SYLLABUS - CONTRACT 1
Academic Year 2001-2002
UNIVERSITY OF THE WEST INDIES
COLLEGE OF THE BAHAMAS
FACULTY OF LAW - LL.B PROGRAMME
LA12B - CONTRACT 1
SYLLABUS
(1)
AGREEMENT - The Phenomenon
A.
Aspects of the Agreement
-
B.
The Existence of Agreement
-
(2)
Intention to create Legal Relations
Formalities
The nature of contractual agreement
Consensus ad idem
Objectivity and agreement
Identifying the agreement
Offer and Acceptance
The Problem of Certainty
CONTRACTUAL TERMS A.
Express Terms
-
B.
Identifying the Express Term
The Collateral Contract
The Nature of Express Terms
Implied Terms
-
C.
The Content of the Agreement
Methods of Implying a Term
Excluding the Implication of Terms
Exemption Clauses
-
Incorporation of the Exemption Clause
Construction of Exemption Clauses
Legislative and other Reforms
SYLLABUS - CONTRACT 1
Academic Year 2000-2001
(3)
CONSIDERATION - Enforcing the Agreement
-
(4)
The Function of Consideration
The Nature of Consideration
The Sufficiency of Consideration
Consideration and the Modification of Contracts
Promissory Estoppel
Discharge of Debt
PRIVITY - Who may Sue or be Sued on the Agreement
-
The Doctrine of Privity
Rationale of the Doctrine
Attempts to Confer Benefits on Strangers
Attempts to Impose Burdens on Strangers
Reform of the Doctrine
OBJECTIVE:
READ:
That the student should become familiar with the nature of
contracts, and especially the basic principles relating to the
identification of contractual obligation and some of the
main preconditions to the enforcement of that obligation.
Carlill v Carbolic Smoke Ball Co. (1893) 1 Q.B. 256 C.A.
TEXTBOOKS:
Cheshire, Fifoot & Furmston; 13th ed., Reprinted
Anson’s Law of Contract (latest edition)
Chaudhary et al - West Indian Law of Contract
Treitel, G.H.. The Law of Contract, 10th Ed., 1999.
CASEBOOKS:
Smith & Thomas (8th Edn.)
Bishop, Beale & Furmston (2nd Edn.)
Chaudhary & Burgess (West Indian cases).
STATUTES:
Sale of Goods Act (any jurisdiction).
Statute of Frauds (all jurisdictions).
GENERAL READING: Atiyah, P.S. - “Contracts, Promises and the Law of
Obligations”
[1978] 94 LQR 193
Atiyah, P.S. - Essays on Contract, 1996, Clarendon
Paperbacks
Macaulay - “An Empirical View of Contract” (1985)
Wis.L.Rev.465.
RMN Topic 1 Page 1
Academic Year 2001-2002
UNIVERSITY OF THE WEST INDIES
FACULTY OF LAW
LA12B - THE LAW OF CONTRACT - 1
AGREEMENT - The Phenomenon
A.
I.
Aspects of the Agreement
INTENTION TO CREATE LEGAL RELATIONS
The law of contract is basically concerned with the enforcement of agreements. Some
agreements, however, fall outside the purview of contract law.
As Atkin L.J. said in Balfour v Balfour [1991] 2 KB 571 @ 578:
“...It is necessary to remember that there are agreements between parties which
do not result in contracts within the meaning of that term in our law. The ordinary
example is where two parties agree to take a walk together or where there is an
offer and acceptance of hospitality...”
This phenomenon is ascribed by the courts to the intention of the parties rather than to the
rules of contract law, even though it is clear that the matter was never considered by the
parties:
“...Will you come to dinner on Tuesday?” “I have pleasure in accepting your invitation.” constitute a proposal and acceptance, but no legal contract because the parties never intended
it to be ...” per Scrutton L.J. in Wyatt v Krelinger & Fernau [1933] 1 KB 793 @ 806.
(Emphasis added).
Since the presence of this issue in any case indicates that the parties did not share any
common intention, if indeed they had any intention at all, the true position would seem to be
that it is for the courts to decide whether or not an agreement or promise made in the
particular context should attract legal sanction.
Important considerations are the identity of the parties - see Jones v Padavatton [1969] 2 AER616;
their relationship - Merritt v Merritt [1970] AC 806; the nature of the agreement, (whether
social/domestic or commercial); any terms of the agreement relating to its enforcement - see
Rose & Frank Co. v J.R. Crompton Bros. Ltd. [1923] 2 KB 261; the extent of the reliance, and the
subject matter of the dispute - Parker v Clark [1960] 1 WLR 286.
