Contract Law

Definition of a contract

A contract is an agreement giving rise to obligations which are enforced and recognised by law

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Four essential elements

Intention to create legal relations; Offer; Acceptance; and Consideration

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Agreement

Consists of an offer and acceptance

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Offer

Is an expression of willingness (person showing that they are willing to enter into a contract) to contract on certain terms with the intention that it shall become binding upon acceptance

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Acceptance

The final and unqualified assent to all terms of an offer (all terms must be accepted) (cannot come back with a counter offer)

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Mirror Image Rule

The acceptance must 'mirror' the offer. You must accept exactly what is being offered

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Bilateral Contract

Both parties have obligations to fulfill

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Unilateral Contract

One party to the contract has an obligation to fulfill( 'If' contracts)

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Doctrine of Privity of Contract (set of rules/principles)

This is the common law rule that says that only the parties to a contract can sue or be sued on it

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Statutory (rules) (Acts of Parliament) Exception to the Rule of Privity of Contract: Contracts (Right of Third Parties Act 1999)

A person who is not a party to a contract may enforce a term if the contract expressly provides that they may. The Third Party must be expressly identified in the contract by name, as a member of a class or as answering a particular description.

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Statutory (rules) (Acts of Parliament) Exception to the Rule of Privity of Contract: Contracts (Right of Third Parties Act 1999) cont..

The Parties must intend that a Third Party can sue and it can only confer a benefit and not a detriment

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Rebuttable Presumptions (ITCLR)

Business contracts - ITCLR always; and Social and Domestic contracts - No ITCLR - no intention

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In business agreements, the presumption is that there is an Intention to Create Legal Relations

Edmonds v Lawson 2000

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Rebutting the presumption in commercial situations including:

'Mere Puffs' - Sales Talk; and Honour Clauses - where the contract states binding in 'honour only' (not intention to be legally binding (Rose & Frank v J R Crompton 1923)

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Rebutting the presumption in Social and Domestic Agreements (Jones v Paddavatton 1968):

Domestic Situations - Separation/Divorce - (Merritt v Merritt 1970)

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Rebutting the presumption in Social and Domestic Agreements (Jones v Paddavatton 1968):

Social Situations - Where a practical benefit has been obtained or a party is at a disadvantage; where there is a mutuality in the arrangements such that the intention to share the benefits, or a party at a disadvantage (Simpkins v Pays 1955)

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Consideration

Is the 'bargain' of the contract - something in value in the eyes of the law

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Consideration

defined as a benefit to one party and a detriment to the other (Currie v Misa 1875)

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Consideration

Price paid for the person's promise (Dunlop Pneumatic Tyre Co Ltd v Selfridge 1915)

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Consideration - Promisor make the Promisee

In Bilateral Contracts both Parties promise to do something

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Acceptance - Final

Negotiations have finished

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Acceptance - Unqualified

No conditions attached to the acceptance

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Acceptance - Assent

Full agreement

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Acceptance - All

Have to agree to everything (by the end) any new terms will revoke the offer (counter-offer)

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Contract Law

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