AFMKU SCHOOL OF ENGLISH LAW
LAW OF CONTRACT
1. Preliminary matters
Contract is of relevance to all individuals
The importance of the law of contract
A brief history of the Law of Contract
2. Introduction
The common law and statutory functions of contract.
Definition of the term “contract”
Salient features of a valid contract
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Offer
Acceptance
Intention to create legal obligations
Written formalities in some cases (to be treated very lightly)
Consideration (not applicable to deeds)
Capacity
Genuine consent (Consensus ad idem) (i.e. meeting of the minds) (to be noted is the
fact that mistake, misrepresentation, duress and undue influence will vitiate the
contract)
(h) Contract must not be illegal or contrary to public policy
Should one or more of the above salient features be absent, the contract will be either void or
voidable or unenforceable.
Explanation of the terms void, voidable and unenforceable
The idea of the notion of “agreement”
(a) The creation of legally enforceable agreements which are binding
(b) Some agreements are not legally binding e.g. collective agreements, socially and
domestic agreements
(c) Standard form contracts. Quid juris?
(d) Application of the objective test is the norm.
3. An analysis of the term “offer”.
(a) What is an offer?
(b) That offer may be made to whom? Carlill v Carbolic Smoke Ball Company (1893)
(c) The distinction between unilateral contract and bilateral contract. Bowerman v ABTA
(1995)
(d) The distinction of “offer” and “invitation to treat”. Fisher v Bell (1961)
(e) Advertisements are generally invitations to treat Partridge v Crittenden (1968)
(f) Termination of offer through revocation Byrne & Co v Van Tienhoven (1880)
(g) Termination of offer through rejection or counter offer.
(h) Termination of offer through lapse of time
(i) Termination of offer by reason of death of the offeror or the offeree
(j) Implied condition precedent Financings Ltd v Stimson (1962)
4. An analysis of the term “acceptance”
(a) What constitutes acceptance? Williams v Carwardine (1833) (knowledge of the offer
at the moment of acceptance.
(b) Acceptance must be unqualified (absolute and unconditional)
(c) Conditions precedent Pym v Campbell (1856) and condition subsequent Head v
Tattersall
(d) The offeree’s assent must match exactly the terms of the offer. Hyde v Wrench (1840)
(e) Request for information not amounting to a counter offer does not destroy the original
offer. Stevenson v McLean (1880)
(f) The “Battle of the Forms” BRS v Arthur Crutchley Ltd (1968) Butler Machine Tool
Co v Ex-Cell-O Corpn (1979) (last shot doctrine)
(g) Communication of acceptance – General rule.
(h) Communication of acceptance – Exceptions Adams v Lindsell (1818) and Household
Fire Insurance Co v Grant (1879)
(i) In general the postal acceptance rule favours the offeree. (i) Post must be the a
reasonable means of acceptance Henthorn v Fraser (1892) (ii) Letter of acceptance to
be properly addressed/posted Re London and Northern Bank (1900) letters and
telegrams Entores v Miles Far East Corp. (1955)
(j) Silence Felthouse v Bindley (1862) and pre-agreed silence
(k) Identical cross offers?
(l) Inchoate agreements and vague agreements Scammell v Ouston (1914) British Steel
Corp. V Cleveland Bridge and Engineering Co (1984)
(m) Vagueness and no performance Hillas v Arcos (1932)
(n) Meaningless terms Nicolene Ltd v Simmonds (1953)
(o) Retrospective acceptance
5. Intention to Create Legal Relations.
(a) Introduction
(b) Express exclusion of that intention Jones v Vernon’s Pools (1938); and Appleson v
Littlewoods Ltd. (1939); and Rose & Frank Co v Compton (1925)
(c) Collective agreements
(d) No express exclusion of that intention – Advertisements
(e) Family arrangements: Husband and wife agreements Balfour v Balfour (1919); Merrit
v Merrit; Spellman v Spellman. (1961) Other family arrangements Simkins v Pays
(1955)
(f) Other cases Peck v Lateu (1973)
(g) Some concluding remarks
6. Consideration and Privity of Contract
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Introduction
How is “Consideration” defined? Please see Lush J’s dictum in Currie v Misa (1875)
Consideration and condition
Executory consideration, executed consideration and past consideration explained.
