Notesale: Turn your study into money

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Offer and Acceptance
- Must have firm offer and unequivocal acceptance
Offer : An expression of willingness to contract on certain terms made with the
intention that it shall become binding as soon as it is accepted by the offeree
(Professor Treitel)
Invitation to treat : An expression of willingness to enter into negotiations which
may lead to a contract
Offer
Imperative words - Storer v Manchester City Council
Unilateral contract - Carlill v Carboric Smoke Ball (Only one party assumes
obligation, offer to pay if an action is performed)
ITT
Precatory words - Gibson v Manchester City Council
a) Bilateral contract - Patridge v Crittendon (All parties assume obligation)
b) Display of goods for sale - Fisher v Bell
c) Statement of price - Harvey v Facey
d) Auctions - Payne v Cave (Bid is an offer, entitled to withdrawal before hammer
is knocked down)
- Barry v Davies (Auction without reserve, not entitled to withdraw
the goods in auction)
e) Tenders - Spencer v Harding (Tender is merely ITT, can choose not to accept)
- Blackpool and Fylde Aero Club v Blackpool Borough Council
(Competitive tendering, implied undertaking to consider all tenders)

Communication of Offer
Acceptance cannot be made in ignorance - R v Clarke
Knowledge is assessed at the time of acceptance - Gibbons v Proctor
Motive of performance is irrelavant, knowledge is - William v Carwardine
*For unilateral contract, at the time of commencement of performance, there is
acceptance, hence knowledge must be present
Termination of Offer
a) Death of Offeror - Bradbury v Morgan
b) Lapse of Time - Ramsgate Victoria Hotel v Montefiore (Reasonable period of
time)
c) Rejection
d) Revocation (Bilateral) - Dickinson v Dodds (Before acceptance, 3rd Party)
e) Revocation (Unilateral) - Shuey v US (Same or more superior method)
f) Counter-Offer - Hyde v Wrench (Reject offer, come up with new offer)
g) Cross-Offer

- Tinn v Hoffman (Both sent an offer to each other, no
contract, but only discussed in obiter
...
Edmunds Properties
Promissory Estoppel
- Only a defence in equity, no consideration, cannot pursue cause of action
Machanism of PE was explained - Hughes v Metropolitan Railways
PE was mentioned in obiter - Central London Property Trust v High Trees
Requirements to be satisfied before relying on PE
a) Pre-existing contract which has been modified
b) Clear and unequivocal promise - Woodhouse AC v Nigerian Produce Marketing
c) Equitable - D&C Builders v Rees
d) Reliance - Alan v El Nasr (Change of position)
e) Shield not sword - Combe v Combe

f) Suspensory - Tool Metal Manufacturing v Tungsten Electric

Terms of Contract
Contractual Certography Guidelines :
a) Importance of a statement - Bannerman v White
b) Knowledge - Dick Bentley v HSM
c) Acceptance of responsibility - Schawel v Reade
Classification of Terms
a) Condition - Poussard v Spiers & Pond
b) Warranty - Bettini v Gye
c) Innominate Term - Hong Kong Fir Shipping v Kawasaki Kisen Kaisha
Sources of Terms
a) Express terms - Parol Evidence Rule (Prevent parties to a written contract from
presenting extrinsic evidence to add to the terms of contract) - Jacobs v Batavia
& General Plantations Trust
b) Implied terms
i) Custom - Hutton v Warren (Common practice)
ii) Courts
- Business Efficacy Test, implied if they are 'obvious and necessary' - Moorcock's
Case
- Officious Bystander Test, officious bystander would think the term should be
included without doubt - Shirlaw v Southern Foundries
iii) Statute
Consumer Transaction - Consumer Rights Act 2015

Non-Consumer Transaction

- Sale of Goods Act 1979
- Supply of Goods and Services Act 1982
- Sale of Goods (Implied Terms) Act 1973

Private vendor/buyer - Common law
Exclusion Clause
- Can rely if there are :
a) Incorporation
i) Signature - L'Estrange v Graucob
ii) Notice

