COMPARATIVE CONTRACT LAW
PART II: THE LAW OF CONTRACT
COMPARATIVE LAW
LLM
KUWAIT INTERNATIONAL LAW SCHOOL
FALL 2013
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DR MYRA WILLIAMSON
INTRODUCTION
What is a “contract”?
Here are 2 possible definitions:
• “A legally binding agreement made between two or more parties,
by which rights are acquired by one or more acts or
forbearances on the part of the other or others”
• Sir William Anson, Principles of the Law of Contracts
• A contract is a promise or a set of promises for the breach of
which the law gives a remedy, or the performance of which the
law in some way recognises as a duty
• American Law Institute’s Restatement Second of the Law of
Contracts
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• (‘forbearance’ means to restrain oneself from doing something)
IN PLAIN LANGUAGE –
WHAT IS A CONTRACT?
An agreement…
Between two or more parties…
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Which is intended to have legally enforceable
consequences
WHERE DID THE IDEA OF
A CONTRACT COME
FROM?
It’s definitely an old idea
Comes from the Latin term pacta sunt servanda which means
‘agreements/pacts must be kept’
Justinian defined an obligation as “a legal bond, with which
we are bound by necessity of performing some act according
to the laws of our state.” He further separated the law of
obligations into contracts, delicts, semi-contracts, and semidelicts.
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Islamic definition? (see next slide…)
ISLAMIC LAW AND
CONTRACTS
This is a new and emerging area of writing – we might come back to it
towards the end of this section on Comparative Contract Law.
In the meantime, here are two interesting links:
A new book called “Islamic law and contract” to be published by IB
Tauris, by Hussein Hassan:
http://www.ibtauris.com/Books/Law/Jurisprudence%20%20general%20i
ssues/Systems%20of%20law/Islamic%20law/Contracts%20in%20Islami
c%20Law.aspx?menuitem=%7BA0AF68D5-381A-44E8-95F60B51307F9D4E%7D
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Article reviewing a book on Islamic contract law:
http://www.ijbssnet.com/journals/Vol._1_No._2_November_2010/14.pdf
CONTRACTS ARE
PART OF OUR LIVES
People enter into contracts frequently
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• For example:
• A contract of carriage (eg. to travel by bus, by plane, by taxi)
• A contract for the sale of goods (eg. buying groceries at the
supermarket)
• A contract for hire
• A contract for the supply of services (eg. having a haircut)
• A contract for both the supply of goods and the supply of
services (eg. Having a meal at a restaurant)
There are many types of contracts including insurance (car,
house, health etc), employment, construction, real estate,
consumer goods and services etc.
CONTRACT LAW AND
CASES
Most of the cases do not involve simple day-to-day transactions. Most
cases to reach the courts these days involve commercial transactions
between business people and companies
There are some significant differences between civil and common law
legal systems (eg civil law usually doesn’t have the requirement of
‘consideration’; common law usually doesn’t have the requirement of
‘good faith’)
Connections between British common law and Kuwait: see articles
from Hein Online describing the British Jurisdiction that existed in
Kuwait until 1961
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We will focus here on the law of contract in the UK (which is also the
basic law of contract in most common law legal systems) –
ELEMENTS OF A CONTRACT
There are some essential elements for a contract to exist
The elements of a contract are:
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• Offer and Acceptance
• By competent persons who have legal
capacity
• Who exchange "consideration"
• To create a "mutuality of obligation”.
DEFENCES TO THE CLAIM THAT A
CONTRACT HAS BEEN FORMED
Mistake
Duress
Incapacity
Undue Influence
Unconscionability
Misrepresentation/fraud
Frustration
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If any of these are present, the contract might be void or
voidable (more on this later)
THE ELEMENTS OF A
CONTRACT: OFFER
•The first element is the “offer”
•An offer can be made to:
– A definite person (or group of persons) – (see Boulton v Jones)
OR
– To the whole world, no one in particular (see Carlill v Carbolic Smoke Ball Co.)
But
– When an offer is made to one person (or a group), only that person (or group)
can accept
and
– When an offer is made to the whole world, anyone can accept by complying
with the terms of the offer
See page 105 of Barker, Law Made Simple
OFFERS MADE TO A
DEFINITE PERSON
Boulton v Jones (1857)
Facts:
Jones made the “offer” to Brocklehurst
Boulton “accepted” the offer and supplied the pipes to Jones
Jones refused to pay
Jones argued: there was no contract between him and
Boulton
BOULTON V JONES
(1857) CONT’D…
The decision:
• The court found in favour of Jones (the defendant)
• Jones did not have to pay for the pipes that he had been supplied with
Held: there was no contract between Boulton and Jones therefore
Jones was not liable to Boulton for the cost of the pipes
This case is authority for the proposition that if you propose to make a
contract with A, then B cannot substitute himself without your consent
In other words…when an offer is made to a definite person, only that
person may accept the offer
OFFERS MADE TO THE
WORLD AT LARGE
Sometimes an offer is made to the whole world
Anyone can accept by complying with the terms of the offer
The classic case to show how this proposition came to be
established in the common law is:
Carllil v Carbolic Smoke Ball Co (1893)
The facts:
• The case concerned a ‘flu remedy called the “Carbolic Smoke
Ball”
• The manufacturer advertised that it would give £100 to
anyone who used the smoke ball and then caught the flu.
