Formation of Contract

Formation of Contract

1. Requirements

   • Consideration
     • the agreement must be supported by consideration
       • there must be an exchange of something
     • 5 Rules
       • Must have same economic value
       • Must be Sufficient but need not be adequate
         • May not = to promise but if something is given in return in a promise = agreement
       • Must not be past
       • Performance of existing obligation cannot be considered as further promise
         • can life guard ask $ from u after saving your life?
       • part payment of debt not a consideration to forgo the balance
     • exception
       • agreement is contained in a deed.
         • deed= legal doc. signed sealed delivered
   • agreement (contract)
     • offer
       • a STATEMENT by one party of his willingness to enter into a contract on certain stated terms
       • offeror
         • making offer
       • offeree
         • one whom the offer is made to
       • offer must be COMMUNICATED
       • OFFEREE ACCEPTS
         • BINDING IS FORMED
           • CANNOT BACK OUT
           • IF BACK OUT= BREACH
       • INVITATION TO TREAT (4)
         • INVITES to negotiate and make offer
         • Supply of Information
           • supply info invite ppl to make offer
           • Harvey V Facey
         • Advertisements
           • Seller would not have a unlimited amount of supply of item
             • cannot who read who get in a contract
           • Patridge v Crittenden
             • ad on bird for sale
         • Tenders
           • offeror submit the tender
             • offeree receives the tender submission
               • contract only forms when co accepts a particular tender submission
                 • AND COMMUNICATED to Party
         • Display of goods in a shop window or store
           • not making offer
             • inviting ppl to make offer
               • offer takes place when customer select item into basket
                 • Customer demand = offer to buy
                   • shop keeper free to accept or reject offer
           • pharmaceutical society of great britan V Boots cash chemist
         • WEBSITES
           • Electronic Transactions Act
             • no contract until merchant communicates its acceptance
           • Rationale: unlimited amount of contracts
       • Termination of offer
         • Revocation by the offeror
           • offeror may withdraw before acceptance
             • effective= communicated to end offeree
           • Bryne V van tienhoven
         • Rejection by Offeree
           • offeree terminates the offer once its received by the offeror
           • YES/NO
             • Once reject no re-accept
         • Rejection by counter-offer
           • offeree introduce new terms / change in terms
             • cancel original offer
               • cannot accept original unless offeror agrees
           • Hyde V wretch
         • Lapse of Offer
           • offer invalid
             • not accepted in a time period
               • TIme based on subject matter
             • Any parties dies before acceptance
         • only terminate 3 pt or it lapse
     • acceptance
       • Offeree unconditionally agrees to the offer without changing terms of offer
       • may be in oral or writing
         • must be communicated to offeror
           • effective when received by offeror
         • Postal acceptance rule
           • receive= letter validly posted
       • Acceptance by Silence
         • Offeror may not put a condition in his offer that silence shall constitute acceptance without the offeree’s consent.
         • NO!
         • Felthouse V Bindley
       • Acceptance by reason of past conduct
         • series of previous transactions between the Offeror and Offeree
           • but in this particular current transaction it is unclear whether the Offeree has accepted the terms,
             • the Court may look at the previous transactions to decide whether such acceptance has indeed taken place.
     • once made if anyone change mind or back out
       • breach of contract
   • intention to create legal relations
     • intended the agreement to be legally binding
       • one fails to carry out promise
         • legally responsible
     • commercial agreement
       • business transaction= intent legal binding
     • social &domestic agreement
       • no intention to create legal enforcable
       • unless theres business elements in it

2. Definition

   • agreement between 2 or more parties which is legally enforcable
     • when a contract is breached innocent can sue for compensation or remedy
   • can be orally or in writing

3. Privity of contract

   • only contracting parties can sue
     • party that has provided consideration can sue

4. Formalities

   • contract can be made orally or by conduct
   • Contracts that need writing
     • Sale of land
     • guarantee

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