1. Contract Law 1

2. Elements of a contract Agreement Consideration
Intention to enter into legal relations
In most cases there are no formal requirements
However, for the contract to be enforceable, the parties must have the capacity to contract
Freedom of contract is the key idea underlying English contract law
In English law, for a contract to be enforceable, three elements are required:
What are they?
Agreement
Consideration
Intention to enter into legal relations
In most cases there are no formal requirements – can be written, oral or even instant messaging, although in certain cases such as the sale of land there must be formal written document.
The parties must have the capacity to contract – not minors, not drunk, of sound mind

3. 1. Agreement
An offer
An offer is a specific and definite proposition to the offeree, manifesting the offeror’s clear intention to be bound.
An offer ends:
if the offeror revokes it before acceptance
Or the offeree
rejects it
makes a counter offer
does not respond within a reasonable period of time
IThe first element is agreement.
Agreement has 3 elements
The first is an offer
An offer is a specific and definite proposition to the offeree, manifesting the offeror’s clear intention to be bound.
f the offeror revokes it (=withdraws it) at any point before it has been accepted (provided that the offeree has not given consideration to keep the offer open)
If the offeree rejects it
If a condition precedent is not fulfilled (p40)
If the offeree makes a counter offer: A counter-offer the offeree responds with a suggestion of different terms. The law regards this as a rejection of the original offer, which means that it ceases to exist.
If the offeree does not respond within a reasonable period of time (the offer lapses).

4. Offer v invitation to treat
An invitation to treat
invites the other party to make an offer
which can then be accepted or rejected.
There is a distinction made in English law between an offer and an ITT.
An ITT invites the other party to make an offer
which can then be accepted or rejected.
It has no contractual significance.
Invitations to treat include most advertisements, goods offered at auction and products for sale on shop shelves.
(Difference ads: usually not specific enough to be an offer, or no clear intention to enter into legal relations, or practical problem supply/demand)
Shops – avoid legal problems.

5. Agreement ii) Acceptance A unequivocal agreement by the offeree
to all the terms of the offer,
made directly to the offeror or to his agent.
No additional terms
If there are additional terms, it is a counter offer
Must be clear but does not have to be explicit, it can be inferred from his conduct.

6. Agreement iii) Communication of acceptance By post:
acceptance occurs when the letter is posted
For methods of instant communication:
acceptance occurs when the acceptance is received
This is important because rules about the communication of the acceptance dictate when the contract becomes binding.
By post: acceptance occurs (and the contract becomes binding) at the moment the letter is posted (=the postal rule). (subject to a test of reasonableness)
For methods of instant communication such as telephone and telex (Entores Ltd v Miles Far East Corporation [1955] )
the contract generally becomes binding when the acceptance is received by the offeror.
BUT
For , answer phones and other devices where the time of reception is uncertain, the law is not totally clear. One approach is the acceptance becomes effective “when the recipient was able to access it” (GET INFO FROM OTHER SHEET)
Can silence constitute acceptance? It can but its rare and must be agreed freely by both sides.

7. 2. Consideration A contract is an “enforceable bargain”
Both parties must offer consideration
This must be sufficient but does not have to be adequate
It cannot be past
It cannot be given by a third party
In English law, a contract is an “enforceable bargain”
That means that Both parties must offer consideration
Consideration The element of exchange in a contract (something of value given by one party to another to induce the other to contract)
Both parties to the contract must contribute something (eg money, goods, performing a service, or not doing something)
Consideration must be sufficient (= it must have some economic value) but does not have to be (=is not required to be) adequate (" a fair price")
(You can have a contract to sell a Ferrari for £20- it is legally sufficient even though it is not adequate.
The court doesn't care that the sum is not adequate - there is no requirement that the consideration is in any way proportional).
Past consideration (something already given/done before the other party makes an offer of recompense) is not sufficient.
Both parties must bring something to the bargain. If you already did the action, you do bring anything to the bargain, don't provide consideration.

8. 3. Intention to create legal relations
Commercial / business contexts: a strong presumption that parties intend to be bound by their promises
Domestic situations: presumption that there is no intention to be bound
These presumptions are rebuttable
There is a strong presumption that parties intend to be bound by their promises
There is a presumption that there is no such intention (remember Balfour v Balfour?)
But both these presumptions are rebuttable (can be disproved using evidence) (Merrit v Merrit)

9. Unilateral contracts Most contracts are bilateral
Unilateral contracts occur when the offeror promises to do something in return for another party performing an act or service
Most contracts are bilateral – they involve an exchange of promises
Unilateral contracts are a special kind of contract. They occur when the offeror promises to do something in return for another party performing an act or service
For example – someone offers a reward for the safe return of their kitten

10. Unilateral contracts
In unilateral contracts there is no requirement of acceptance
If someone performs the required act, the contract becomes binding.
His act is referred to as “executed consideration” (p43)

11. Deeds A formal, written document No consideration is required
Signed in the presence of a witness
Affixed with a seal (for companies)
No consideration is required
Unlike a contract the party receiving the benefit of the deed is not expected to give any consideration.(ie it can be used for gifts, e.g. to transfer land or proerty)