LW2903 Business and Law Lecture 1 Introduction and Formation of a Contract 1 Course Intended Learning Outcomes On completion of this course, students should be able to demonstrate; • knowledge on contract law, tort law, employment law and legal system and alternative dispute resolution; • ability to extract legal principles from decided cases; • the basic skills in understanding and interpreting legislation, and ability to identifying and understanding legal issues relevant to their future occupation; and • ability to apply and analyse cases to solve legal issues. 2 Assessment • Coursework: 30% – Assignment: (30%) to be submitted in Week 6; • Examination: 70% – 3 hours examination. • To pass this course, a student must obtain a minimum mark of 30% in both coursework & exam with an overall mark of 40 or above. • Textbook – DK Srivastava, Business Law in Hong Kong, (2020) 6th Edition, Sweet & Maxwell. (ISBN: 9789626617359) 3 What is a contract? • Definition: A contract is a legally binding (enforceable) agreement made between two or more parties. • If a party to the contract does not perform its contractual obligations, the other party can go to the court and seek a remedy. • Making a contract: Elements 1. Offer 2. Acceptance 3. Consideration 4. Intention to create legal relations 4 1. Offer • An offer is a definite promise or proposal to be bound on specific terms and it has to be definite, not vague. An offer may be made orally, in writing or by conduct. • Distinction between an offeror and offeree. 5 Offer • An offer distinguished from an invitation to treat. • Examples: Display of goods in a shop window or on the open shelves of a self-service shop (supermarket), Tenders (construction works) or Auctions (land), Price List and Merchant’s Catalogue, general Advertisement of goods (TV & newspaper). 6 Offer • In Partridge v. Crittenden (1968), the newspaper advertisement without sufficient details was held to be an invitation to treat. – An advertisement – “Bramblefinch…cocks and hens, 25 shillings each”. • In Carlill v. Carbolic Smoke Ball Co. (1893), a newspaper advertisement promised to pay £100 to any person who used the “smoke ball” and still contracted influenza and also deposited £1,000 with a bank for future claims. It was an offer, not a mere puff. • Mere puff? 7 Carlill v. Carbolic Smoke Ball Co. (1893) 8 Counter Offer • An offeree may, upon receiving an offer, suggest qualifications. If the intention of the offeree is to reject the offer that he has received, then he is said to make a counter-offer. • A counter offer destroys the original offer and introduces a new offer, which the original offeror (offeree of the new offer) may now accept. • Difference between a counter offer and a request for further information 9 Acceptance • Acceptance means acceptance of an offer by the offeree who is willing to be bound by the terms of a contract or all the terms of the offer. • Can silence amount to acceptance? (Felthouse v Bindley [1862]) 10 Communication of Acceptance • Acceptance is not effective until it is communicated by the offeree to the offeror. • The offeror may prescribe the method of communication. • What happens when there is no prescribed method of communication? • Acceptance must take place before the offer is revoked. Unlike an offer, acceptance cannot be revoked. 11 Exceptions to the general rule on Communication 1) Unilateral contract: where the terms of the offer show that it may be accepted by performance, the performance of that act is in itself an adequate indication of an assent. 2) Postal Rule: to protect the offer from delays in the postal system – Adams v Lindsell [1818] : See: Household Fire and Carriage Accident Insurance Co v Grant (1879) and the case of Brinkibon Ltd v Stahlwarenhandelsgesellschaft GmbH [1983] 3) Instantaneous communication - Entores v Miles Far East Corporation [1955] – communication by telex 4) Auctions 12 • Consideration and Intention will be discussed next week 13