RMN Topic 1 Page 2
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I.
INTENTION TO CREATE LEGAL RELATIONS
See also the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Inferences from language (puff/inducement) - Lambert v Lewis [1980] 1 AER 978
Inferences from conduct (‘reliance’) - Kingswood Estate v. Anderson [1963] 2QB 169
Inferences from circumstances - White v Blackmore [1972] 2 QB 651; Coward v MIB
[1963] 1 QB 259 (overruled but not on this point); Licences Insurance Corp. v Lawson [1896]
12 LTR 501
Meaning of domestic agreement - Merritt v Merritt (supra); Balfour v Balfour (supra);
Pettitt v Pettitt [1970] AC 777; Jones v Padavatton (supra); Simpkins v Pays [1955] 3 AE 10;
Buckpiatt v Oates [1968] 1 AE 1145.
Commercial agreements - Carlill v Carbolic Smoke Ball Co. [1892] 2 QB 484; J. Evans
& Son (Portsmouth) Ltd. v Andrea Merzario [1976] 1 WLR 1078.
Rebutting presumption of contractual intention in commercial agreements Edwards v Skyways Ltd.[1964] 1 WLR 349; Bahamas Oil Refining Co. v Kristiansans Tankrederie
[1978] 1 Lloyd’s Rep 211.
Commercial agreements between family members - Snelling v John G. Snelling Ltd.
[1973] QB 87.
Express denial of contractual intention - Jones v Vernons Pools Ltd. [1938] 2 AE 626;
Appleston v Littlewood Ltd. [1939] 1 AE 464; Rose & Frank Co. v J.R..Crompton Bros. (supra).
Goodwill agreements - Orion Insurance Co. v Shere Drake Insurance [1992] 1 Lloyd’s Rep.239
Comfort letters - Kleinwort Banson v Malaysian Mining Corp Berhad [1989] 1 AE 785 (C.A.)
Esso Petroleau v Commrs. Of Customs & Excise [1976] 1AE 177; and
Sousa v Marketing Board [ 1962] 5 WIR 152.
See also:
Articles:
“Letters of Comfort or Letters of Cold Comfort”, A.D.M. Forte - Journal of Maritime Law
and Commerce, Vol 21 No 1, Jan. 1990, @ p 99
Caribbean Law & Business (No. 3) 445, (Cumberbatch)
Statutes: The Sale of Goods Act (Bahamas), s.20; (Jamaica), s.9
II.
FORMALITIES
The law requires that certain contracts must either be in writing or evidenced in writing.
A failure to comply with the required formalities generally renders the contract
unenforceable, but see:
Daulia Ltd. v Four Millbank Nominees [1978] Ch. 231;
Elias v Sahely [1982] 2 AE 801 (PC); First National Securities Ltd. v Jones [1978] 2 AE 221;
BG & TM Life Ins. Co v Harry [ 1962] LRBG 39 (CB 65).
See now also s. 2 of the Law of Property (Miscellaneous Provisions) Act,
1989 (U.K.) - contract for the sale or other disposition of an interest in land must be in
writing containing all the agreed terms signed by each party to the contract.
Spiro v Glencrown Properties. [1991] 2 WLR 931
RMN Topic 1 Page 3
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B. THE EXISTENCE OF AGREEMENT
Reading:-
Ch & F. Cap 3
Anson - Cap. 2
Treitel - Cap 2
WILC - Cap 1
ST - Part (1 - 5)
CB - Cap. 1
BBF- Cap. 9 (b), (e), (f), 10
THE NATURE OF AGREEMENT
Must there be a consensus ad idem?
Raffles v. Wichelaus (1864) 2 H & C 906
Byrne v. Van Tienhoven (1880) 5 CPD 344, 42 L.T. 371
The Objective Test
Storer v. Manchester C.C. (1974) 3 All ER 824, 828, per Lord Denning
Trentham Ltd. v. Archital Luxfer (1993) 1 Lloyds Rep. 25, 27 per Steyn L. J.
The Leonidas D. (1985) 2 All ER 796
c.f. Hartog v Colin & Shields (1939) 3 All E.R. 566
The Indicia of Agreement
Gibson v Manchester C.C. (1978) 2 All ER 583, (1979) 1 WLR 294 (H.L.)