Roscorla v Thamas (1842) and Re McArdle (1951)
The requested performance exception Lampleigh v Brathwait (1615)
Sufficiency of consideration – An explanation.
Where consideration is of little economic value but sufficient in the eyes of the law.
General matters (i) Thomas v Thomas (1842) and Chappell &Co Ltd v Nestle Co. Ltd
(1960) (ii) Compromise of claims Horton v Horton (No. 2)(1960), (iii) Forbearance to
sue Alliance Bank Ltd v Broom (1864); (iv) Invented consideration De La Bere v
Pearson (1908) (and the tort case of Hedley Byrne &Co. Ltd v Heller & Partners
(1964)
What constitutes sufficient consideration?
(a) Moral obligation, love and affection, etc... Eastwood v Kenyon (1840); White v
Bluett (1853)
(b) The performance of existing legal duties
(c) Duties imposed by the general law Collins v Godefroy (1813) Glasbrook Bros. V
Glamorgan County Council (1925) and Ward v Byham (1956)
(d) Contractual duty Stilk v Myrick (1809) and cf. Hartley v Ponsomby (1857)
(e) Duties owed to third parties Jones v Waite (1839) and Shadwell v Shadwell (1860)
(f) Discharge of existing financial obligations (repayment of debts) Pinnel’s case
(1602) (received House of Lords approval in (1884) in Foakes v Beer.
(g) Promissory Estoppel: (position in equity) Central London Property trust Ltd v
High Trees House Ltd. (1947)
(h) Privity of contract : The Doctrine explained Tweddle v Atkinson (1861) Beswick v
Beswick (1068)
(i) Exceptions to the doctrine (i) statutory exceptions, (ii) assignment of contractual
rights (iii)the law of agency
(j) The avoidance of privity of contract through the existence of a collateral contract
Shanklin Pier Ltd v Detel Products Ltd (1951)
(k) The law of torts Donoghue v Stevenson (1932)
(l) Conclusion
7. Terms of the contract
(a)
(b)
(c)
(d)
Introduction
Express terms
The parole evidence rule Hawkrish v Bank of Montreal (1969)
What does the plaintiff need to prove in order to displace the parole evidence rule? SS
Ardennes (Cargo Owners) v Ardennes (Owners) (1950)
(e) Terms and representations – a distinction Routledge v Mc Kay (1954)
(f) Does one party have specialist knowledge? Oscar Chess Ltd v Williams (1957) Dick
Bentley Productions Ltd v Harold Smith Motors Ltd. (1965)
(g) Implied Terms
(h) Custom and Practice: British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd
(1975)
(i) Statute: Varley v Whipp (1900) and Beale v Taylor (1967)
(j) Common law implication (cases will be given during the lecture)
(k) Conditions and warranties. An explanation Bettini v Guy and Poussard v Spiers and
Pond (1876)
(l) What was the parties’ intention? Bannerman v White (1861) and Schuler AG v
Wickman Machine Tools Sales Ltd (1974)
(m) What are the consequences of the breach? Hong Kong Fir Shipping Co. Ltd. v
Kawasaki Kisen Kaisha Ltd (1962)
8. Discharge of liability
(a)
(b)
(c)
(d)
(e)
(f)
Introduction
Performance: Boulton v Mahadeva (1972)
Substantial performance: Dakin & Co.Ltd v Lee (1916)
Acceptance of partial performance: Sumpter v Hedges (1898)
Prevention of performance; Planche v Colburn (1831)
Repudiation before or during performance: (i) anticipatory breach Hochester v De La
Tour (1853)
(g) Breach occurring during performance: Munro & Co.Ltd v Meyer (1930)
(h) Breach of term of major importance:
(i) Consequences of repudiation of the contract or breach of major term. (i) treat the
contract as continuing or (ii) treat the contract as terminated.: Howard v Pickford Tool
Company (1951) and Vitol SA v Norelf Ltd (1996)
(j) Agreement
(k) Bilateral discharge by agreement
(l) Unilateral discharge by agreement. Pinnel’s case (1602)
(m) Frustration Theories. (i) Implied term theory : Tamplin Steamship Co. Ltd v AngloMexican Petroleum Products (1916), (ii) the just solution theory: per Lord Radcliffe
in Davis Contractors Ltd. v Fareham UDC (1956)
(n) Circumstances in which frustration may occur (i) Destruction of the subject matter of
the contract (ii) Non-occurrence of a particular event which forms the basis of the
contract: Krell v Henry (1903), Herne Bay Steamboat Co v Hutton (1903) (iii) Non
availability of one of the parties because of death, illness, or other circumstances.
