LAW CA – FEB ’12 COMPLETE
A CONTRACT - a legally enforceable agreement between two or more parties
ESSENTIALS OF A CONTRACT
There must be an agreement made as a result of an offer & unequivocal acceptance of that offer
Either the contract must be under seal or there must be consideration
There must be an intention to create legal relations
Both parties must have the capacity to contract
There must be genuine consent to the terms by all parties to the contract
The terms of the contract must be legal & capable of performance
VOID CONTRACTS
A void contract is not a contract at all
Its an agreement without legal effect
Usually for a minor for supply of goods other than necessity
VOIDABLE CONTRACTS
Where the law allows one of the parties to withdraw if they wish
Remains valid until/unless innocent party chooses to terminate it
Usually for a minor
Or if induced by undue influence/mispresentation
UNENFORCABLE CONTRACTS
A valid contract that cannot be enforced by courts due to lack of legal evidence ie. Written evidence
If deemed unenforceable then either party cannot compel other side to do so
OFFER
The first essential of a valid contract
An offer exists where the offeror undertakes to be contractually bound if the offeree makes a proper acceptance. It
is a definite promise to be bound on certain specific terms.
The terms of an offer must be clear, certain & complete
It cannot be vague
 The offer must be communicated to the other party
 Can be communicated to a person, group or public at large
 The offer must be made by written, spoken or inferred by conduct
 Letter, phone, fax, or any means which is appropriate & reasonable in circumstances
 The offer must be intended as such before a contract can arise
 If it is not with a view to create legal relations
RECOGNISING AN OFFER
An offer is NOT: The answer to a question or supply of information
 Invitation to treat
 An invitation to another person to make an offer
 An invitation to treat cannot be accepted
 To advertise goods or display goods
 Statement of intention
 If a person states they intend to perform some act & they don’t
 Ie. Father states his son will be beneficiary to estate doesn’t form a contract
 An option
 The right to buy / sell something at a specified price
TERMINATION OF AN OFFER
 By revocation before valid acceptance
 The offeror can revoke / withdraw at any time, even within specified time frame
 Lapse of time
 Will terminate at the end of a specified time
 If no time, then what is considered reasonable time
 Rejection or counter offer
 If outright rejection is communicated
 A rejected offer cannot subsequently be accepted
 Failure of express or implied condition
 Death of offeror or offeree
ACCEPTANCE
ESSENTIALS OF A VALID ACCEPTANCE
Acceptance may be oral, written or implied by conduct
 Dispatching goods in response to offer
 Carbolic smokeball, by using the smokeball
Acceptance must be clear & unqualified & must match offer exactly
 Acceptance must be communicated to & received by offeror
 Otherwise no enforceable contract exists
 Acceptance must be communicated by the offeree, or by someone with their authority, to the offeror
 The offeror may expressly or impliedly stipulate the method of acceptance
 Unless offeror states this is only method of acceptance they may accept other forms of acceptance as long as
offeror suffers no disadvantage
COMMUNICATION OF ACCEPTANCE
 Offeree / agent must communicate acceptance to offeror / agent EXCEPT: Where performance of an act or the conduct of a person is deemed to constitute acceptance.
 CARBOLIC SMOKEBALL
 A ‘unilateral contract’ may be established whereby offer includes a term providing that complete
performance or conduct by the offeree will constitute complete acceptance. No need for advance notice
of acceptance.
 Where acceptance is made by post
 An offer effect if & when it is received. Acceptance by letter takes effect when it is posted.
CONSIDERATION
Consideration is required for all enforceable contracts, except deeds under seal.
DEFINITION
Some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other.
 Consideration can consist of doing something, refraining from doing something or making a promise in return for
the other party doing any of the above.
 If there is no consideration the agreement is unenforceable unless it is under seal or unless the principle of
promissory estoppel applies.
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Consideration must be of some value but need not be adequate
 Anything of value which contributes to the bargain made is recognised in law as good consideration. It can
money, land, goods, services or any undertaking which confers a benefit on one party or represents a loss
to the other
Existing Legal obligation
 Performance of an existing legal obligation imposed by statute is no consideration for a promise. However,
of some extra service is given then that is sufficient consideration
Consideration mist be provided by the promise
 Consideration is the price of a promise, so a person can only enforce a promise if they themselves provided
the promise ie. Consideration must move from the promisee
Past Consideration – consideration must not have been provided prior to the agreement
 Is any act which has already been performed before a promise in return is given & is not sufficient to enforce
the promise
EXCEPTIONS
 Past consideration will support bills of exchange (cheques) since most of these are issued to pay existing
debts
 Past consideration supports a later promise to pay for something done at the promisors request ie. That
consideration provided in the past will be good consideration when it was understood at the time there
would be payment in the future
RULE IN PINNEL’S CASE
Consideration must be given to enforce the waiving of a contractual obligation
Payment of part of a debt is not good consideration for a promise to write off the balance of a debt
 If a party to a contract waives existing right which it has under the contract,it is not legally bound by such a
waiver unless it has received consideration for it. This is because the waiver leads to a new agreement
which must be accompanied by consideration to make it enforceable.