Capacity to Contract
Infants Relief Act, Ch. 120, (Bahamas) ss. 1-3
Infants Settlements Act, Ch. 122 (Bahamas) ss.1-4
Law of Infants (Amendment) Act (St. Vincent Bev. 1926 c.9) ss. 16-18
Nash v Inman [1908] 2 KB 1; Peters v Fleming [ 1840] 6 M.& W. 42; Roberts v Gray [1913] 1 KB 520;
DeFrancesco v Barnum[1890] 45 Ch.D. 430; Chaplin v Leslie Frewin (Publishers) Ltd. [1965] 3AE 764;
Steinberg v Scala [1923] Ch. 452; Valenti v Canali [1889] 24 QBD 166; Pearce v Brain [1919] 2 KB 310;
Coutts v Browne-Lecky [1947] KB 104; Stocks v Wilson {1913] 2 KB 235; Cowern v Nield [1912]2KB 419.
Married Women’s Property Act (Belize c. 142) ss. 3-6
Wood v Lewis[1914] 3 KB 73.
Companies Act, (Barbados c. 308) ss. 17-25.
Ashbury Railway Carriage and Iron Co. v Riche [1875] LRHL 653; Church v Imperial Gas Light &
CokeCo. [1837] 6 Ad. & El. 846, 1837.
Companies Act, (Guyana c. 89:01) 5.85
1. OFFER
An offer will be held to exist where the courts can identify an undertaking by the alleged offeror to
be bound to do the thing which, it is alleged, constitutes the contractual obligation. An offer is,
however, best defined by what it is not. It is not:
(a) A Statement of Present Intention or Preliminary Negotiation
Harvey v. Facey (1893) AC 552
Gibson v. Manchester C.C. (1979) 1 All ER 785
Kleinwort Benson v. MMC (1989) 1 All ER 785
RMN Topic 1 Page 4
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1. OFFER
An Offer is not:
(b)
An Advertisement
Partridge v. Crittenden (1968) 2 AER 421
Andrews v R. (1984) C.I.LR. 40
Spencer v. Harding (1870) 23 L. T. 237
Cf. Carlill v. Carbolic Smoke Ball Co. (1893) 1 QB 256
McGowan v. Gomes (1891-93) LRBG 171
Harvela Investments v. Royal Trust (1984) 2 AER 65;(1985) 2 AER 966
(c)
A Display of Items
Fisher v Bell (1961) 1 QB 394
PSGB v. Boots Cash Chemists (1953) 1. Q.B. 401
c.f. Fair Competition Act 1993 (Jamaica); Section 41
(d)
A Letter of Intent
BSC v. Cleveland Bridge & Engineering Co. [1984] 1 AE 504
THE PROBLEM OF CERTAINTY
(a)
Vagueness and Incompleteness
Hillas v Arcos [1932] 147 LT 503;
Raffles v. Wichelaus [1864] 2 H & C 906
Scammell v. Ouston [1941] AC 251
Nicolene Ltd. v. Simmons [1953] 1 QB 543
May & Butcher v. R.[1934] 2 KB 17n
Smith v Morgan[1971] 2 AE 1500
Beer v Bowden [1981] 1 AE 1070
Sudbrook Trading v Eggleton [1982] 3 AE 1
(b)
The Promise to Negotiate in Good Faith
Hillas v.Arcos [1932] 147 LT 503
Courtney V. Tolaini[1957] 1 AE 716
Walford v. Miles[1992] 2 WLR 174
Pitt v. P.H. Asset Management Ltd. [1994] 1 WLR 327
Cumberbatch: “In Freedom’s Cause” [1992] 12 Ox.J.L.S. 586
(c)
Promises Subject to Contract
Chillingworth v. Esche [1924] 1 Ch. 97, 114
Alpenstow Ltd. v. Regalian Plc. [1985] 1 WLR 721
RMN Topic 1 Page 5
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2.
ACCEPTANCE
Generally
R.v. Clarke [1927] 40 CLR 227 (Australia)
Taylor v. Allon [1966] 1 QB 304
Brisbane et al v. Joyles (St. Vincent, ECCA, Jan 12, 1998 unreported)
(a)
(i)
The “Acceptibility” of Offers
Acceptance of an offer will only result in an agreement where the offer is
still capable of acceptance.
