Liability in contract

Liability in contract

1. Contracts

   • "A set of promises that the law will enforce"
   • Don't have to be written down
   • Can be made in writing
   • Can be made orally and partly written
   • Some contracts HAVE to be in writing e.g. sale of land, selling copyright, guarantees
   • An agreement is not a contract if it was not intended to be enforceable by law
   • An agreement is not a contract if it was not supported by consideration

2. Elements

   • An agreement freely made
     • Offer
       • indication that a person is willing to enter into a contract on particular terms
       • Can be made to the world at large
         • Carlill v Carbolic Smoke Ball Company
       • Advertisements are not regarded as offers - taken to be invitations to treat
         • Pharmaceutical Society of Great Britain v Boots Cash Chemist
           • Judge ruled that display is offer to treat, basket is offer to chemist, checkout is acceptance
       • Puffs
         • Exaggeration made by a salesperson or found in an advertisement that concerns the quality of goods offered for sale
         • Presents opinions rather than facts, not considered a legally binding promise
       • Offer may be withdrawn at any time PRIOR to acceptance (once acceptance occurs the contract is made)
     • Acceptance
       • Accept offer
         • Requires: Acceptance of PRECISE TERMS (otherwise its a counter offer), communication of acceptance
         • Offer can only be accepted by the person to whom it is directed
       • Rejection of offer
         • Once rejected the offer cannot be later accepted
       • Counter offer
         • occurs when precise terms are not accepted but offeree still wants to negotiate
   • Intention that the agreement may be enforced by law
     • If an agreement is made in a business context it will be assumed to bring with it an intention to create legal relations except where there is clear evidence of a contrary intention
     • Balfour v Balfour
       • Husband/Wife, domestic/social. Husband promised to send $30 a month but they grew apart, she still wanted payments. No enforceable agreement
   • Consideration
     • The price paid by one party for the other's promise to do something
       • Not the same as performance (of that promise)
     • Past consideration is not valid consideration
       • Re McArdle
         • Promise of payment given AFTER improvements had already been made = past consideration = not valid
     • Deeds
       • A way to avoid the need for consideration but still create an enforceable obligation
   • Other factors that may result in the contract being unenforceable, subject to cancellation/modification
     • Lack of genuine consent (gun to head)
     • Lack of contractual capacity
       • Under legal age (18)
       • Drunk/drugged
       • Mental disabilities
     • Subject matter of contract is illegal
     • misrepresentation/mistake which can affect genuine consent
       • e.g. selling an old painting and realising its a picasso