EXCEPTIONS TO PINNEL
 If the creditor accepts payment of a lesser sum in full settlement before the due date, the payment
discharges the whole debt
 If the creditor accepts anything different to which already entitled
 Ie. Goods instead of cash, even though the value of the goods may be less than the cash value
 If the creditor accepts part payment in full settlement from a third party. The creditor will have received
consideration from whom they had no previous claim
 If a group of creditors arrange that they will each accept part payment in full settlement. This will be binding
among themselves.
 If it can be enforced under PROMISSORY ESTOPPEL
PROMISSORY ESTOPPEL
An equitable exception to pinnels case
Equity mitigates the hardship that could be caused to person who relies on a promise that debt will not be enforced
in full.
Under the principle, where a person makes a promise, unsupported by consideration, to waive a debt or other
obligation, and where the promisee acts on this promise, the promisor is estopped (prevented) from retracting the
promise
However, the principle prohibits promisors from insisting on their strict legal rights when it would be unjust to allow
them to do so.
 If the circumstances give rise to the promise to accept less change, then the promisors right to insist on full
payment can be revived
 It only applies to a promise of waiver which is voluntary
o It does not apply to a promise under threat “take €x or nothing !!”
 It is a shield not a sword, ie a defense, cannot be grounds for cause of action
INTENTION TO CREATE LEGAL RELATIONS
The law upholds agreements, not only because of the consideration involved, but also because the parties intended
to create legal relations. Otherwise, there is no binding contract.
What matters is not whether the parties intended in their minds to be bound by what agreed to do, but the
inferences that a reasonable person would draw from their words, conduct or circumstances of negotiations
An express statement by the parties of their intention to create / not to create legal relations is conclusive
 “subject to contract” “agreement in principle” “provisional agreement” mean parties do not intend to be
legally bound prior to signing of a contract.
Where no express statement exists then courts have 3 principles:COMMERCIAL AGREEMENT
Presumed that both parties DID INTEND to create legal relations
The assumption that a commercial agreement is legally binding needs to expressly DENIED
DOMESTIC AGREEMENT
An agreement between friends, family, husband & wife etc… normally presumed NOT TO create legal relations,
subject to contrary intention ( words, actions…)
COLLECTIVE AGREEMENTS
Procedural agreements between trade unions & employers relating to a contract of employment are not usually
legally binding, despite their elaborate & very legal content. If the court finds that the parties intended to create
legal relations through such collective agreements it will hold the contract enforceable.
CONSUMER PROTECTION ACT, 2007
UNFAIR COMMERCAIL PRACTICE
Unfair where a breach of good faith occurs & the average consumer is denied the reasonable standard of skill & care
to which he is entitled & it is likely to impair the average consumers ability to make an informed decision to purchase
/ not
Unfair commercial practice can be : Misleading
 Aggressive
 Prohibited
MISLEADING COMMERCIAL PRACTICE
A commercial practice which contains false or untruthful information or in any way deceives or is likely to deceive
the average consumer, influencing the decision to purchase
Misleading if it : Omits or conceals information that the average consumer would need to make an informed decision to
purchase / not
 Contains relevant information but presents it in a form that is unclear, unintellible, ambiguous or untimely
AGGRESSIVE COMMERCAIL PRACTICE
Prohibition from engaging in aggressive commercial practices if: Harassment ( pressurising, intimidating & taking advantage of vulnerable consumer )
 Coercion, or exercising undue influence
Eg. Use of threatening or abusive behaviour or language
 Exploitation of consumers misfortune
 Circumstance when the trader is aware that consumers judgement is impaired
 Persistence
2 FACTORS FOR AGGRESSIVE / MISLEADING
 Would the action influence the average consumer to take a decision he would not have otherwise taken
 Traders professional diligence
 Required to act with good faith & expected standard of care & skill
PRODUCT CONFUSSION
Traders must not mislead consumers by confusing a competitor’s product with their own or by confusing a
competitors trademark, or trade name with theirs
PROHIBITED COMMERCAIL PRACTICES
 Automatically unfair & prohibited
 Offence to engage in
 Black list: Trader has endorsement of regulatory body
 Closing down / cease trading sale ( must be true )
 Unsupported claims that a system would win games of chance ( ie lottery )
 Cure for illness
 Representation that the consumer has won a “free gift” if the consumer has to incur out of pocket
expenses to cliam the gift ( not P&P or standard rate call )
 Switch & bait advertising – advertise a product cheaply but not actually available !!