- Chapelton v Barry UDC (Ticket is not contractual document)
- Olley v Marlborough Court (Incorporation before/at the time
contract is made
- Interfoto Picture v Stilletto (The more unusual the notice, the
greater measures must be taken)

iii) Course of dealings

- McCutcheon v MacBrayn (Inconsistent)
- Hollier v Rambler Motors (Irregular)
- Henry Kendall v William Lillico (Regular, Consistent)

b) Interpretation
Contra Proferentum Rule (Shold there be ambiguities, interpretation would favour
the party who did not insert the term) - Houghton v Trafalgar Insurance
c) Invalidation

- Unfair Contract Terms Act 1977
- Consumer Rights Act 2015

Privity of Contract
GR : Only parties in a contract are bound and derive a right
Dunlop Pneumatic Tyres v Selfridge - HoL recognized the doctrine of privity
3rd party can enforce the contract if :
s1(1)(a) Contracts (Rights of Third Parties) Act 1999 - The contract expressly
provides that he may
s1(1)(b) Contracts (Rights of Third Parties) Act 1999 - One of the purposes of the
bargain is to confer a benefit to 3rd party
Common Law Exceptions (Allow 3rd party to bypass privity)
1) Enforcement by promisee (3rd party gets party to contract to sue for him)
i) Sue for breach of contract
ii) Get specific performance
iii) Recover on behalf of 3rd party only under limited circumstances
- Jackson v Horizon Holidays
iv) Promise not to sue - Snelling v John Snelling
2) Collateral contract - Shanklin Pier v Detel Products (No double liability s5)
3) Agency (Principal - 3rd Party)
4) The Eurymedon Device - New Zealand Shipping v Satterthwaite (3rd party can
rely on exclusion clause between principal and agent if there was such a clause in
place)
5) Trust
6) Tort
7) Assignment

Misrepresentation
- Pre-contractual statements
Objective : To rescind contract (Voidable)
1) False statement
GR : No legal obligation to disclose everything - Fetcher v Krell (Silence would not
be misrepresentation)
Exception :
a) Uberimae Fide Contracts - Lambert v Cooperative Insurance
b) Fiduciary Relationship
c) Half-truth - Dimmock v Hallet
d) Change of circumstances - With v O'Flanagen
2) Of fact
a) Related to their business - Esso Petroleum v Mardon (Fact)
b) Not related to their business - Bisset v Wilkinson (Opinion)
c) In a position to verify opinion - Smith v Land & House Property Corporation
(Fact)
3) Made to representee - Peek v Gurney
4) To induce reliance
a) Refused to check validity of statement - Redgrave v Hurd (Reliance)
b) Checked validity of statement - Attwood v Small (No reliance)
c) Sole reliance not required - Edgington v Fitzmaurice

Classification of Misrepresentation
1) Fraudulent Misrepresentation
- Deliberate intention / reckless to misrepresent
McMeekin v Long
2) Negligent Misrepresentation
- When representor does not come up to the standard of duty expected
Esso Petroleum v Mardon
3) Innocent Misrepresentation
- Representor making false statement at the time he believes to be true
- Satisfies the four elements of misrepresentation (Accidentally)
Remedy
1) Rescission (Common Law)
Bars to Rescission
i) Lapse of time (Not applicable to fradulent misrepresentation) - Leaf v
International Galleries
ii) Affirmation of contract - Long v Lloyd
iii) Restitution impossible - Clarke v Dickson (Subject matter has changed)
iv) Third party rights - Phillips v Brooks (May cause injustice to third party)
2) Fraudulent and Negligent Misrepresentation
s2(1) Misrepresentation Act 1967 - Contract + Losses
Remedy : Rescission AND/OR Damages
Defence : Representor believed in the truth of statement - Howard Marine v
Ogden Brothers

3) Innocent Misrepresentation
s2(2) Misrepresentation Act 1967 - Contract + Losses
Remedy : Damages in lieu of rescission (Even if rescission is available, courts will
use its discretion to determine whether to award damages or rescission because
representor is innocent in misrepresenting)
British Aerospace v Zanzibar - If rescission is barred by the bars, cannot claim
damages because it is innocent misrepresentation

