Domestic agreements – ones made between family members and relatives; and Boundary agreements – where the parties ay volunteer their services. With these agreements the presumption is that there is no intention to create legal relations. 2 Commercial or business agreements: In business and commercial agreements the courts assume that there is an intention to create legal contractual relations. Discuss examples of commercial agreements in class. Agreement Is there agreement between the parties? Generally characterized by an ‘offer’ by one party and an ‘acceptance’ by another. Important in determining the time, the place and contents of the agreement. Rules relating to offers Rules as to offers 1. 2. 3. . 5. 6. 7. 8. 9.
An intention or willingness to be bound A firm promise Communication of the offer (writing, orally or by conduct) There must be an intention or willingness to be bound or it may be an invitation to treat (Pharmaceutical Society v Boots) It must be a firm promise (Harvey v Pace ) It must be communicated to the offered (R v Clarke) The offer may be made to one person, a group or the world at large (Cargill v Carbolic Smoke Ball Co) All terms must be brought to notice of offered and followed exactly The offer may be terminated by offer/foretell may be kept open if supported by consideration Termination of offer Rules relating to acceptance Acceptance must be made in reliance of the offer The offered must intend to accept the offer – R v.
Clarke (1927) Acceptance must be strictly in accordance with the terms of the offer If the offer specifies a method of acceptance it must be followed – Gilbert] McCall (Status) Pity Ltd v. Pit Club Ltd (1954) Acceptance must be communicated Acceptance must be communicated to the offer either by words or by conduct. Mental acceptance – is insufficient unless communication has been waived by the offer Flophouse v. Bindle (1862) Who can make an acceptance? Acceptance must be conveyed by someone with authority – Powell v. Lee (1908) 4 Cross-Offers Cross-offers do not give rise to an agreement Thin v. Hoffman & Co (1873) Acceptance must be absolute and unconditional Acceptance must be absolute and unqualified or it may amount to a counter-offer – Masters v.
Cameron (1954 The postal rule Where the parties contemplate the use of the post as a medium of exchange of promises, the rules as to the time of acceptance change as follows: Non offer by letter is not effective until received by the offered. Acceptance is effective as soon as it is posted – Adams v. Lindsey (1818) Elf evocation of the offer is to be effective, it must be received by the offered before they post their letter of acceptance Rules relating t o acceptance Instantaneous communications Where the communication of acceptance is instantaneous, the contract is effective when the acceptance is received – Enters Ltd v. Miles Far East Corp. (1955) In cases of agreements communicated by means of telephone, fax or email, the contract is formed when and where the offer hears or receives the offered”s acceptance. The Electronic Transactions Act 1 999 (Cat) provides guidance on times for receipt and dispatch. Consideration What is Consideration? “An act or forbearance of one party, or the promise thereof, is a price for which the promise of the other is bought; and the promise thus given for value is enforceable” Dunlop Pneumatic Tree Company v Selfridges and Co  Formal Contracts Formal contracts do not require consideration e. G. Deeds. Simple Contracts Valuable consideration is required for the ћagreement” to become a contract Purpose of consideration Consideration is what each contracting party bargains for and gives in exchange for the return promise or performance of the other party. The aim in defining consideration is to enable a distinction to be drawn between promises of a gratuitous nature and given freely such as gifts, and those which are onerous or ћpaid for” by the incurring of some obligation. 6 Rules for Consideration 1 . Consideration is essential to the validity of every simple contract It may be:-something the promises gives the promise; the carrying out of some act; or the refraining from doing something that the promises had a legal right to do. 2. Consideration must not be past Consideration must be: -Present (executed) consideration which is an act done in return for a promise. Future (executors) consideration where the parties exchange promises. Rules for consideration 3. Consideration must move from the promises: BUT it need not move to the promise: Dunlop Pneumatic Tree Co Ltd v. Selfridges & Co.
Ltd (1915) Where there are joint promises and only one has given consideration, the other can still enforce the promise: Sculls v. Bigot’s Executor and Trustee Co Ltd (1967) 4. Consideration must have value but need not be adequate Consideration must have value but need not be adequate as this is something only the parties to the contract can decide Chapel & Co Ltd v. Nestle Co. Ltd (1960) 5. Consideration must be sufficient This means that it must have some legal value. As long as consideration exists, the courts will not be concerned about its adequacy.