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Agreement Itclr And Capacity To Contract Notes

GDL Law Notes > GDL Contract Law Notes

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CONTRACT LAW AGREEMENT 1: OFFER, ACCEPTANCE AND ITCLR

Essential elements of a contract: 1) 2) 3) 4) 5)

Offer Unequivocal acceptance (mirrors offer) Intention to create legal relations Capacity Consideration

An offer is a promise or undertaking of an offeror to be contractually bound in the event of an unconditional acceptance being made. An offer must be clear, certain and final. If it is not, any purported acceptance will not result in a contract.

Types of contracts 1) UNILATERAL A unilateral contract is when one party makes an offer in terms which call for an act to be performed - performance of the act constitutes acceptance and this is when a contract is made. In unilateral contracts, only one party (the offeror) assumes an obligation. Acceptance of the offer does not need to be communicated and only performance of the required act(s) will equate to acceptance, i.e. promising to perform the act does not constitute acceptance. CASES: Carlill v Carbollic Smoke Co. Errington v Errington and Woods 2) BILATERAL In a bilateral contract, two parties assume an obligation to each other by exchanging promises. Bilateral contracts are the most common type.

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RULE

CASE

An offer must be clear and certain

GIBSON V MAN CITY COUNCIL STORER V MAN CITY COUNCIL

Offer must be communicated

TAYLOR V LAIRD

Advert - not offer but invitation to treat

PARTRIDGE V CRITTENDENEXCPEPTION: Unilateral contracts

CARLILL V CARBOLLIC SMOKE BALL COEXCEPTION: Manufacturers

GRAINGER V GOUGH

Display of goods for sale - invitation to treat

FISHER V BELL (shop window) PHARMACEUTICAL SOC GB V BOOTS (shelves)

Invitation to tender - invitation to treat

SPENCER V HARDINGEXCEPTION: Tender expressly undertakes to accept highest/lowest bid

HARVELA INVESTMENTS V ROYAL TRUST COEXCEPTION: Promise is made to consider all bids, then an offer has been made to consider

BLACKPOOL FYLDE AERO CLUB V BLACKPOOL BOROUGH COUNCIL

Auctioneer's requests for bids = invitation to treat, not an offerEXCEPTION: auction held without reserve - unilateral offer made to accept to highest bid

Websites are ITTs not offers

PAYNE V CAVE

BARRY V DAVIES

ARGOS TV CASE

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REQUIREMENTS OF A VALID OFFER RULECASE An offer must be clear and certain

EXCEPTION

CASE

GIBSON V MANCHESTER CC City treasurer wrote to G saying that the council 'may be prepared to sell the house at
PS2180. G completed application form and sent it back, as requested. Council subsequently changed its policy and could not proceed with G's application. HELD: There was no binding contract because no offer was made. The council's letter stated it 'may be prepared' to sell the house - this lacked clarity and certainty.

STORER V MANCHESTER CC Town clerk sent C a letter which stated 'I enclose an agreement for sale'. C signed and returned agreement as instructed. Council's policy changed prior to town clerk signing agreement. HELD: Letter = offer because its terms were clear and certain. Acceptance took place when C signed and returned letter therefore there was a binding contract. Communication: An offer must be communicated.An offer can be communicated orally, in writing or by conduct.

TAYLOR V LAIRD The captain of a ship resigned during a voyage, but continued to offer navigation services for the remainder of the voyage even though this had not been requested by the owner of the ship. He later claimed in the courts for proper remuneration for his services from the owner. HELD: The captain had not communicated his

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?An offer can be made to a specific person, group of people or to the whole world. Adverts are not offers, but invitations to treat.

offer to provide such services. As such the owner did not have the opportunity to refuse or accept the offer as he had no knowledge of its existence. There was no binding contract. PARTRIDGE V CRITTENDON Partridge placed an advertisement containing the words 'Advertisement of Bramble Finch Cocks and Hens'. Partridge was convicted of the offence of offering the birds for sale contrary to the Protection of Birds Act 1954 and appealed. HELD: Advert was not an offer, but an invitation to treat therefore Partridge had not committed an offence.

