Contract Formation

Contract Formation

1. Simple Contracts

   • oral
   • written
     • 4 elements
       • Offer
         • Offer MUST be communicated
           • made to specific offeror
             • Offer terminated
               • withdrawal/revocation (can be by 3P too)
                 • By post (effective only when received NOT when sent)
               • rejection (counter offer)
               • lapse of time
               • failure of condition
               • death
           • made to group or whole world (unilateral contract)
       • Acceptance
         • Unconditional YES
           • GOLDEN RULE - Acceptance MUST be communicated
             • Modes of communication
               • Instatenous
                 • Phone call or face-to-face
               • Business Hours
                 • Telex or Fax
               • Email
                 • ETA 2010
             • Exceptions
               • Postal Rule
                 • letter is properly addressed and stamped, reasonable to use post and sent to post office
               • Silence is acceptance
               • Offeror waives communication of acceptance
           • Counter offer, conditional acceptance and silence are not acceptances
       • Intention to create legal relations
         • Objectivity Test
         • Social/Domestic Agreements
           • No intention unless business context
         • Commercial Agreements
           • intention
             • exceptions - in honor, gentleman's agreement, letters of intent/comfort, MOUs
       • Consideration
         • Types of consideration
           • Executory, executed or past
         • Principles of Consideration
           • Must move from promisee but need not move to promisor
             • to enforce promise (promisor need not benefit)
           • Need not be adequate but must be sufficient
             • Sufficient
               • goods, services, money, property OR forbearance to sue OR performance of existing duty to 3P OR promisee suffers detriments in the process
             • Insufficient
               • vague promises
                 • unless promisor enjoys benefit and promise not made under duress/fraud
               • performance of exiting duty
                 • unless perform beyond duty
               • part payment of existing debt (Pinnel's case)
                 • unless promisory estoppel
                   • existing r/s, promisor will not enforce strict actions against promisee + promisee relies on promise and alters position + equity will not allow promisor to go back on promise
               • past consideration
                 • unless understood to be remunerated (eg paid) - contract enforceable
   • privity of contract = contract can only be enforced by binding parties
     • unless agency, tort, assignment and trust OR Rights of 3P Act Cap 538 (3P can enforce for their benefit even if they do not receive consideration)

2. Special Contracts

   • Written - deed