Law of contract
[chesine, fifoot, formstones law of contract : main reference
What is Law?
- its a set of rules enforcable by courts regulating the government of
the states (subject of states) .
-The relationship between the organs of the
government and individuals, it also regulates the
relationship or conduct of subject towards each other.
- These laws are made by the legislator ()املشرع.
What is a contract ?
According to Anson: a contract is a legally binding agreement
between two or more persons by which rights are acquired by
one or more persons to act of forbearance on the contract
Tritels definition of a contract:
-Its an agreement giving right to obligation that are
enforced by the law.
-The factor which distinguish contractual obligation’s from
the legal obligations is that it’s based on the obligation of the
parties
Types of contract:
1) simple contract
2) formal contract
1) Simple contract
- Is a contract made orally or in writing or both of them rather
than a contract made under a seal ()ختم.
2) Formal contract
- Is a contract when the parties have signed under a seal while
an informal is not under a seal
Elements of a contract :
- Offer
- Acceptance
- Consideration
- Capacity
- Mutual Assent
Elements of a valid contract :
- A contract is an agreement between parties, creating mutual
obligations that are forcable by the law.
- Mutual assent
- Acceptance
- Consideration
- Capacity
- Offer
Offer: An offer is a promise to do or refrain from something
else, it must be stated and delivered in a way that will lead a
reasonable person to expect a binding contract arise from its
acceptance.
The two types of an Offer
-Expressed
- Implied
-When an offer is expressly communicated by the offeror it is
regarded as an expressed offer, it can be written or verbal.
- Anoffer that can be understood by the circumstances of a
case or the conduct of parties, is known as an Implied offer.
Offer to the public at large
- It Is a valid case offer
- The first task of the plaintiff is to prove the presence of a
definite offer, made either to a particular person or in an
advertisement of rewards, for services to be rendered to the
public at large.
Carlil -V- Carbolic smoke balls & CO
- In the famous case of Carlill -V- Carbolic smoke ball & CO (1893)
it was assigned that an effective offer cannot be made to the
public at large, in that case the defendant who were producing of a
medical preparation called (the carbolic smoke balls). Issued an
advertisement in which they offered to pay 100 pounds to any
person who catches influenza after having used one of their
smoke balls in a specified manner and for a specified period.
-The plaintiff on the faith of the advertisement bought and
used the smoke balls as prescribed, but succeeded in
catching influenza,she sued for 100 pounds
-The defendants argued that the transaction was a bet within
the meaning of gaining acts, that the government considered a
mere puff and it was never intended to create a binding
obligation, that there was no offer to any particular person,
and that even there were, the plaintiff has failed to notify our
acceptance.
-Thecourt of appeal destroyed the argument that an offer
cannot be made to the public at large.
-The court of held that Mrs.Carlill was entitled to the reward
because the advertisement constitutes an offer of a unvalid
offer she accepted with the condition of the offer.
Invitation to treat
- It is a concept within the contract law meaning inviting an
offer.
-An invitation to treat is an expression to negotiate
- It
is not an offer and cannot and cannot be accepted so as to
form a binding contract
- It is a mere deceleration of willingness to enter into negotiation
- Display of goods in a shop is considered to be an
invitation to treat and not consisting an offer for the
purpose of contract, neither informing various persons of
the current prices nor allowing assets for sales by
dispatching a schedule of such items which includes
prices shall be deemed to be an offer
Pharmaceutical society of Great Britain
-V-
Boots cash chemists LTD ( 1952)
-The defendants adapted one of the shops to a self service
system, a costumer when entering was given a basket, and
having selected from shelves the articles he required, put them
in the basket and took them to the cashier desk near the desk
was a registered pharmacist, who was authorized if necessary
to stop a customer from removing any drug from the shop.
- The question was at what time the sale took place and wether
the display of the goods with prices attached was an offer or an
invitation to treat.
