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Lecture notes - full package of the 'Law of Obligations'
Contract Law (LAWS10021)
University of Manchester
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The Law of Obligations Summary OFFER AND ACCEPTANCE offer is an expression of willingness to contract on certain terms with the intention that it shall become binding as soon as It is accepted the person to whom it is o THORNTON V SHOE LANE PARKING: money inserted into a machine, held machine constituted the offer and acceptance was buy putting the money in and dispensed ticket acceptance. o Offers can take a unilateral form like CARLILL V CARBOLIC SMOKE BALL where the context is an offer made to the whole world o Offers can be made writing, orally or conduct The requirements for a valid contract 1) Agreement between both parties 2) Requirement of certainty 3) Consideration 4) Intention to create legal relations 5) Both parties entering into the contract must be mentally sound and of age. INVITIATION TO TREAT or conduct indicating the willingness to receive Advertisements service and shop window displays Partridge v Crittenden dft placed advertisement in a magazine stating bramblefinch cocks 25s each prosecuted under the birds act 1954 held ITT and not ofer Pharmaceutical society v Boots o Defendants changed format of their shop from counter service to s of pharmacy and poisons act 1933 provided that the sale of certain drugs should contain certain drugs occur other than under supervision of a registered pharmacist o CA considered whether contract formed at time that customer removed goods from shelves or at time goods presented at counter for payment o Held contract formed when goods presented at cash desk and that display of goods on shelves was an ITT Fisher v Bell o Shopkeeper displayed knife in window offensive weapons act 1959 prohibited the offering for sale of various offensive weapons. shopkeeper prosecuted under act o Prosecution failed as court held display of knife in window was an ITT not offer COMMUNICATION OF OFFERS o For a valid offer it must be communicated to the offeree meaning that no party is bound an offer they are unaware of TERMINATION OF OFFERS o Offers can simply be rejected and refused or extinguished using counter offers in addition offers may be terminated Revocation Lapse of time Failure to comply with condition precedent Death of one of the parties 2 Refers to the rescinding annulling or withdrawal of the offer RNE V VAN TIENHOVEN Revocation must be communicated it can be done a reliable 3rd party 3rd party both parties deem reliable Offers stay open forever, it can state when to be terminated on a particular fixed period RAMSGATE VICTORIA HOTEL V MONTEFIERE Claimant offered to buy shares in the hotel company in June but issue shares till November, court held offer would lapse after a reasonable would depend on offer and subject matter. Offers can also terminate if parties had agreed to meet certain conditions and then failed to do so, for instance, an offer to sell a car on was considered to be subject to condition that it would remain in same condition Death of the offeror when die before offer accepted then personal representatives may still be bound an acceptance provided that o FELTHOUSE V BINDLEY uncle and nephew negotiating the sale of a horse, uncle stated that if I hear no more from you I shall consider the horse mine at agreed price, nephews reply but asked an auctioneer to withdraw horse from an auction. He forgot and it was sold to another party court held no contract since nephew never communicated his intention to accept his uncle or done anything to bind himself. o Acceptance conduct BROGDEN V MET RAILWAY CO o Acceptance postal rule ADAMS V LINDSELL forget to discuss the actual conditions which apply when dealing with postal rule) COMMUNICATION OF ACCEPTANCE o Acceptance takes place when and where the acceptance is received ENTORES V MILES FAR EAST CORPORATION o BRINKIBON V STAHAG STAHL acceptance was sent telex out of office hours and HOL held telex message sent outside office hours be considered instantaneous communication and therefore could only be effective when office CONSIDERATION AND PROMISSORY ESTOPPEL Parties agreements must be complete and certain English law will not enforce an agreement on a contract unless the parties reached an agreement on all necessary terms and the terms are sufficiently clear to be enforced SCAMMEL V NEPHEW V OUSTON Valuable consideration in the eyes of the law may consist of some right or benefit to the other party or some detriment or loss undertaken the other CURRIE V MISA English laws badge of enforceability promisee be able to enforce a promise unless promisor obtained something in return. What will the law recognize as good consideration? 