Professional Documents
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Offer
“An Express or implied statement of the term on which the maker is prepared to be
contractually bound if its is accepted unconditionally. The offer may be made to one person,
to a class of person or to the world at large, and only the person or one of the person to
whom it is made may accept it”
Calil v Carbolic Smoke Ball Influenza The offer may be made to one
Co. person, to a class of persons or to
the world at large.
Offer cannot be vague
Supply Of Information
Harvey v Facey Price of Bumper Hall A statement which sets out possible
pen term of a contract is not an offer
unless this is clearly indicated.
An invitation to treat
“An indication that a person is prepared to receive offer with a view to entering into a
binding contract"
Auction Sales
Advertisement
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Exhibition of Goods for Sale
Invitation to a tender
Termination of Offer
An Offer may only be accepted when it is still open. In the absence of an acceptance an offer
may be terminated.
Rejection
Counter Offer
Lapse of time
An offer may be expressed to last for a specified time. If , however, there is no express
time limit set, it expires after a reasonable time.
Revocation of an offer
Routledge v Grant Offer to buy house, If the offer remains open for
acceptance required acceptance for a specified time he
within 6 weeks may still revoke it within that time.
Failure of a Condition
Termination by Death
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Bradbury v Morgan Death The death of offeree terminates the
offer, unless the offeree accepts the
offer in the ignorance of the death.
Acceptance
“ A positive act by a person to whom an offer has been made which, if conditional, brings a
binding contract into effect”
Silence
Felthouse v Bindley Nephew‟s Horse There must be some act on the part
of the offeree to indicate his
acceptance.
Means that the offeree is agreeable to the terms of the offer but proposes that the parties
should negotiate a formal contract
Letters of intent
Letters of intent are an indication be one party to another that they may place a contract
with them.
Communication of Acceptance
Acceptance must be communicated to the offeror and that it is not effective until this has
been done.
Waiver of Communication
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Adam v Lindsell Post on Different Where the use of the post is within
dates the comtemplation of both parties,
the acceptance is complete and
effective as soon as the letter is
posted, even though it may be
delayed or even lost altogether in
the post.
Household Fire and Carriage Application for The intention to use the post for
Accident Insurance v Grant shares communication of acceptance may
be deduced from the circumstances.
Cross Offer
Unilateral Contract
Collateral Contracts
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Chapter 5-Formation of Contract II
Consideration
A consideration in the sense of the law may consist either in some right, interest, profit or
benefit accruing to one party, or some forbearance, detrement, loss or responsibility given,
suffered or undertaken by the other
Past Consideration
Adequacy
Sufficiency
Glasbrook bros v Glamorgan Extra Police force If extra service is given that is
sufficient consideration
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Stilk v Myrick Two members of The promise for an additional reward to
crew perform existing contractual duties in
not binding as there is no extra
consideration
William v Roffey Bros & Refurbish a block Practical benefit is also a valid
Nicholls (Contractors) Ltd of flats consideration
Promissory Estoppel
“If a creditor (Y) makes a promise (unsupported by consideration) to the debtor (X) that
Y will not insist on the full discharge of the debt, and the promise is made with the
intention that the X should act on it and he does so, Y stopped from retracting his
promise, unless Z can be restored to his original location”
Central London Property Half rent in war If someone has made a promise they
Trust v High Trees House time can be prevented from denying it
“An agreement will only become a legally binding contract if the parties intend this to
be so. This will be strongly presumed in the cases of business agreements but not
presumed if the agreement is of a friendly, social or domestic nature”
Balfour v Balfour For health reasons The fact that the parties are husband
wife would not and wife does not mean that they
return cannot enter into a contract
Relatives
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courts
Commercial Agreements
Jones v Vernons Pools Football pools If the parties state that an agreement is
coupon binding in honor only these amounts to
an express denial of intention to create
legal relations
Privity of Contract
“As a general rule, only a person who is a party to a contract has enforceable rights or
obligations under it. Third parties have no right of action save in certain exceptional
instances”
Exceptions
Beswick v Beswick X transfer his The third party can sue in another
business to his capacity.
nephew
Original beneficiary could claim full damages on behalf of the third party
Statutory Exceptions:
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Contract (Rights of third parties) Act 1999
a) Where the contract itself expressly so provides
b) Where the term confers a benefit of the third party, unless it appears that the
contracting parties did not intend him to have the right to enforce it
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Chapter 6- Terms of Contract
Contract Terms
“Terms clearly include in the contract are express terms. The law may complement or
replace terms by implying terms into a contract”
Implied Terms
Hutton v Warren Tenant Farmer The parties may enter into a contract
subject to custom of their trade. Any
express term overrides a term which
might be implied by custom
Liverpool City Council v Irwin Inter Alia the lifts Terms may be implied if the court
did not work concludes that the parties intended
those terms to apply to the contract
A condition is the vital term, going to the root of the contract, breach of which entitles
the injured party to treat the contract as discharged and claim damages.