 Supply information in a different language
 Trader pretending his offer is unique when in fact the terms are legislation
Ie “dvd players don’t work, money back” <= law not unique offer
 Using editorial content in media to promote a paid for product
- must state that a paid for feature or advertising feature
 Security companies using exaggerated claims to scare consumers into purchasing a product to protect
themselves
 Misleading consumer that a 2nd product is manufactured by the same company as the well-known brand
 Disguised business sale – trader acting as a consumer
 Creating the impression that a consumer has won or will win the top advertised prize or equivalent value
prize, when there is no prize or if the consumer has to make payment or incur loss
 Including invoices for a similar product with marketing material
 Failing to comply with a request to leave the consumers residence
 Persistently failing with a consumers request to cease unwanted communications
 Including in advertisements a direct exhortation to children ( pester power )
 Seeking payments for unsolicited products
 Offences of a trade due to actions of another ( clocked car )
NATIONAL CONSUMER AGENCY
Set up on 1st may 2007
Powers & functions of director of consumer affairs
Responsible for promoting 7 protecting the interest & welfare of consumers through enforcement of consumer
legislation; advocacy & research; education & awareness.
NCA has powers to work closely with regulators
SANCTIONS & PENALTIES
1) PROSECUTION
Can be taken within 2yrs from the date of the offence occurred.
Liable to €3000 max fine or prison for 6 months or both
Any subsequent conviction - €5000 max fine or 1 yr prison or both
Again - €500 per day, €60,000 max fine, 18 months prison or both
Publish corrective statements
NCA’s cost are in addition to any penalties
2) COMPLIANCE NOTICE
New enforcement tool. Price display offences are exempt.
Authorised office issues trader notices of breach & requiring him to comply by certain date
The trader has the right to appeal within 14 days
 if they fail they are liable to compliance
 if they fail they are liable to penalties in prosecution
Compliance notices can also be issued under : Sale of goods act
 Package holiday & travel trade act
 Consumer information orders
3) UNDERTAKINGS
If a trader is believed to be involved in a prohibited practice they may accept a written undertaking that the trader
will comply with legislation. Undertakings may include:Commitment to compensate the consumer, inc reimbursement
Publish at own cost advert containing a corrective statement
If trader renages on undertaking the circuit/high court prohibition order
4) PROHIBITION ORDER
Section 71 enables NCA to apply to circuit / high court for an order prohibiting a trader from committing or engaging
in a prohibited act / practice
Failure to comply to an order, without a reasonable excuse, the trader is liable to penalties in prosecution.
5) FIXED PENALTY NOTICES
Section 85 provides for fixed payment notices for price display legislation
This is an alternative to prosecution
May be done either in person or by post by an NCA officer
Fixed payment of €300
28 days to pay the fine from date of issue
Failure to pay will result in prosecution
SALE OF GOODS
FORMATION OF A CONTRACT
DEFINITION
Seller transfers / agrees to transfer property in goods to buyer for a money consideration, called the price
Sale:- property is transferred from seller to buyer
Agreement to sell :- future transfer of property
Contract of sale for €12.70 upwards not enforceable unless: buyer accepts & receives parts of goods
 buyer gives something in earnest to bind contract ( part pay / deposit )
 memo in writing is signed by the party to charged / his agent
IMPLIED TERMS
TITLE S.12
Seller has the right to sell
Seller will have the right to sell when property is to pass
WARRANTY
 all charges were disclosed pre-contract
 buyer will enjoy quiet possession subject disclosed charges
No exemptions unless international trade
SALES BY DESCRIPTION / SAMPLE
S.13
Goods must correspond with description
Bulk of goods must correspond with sample & description
=>O’Regan V micro bio
Exemptions
B2B allowed provided fair & reasonable
 bargaining strength of parties
 whether buyer received inducement to agree to term
 buyers knowledge of existence of the term
 whether goods where manufactured to special order by buyer
MERCHANTABLE QUALITY
S.14
Is implied where the seller sells incourse of a business except: defects specifically drawn to buyers attention pre contract
 if buyer eximes goods pre contract, defects that should have been seen
Goods are: fit for purpose for which goods of that kind are commonly bought