1) Intangible actions e. giving up right of action COOK V WRIGHT 2) Promise not to do something, if it has value WHITE V BLUETT 3) Person who promises to do more than his existing public duty WARD V HAM Promise only enforceable if its supported consideration unless Promissory estoppel Contained in deed On basis of other doctrines RULES OF CONSIDERATION 4 1) May be sufficient but need not be adequate to both parties Chappell co v Nestle 2) It must be not be past consideration ROSCORIA V THOMAS 3) Must move from the promise TWEEDLE V ATKINSON PERFORMANCE OF AN EXISTING DUTY STILK V MYRICK WILLIAMS V ROFFEY BROS V NICHOLLS extra benefit PART PAYMENT OF DEBT General rule part payment of a debt without more good consideration for the crediors promise to accept lesser sum and discharge the remainder Cheque payments amount to more Approved CA in BUILDERS AND REES PINNELS CASE FOAKES V BEER foakes owed beer they agreed that foakes could pay in instalments and beer agreed that no futher action would be taken if the debt was paid the agreed date later beer demanded an additional interest payment foakes refused to pay PROMISSORY ESTOPPEL The equitable doctrine of promissory estoppel can provide a means of making a promise binding even without consideration developed Lord Denning in High Trees CENTRAL LONDON PROPERTY TRUST V HIGH TREES REQUIREMENTS FOR THE DOCTRINE TO APPLY Must be a clear or unequivocal promise or representation Inequitable for promisor to go back on promise Promisee must alter his position in reliance on promise PROMISSORY ESTOPPEL CANNOT CREATE RIGHTS AS AFFIRMED IN COMBE V COMBES shield, not a Promissory estoppel can only protect contractual rights which are already existing cannot form basis of an action which seeks to establish new rights, obviously work in a Roffey case as this was an action to claim more than Williams was entitled to under the original contract. CONTRACTS AND 3RD PARTIES PRIVITY OF CONTRACT 5 S.1 contract expressly provides that he may 3rd party must be expressly identified contract name as a member of a class or answering a particular description but need not be in existence when the contract is entered into. CONTRACTUAL TERMS Puff Boastful statement, extravagant phrasing TURNER V ANQUETIL (extravagant phrasing which would naturally be discounted sensible persons) Representat Statement inducing party to enter into the contract ion WALKER V MILNER (sale of a safe which was described as strong, holdfast and thief proof it was in fact stolen within 30 minutes of purchase) Terms Promise which becomes part of the contract itself CF OSBORN V HART (superior old port it was borderline undrinkable not a mere representation but actual term of the contract) DISTINGUISHING BETWEEN TERMS, REPRESENTATIONS AND TERMS Timing Importan ce Special skill or knowled ge 7 The longer the interval between negotiations and entering contract less likely its treated as a representation: ROUTLEDGE V MCKAY (motorcycle and car exchanging motor and paying it was stated that the vehicle was a 1942 and it was actually a 1932 model it was held that it was a statement held as a representation not a term neither part expert and there was a lapse in time) If a specific element of the contract is expressed with importance and abided then this poses an issue BANNERMAN V WHITE (claimant agreed to purchase hops for beer making and want hops treated with sulphur and he emphasised the importance of this and hops were in fact treated with sulphur it was held to be a term of the contract due to the emphasis of its importance BOC claim was successful) COUCHMAN V HILL requested to be unserved but it was in fact 8 weeks pregnant and it died of a OSCAR CHESS V WILLIAMS: Williams bought a 2nd hand car on the basis it was a 1948 model and the son used the car as a trade in for a new Hillman which he purchased from OC later found that the car was a 1939 model and was worth much less brought an action for breach of contract giving grounds to repudiate contract and claim damages. CONTRACTS IN WRITING o If contracts are in writing, then the statements within them are held to usually be regarded as terms rather than representations. o v Graucob Mrs L owned a ordered cig machine from manufacture and was faulty. Contract she signed contained a clause stating express or implied condition, statement or warranty is here she claimed for