-Accordingto the plaintiffs it was an offer accepted when the
customer put an article in the basket, and this offer and the
defendant was free to reject or accept it
-The court held that it is clear that according to the ordinary law
of contract, the display of an article with the price on it in a shop
window is a meaning an invitation to treat, it is no sense on offer
for sale, the acceptance at which constitutes a contract.
The difference between an offer and an invitation
to treat:
-An offer:
Is a statement by one party of willingness to enter into a contract
on stated terms provided that these terms are in turn accepted by
the offree or offerer is addressed when accepted it will render an
agreement to be a valid contract.
-An invitation to treat:
Is an expression of willingness to enter into negotiation, which
it is hoped will lead to the conclusion of a contract at a later
date.
Requirement of an offer:
- An offer is a promise or commitment to a perform or refrain
from performing some specified act.
-Theparty making an offer is called offeror and the party to
whom the offer is made is called offree
The three elements for an offer to be effective:
1) The offer must have serious intentions to become bound by
the offer
2) The terms of the offer must be reasonably contain or
definite for instance, the purchaser must have sufficient
knowledge of the items sold and basic descriptions
3) The offer must be communicated to the offree
Acceptance
-Acceptance is a voluntary act by the offerer that shows
assent or agreement to the forms of the offer.
-The offerer’s act may consist of words on conduct.
-The acceptance must be unequirreal and must be communicated
to the offeror.
-The offeree must unreservedly assent to the terms proposed
by the offeror.
-If the acceptance is subject to new conditions and the terms of
acceptance is subject to new conditions and the terms of
acceptance materially change the original offer, the acceptance
may be deemed a counter offer, it’s effect in the eyes of the law
is to destroy and reflect the original offer.
Hyde - V - Wrench (1842)
The defendant on 6th of June offered to sale and estate
the plaintiff for 1000 pound, on 8th of June, in reply the
plaintiff made an offer of 950, which was refused by the
defendant on 27th of June.
Finally on 29th of June the plaintiff wrote that he was now
prepared to pay
-The court held that no contracts existed.
By his letter of 8th of June the plaintiff had rejected the
original offer and was no longer able to revive it by changing
his mind and rendering a subsequent acceptance.
Conditional assent
- The assent to an offer that includes additional conditions or
limitations in the contract.
- The additional assent is incapable of forming a valid contract
- It does not constitute acceptance
Branca -V- Cobarno
A vendor agreed to set the lease of a mushroom of the detail of a
written document which was declared to be provisional agreement
(until a fully legalized agreement) drown up by a solicitor and
embodying all the conditions stated is signed.
- Thecourt of appeal held that by using the word (provisional)
the parties has intended that the agreement is to be replaced by
a more formal contract, in which case their obligations will be
suspended.
- How ever the use of formula (subject to contract) create a
strong presumption that the parties do not intend and
immediately bind the contract.
Effects of silence acceptance
-The general rule is that silence does not constitute
acceptance, an offeror may not impose contracted liability
upon an offeree by proclaiming that silence shall be
deemed consent.
Felt house -V- bindley
-The plaintiff (felt house), wrote to his nephew john
on 2nd of February , offering to buy his horse for 30
pounds and adding.
(If i hear no more about him, i consider the horse
mine at that price).
-The nephew Made no reply to his letter but intimated to
the defendant (an auctioneer) who was going to sell his
stock, that the horse was to be kept out of the sell.
-The defendant inadvertently sold the horse to a third party at
an auction held on 25th February the plaintiff sued him.
-The court held that the action must be failed as they have
been no acceptance of the plaintiff’s offer on the 25th of
February, and the plaintiff have therefore, at that date, has
no reason to sue.
The silence can never be unequivocal evidence.
* The general rule is that silence not a form of acceptance
-Mode of communication an offeror may prescribe the method
of communicating acceptance if no particular method is
prescribed.
-The form of communication will depend upon the nature of the
offer and the circumstances in which it’s made.
e.g where the negotiations have been concluded through
the post.
