Contract Law


Contracts are made by ordinary people in everyday situations, often many times during a day. (for example buying a newspaper, parking a car...). Most of these events usually take place without problems and so, without any awareness of a contract having been made. As the majority of people honour their promises and it not until disputes occur that the question of a possible contract arises.

1. Offer

A. Classification of contracts :

Specific contract: made to one person or group of people.

General contract: made to 'the whole world‘ (e.g. advertisements)

Express contract: agreement of parties manifested by words, written or oral

Implied contract: agreement not shown by words, but by acts and conduct of parties

B. Offer and invitation to treat

A display of goods in a shop window, or on the shelves of a self-service shop, is generally regarded as an invitation to treat rather than as an offer to sell.

Pharmaceutical Society of Great Britain v Boots [1953]

Fisher v Bell [1961]

2. Acceptance

The communication of the acceptance must be effective. Silence is not considered as a valid acceptance. To be valid, the terms of the acceptance must exactly match the terms of the offer. So, if the offeree attempts to add new terms when accepting, this is a counter-offer and no contract will exist.

Hyde v Wrench (1840) ( counter offer)

When you use a machine, this one represents the offer. By inserting the money, you accept the offer.

Thornton v Shoe Lane Parking (1971)

3. Consideration

Consideration is the concept of legal value in connection with contracts. This may be money or services. However, it could also be something more abstract, like a promise to do something.

Consideration must be sufficient (Thomas v Thomas (1842)) , it must not be past (Re McArdle (1951)) and must not be an existing duty (Collins v Godefroy (1831)

4. Intention to create legal relations

The reason for the requirement in making contracts is that two people may sometimes make some arrangement, but not really intend it to be legally binding. Traditionally, the law has distinguished between domestic and social agreements in which people are presumed to have no intention to create legal relations (Balfour v Balfour (1919)

Merritt v Merritt (1970)) and commercial agreements (Carlill v Carbolic Smoke Ball Co (1893)). In the case of commercial agreements, the presumption provides some protection for the consumer, especially in promotional campaigns.

5. Various factors can harm the consent

a) mistake: where two parties intend to contract, and the first party intends to contract with regard to one thing while the second intends another thing, there is no true agreement and therefore no contract.

b) misrepresentation: a wrong statement about some material element of the contract made by one of the parties and, due to this statement, the other party entered into the contract.

c) duress: violence or threatened violence that prevents a party from exercising free will when executing a contract

d) undue influence: a more subtle form of pressure exerted upon a party to a contract

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