breach of a term implied the sale of goods act 1893 that goods unfit for purpose also claimed she seen clause and had therefore no knowledge of its contents. o Her claim failed Scrutton LJ document containing contractual terms is signed then in the absence of fraud or misrepresentation the party signing it is bound and it is wholly immaterial whether he has read the document or PAROL EVIDENCE RULE o General rule states that where a contract has been reduced to writing, extrinsic evidence is inadmissible to add to, or vary, or contradict its terms JACOB V BATAVIA GENERAL PLANTATIONS TRUST o UK LTD V WEIS 2004 Property sold at an auction and memorandum of the sale was signed and it contained a mikvah with the accommodation but seller intended to exclude both from the accommodation and there was confusion with the documentation and the written agreement took precedent. o At common law a written contract is presumed to contain everything upon which parties agreed and anything that embodied in the contract is considered to have been never initially intended. o Law commission in 1976 recommended the rule to be abolished but 1986 they concluded that it stop courts accepting parol evidence. EXCEPTIONS TO THE BASIC RULE 1) If written agreement intended to include to be the whole contract on which the parties had actually agreed, parol evidence is inadmissible. 2) Parol evidence may be given to determine the validity of the contract. J EVANS AND SON 3) Parol evidence can show contract yet to operate or that it ceases to operate PYM V CAMPBELL CLASSIFICATION OF TERMS Condition 8 to the root of the Most important terms of the contract Terms implied the court 1) Implied in fact 2) Implied in law Terms implied custom 10 1) Term will be implied in fact if it is obvious and necessary in order to give contract business effect (business efficacy test) the courts in this case used the officious stander test o THE MOORCOCK claimant entered into a contract with defendants to dock and unload cargo from his ship at their wharf in thames. The ship was grounded at the jetty at low tide and broke up on rocks claimant sued for damage to ship defendants claimed no express term relating to the safety of the ship and as such be liable for BOC o court held there was an implied term in the contract that the ship would be damaged. This term was necessary in order to give the contract business efficacy dft liable for BOC for implied term. 2) As well as terms which are implied the courts in fact, there are also terms which are implied the courts in law. o LIVERPOOL CITY V IRWIN condition of a council tower block deteriorated such that the stairs and lifts were in disrepair and internal rubbish chutes were blocked. Irwin alleged that a breach on the part of the council of its implied covenant for their enjoyment of the property. o HOL held it an implied term of the lease that the landlord should take reasonable care to keep common parts of the block in a reasonable state of repair o BOTH TESTS OVERLAP AND LORD SIMON IN BP REFINERY V HASTINGS PROVIDED 5 CONDITIONS THAT MUST BE SATISFIED IN ORDER FOR A TERM TO BE IMPLIED IN FACT 1) Reasonable and equitable 2) Necessary to give contract business effect 3) So obvious goes without saying 4) Capable of clear expression 5) Not contradict any express term of contract o Terms implied custom, in response to the parol evidence rule. o Where the contract itself is silent on the matter HUTTON V WARREN o Terms be implied custom where they would be contrary to express terms of contract Terms implied statute Certain terms are implied into contracts stature primarily to protect parties where there is inequality of bargaining strength. 1) Sale of goods act 1979 makes it a term of sales contract that item bought will be of merchantable quality 2) Supply of goods and services act 1982 states that those supplying services will take reasonable care in performing them EXCLUSION OF LIABILITY UCTA 1977 is commonly referred to as Unfair Contract Terms Act These clauses are ones in which the parties to a contract place a limit on the other legal liability relevant clause may be termed a EXCLUSION CLAUSES MUST SATISFY THE FOLLOWING 3 TESTS 1) must be a term of the contract 2) cover damages that caused 3) must be reasonable EXCLUSION CLAUSE IS IT VALID AT COMMON LAW If it is is it valid within UCTA 1) Is it valid within regulations if yes valid clause If not it is not a valid clause If not clause valid. METHODS OF INCORPORATION Incorporation can also be via a ticket as seen in CHAPELTON V BARRY URBAN DISTRICT COUNCIL Signatu re