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A warranty is a term subsidiary to the main purpose of the contract, breach of which
only entitles the injured party to claim damages.
Innominate Terms
When it not possible to determine whether a term is a condition or a warrant, such terms are
classified as innominate terms
If the consequences of the breach is not so serious the term cannot be treated as condition,
hence injured party could not treat the contract as breached
Exclusion Clauses
“An exclusion clause may attempt to restrict one party‟s liability for breach of contract
or for negligence”
a) Exclusion Clause must be incorporated into a contract before they have legal effect
b) Exclusion Clauses are interpreted strictly
Contractual Document
Chapelton v Barry UDC Pile of deck chairs Where the exclusion clause is
contained in an unsigned document it
must be shown that this document is
integral part of the contract
Signed Document
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Olley v Marlborough court Ltd Notice in Bedroom Each party must be aware of the
contract‟s term before or at the time of
entering into the agreement if they are
to be binding
Onerous Terms
Interfoto picture library Ltd v Holding fee of £5 Where a term is particularly unusual is
Stiletto visual programmers plus VAT should be highlighted otherwise it
Ltd won‟t be incorporated into the contract
By this, the court presumes that the clause was not intended to prevent the main purpose of
the contract
Fundamental Breach
Photo Productions v Securicor Small Fire by A properly drafted exclusion clause can
Transports guard cover any breach of contract under
common law
If an exclusion clause is made void by statute it is unnecessary to consider how other legal
rules might affect it
George Mitchell Ltd v Finney Dutch winter Courts decides relying exclusively on
lock seeds Ltd cabbage seeds the statutory ground of reasonableness
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“A consumer is defined as „a natural person‟ who, in making a contract to which
these regulations apply, is acting for purposes which are outside his business”
“An Unfair term is any term which causes a significant imbalance in the parties‟
rights and obligations under the contract to the detriment of the consumer”
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Chapter 7- Breach of Contract
Repudiatory Breach
Anticipatory Breach
“Where one party declares in advance that he will not perform his side of the bargain
when the time for performance arrives, the other party may treat the contract as
discharged forthwith, or continue with his obligations until actual breach occurs. His
claim for damages will then depend upon what he has actually lost”
Hochester v de la tour European tour The claimant can sue as soon as the
anticipatory breach occurs
White & Carter (Councils) v Litter bins Repudiation does not, of itself, bring
McGregor the contract to an end. It gives the
innocent party the choice of affirmation
or rejection
Damages
“Damages are a common law remedy intended to restore the party who has suffered
the loss to the same position he would have been in if the contract had been
performed”
The two tests applied to a claim for damages relate to remoteness of damage and measure
of damages.
Remoteness of Damages
Hadley v Baxendale Crank Shaft The loss must arise naturally form the
breach and in a manner which the
parties may reasonably be supposed to
have contemplated
Victoria Laundry (Windsor) v Large Boilers A loss outside the natural course of
Newman Industries events will only be compensated if the
exceptional circumstances are within
the defendant‟s knowledge when he
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made the contract
Measure of Damages
“The measure of damages is that which will compensate for the loss incurred. It is not
intended that the injured party should profit from a claim. Damages may be awarded
for financial and non financial loss”
C & P Haulage v Middleton Renewable license A claimant may seek to have his
reliance interest protected, i.e. the
position he would have been in had he
not relied on the contract. This
compensates for wasted expenditure
The seller would have to compensate the buyer for any additional cost the buyer incurred
over the contract cost and vice versa (when buying or selling the equivalent goods at market
price)
Alexander v Rolls Royce Repair of Rolls Breach of contract to repair a car did
Motor cars Ltd Royce not give rise to any liability due to
distress
Cost of Cure
Ruxley Electronics and Swimming Pool If the claimant is seeking cost of cure
Construction Ltd v Forsyth for the defect which constituted the
breach, he may be denied if it is wholly
disproportionate to the breach
Mitigation of loss
In assessing the amount of damages it is assumed that the claimant will take any reasonable
steps to reduce or mitigate his loss
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Liquidated damages can be defined as „a fixed or ascertainable sum agreed by the
parties at the time of contracting, payable in the time of breach‟
A penalty clause can be defined as „a clause in a contract providing for a specified
sum of money to be payable in the event of a subsequent breach. If its purpose is
merely to deter a potential difficulty, it will be held void and the court will proceed to
asses un liquidated damages‟
A simple action for the price to recover the agreed sum should be brought if breach of
contract is failure to pay the price
Quantum Meruit
De Barnardy v Harding Advertise and sell Quantum Meruit‟s aim is to restore the
tickets claimant to the position he would have
been in if the contract had never been
made and is likely to be sought where
one party performed part of his
obligations and other party repudiates
Equitable Remedies
Specific Performance
Injunction
Warner Bros Pictures Inc v Film star Bette An injunction may be used to enforce a
Nelson Davis contract of personal service for which
an order of specific performance would
be refused
Recission
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Chapter 8- The Law of Torts
Tort
A tort is a civil wrong and the person wronged sues in a civil court for compensation or an
injunction.
