Formation of a Contract

Formation of a Contract

1. Agreement

   • Offer/Acceptance Approach
     • Offer = An unconditional readiness to be legally bound if the offer is accepted by the other party
       • An offer requires Target of an offer = the person/people to whom the offer is made
         • Carlill v Carbolic Smokeball
       • Not an offer if it's a cross-offer = If 2 people make an offer at the same time as opposed to offer-acceptance
       • Not an offer if it's an Invitation to Treat
         • No readiness to be bound by the terms set out in the "offer"
         • The terms are not definate
         • It cannot be accepted since it wasn't an offer = you can make a further invitation to treat or put forward an actual offer
         • Carlill v Carbolic Smokeball
       • Termination of an Offer
         • Lapse of time = needs to be reasonable
         • Revocation/Withdrawal = can happen any time BEFORE acceptance
         • Rejection of the offer
         • Failure of condition = If the offer has a condition attached which says it can only be accepted if the condition is met
         • Death
       • An offer requires Communication of the terms
     • Acceptance = A final and unconditional acceptance of the terms of the offer
       • Not acceptance if Counter-offer = when you change terms from teh original offer
       • Acceptance requires communication of acceptance = If it has not been expressed, legally it hasn't happened
         • EXCEPTION: Silence is acceptance in specific circumstances = "If you dont hear from me go ahead"
       • Unilateral Contracts = When performance and acceptance are the same thing = the contract requires you to do something and you do it
         • Carlill v Carbolic Smokeball
       • One can enter a contract simply through conduct or oral agreement
         • Beckham v Drake
       • The only person who can accept an offer is the person it was targeted at
         • Carlill v Carbolic Smokeball
     • Battle of the Forms = When 2 parties both have standard terms the court applies the terms that were proposed last
       • Tekdata Interconnections v Amphenol
   • Substance of the agreement approach
     • Proposed by Denning who said the other approach was too technical/rigid = he wanted to find the substance of the agreement and apply that
       • Gibson v Manchester

2. Intention To Create Legal Relations

3. Consideration

   • Economic Value
     • The exchange of two things of economic value between the promisor and the promisee
       • Thomas v Thomas
       • Currie v Misa
       • Dunlop v Selfridge
       • Lord Mansfield said that a moral obligation amounted to consideration = WAS WRONG
         • Mere moral obligation has no economic value and so cannot amount to consideration
           • Eastwood v Kenyon 1840
         • Hawkes v Saunders 1782
   • Gifts
     • To be able to enforce a promise or a gift, it must be a deed
     • If there is a promise of a "gift" in return for something then it is no longer a gift but a contract
     • Carlill v Carbolic Smokeball
     • Chappell v Nestlé
   • Benefit/Detriment