Notice Previou s course 11 V GRAUCOB ordered a cigarette machine and it was faulty she signed the necessary documents and it contained a clause that an an express or implied condition excluded claimed for breach of contract of the term SGA 1893 when you sign bound it whether read it or not OLLEY V MARLBOROUGH HOTEL Couple booked a holiday at a hotel and the contract formed at point while out a fur jacket belonging to the couple was stolen and she claimed damages from hotel they attempted to disclaim the liability based on notice on wall of hotel door rely on it as EC was formed at reception desk must be incorporated BEFORE OR AT TIME the contract is made. SPURLING V BRADSHAW parties contracted between each other for many years for storage of goods in a warehouse and on o Seeks to impose statutory limits on the extent to which civil liability for breach, negligence and other breach of duty can be avoided. o UCTA only applies to business liability apply to contract with an international element. o THEY ONLY APPLY TO BUSINESS 2 BUSINESS AND CONSUMER 2 CONSUMER CONTRACTS o Business consumer consumer rights act 2015 UCTA Business liability S (3) Negligence S (1) Negligence S (2) A) Things done or to be done a person in the course of a business or B) occupation of premises used for the business purposes of the occupier o Liability for from negligence cannot be excluded o Loss or damage other than death may be excluded or limited so far as reasonableness test is satisfied. MISREPRESENATION Actionable representation 1) Statement of material fact 2) Addressed to the party misled and therefore induced 3) Induces other party to enter into contract A statement of material fact certain statements which might not be treated as being statements of material fact Opinion Mere sales talk Statements of future intention or conduct 13 BISSET V WILKINSON claimant purchased 2 pieces of land from the defendant for sheep farming, dft said it was suitable for and he bought the land in this belief both parties knew dft not carried sheep and it in fact carry sheep Court upheld decision of trial judge who considered that, in ordinary circumstances, any statement made an owner who has been occupying his own far as to its occupying capacity would be regarded as a statement of fact but this however the case DIMMOCK V HALLET during negotiations for the sale of land, the land was described as and court considered this statement had insufficient substance to be classed as a representation EDGINTON V FITZMAURICE Shareholder received circular issued directors requesting loans to the amount of 25 grand to grow business money was in fact used to pay off debts not grow business. Claimant who had taken debentures claimed repayments of his money on the ground that it had been obtained from him misrepresentation. Court held that the untrue statement as to future intention was a misrepresentation of fact. KEATES V CADOGAN landlord who was letting his house disclosure of information and silence tell tenant that it was in a ruinous condition Failure to disclose material information was held not to be a misrepresentation COURTS MAY DECIDE THAT IN PARTICULAR CIRCUMSTANCES THERE IS A POSITIVE DUTY OF DISCLOSURE Contracts of utmost good faith Change in circumstan ces and knowledge Fiduciary relationshi p Contracts of insurance for e. duty on insured party to disclose all material facts. These typically arise where 1 party is in a strong position to know the truth and the other is in a weak position. WITH during course of negotiations for sale of a medical practice, vendor made representations to purchaser that it was worth a year. the time the contract was signed 4 later value of practice declined to only because vendor was ill. Failure of vendor to disclose the state of affairs to purchaser amounted to a misrepresented When statement represent the whole truth then this may be regarded as a misrepresentation. Solicitor client Doctor patient MISREPRESENATION CONDUCT SPICE GIRLS V APRILLA WORLD SERVICE Aprilla contracted with SG to sponser concert tour, group appeared in promotional material before aprilla entered into the contract on 6th may 1998. Contract based on representation that all 5 members of band would continue working together Ginger spice left band misrepresentation conduct since participation of all 5 band members in commercial induced aprilla into entering contract MADE PRIOR TO THE CONTRACT REDGRAVE V HURD if you used due dilligance you would have found the statement to be untrue Misrepresentation must be made before the contract is formed. a statement made