Duty of care
Probability of Injury
Glasgow Corporation v Taylor Poisonous berries A warning notice was not considered to
be sufficient to protect children.
Paris v Stepney Borough Protective goggles There was a higher standard of care
Council owed to the employee because an
injury to remaining good eye would
blind him.
Latimer v AEC Ltd Slippery floor Duty of care is not breached because
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reasonable step was taken.
Common Practice
Where an individual can prove their actions in line with common practice or custom it is
likely that they would have met their duty of care
Social Benefit
Persons who hold themselves out to possess a particular skill should be judged on what a
reasonable person possessing the same skill would do in the situation
Barnett v Chelsea Arsenic poisoning The claimant must prove that if it was
not „but for‟ the other‟s actions they
would not have suffered damge
Multiple Causes
McKew v Holland Leg injury The actions of the claimant may break
the chain of causation (Act of
Claimant)
Lamb v Camden LBC Damaged house Where a third party intervenes in the
course of events the defendant will
normally only be liable for damage
until the intervention (Act of a third
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party)
Remoteness of Damage
Defences to negligence
Contributory Negligence
Sayers v Harlow UDC Defective lock A court may reduce the amount of
damages paid to the claimant if the
defendant establishes that they
contributed to their own injury or
loss.
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Chapter 9-Professional negligence
Professional negligence
Special relationship
“If someone possessed of a special skill undertakes….to apply that skill for the
assistance of another person who relies on that skill, a duty of care will arise”
Hedly Byrne & Co v Statement about Claim for negligence cannot succeed if
Heller and Partners Ltd financial resources there is a „disclaimer‟ even if the
special relationship existed and duty
of care is breached
“Auditors do not owe a duty of care to the public at large or to shareholders increasing
their stakes”
Caparo Industries plc v Auditors The auditor‟s duty did not extend to
dickman and others Takeover Bid potential investors nor to existing
Directors (the dickman shareholders increasing their stakes.
brothers) It was a duty owed to the body of
shareholders as whole.
ADT Ltd v BDO Binder Joint auditor The courts expect a higher standard
Hamlyn True & Fair view of care from accountants when giving
Potential buyer advice on company acquisition since
Meeting the losses can be so much greater.
Difference &Interest
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Chapter 10- Employment Contract
An Employee is “an individual who has entered into, or works under a contract of
employment”.
Massey v Crown Life Insurance Co. Where there is some doubt as to the
Assurance nature of the relationship the courts
will then look at any agreement
between the parties
Tests
Control Test
Mersey Docks & Harbour Stevedores The court will consider whether the
Board v Coggins & employer has control over the way in
Griffiths which the employee performs his
duties
Integration Test
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Agency workers
Two cases are considered
(a)Length of Service
(b)Control over the worker
Taxation VAT
Employee‟s duties:
Fundamental duty of faithful service
Reasonable competence
Obedience
Duty to account for all money and property
Reasonable care and skill
Personal service
Hivac Ltd v Park Royal Spare time Even though the employees had not
Directly competed passed on any confidential
information, they were still in breach
of their duty of fidelity to the
claimants.
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reasonable.
Employer‟s duties
Pay remuneration
Indemnify the employee
Health and safety
Provide work
Duty of mutual trust and confidence
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Chapter 11- Dismissal and Redundancy
Summary dismissal
Summary dismissal is where the employer dismisses the employee without notice. He may do
this if the employee has committed a serious breach of contract
Constructive dismissal
Constructive dismissal is where the employer commits a breach of contract, thereby causing
the employee to resign
Western Excavating (ECC) Ltd Advance Holiday If the employer is not in breach of
v Sharp Pay contract, the employee cannot claim
for constructive dismissal
Wrongful dismissal
Wrongful dismissal is a common law concept arising in specific circumstances. It gives the
employee an action for breach of contract
Justification of dismissal
Willful disobedience of a lawful order
Misconduct
Dishonesty
Incompetence or neglect
Gross negligence
Immorality
Drunkenness
Unfair dismissal
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International Sports Ltd v Employee did not The illnesses were unrelated and
Thomson work for 25% of the unverifiable so dismissal was fair
time
Reinstatement
Re-engagement
Re-engagement means that the employee is given new employment with the employer (or his
successor or associate) on terms specified in the order.
Compensation
Basic Award
Compensatory award (up to £66,200)
Punitive additional award (up to £380 per week)
Redundancy
High Table Ltd v Horst and Waitresses Dismissal was for genuine redundancy
Others as the place of work was of the new
employer was at the client company
premises
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