Termination of Offers
Lapse of Time
Routledge v. Grant [1828] 130 E.R. 920
Pitt v. PHH Asset Management Co. [1993] 4 AE 961
Ramsgate Victoria Hotel Ltd. V. Montefiori [1866] LR 1 Ex. 109
(ii)
Revocation
Byrne v. Van Tienhoven [1880] 42 LT 371
Dickinson v. Dodds [1876] 2 Ch.D. 463
Errington v. Errington and Woods [1952] 1 KB 290
Daulia Ltd. v. Four Millbank Nominees [1978] Ch. 231
Cf. White & Carter (Councils) Ltd. v. McGregor [1962] AC 413
(iii)
N.B.
Death
Bradbury v. Morgan (1862) 1 H & C. 249
Re Irvine (1928) 3 D.L.R. 268
(iv)
Supervening Impossibility
Financings Ltd. v. Stimson (1962) 3 All ER 386 (CA)
Akin Taylor & Co. Ltd. v. Gammon (Nigeria) Ltd. (1967) 1 A.L.R.(Comm) 271
(v)
Counter Offers
Hyde v. Wrench (1840) 94 E.R. 132
Buckle v. Dunkley (1966) G.L.R. 63
N.W. Leicester District Council v. EMHA (1981) 1 W1R 1396
Stevenson, Jacques & Co. v. McLean (1880) 5 QBD 346
Sousa v. Marketing Board (1962) 5 W1R 152
An issue of "acceptibility" is also raised where the offer is mistakenly expressed.
Hartog v. Colin & Shields (1931) 3 All ER 536
Aircool Awning Ltd. v. Silvera (1986) 10 W1R 14
Centrovincial Estates PLC v. Merchant Investors Ass. (1983) Comm. L.R. 158
Smith v. Hughes (1871) L.R. 6 Q.B. 597
Raffles v. Wichelaus (1864) 2 48C 906
Falck v. Williams (1900) A.C. 176; Henkel v. Pape (1870) L.T.R. 41
RMN Topic 1 Page 6
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(b)
The Nature of Acceptance
(1)
(2)
Conduct
Brogden v Metropolitan Ry Co. (1877) 2 App. Cas. 666
Trentham Ltd. v. Archital Luxfer (1993) 1 Lloyds Rep. 25
Signature & non est factum
L'Estrange v. Graucob (1943) 2 K.B. 394
Tilden Rent-a-Car v. Clendenning (1978) 83 D.L.R. (3d.) 400
Saunders v. Anglia Building Society (1970) 3 All E.R. 961
Tomlinson v. Chai Chong (1946-40) 5 J.L.R. 181
Miller v. Ebanks et al (1994-95) C.I.L.R. 46
Maeniani v. Saemala (1980-84) LRC (Comm.) 339
UDT Ltd. Western (1976) 1 QB 513
Norwich & Peterborough Building Society v Steed (No.2) (1993) 1 All ER 330
Brown v Blake (1985), (unreported, Jam.) (W1LC 175)
Avon Finance Co. Ltd. v. Bridger (1985) 2 All E.R. 281
(3)
Counter-Offers
Hyde v. Wrench [1840] 49 ER 132
Stevenson v. McLean [1880] 5 QBD 346
(c)
The Communication of Acceptance
(i)
Generally
Carlill v. Carbolic Smoke Ball Co. Ltd. (1892) 2. Q.B. 484
Robophone Facilities v. Blank (1986) 1 WLR 1423
Holwell Securities Ltd. v. Hughes (1974) 1 All ER 161
Brinkibon Ltd., Stahlwarehandels.(1983) 2A.C. 34
The Brimnes (1975) Q.B. 929.
(ii)
Silence
Felthouse v. Bindley (1862) 11 C.B. (N.S.) 869
Food Corporation of India v. Anticlizio Shipping Cor. (1987) 2 Lloyds
Rep. 130, 146 per Nicholls L.J.
Re Selectmove Ltd. (1995) 1 W.L.R. 474
(iii)
Who may Accept an Offer
Powell v. Lee (1908) 99 L.T. 284
Edgar v. Demerara Mutual Life Assurance (1990-91) 4 Carib.Comm. L. R. 222
RMN Topic 1 Page 7
Academic Year 2001-2002
3.