after formation of the contract cannot be actionable. Statement must finally be an inducement to the other party to enter into the contract Claimant must have relied on or been induced to enter the contract false statement of fact. 1) Claimant must have known of the existence of statement 2) Statement must have been materially affected judgement such that the claimant induced it or acted in reliance upon. Party aware of statement 14 HORSFALL V THOMAS Buyer of a gun examine it prior to purchase, a defect in the gun was concealed remedy where impossible to do so.) Damag es Damages in lieu (rescission may not be available if court considers damages in lieu of rescission provides ) Fraudulent misrep Claim arises in tort of deceit and intention is to return claimant to position they would been in if misrep handnt Negligent misrep In negligent misrep a claim can be made under the principles of hedley v rne here only reasonably foreseeable Innocent misrepresentation No common law action for innocent misrep rescission is possible as an equitable remedy. DURESS Essential characteristic of contract law that the parties who enter into an agreement voluntarily. As such, a party who has been coerced into entering into a contract may be able to avoid the obligations of the contract reliance upon duress and although much depends on the sort of pressure that has been applied to the claimant. R V HER MAJESTY AG FOR ENGLAND AND WALES 2003 Lord Hoffman elements in wrong of One was pressure amounting to compulsion of the will of the victim and 2nd illegitimacy of the pressure Citing Lord Scarman in universe tankship v international transport federation Actual or threatened violence to the person BARTON V ARMSTRONG (claimant managing director of a company of which dft was formed chairman, dft threatened to kill claimant if he purchase shares from the dft. Claimant purchased shares but sought a declaration that the transaction was void for duress court contract was voidable because threats of personal violence were a factor in claimant decision to purchase shares even though he may have entered into a contract without threats being made.) Threats to property for many years courts refused to accept that threats to damage or remove property would amount to duress. Its likely because pressure involved seem sufficientn to amount to a compulsion. SKEATE V BEALE Economic duress North Ocean shipping co v Hyundai construction UNDUE INFLUENCE Equitable remedy covers situation where one party has gained an unfair advantage over the other applying improper pressure. Class 16 Actual undue influence 1 Class 2 Presumed undue influence. REMEDIES Definition of damages remedy that aims to compensate the injured party for the consequences of the breach of contract, in general, principle guides award of damages is that the injured party should be put into a position as far as is possible that they would have been in if the contract had been carried Essentially the most important part as those in contractual situations that go badly come to court to seek a remedy Secondary obligations Two sets of solution Either damages or specific performance Two measures of damages expectation losses and reliance losses 3 factors may limit the availability of damages 1 Causation claimant can only recover damages if breach of contract caused his loss its not enough that there is a breach and loss: loss must be a consequence of the breach. As such an intervening act that occurs between the breach of contract and loss may breach 2 Remoteness not all loss that is caused breach of contract is recoverable Hadley v Baxendale and Victoria laundry v newman industries 3 Mitigation of loss duty to mitigate is a principle where the innocent party who has suffered a breach of contract has a duty to take reasonable steps to minimise the extent of their loss arising from breach. Reliance loss Expectati 17 Situations where its impossible or difficult to calculate damages on the basis of position aim to place innocent party in position that they would have been in if contract never been made. ANGLIA V TV REED agents of American actor had mistakenly double booked him for actual period required and perform and question was which loss has been sustained expectation loss made sense he Can either claim for loss of profits or for hiss wasted expenditure claim both Innocent party has lost what he expected to receive from
Lecture notes - full package of the 'Law of Obligations'
Module: Contract Law (LAWS10021)
University: University of Manchester
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