CARLLIL V CARBOLIC
SMOKE BALL CONT’D…
The advertisement was
placed in the Pall Mall
Gazette of 13 November
1891
CARLLIL V CARBOLIC
SMOKE BALL CONT’D…
•The plaintiff (Mrs Carllil) bought the smoke ball. She used it
as directed and then she contracted the ‘flu.
•She used it three times daily from Nov 20 1891 to Jan 17
1892
•She claimed the reward of £100 when she caught the ‘flu.
•Carbolic Smoke Ball company refused to pay out
•She sued them for breach of contract
WHAT WAS THE
DECISION IN THIS CASE?
At first instance, Hawkins J held:
Mrs Carllil is entitled to the 100 pounds
Carbolic Smoke Ball appealed that decision
Court of Appeal held: Mrs Carllil was entitled to the 100
(It upheld the lower court’s decision)
WHAT WAS THE
REASONING?
•Court of Appeal held that:
– There was an offer that was made to the whole world
– Anyone could accept the offer by complying with the
conditions
– The plaintiff complied with the offer using the smoke ball as
directed
– It did not matter that she did not communicate the acceptance
of the offer to the company
– In this type of situation, notification of compliance is not
generally necessary – compliance is enough
CARLLIL V CARBOLIC
SMOKE BALL: SUMMARY
What does this case stand for?
This case is authority for the proposition that when an offer
is made to the whole world, anyone can accept by complying
with the terms of the offer
The offeree does not need to tell anyone that they have
complied with the offer
THE OFFER MUST BE
COMMUNICATED TO THE
OFFEREE
•What is an offeree?
•The person to whom the offer is made
•The rule: an offer must be communicated to the offeree
before it can be accepted: Taylor v Laird
•In other words…
– If you don’t know about the offer, you can’t be said to have
accepted it
TAYLOR V LAIRD
(1856)
The facts:
• Taylor was engaged to command Laird’s ship
• He was to conduct some explorers on an expedition up the
River Niger
TAYLOR V LAIRD
CONTINUED…
At a certain point during the trip, he refused to go any further
and he gave up command of the ship
However, he helped the ship home and then claimed payment
for that work.
Held:
Taylor could not recover because he did not communicate his
offer (to work the ship home) to the owner, Laird
Since the offer was not communicated, Laird never had the
chance to accept or refuse the offer
What is this case authority for?
It is authority for the proposition that for an offer to be valid, it
must be communicated to the offeree
TAYLOR V LAIRD
CONTINUED
One final point…
The judge also said:
• “Suppose I clean your property without your knowledge, have
I a claim on you for payment? How can you help it? One
cleans another shoes; what can one do but put them on?”
Reasoning by analogy
Think of examples where this rule applies in day-to-day life
Think of Kuwaiti law – is this the same rule?
Think of Islamic law – is this the same rule?
OFFER V AN INVITATION TO TREAT
An offer is different from a mere “invitation to
treat”
An “invitation to treat” is an offer to make
offers
For example, at an auction: the auctioneer is
inviting the people to make offers
Where goods are displayed in a shop window,
that is an invitation to customers to make
offers – its “an invitation to treat”
THE INVITATION TO TREAT:
EXAMPLE
Placing the item on the shelf = invitation to treat
You, picking it up and taking it to the cashier = an offer
The cashier accepts the offer and takes your cash = the
acceptance
FISHER V BELL (1960)
The flick knife on display in a shop window
Owner was charged with offering for sale a flick knife – (a
violation of the Offensive Weapons Act)
Held: the display of items in a shop window is not an offer –
it is a mere invitation to treat (Parker LCJ)
HARRIS V NICKERSON
(1873)
Offer v invitation to treat
Facts: Nickerson advertised an auction; Harris traveled to
participate in the auction; the furniture was withdrawn
H sued N for the costs he incurred
Held:
There was no contract
The advertisement was a mere invitation to treat
H could not recover, ie. he lost the case
A STATEMENT OF PRICE IS NOT
NECESSARILY AN OFFER
See Harvey v Facey (1893)
The facts:
• Some telegraph messages were exchanged between the parties
over a pen. Harvey wanted to buy a fancy pen from Facey.
1st telegram:
H: “Will you sell us a Bumper Hall pen? Telegraph your
lowest price”
2nd telegram:
F: “Lowest price for bumper Hall pen is 900 pounds”
3rd telegram:
H: “We agree to buy Bumper Hall pen for 900 pounds”
F: didn’t reply
HARVEY V FACEY
(1893) CONTINUED…
Held:
•
•
•
•
There was no contract between the parties
The second telegram was just an invitation to treat
The third telegram was the ‘offer’ to buy
There was no ‘acceptance’ of that offer
SUMMARY
So far, we have seen that for a contract to exist under the English
common law, there must be an offer and there must be acceptance
Many cases have come before the courts over the years which have
helped to clarify what an “offer” is.
The precedents created in those cases are then applied in later
cases – and they are applied over and over again, building up a
body of case law
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There have also been cases explaining how an offer can be taken
back or ‘revoked’. The next slide show will begin with that area and
continue into examining ‘acceptance’.