Mistake
- Contract is void ab initio
Bilateral Mistake (Both parties make mistake)
a) Mutual Mistake (Different mistake)
Raffles v Wichelhaus (No agreement as both parties were not in consensus)
b) Common Mistake (Same mistake)
i) Res Extincta (Subject matter is non-existent)
Couturier v Hastie (Total failure of consideration)
ii) Res Sua (One's own property)
Cooper v Phibbs (Legal impossibility)
iii) Quality of subject matter
HoL - Bell v Lever Bros (Contract valid and binding, objective of the contract was
achieved)
CoA - Solle v Butcher (Contract set aside in equity, mistake was not fundamental
but misapprehention was)
CoA - Great Peace Shipping v Tsavliris Salvage (Contract valid and binding, not
fundamentally different to make it void)

Unilateral Mistake (One party makes mistake)
a) Mistaken Assumptions
Smith v Hughes - Buyer made self-informed decision
Hartog v Shields - Buyer knew defendant made a mistake and took advantage of it
b) Non est factum (Not my deed)
Gallie v Lee - Must be fundamentally different to what was believed to be signed
c) Mistake as to identity (Fundamental)
i) Inter Praesentes (Face to face)
- Phillips v Brooks (Seller identified buyer by sight and hearing, no mistake as to
identity, but mistake as to attributes)
- Lake v Simmons (Seller did not identify buyer by sight and hearing, mistake as to
identity)
ii) Inter Absentes (Not physically present)
- Cundy v Lindsay (Mistake as to identity as company was in existence)
- Shogun Finance v Norman Hudson (Mistake as to identity as the license was
stolen)

Illegality
a) Illegal in Formation (Express prohibition by statute)
Re Mahmoud and Ispahani - Buyer could rely on own illegality
Mohamed v Alaga & Co - Quantum meruit can be sought
b) Illegal in Performance
- Central = Void
- Not central, depends on knowledge

Anderson v Daniel - If requirement is central to the contract then illegal in
performance, contract is void
St John Shipping v Joseph Rank - Illegality of overloading was not central to the
contract, it was merely ancillary
Claim for damages for illegal in performance which is not central to contract
Ashmore, Benson v Dawson - Both parties had knowledge of illegality, cannot claim
for damages, contract is void
Archbold v Spanglet - Can't punish party not knowing about the illegality
The effect of illegal contracts
GR : Money or property transferred cannot be recovered
Exception to the general rule
a) Not pari delicto (Not equally guilty)
Kiriri Cotton v Dewani - Lesser guilty party allowed to obtain compensation
b) Party was mistaken and unaware of illegal nature
Oom v Bruce
c) Does not rely on illegal nature of the contract
Tinsley v Milligan (Rely on other area of contract)
Wagering Contracts
s18 Gaming Act 1845 - Contracts for wagering shall be null and void, except for
lawful game, sport or exercise

Restraint of Trade
- Not to disclose secrets of the trade
Exception
1) Employment
2) Sale of Business
3) Solus Agreement
Patel v Mirza - Courts now have to consider whether enforcing the claim would
harm the integrity of the legal system, public policy and whether denying the claim
would be proportionate response to illegality

Frustration
- Discharge a contract
GR : Absolute obligation once entered into contract and parties should make
provisions for frustrating events - Paradine v Jane
Theories of Frustration
a) Implied Theory
Taylor v Caldwell - Requires continued existence of subject matter
b) Just Solution Theory
Davis Contractors v Fareham UDC
i) Root of the obligation?
ii) Did frustrating event take place after contract was made?
iii) Can contract be executed despite supervening event
National Carrier v Panalpina - Difficult, not impossible

Circumstances
a) Subject matter is unavailable - Taylor v Caldwell (Destroyed)
- Gamerco SA v ICM Fair Warning (Unsafe)
b) Failure of an event