Adam - V - Lindsell
- The plaintiffs were wool manufacturers -the defendant- were
wool dealers, On 2nd of September the defendant wrote to the
plaintiff offering a quantity of wool in certain terms and they
require an answer in “course of post”
-The defendants miss directed their letter which didn’t reach
the plaintiffs until the evening of 5th of September.
- That same night the plaintiffs posted a letter of acceptance,
which was delivered to the defendant on 9th of September
- If the original has been properly addressed, a reply could’ve
been expected by 7th of September and meanwhile, on 8th of
September, not having received such a reply, the defendants
had sold the wool to third parties
- The important question was wether a contract of sell has been
made between the parties before 8th of September and wether
an offer made through the post might be regarded as accepted
in the eyes of the law in the following situations:
- The plaintiffs sue the defendants, the court directed a
A) as soon
judgment as plaintiff
for the the letteronofthe
acceptance is put
ground that the into thewas
delay post.
due
to the defendant’s negligence.
B) when the letter of acceptance is delivered to the offers
address.
C) When the letter of acceptance is brought to the actual
notice of the offeror, in this case the court preferred the first
solution and decided that the contract was concluded when
the letter of acceptance was posted on 5th of September.
- Must the acceptor have knowledge of the offer?
Do contractual obligations arise if services rendered which
in fact fulfill the terms of an offer but are performed in
ignorance that the offer exist?
R -V- Clarke (1927)
- The government of Western Australia offered a reward of 1000
pounds for such information as shall lead to the arrest and
conviction of the murderer of 2 police officers and added that if the
informant should be given, not being himself the murder he should
be a free pardon
Clark saw the offer and sometime later gave the necessary
information. He claimed the reward , he admitted not only that
he had acted to save his own skin but that as the time when he
gave the information the question of the reward had passed out
of his mind
The court held that it’s claim must failed, he was in their
opinion in the same position as if he had never heard of the
reward, in ignorance of the offer is the same thing wether its
due never hearing of it or to forgetting about it after hearing.
Termination of an offer
1) Revocation
2) Lapse of time
3) Death of one of the parties
4) Offer maybe subject to a condition that fails to be satisfied
Revocation
It has been established that the revocation is possible and
effective of anytime before acceptance
Rutledge - V - Grant (1828)
The defendant offer on 18 march to buy the plaintiffs house
for a certain some. A definite to be given within six weeks
from the date, before acceptance the defendant changed his
mind and withdrew the offer, the plaintiffs sued the
defendants.
The court held that the defendant could withdraw at any
moment before the acceptance even though the time limit have
not expired.
- Revocation of an offer must be communicated with the
offeree
Bynne - V - Tienhoven (1911)
The defendant posted a letter on the 1st of October offering to
sell the plaintiff 1000 boxes of templates on 8th October they
posted a letter revoking the offer.
On October 11 the plaintiffs telegraphed their acceptance and
confirmed it in a letter posted on 15th of October.
On October 20 the letter of revocation reached the plaintiffs
It was held that the revocation was in operated until 20th of
October, that the offer therefore continued open up to that date,
and that it has been accepted by the plaintiffs in the interim.
Lapse of time
-If an offer states that it is open for acceptance until a certain
day, after acceptance will clearly be effective
- If there is no express time limit an offer is normally open only
for a reasonable time.
Ramsgate Victoria hotel
-V-
Montefiore
- The defendant had applied in June for shares in the plaintiffs
company and had payed a deposit into the company’s bank.
- He heard nothing until the end of November, when he was
informed that the shares has been allotted to him and that he
should pay the balance due upon them.
- He refused to take them the plaintiffs sued the defendant’s
company.
- The court held that his refusal to take them was justified,
his offer should have been accepted with in a reasonable
time and interval between June and November was
excessive
Failure of condition subject to which the offer is made
- An offer may be conditional and not absolute if the condition
fails to be satisfied, the offer will not be capable of acceptance,
the condition may be expressed or implied.