1. Clear and certain adverts from manufacturers with unlimited supply.

1. GRAINGER V GOUGH Price list submitted by a wine merchant was held to be an invitation to treat and not an offer because the wine merchant would only have limited stock. Obiter from Lord Herschell suggests that if the supplier is also a manufacturer, the advert could amount to an offer as, theoretically, they would have an unlimited supply of goods.

2. CARLILL V CARBOLIC SMOKE BALL CO

2. Unilateral offers

D placed an advert om a newspaper offering to pay PS100 to anyone who contracted influenza after buying and using their smoke ball as prescribed. C used smoke ball as instructed but still caught the flu.

HELD: The advert was a unilateral offer. Carlill had accepted the offer by completing the required act therefore there was a binding contract.Display of good for sale is not an offer, but an invitation to treat.

FISHER V BELL Bell convicted of offering flick knives for sale contrary to the Restriction of Offensive Weapons Act 1969.

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HELD: Displaying goods on a shop window is not an offer, but an invitation to treat therefore Bell was not guilty.Display of goods on shelves is not an offer, but an invitation to treat.

PHARMACEUTICAL SOC OF GB V BOOTS Under the Pharmacy and Poisons Act 1933, it was an offence to sell prohibited medicines unless the sale was supervised by a registered pharmacist. Two customers took prohibited medicines from the shelves of a self-service shop and bought them. HELD: Display of goods on shelves = ITT. Offer is made by the purchaser and accepted by the seller at the tills. Since there was a registered pharmacist supervising sales at the tills, Boots = not guilty.Invitation to tender is not an offer, but an invitation to treat.

SPENCER V HARDING A circular was sent out whereby stock was offered for sale by tender. Plaintiff submitted the highest bid, but C would not accept. HELD: No contract had been made because an invitation to tender is an ITT. The tenders were offers which the seller could choose to accept or reject.

1. Tender expressly undertakes to accept highest/lowest bid

1. HARVELA V ROYAL TRUST Two firms invited to submit sealed bids for a block of shares. Promise is made to sell to the highest bid. HELD: Commitment to sell to the highest bid meant that the invitation to tender constituted a contract. Therefore, seller had an obligation to sell to the highest bidder.

2. BLACKPOOL & FYLDE AERO CLUB V BLACKPOOL BC

2. If a promise is made that the bid will be considered, then an offer

Plaintiff invited by council to make a bid for a concession to operate pleasure flights from the airport. Council made a promise to consider all

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has been made to consider (but not accept) the bid.

Auction Sales GR: An auctioneer's request for bids is an invitation to treat, not an offer. Auctioneer is entitled to accept/reject bids. Acceptance takes place when the auctioneer drops his hammer, and a bidder can revoke his offer before that point.Websites are ITT's, not offers.

PAYNE V CAVE D made a bid of PS40 and revoked his offer when the auctioneer delated in accepting his bid. HELD: D entitled to withdraw bid, as it was merely an offer that he could revoke any time before acceptance.

1. When an auction is held 'without reserve' the auctioneer is offering to sell to the highest bidder.

bids, but failed to consider the Plaintiff's bid, even though it was submitted by the deadline. HELD: Council had a contractual obligation to consider tenders conforming to the conditions if they promise that all tenders will be considered.

1. BARRY V DAVIES C made a bid of PS200 each for two new engine analysers at an auction held without reserve. List price of items was PS14,000 each and auctioneer refused to sell to C because the bid was too low. C sought damages of PS27,600. HELD: In auctions without reserve, two contracts are made. 1 = bilateral contract as usual in all auction sales where an offer is made by the bidder and the fall of the hammer constitutes acceptance. 2 = unilateral where the auctioneer offers to sell to the person who makes the highest bid. Making the highest bid =
acceptance. Therefore, D is in breach of the unilateral contract and C was entitled to damages amounting to the difference between the bid and the list price of the goods.

ARGOS TV CASE Argos mistakenly advertised TVs for sale at PS3 and subsequently refused to accept any orders placed. The website was merely an advert and therefore an invitation to treat. Also, one customer placed an order for 80 TV sets. It could be argued that, had the advert been an offer, it couldn't be accepted by a customer trying to snatch up a bargain

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