AN ANALYSIS OF AGREEMENT
(1)
The Battle of Forms
British Road Services v. Crutchley (1968) 1 All ER 811
Butler Machine Tool Co. v. Ex-Cell-O-Corpn (1979) 1 All ER 695
Uniform Commercial Code - Section 2 - 207
(2)
Implied Agreement
Shanklin Pier v. Detel Products (1951) 2 KB 854
Clarke v. Dunraven (1897) A.C. 59
Upton-on-Severn R. D. v. Powell (1942) 1 All ER 220
Norweb p.l.c. v. Dixon (1995) 3 All E.R. 952
Tanner v. Tanner (1975) 1 WLR 1346, 1350
(3)
Cross Offers
Tinn v. Hoffmann & Co. (1873) 29 L.T. 271
FOR TUTORIAL DISCUSSION
1.
Darby and his wife are contemplating divorce. One day, during a heated argument over the amount of time
Darby spends on the golf course, Darby tells her that she can have his golf clubs for $5.00. The set is worth
at least $2,500.00. Joan offers him the $5.00 but Darby insists that he is not serious.
Later, they both contribute $10.00 to purchase five Lotto chances. They win a prize of $500.00 but Joan is
unwilling to share it once she has collected the winnings, on the basis that she alone chose those particular
numbers.
Finally Darby agreed to transfer his interest in a plot of land his uncle has left him to Joan for $2,000.00.
The agreement is not in writing and he now refuses to transfer the property to Joan.
With reference to decided cases, advise Joan.
2.
Critically discuss the view that the intention of the parties is an irrelevant consideration in the court’s
decision as to whether to refuse enforcement of an agreement on the grounds that there was no intention to
create legal relations.
3.
“An agreement, if it is to be enforced, must be certain or, at least, capable of being rendered certain...”
Discuss.
4.
Darby says to his wife, Joan, “I will sell you the housing lot which I inherited for $100,000. I will also sell
you my car and let you have my golf clubs on hire-purchase”. Joan replies, “I accept all your offers”. Both
of them sigh a document reading as follows: “Subject to contract, Darby agrees to sell Joan his lot for
$100,000, and to sell her his car and let her have his golf clubs on hire purchase”.
The next day, Darby announces to Joan that, on maturer reflection, he has decided to retain the land, the car
and the golf clubs so as to be able to leave them to a cats’ home.
With reference to decided cases, advise Joan.
RMN Topic 1 Page 8
Academic Year 2001-2002
FOR TUTORIAL DISCUSSION
5.
Johnny, aged 17, asked Michael (Thompson), a professional basketball player, to instruct him in the art of
rebounding. After four years’ instruction, Johnny accepted a contract to play basketball in the NBA, and
thereupon promised to pay Michael $25,000 for his past instruction as soon as he, Johnny, had completed
his first season. After his first season Johnny returns home, but refuses to pay Michael anything.
With reference to decided cases, advise Michael.
6.
Prepare arguments for and against the enforcement of the promise to negotiate in good faith.
7.
X promises to pay Y $500.00 if Y will build a box for X. After Y has completed two sides of the box,
X tells him that he will not be needing the box anymore. Advise Y.
8.
When is an agreement unenforceable due to a lack of certainty?
9.
In what circumstances will silence constitute acceptance?
10.
Discuss the nature of and the consequences of a plea of non est factum.
11.
Write brief notes on:
(a) The Battle of the Forms.
(b)
The acceptance of an offer which is mistakenly expressed.
12.
On 3 July, during a national telephone and telegraph strike, John receives a letter from Susie saying:
“You can have my Mercedes for $30,000.00. I have to send this by post because of the strike”.
On 4 July, Susie sends a letter to Lennie by hand offering to sell him the Mercedes for $10,000.00.
On 5 July, the strike is settled.
On 6 July, John posts a letter to Susie accepting her offer, which is lost in the post.
On 7 July, Susie telegraphs to John withdrawing her offer.
On 8 July, Lennie posts a letter to Susie, accepting her offer provided she will throw her bicycle in for the
same price.
On 11 July, Susie advertises an auction of the Mercedes without reserve.
On 12 July, Susie sells the Mercedes to Shawn for $30,000.00.
On 13 July, Susie receives Lennie’s letter, and Ormond turns up for the auction.
On 14 July, Lennie telegraphs to Susie, “Cancel previous letter. Accept offer”.
Advise Susie.
Lecturer: Rubie M. Nottage (Mrs.) B.A. (Queens),
LL.B. (Hons.), LL.M. (Lond.)
M.B.A. (Templeton), B.A. Theology (Oxon.)
January 2002