Financing Ltd - V - Stimson (1851)
- The defendants signed an offer to buy a car on hire purchase
from a finance company.
- The document had a clause which said that the agreement
would not be binding until it had been accepted by the finance
company
- The defendant payed the first installment, insured the car
and take it away, being unhappy with it’s performance, he
returned the car to the dealer and canceled his insurance
- The car was stolen from the dealer and damaged, not knowing
of this the finance company then accepted the written offer
which has been sent to them
- The defendant refused to pay the charges, and the company
sued him for breach of higher purchase contract
- The court held that the defendant offer was subject to an
implied condition the car should continue in it’s undamaged
state and of the failure of that condition.
Consideration
- Any promises made by parties must be supported legally
sufficient consideration (something of value received or
promised to convince a person to make a deal)
- Classification of consideration is split into two categories
A) executory
B) executed
a) executory
Consideration is said to be executory when it consists of promise
to do or forbear from some act in the future.
- An agreement between a seller & a buyer for the sale of
goods for further delivery on credit is an example.
- At the time when the agreement is made nothing has yet
been done to fulfill mutual promises of which bargain is
composed.
b) executed
- When it is made in return for the performance of an act.
E.g if (A) offers 50 pounds to any who returns his lost dogs, the
return of the dog by (B) at once an acceptance of the offer & the
performance of the act constituting the required conditios
Elements of a consideration of a consideration
A) Something of legally sufficient value must be given in
exchange for the promise.
B) And that there must be a bargained for exchange.
Past consideration
- If the defendant makes a further promise, subsequent to and
independent of the transaction it must be regarded as a mere
expression of gratitude or gift for passed favors and no
contract will arise, in sudan incase the promise is declared to
be made on past consideration
Re Me Andle case (1951)
- A number of children, by their fathers will, where entitled to a
house after their mothers death
- During the mothers life one of the children and his wife lived
with her in the house
- The wife made various improvements to house, and at a
later date all children’s signed a document addressed to her
stating, that
“In consideration of your carrying out certain obligations and
improvements to the property, we here by agree that the
executors shall repay to you from the estate , when distributed,
the sum of 488 pound in settlement is the amount spent on such
improvements”
- They failed to repay her, she sued them.
- The court of appeal held that , as the work on the house had in
fact be complete before the document was signed, this was the
case of past consideration And that the document could not be
supported as a binding contract.
- It was established that no stranger to the consideration
can take advantage of contract although made for his/her
benefit.
Price - V - Easton (1833)
- The defendant promised X that, if X did a certain work for him,
he would pay a sum of money to the plaintiff
- X did the work, but the defendant did not pay the money.
- The plaintiff sued the defendant.
- The Court of Queen bench held that the plaintiff could not sue
the defendant and explained their decision in two different
ways:
A) The plaintiff could not show any consideration for the
promise moving from him to the defendant and that
means (no privity is shown between the plaintiff and the
defendant)
B) It was established that no stranger to the consideration
can fake advantage of a contract although made for his/her
benefit
Relation of Consideration to the
doctrine of privity
- “A” , “B” , & “C” may be signatories to an agreement
where by “C” promises “A” & “B” to pay 100 dollars if “B”
will carry out work designed by “C”
- “B” & “C” may take an agreement where “B” promises to
write a book for “C” and “C” promises to pay 100 dollars to
“A”
- Historically “A” could not sue “C” in either case
- He could fail in the 1st situation because consideration has
not moved from him and in the 2nd is because he is not a
party to the contract
-The judges distinguished the two situations and
declared two principles:
- First :
(only person who is a party to a contract can sue on it)
- The second :
( Only a person who has given consideration enforce a contract)
Invitation to create legal relations
-The question to be discussed is wether a contract is necessarily
results once the court has ruled that the parties must be taken to
have made an agreement and that it’s supported by
consideration.
-This conclusion is commonly denied.
- The law it is said , does not proclaim the existence of a
contract merely because of the presence of mutual & social
life, when the parties do not intend to invoke the assistance of
the courts should the engagement not be honored.
