Contracts

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Classification of Contracts (7 – 1.30)

Simple and formal contracts

A formal contract is a written contract (such as a deed). A simple contract can be entirely orally or a combination of oral and written.

Bilateral Contract: exchange of promise – one promise for another (a promisee’s promise in return for the promisor’s promise or vice versa)

o Union Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 All ER 104 at 108, Lord Diplock

Unilateral Contract: A one way contract. No counter promise, the contract is performed when both parties have performed i.e. “Wanted dog poster” – it is ultimately the exchange of a promise for an act

o Australian Woollen Mills Pty Ltd v The Commonwealth (1953) 92 CLR 424 at 456

o Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484

o Mobil Oil Australia Ltd v Lyndel Nominees Pty Ltd (1998) 153 ALR 198 at 222

• Informal (simple contract): Oral and/or in writing

• Formal Contract: In writing, such as a deed.

Vitiating Factors

• Void: not a contract and the main effect of such an agreement is that neither party is able to sue each other pursuant to it - such as a mistake or restraint of trade.

• Voidable: A contract whose validity is called into question because of a defect in the quality of the consent given by one of the parties upon entering into it – misrepresentation, mistake, duress, undue influence and unconscionability – no right to rescind in certain circumstances.

• Rescinded contract: Treated as if it never had effect

o London Borough of Islington v Uckac [2006] EWCA Civ 340 at [26]

• Unenforceable contract: An entirely valid contract, but can not be enforced due to absence of requirement by a state issued statute – such as in sale of lands.

• Illegal contract: a prohibited contract.

The Fact of Agreement (35)

An offer

• Must be communicated to the offerree, or his or her agent.

• Must have will or intent of the offeror to be bound in contract by the terms of the offer. – Gibson v Manchester City Council [1970] 1 All ER

• If an offer is learned by an unauthorized person there is no offer to accept: Bank v Williams (1912) 12 SR (NSW) 382 at 390-1

Acceptance

• Can not be conditional

• Must be in reliance on offer

o R v Clarke (1927) 40 CLR 227

• May be express or implied

• Must be communicated

Invitation to treat

Authority on treating: Storer v Manchester City Council [1974] 3 All Er 824

• Circulars, catalogues and advertisements

• Displays of goods

• Auctions

• Tenders

• Standing offers

Authority on above contexts: Partridge v Crittenden [1968] 2 All ER 421

Exceptions to advertising material: If it is clear that the seller is limiting his/her liability to the amount of stock in hand: Lefkowitz v Great Minneapolis Surplus Store 86 NW 2d 689 (1957)

Displays of Goods

Authority: Pharmaceutical Society of Great Britain v Boots Cash Chemists (southern) Ltd [1953] 1 QB 401; [1953] 1 All ER 482

• Are invitations to treat and not an offer.

• Exception – things for hire: Chapleton v Barry Urban District Council [1940] 1 KB 532; [1940] 1 All ER 356

Auctions

Are invitations to treat, bidders make the offers. Acceptance of an offer is by the fall of hammer. Advertising of an auction is not an offer to hold an auction.

• Harris v Nickerson (1873) LR 8 QB 286

Tender

Similar to auction, except each bidder makes one bid with no knowledge of other bids.

• Blackpool & Fylde Aero Club v Blackpool Borough Council [1990] 3 All ER 25

Termination of Offers

Rejection

An offer on rejection is terminated. A counter offer constitutes a rejection of an offer

Authority: Hyde v Wrench (1840) 49 ER 132

Inquiry

An inquiry is not a rejection, but simply a request for more information.

Authority on...
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