Condor v Barron Knights Ltd (1966); (iv) Frustration of the common adventure:
Jackson v Marine Insurance Co Ltd. (1874) (v) Supervening illegality.
(o) Effects of the doctrine of frustration at common law: Appleby v Myers (1867) and
Chandler v Webster (1867) The Fibrosa (1942)
9. Vitiating Factors
(a) Introduction
(b) Misrepresentation
(c) Representations and terms (i) Manner and timing of statement: Ecay v Godfrey
(1947) Schawel v Reade (1913). (ii) Importance of statement Bannerman v White
(1861), (iii) special knowledge and skill Dick Bentley Productions Ltd v Harold
Smith (Motors) Ltd (1965)
(d) Actionable misrepresentation (i) False statement of fact ; (ii) statements of opinion
and belief Bisset v Wilkinson (1927) (iii) statements of future conduct and
intention: Edgington v Fitzmaurice (1885), (iv) silence does not amount to
representation but there are four exceptions namely half truths, Tapp v Lee (1803)
change of circumstances, (1936)contracts uberrimae fidei (of the utmost good
faith) and parties in a fiduciary relationship
(e) Inducement: Attwood v Small (1838) and Redgrave v Hurd (1881)
(f) Types of misrepresentation. (i) Fraudulant Derry v Peek (1889) (ii) negligent
misrepresentation at common law Esso Petroleum Co Ltd v Mardon (1976)
(g) Remedies (i) Recission: Whittington v Seale Hayne (1900)
(h) Damages for misrepresentation
(i) Duress: Northern Ocean Shipping Co. Ltd. Hyundai Construction Ltd (1978) and
Undue Influence. (i) No special relationship Williams v Bayley (1866) and (ii)
where a special relationship exists Lloyds Bank v Bundy (1975)
(j) Inequality of bargaining power Fry v Lane (1888)
(k) Mistake (i) Mistake as to the existence of the subject matter (res extincta)
Coutourier v Hasty (1856) Scott v Coulson (1903) (ii) Mistake as to title (res sua)
Cooper v Phipps (1887), (iii) Mistake as to quality Leaf v International Galleries
(1950) (iv) Common mistake in equity Solle v Butcher (1950); (v) Mutual mistake
(10) Illegal and void contracts
Everet v Williams (1725) to be contrasted with Somma v Hazelhurst (1978).
Contracts in restraint of trade. ((i) Agreements between employers and employees (Plase see
Lord ManNaughten in Nordenfelt v Maxim Nordenfelt (1894). And Herbert Morris v Saxelby
(1916)
(11) Remedies
These will receive a tertiary treatment
(a) Damages and mitigation of loss. Liquidated damages and penalty clauses.
(b) Equitable remedies (i) Specific performance (ii)injunctions (mandatory and
prohibitory) (iii) Restitution (iv) Quantum meruit
Reading Materials
1. Jill Poole “Textbook on Contract Law” (10th Edn) (2010) Oxford University Press
2. Ewan McKendrick “Contract Law. Text. Cases and Materials” (4th Edn) (2010)
Oxford University Press.
3. Adrian Chandler with Ian Brown (Questions and Answers Series) “Law of
Contract” (2011) Oxford University Press.
Jo Carby-Hall
28th October, 2011