- Krell v Henry (Commercial value lost)
- Herne Bay Steamboat v Hutton (Commercial value not
lost)

c) Government interference - Metropolitan Water Board v Dick Kerr
d) Death or incapacity - Condor v The Baron Knights (Incapacity)
e) Illegality - Finelvelt v Vinova Shipping
Limitation
a) Frustration cannot be self-induced - The Super Servant Two
b) Foreseeability - Amalgamated Investment v John Walker (Foreseen and taken
the risk)
c) Express Provision (Delegate risk)
Remedy
Law Reform (Frustrated Contracts) Act 1943
s1(1) - Frustrate contract
s1(2) - Gamerco SA v ICM Fair Warning (Expenses recoverable)
s1(3) - BP v Hunt (Non-money resources claimable)

Duress
Duress to Person - Barton v Armstrong (Threat)
Duress to Goods - The Siboen and The Sibotre (Threat)

Economic Duress - Pao On v Lau Yiu Ying :
i) Did the person protest?
ii) Did the person have other available course of action?
iii) Were they independently advised?
iv) Did they take steps to avoid it?
Legitimacy of pressure : (i) Nature of pressure
(ii) Nature of the demand which the pressure is applied
to support
Effect of Duress : (i) Voidable - Pao On v Lau Yiu Long
(ii) Affirming Contract - North Ocean Shipping v Hyundai
Construction
Remedy of Duress : (i) Rescission - Halpern v Halpern

Remedy
Common Law
Aim of granting damages is to put parties in position as if contract has been
performed - Robinson v Harman
Types of Loss
a) Pecuniary Loss
b) Non-pecuniary Loss
GR : Cannot claim
Exceptions :
Injured feelings cannot claim - Addis v Gramaphone
Loss of enjoyment can claim - Farley v Skinner

How to assess?
1) Expectation Loss (Benefit under contract is clear)
- Ruxley Electronics v Forsyth (Loss of amenity)
2) Reliance Loss (Expenses or cost incurred because of contract)
- McRae v CDC (Incurred cost)
3) Restitution (Calculated based on defendant's gain, require defendant to forfeit
gain)
- AG v Blake (Stop payment of royalty from being paid to defendant)
Causation
- County v Girozentrale Securities (Intervening act, Breach chain of causation?)
Mitigation of Losses
Payzu v Saunders (No mitigation although could)
British Westinghouse v Underground Electric Railway (Over-effective)
Remoteness of Damages
Hadley v Baxendale
(i) Losses arise naturally and directly from the breach
(ii) Losses ought to be in reasonable contemplation of parties at the time contract
was entered into
Victoria Laundry v Newman Industries (Losses that are too remote cannot be
claimed)
Liquidated Damages
(i) Contract is formed by intentions of the parties

(ii) Parties can place amount on compensation (liquidated damages) that has to be
paid in the event of failure of performance
Cavendish Square Holdings v Makdessi (True Test : Balance claimant's legitimate
interest with the loss suffered regardless of actual loss)
Dunlop Pneumatic Tyres v New Garage - Penalty cannot be enforced
Quantum Meruit
Absence of contract, innocent party allowed to claim for damages for services
provided
Equitable Remedies
- Discretion of the courts as opposed to as of right
a) Specific Performance
- Order for performance of a contractual duty
Granted when :

(i) Damages are inadequate - Beswick v Beswick
(ii) Supervision by court is possible - Cooperative Insurance
Society v Argyll Store

Not granted when :(i) Causes severe hardship on the defendant - Patel v Ali
(ii) Performance is impossible - Watts v Spence
(iii) Personal services - Giles v Morris (Due to human nature)
(s236 Trade Union and Labour Relations (Consolidation) Act
1992)
b) Injunction
- Mandatory injunction
- Prohibitory injunction
- Interlocutory injunction

s50 Senior Courts Act 1981 - Courts may award damages in lieu of specific
performance or injunction
Entire Contract Rule
- Completion of contract triggers payment - Cutter v Powell
Exception
a) Doctrine of substantial performance - Hoenig v Isaacs (Reflect amount not
performed)
b) Acceptance of part performance - Sumpter v Hedges
c) Severable contracts - Ritchie v Atkinson (Where contract can be separated into
parts)
Anticipatory Breach
- After agreement but before performance is due
- Can either terminate + damages or affirm the contract
Terminate - Hochster v De La Tour
Affirm - White & Carter v McGregor



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