell the house at the price stated. Didn’t want to sell in the end

Held:

• HOL said contract was not valid. The words “may be prepared to sell” made the difference.
• Claimant also needed to have made a formal application to buy

Question 15

Storer V Manchester City Council (1974)

Answer 15

Facts

1. Storer wanted to purchase a countcil house
2. Council sent him a ‘tenancy purchase agreement’, which storer signed and returned.
3. Before the Council countersigned, political control of the Council changed, and they decided not to proceed with the sale.
4. Council argued that there was no valid contract as they haven’t yet signed

Held

1. Lord Denning held valid & binding
2. No need for formal execution, as long as there is clear agreement & ITCLR
3. The Council’s letter and the purchase agreement, combined with Mr. Storer’s signature and return, amounted to an offer and acceptance.

Question 16

What 5 cases deal with validity of offer & acceptance?

Answer 16

1. Centrovincial Estates v Merchant Investors (1983) - valid
2. Harris v Nickerson (1873) - invalid
3. Harvey v Facey (1893)- invalid
4. Clifton v Polumbo (1944) - valid
5. Bigg v Boyd Gibbins (1971) - valid

Question 17

Centrovincial Estates v Merchant Investors (1983)

validity of offer & acceptance

Answer 17

Facts

1. Claimant (leaseholder) mistakenly offered 65k pounds to defendant where he accepted
2. Instead it was supposed to be 126k pounds, so defendant sued that it was already binded

Held

• Court ruled in favour of defendant
• That subjectively mistaking does not prevent a contract from being made

Question 18

Harris v Nickerson (1873)

Answer 18

Facts

1. Defendant (auctioneer) would help claimant to sell furniture
2. Last minute he withdraw the furniture
3. Claimant brought to court for wasting time and sued for breach of contract

Held

• Court ruled that contract was not binding
• Advertisement that put up was only a declaration to inform purchasers that there would be a sale taking place
• Was not an offer to contract

Key point

• A statement of intention where the party says that he intends to do something, will not amount to an offer

Question 19

Harvey v Facey (1893)

Answer 19

Facts

1. Claimant telegraphed to sell property
2. Defendant requested that 900 pounds was the highest
3. Claimants accepted and told defendant to reply
4. He didn’t

Held

• Court held that there was no contract created
• The first telegraph was request for information
• Second telegraph by claimants were the offer
• There was no acceptance

Takeaway

• Mere inquiry does not count

Question 20

Cliffton v Polumbo

Answer 20

Facts

1. Defendant negotiating to purchase plaintiff’s estate
2. Plaintiff offered 600k pounds with the word ‘offer’
3. But then decided that it was too low of a price which then wrote another letter to postpone and negotiate again
4. Defendant agreed to the first offer written on 7 June

Held

• 1st offer - First letter though contained word ‘offer’, was a preliminary statement made in the negotiations
• 2nd offer - Whereas the second letter with ‘schedule of completion’ would be the binding factors