 durable as it is reasonable to expect having regard to any description applied to them, the price, all relevant
circumstance
=> Egan V McSweeny
No excemption where buyer is a consumer
Exemptions for B2B if fair & reasonable
Fit for purpse
Seller sells in the course of a business &
Buyer (expressly/impliedly) makes known particular purpose to seller
EXCEPT where buyer does not rely/unreasonable to rely on, sellers skills or judgement
=> O’Regan V Micro Bio
SALE BY SAMPLE
S.15
Bulk corresponds with sample in quality
Buyer has reasonable opportunity of comparing bulk with sample
Goods are free from defect rendering them un-merchantable which would not be apparent on a reasonable exam of
sample
No exemptions where buyer is a consumer
Exemptions for B2B if fair & reasonable
IMPLIED WARRANTY FOR SPARE PARTS & SERVICING
Adequate after sales service available from seller as per any statements by seller for stated period ( or reasonsable if
not stated )
SALE OF MOTOR VEHICLES
At time of delivery, except dealers, it is free from defects which would render it a danger to the public, including
person in it
Exemptions: Seller & buyer agree that vehicle is not intended for use in condition which it is to be delivered to buyer &
 Statement to that effect signed by both & given to buyer &
 Above agreement is fair & reasonable
GUARENTEES
Seller is liable to buyer under guarantee by him to buyer unless: Expressly indicated to contrary when guarantee is given OR
 Seller is a retailer gives his own guarantee then it is presumed seller is NOT liable under guarantee
TRANSFER OF PROPERTY IN GOODS
No transfer of property in unascertained goods until they have been ascertained
Property in specific/ascertained goods passes when intended to pass
Risk passes with property unless otherwise agreed except:Buyer/seller’s fault delays delivery
Buyer/seller retains liability of a bailee/custodier
TRANSFER OF TITLE BY NON-OWNER
NEMO DAT QUOD NON HABET ( cannot give what you haven’t got )
Where goods are sold by a person who is not the owner, the buyer acquires no better title to the goods then the
seller had
Exceptions
 Seller acts as an agent/with owners consent
 Sale by mercantile agent in normal course of business who is in possession of goods title with owners
consent
=>Folks v king
 Estopple :- owners conduct precludes him from denying sellers authority to sell
=>central newbury car auctions V unity finance
 Sale under statutory power ( sheriff ) or common law power ( finder )
 Sale in market overt ( open public market ) provided : According to the usage of the market &
 Buyer buys in good faith & without notice of any defect or want of title on part of seller
 Goods obtained from the real owner by fraud
=>Lewis V avery
 Sale in possession of goods after sale, and buyer buys goods in good faith, and without notice of the previous
sale, then seller deemed authorised by owner to sell goods
=>O’Riell V fineman
 Sale by buyer in possession who is mercantile agent
 Any person receiving goods in good faith & without notice of rights of original seller gets good title
=>Newtons of wembly V Williams
PERFORMANCE OF A CONTRACT
DUTIES OF BUYER/SELLER
Seller – deliver goods in accordance with contract
Buyer – accept & pay for goods in accordance with contract
RULES AS TO DELVIVERY
Look to contract, as to terms in contract, to determine when delivery takes place
Detailed rules in the act RE: place, time, wrong quantity, & instalments where contract is silent
EXAMINAATION BY BUYER
Goods not accepted until buyer has reasonable chance to examine
Unless otherwise agreed, seller must, on request, afford buyer reasonable time examine goods
ACCEPTANCE
Goods deemed accepted when :Buyer intimates acceptance to seller OR
Goods delivered to buyer & he does any act in relation to them which is inconsistent with ownership of the seller OR
When, without good and sufficient reason, buyer retains goods without intimating rejection to seller
RIGHTS OF THE UNPAID SELLER
DEFINITION
Entire price not paid or tendered OR
Bill of exchange/negotiable instrument no paid because of dishonour ( cheque bounced )
UNPAID SELLER RIGHTS
Lien / withhold delivery
 Retains goods pending payment
Stoppage in transit
 Retake passion of goods whilst in transit
 Retain goods until payment where buyer becomes insolvent
Right to resale
Retention of title clause (ROT)
 Goods in possession of buyer but property retained to seller
 Seller has a right to recover possession of goods
=>aluminium industrie Vaasen V rompala aluminium
BREACH OF CONTRACT
Remedies of seller
 Action for price
 Damages for non acceptance
Remedies buyer
 Damages for non delivery
 Specific performance