- To offer a friend a meal is not to invite litigation.
- It is therefore contended, in addition to the agreement and
the presence of consideration, a third contractual element is
required the intention of the parties to create legal relations.
-The cases in which a contract is denied on the ground
that there is no intention to create legal liability may be
divided into two classes:
- Class one
There are social family or other domestic agreements where
the presence and absence of an intention to create legal
relations upon the inference to be drawn by the court from
the language used by the parties and the circumstances.
-Second case
- There are commercial agreements where the intention is
presumed and must be rebutted by the party seeking to
deny.
Domestic agreements
- Agreement between husband and wife
- In the course of family life many agreements are made, which
could never supposed to be the subject of litigation.
-If a husband arranges to make a monthly allowance to his
wife for her personal enjoyment, neither would normally be
taken to create legal relations.
- Therelation between the husband and wife precludes the
formation of a contract.
Merrit - V - Merrit (1970)
-The husband left the matrimonial home which was in the
joined name of husband and wife subject to a building society,
to live with another woman.
- The husband and wife met and had a discussion in the
husbands car during which the husband agreed to pay the wife
40 dollars. Monthly out of which she must pay for the
mortgage payment on the house.
- The wife refused to leave the car until the husband recorded
the agreement in writing and the husband wrote and signed a
piece of paper which stated
“In consideration of the fact that you will pay all changes in
connection with the house - until such time as the mortgage
payment has been completed I will agree to transfer the
property to sole property”
- After the wife had paid off the mortgage the husband refused
to transfer the house to her. She sued him.
- It was held by the court of appeal that parties had intended to
create legal relations and that an action for breach of contract
could be sustained.
Balfour - V - Balfour
- In this case, the defendant was a civil servant in Ceylon.
His wife alleged that while they were both in England on
leave and when it had to cone clear that she could not again
accompany him abroad.
- Because of her health, he had promised to pay her 30 dollars
monthly as maintenance during the time, they were forced to
live apart.
- Later he refused to pay her the 30 dollar’s monthly as
maintenance.
- She sued him for breach of this agreement.
- The court of appeal held that no legal relation had been
created and that the wife’s action must fail.
- At Kin. L.D had no doubt, while consideration was present, the
evident shows that the parties had not designed a binding
contract.
- It is necessary to remember that there are agreements
between parties which do nit result in contract.
- The ordinary example is where 2 parties agree to take a
walk together or where there is an offer and an acceptance of
hospitality.
-Agreement between parents & children
Agreement between parents & children may present a problem
similar to those of husband and wife.
Jones - V - padavatton (1969)
- Miss jones lived in America with her daughter had a post in
the Indian embassy in Washington , she had been married
and had a young son, but was divorced.
-Miss jones wished her to go to England and offered to make
her a monthly allowance while she read for the bar.
- The daughter reluctantly accepted the offer and went to
England in 1962.
-In 1964 Miss jones bought a house in London.
-The daughter lived with her child in part of it, and the rest
was Let to tenants, whose rent covered expenses and
daughters maintenance.
- In 1967 Miss jones and her daughter quarreled, and miss
jones issued a summons claiming the possession of the house.
- At the time of the hearing the daughter have passed only a
portion of part 1 of the BAR examination.
- Two agreements failed to be considered by the first
agreement, the daughter agrees to leave Washington & read for
the BAR in London and her mother agreed to pay her a fixed
monthly sum.
-By the second, the mother allowed the daughter to live in the
house which the mother had bought, and the rent received
from the tenants provided for the daughter’s maintenance.
- In each agreement there was an exchange of promises, but
In neither where the terms put into writing, nor the duration of
the agreement precisely defined.
- The question was wether in either case the parties had
intended to create legal relations.
- At the hearing in the court, the judge dismissed the mother’s
claim for possession of the house.
-As the court of appeal held that neither agreements intended
to create legal relations.
