CONTRACT LAW CHAPTER 2 CONTRACTS ACT 1950

CONTRACT An agreement which is legally binding between the parties and enforceable by law DEFINITION

INTENTION TO CREATE LEGAL RELATION OFFER / PROPOSAL ACCEPTANCE CONSIDERATION INTENTION TO CREATE LEGAL RELATION CAPACITY CERTAINY ELEMENTS OF CONTRACT

SECTION 2 (a) CONTRACT ACT 1950 OFFER or PROPOSAL SECTION 2 (a) CONTRACT ACT 1950 “When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to act or abstinence, he is said to make a proposal.”

A offer to sell his car to B OFFER or PROPOSAL A offer to sell his car to B Offeror/proposer/promisor

FORM OF PROPOSAL PROPOSAL ORAL/VERBAL WRITING CONDUCT/GESTURE

COMMUNICATION OF THE PROPOSAL The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The acceptor must know about the proposal

CARLILL v CARBOLIC SMOKE BALL CO [1893] 1 QB 256 The D manufactured a product called ‘smoke ball’ claimed it to be a cure for influenza. They advertised the product in a newspaper and offered to pay £100 to any person still not cured with the disease after using the product for 3 times daily for 3 weeks. £1000 was deposited with the Alliance Bank to show their sincerity on that matter. The P saw the advertisement, bought the product and used it ad instructed for nearly 2 months. However, she still contracted with the flu and later on claimed £100 from the D. Held: The P entitled to the money as she followed the instruction.

CARLILL v CARBOLIC SMOKE BALL CO [1893] 1 QB 256

INVITATION TO TREAT DEFINITION: Statements which are NOT proposals. It is an offer to negotiate or an offer to receive another offer. A person making ITT does not intent to be bound.

INVITATION TO TREAT (ITT) SITUATIONS OF ITT: DISPLAY OF GOODS ON SHELVES OR IN A SHOP WINDOW. ADVERTISEMENT AUCTION

1)DISPLAY OF GOODS ON SHELVES OR IN A SHOP WINDOW The shop owner display goods on shelves is making an invitation to the customer to buy the goods. The customer have the choice whether to buy or not. If the customer choose to buy the goods, he will bring the goods to the payment counter. The person who is making the proposal is the customer not the shop owner. Because he, himself wanted to buy the goods and offered to pay the goods to the cashier.

DISPLAY OF GOODS ON SHELVES OR IN A SHOP WINDOW FISHER v BELL [1961]1 QB 394 The D displayed a flick knife in the window of his shop. Under the Restriction of Offensive Weapon Act 1959 it was illegal to sell or offer for sale any weapon which has a blade. Court held: It was ITT as it was displayed on the window.

DISPLAY OF GOODS ON SHELVES OR IN A SHOP WINDOW PHARMACEUTICAL SOCIETY of GREAT BRITAIN v BOOTS CASH CHEMIST [1953] 1 QB 401 The D operated self-service shop where a customer was given a basket upon entering the shop and selected the items on the shelves, put them in the basket and take it to the cash counter to the authorized registered pharmacist. The D was charged for selling a listed poison without the supervision of a registered pharmacist as the customer can freely placed the items into the basket. Court decision: by placing the goods into the basket, it was the customer who made the offer to buy the goods. The offer could either be accepted or rejected by registered pharmacist at the cash counter.

2)advertisement 3)auction Generally advertisement is an ITT. The person advertising it is not compelled to sell the goods to every customer. 3)auction Is a process of buying and selling goods by offering them up for bid. The goods are sold to the highest bidder. An offer come from the participant of the auction and the acceptance took place after the fall of the hammer by the auctioneer.

CARLILL v CARBOLIC SMOKE BALL CO [1893] 1 QB 256 The D manufactured a product called ‘smoke ball’ claimed it to be a cure for influenza. They advertised the product in a newspaper and offered to pay £100 to any person still not cured with the disease after using the product for 3 times daily for 3 weeks. £1000 was deposited with the Alliance Bank to show their sincerity on that matter. The P saw the advertisement, bought the product and used it ad instructed for nearly 2 months. However, she still contracted with the flu and later on claimed £100 from the D. Held: The advertisement was ITT but The P entitled to the money i) as she followed the instruction. She used the product as instructed and ii) the D also deposited £1000 into the bank to show their intention to pay to the customer for compensation.

3)auction PAYNE v CAVE (1789) 3 TR 148 Is a process of buying and selling goods by offering them up for bid. The goods are sold to the highest bidder. An offer come from the participant of the auction and the acceptance took place after the fall of the hammer by the auctioneer. PAYNE v CAVE (1789) 3 TR 148 The D made the highest bid and withdrew it before the fall of the hammer. Court decision: the bids constituted the offer and the auctioneer was free to accept it by fall of the hammer or to reject it. Since the D withdrew the offer before the fall of the hammer, thus, the offer was not made and there was no contract between the parties.

4)Supply of information Prospective seller sometimes provide details of what they may sell without the intention of making proposal to be legally binding. HARVEY v FACEY [1893] AC 552 The A telegraphed to the R: “will you sell us Bumper Hall Pen? Telegraph lowest cash price.” The R replied by telegram: “lowest price for Bumper Hall Pen £900.” The A replied “we agreed to buy Bumper Hall Pen for £900 asked by you. Please send us your title deed in order that we may get early possession”. But the A did not received any reply. Court decision: the R’s reply was not an offer but supply of info. There was no contract between the parties.

4)tender Tenders are offer, but advertisement for tenders is an ITT.