Law of Contract

Topics: Contract, Invitation to treat, Contract law Pages: 9 (2143 words) Published: December 6, 2012
1. Introduction – What is a Contract?
1.1 Definitions
Not all agreements will be contract enforceable in law - social arrangements, for example, or contracts which offend against public decency and public policy and those which involve criminal activity.

‘A contract is an agreement giving rise to obligations which are enforced or recognised by law. The factor which distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties.' Treitel

‘A promise or set of promises which the law will enforce.' Pollock

‘The law of contract may be provisionally described as that branch of the law which determines the circumstances in which a promise shall be legally binding on the person making it.' Anson

1.2 Why should contracts be enforced? As a very broad principle, agreement between individuals and between commercial entities is based on a very high degree of freedom of choice; but, in the modern era with increasing use of statute to regulate behaviour that may mislead, exclude liability or be oppressive.

1.3 Essentials of a modern contract
* Intention to create legal relations
* Offer
* Acceptance
* Written formalities in exceptional cases
* Consideration except for contracts under deed
* Clear terms
* Parties must have capacity to contract
* The contract must not be ‘illegal' or contrary to public policy

There must have been genuine consent, not vitiated by:
* Mistake
* Misrepresentation
* Duress
* Undue influence

1.4 Contracts may be void, voidable or unenforceable
In the absence of any of the elements referred to in s1.3 the contract may be void, voidable or unenforceable. Void ab initio – no legal effect at all.
Voidable – legally binding, but one party has a right to set it aside Unenforceable – valid in all respects but may not be enforced in a court of law. Money paid under such a contract cannot usually be recovered. Limitation Act 1980

3.1 What is an Offer?
An intimation (viewed from an objective standpoint) by words or conduct of a willingness to enter into a legally binding contract, specifying the terms of the binding agreement which will be formed should the offer be accepted by the party to whom it is addressed.

3.1.1 An offer may be made to a specific person, a group of persons or an individual

Carlill v Carbolic Smokeball Co Ltd [1893]
The Carbolic Smoke Ball Company made a product called the "smoke ball". It claimed to be a cure for influenza and a number of other diseases. The Company published advertisements in the press claiming that it would pay£100 to anyone who became sick with influenza after using its product according to the instructions set out in the advertisement. -------------------------------------------------

£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. -------------------------------------------------

£1000 is deposited with the Alliance Bank showing our sincerity in the matter. -------------------------------------------------

Mrs Carlill saw the advertisement, bought one of the balls and used it in accordance with the instructions. l She contracted the flu She claimed £100 from the Carbolic Smoke Ball Company. Mrs Carlill brought a claim to court. She contended that the advertisement and her reliance on it was a contract between her and the company, and so they ought to pay. The company argued it was not a serious contract....
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