BE VERY KEEN ON INSTRUCTIONS BEFORE YOU START HANDLING THE PAPER and REVIEW VERY KEENLY

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UNSW Foundation Studies

2016 B/B+ Semester 2

Unit 4:

Contract Law

Lecturer: Hui Thong

Business Law

Unit 4: Contract Law

Overview

Introduction to contract law

Definition of a contract

Formation of a contract

Offer

Acceptance

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Introduction

A contract is an agreement made between two or more parties with an intention of certain legal rights and obligations which the law will enforce.

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Formation of Contract

Valid/binding from its specified form

Must be a deed or under seal

Written and signed by parties (witnessed)

May be enforceable without consideration (See Unit 5)

Examples:

Gratuitous promises/gift

Power of Attorney

No particular form

Can be written, oral, implied

Must be supported by consideration (See Unit 5)

Examples:

Bus rides

Purchase of clothes

Formal contract Simple contract

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Formation of Contract

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Bilateral v Unilateral Contracts

Bilateral Contract

Involves a promise in return for a promise

Consideration is executory (See Unit 5)

Unilateral Contract

Involves a promise which is accepted by doing something

Consideration is executed (See Unit 5)

Formation of Contract

Essential elements of a valid contract

Agreement = Offer + Acceptance

Consideration (See Unit 5)

Intention to create legal relations (See Unit 5)

Agreement Consideration Intention Contract

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Formation of Contract

Other things to consider

Capacity of parties

Genuine consent

Legality of object/Purpose of contract

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Agreement

Offer Acceptance Agreement

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Offer

Promise (offer) made by the offeror

Capable of acceptance by the offeree

Offeror – Person making the offer

Offeree – Person receiving the offer

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Offer

Mere supply of information is not an offer

Harvey v Facey [1893] AC 552

Facts

H F: Will you sell us Bumper Hall Pen? Telegraph lowest cash price.

F H: Lowest price for Bumper Hall Pen £900.

H F: We agree to buy Bumper Hall Pen for the sum of £900 asked by you.

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Offer

Harvey v Facey [1893] AC 552

Issue

Was there an offer from Facey to sell the land for $900 to Harvey?

Held

No offer was made by Facey

Facey was merely supplying information as requested

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Offer

Offer must be distinguished from invitation to

treat

The general rule: Advertisements, brochures, catalogues and price lists amount to invitations to treat

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Offer

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Partridge v Crittenden [1968] 1 WLR 1204

Facts

Partridge advertised rare wild birds for sale

It was an offence to offer for sale this rare species of wild birds

Advertisements

Offer

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The same principle was applied for catalogues in Grainger and Sons v Gough [1896] AC 325

Offer

Shop displays

www.thamesweb.co.uk

Pharmaceutical Society of Great Britain v Boots

Cash Chemists (Southern) Ltd [1953] 1 QB 401

Facts

Drugs on display

Customer select and took to the cashier which was supervised by a pharmacist

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Offer

Pharmaceutical Society of Great Britain v Boots Cash

Chemists (Southern) Ltd [1953] 1 QB 401

Issue

Were the goods displayed offers to sell by the shop owner?

Decision

The display of goods was an invitation to treat

The customer made the offer to buy www.thamesweb.co.uk

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Invitation to treat

Offer

popcorndisplays.com.au

www.heraldsun.com.au

H Thong

Catalogues are invitations to treat even when the word “offer” or “offers” is used in the advertisement

coles.com.au myer.com.au

Offer

The general rule: Advertisements, brochures, catalogues and price lists amount to invitations to treat

The exception: Advertisements which comes under the category of unilateral contracts are considered offers and not invitations to treat

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Offer

Facts

“£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1,000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter”. laws.londoninternational.ac.uklaws.londo

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

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Offer

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Issue

Was the defendant’s to pay £100 contained in the advertisement a binding offer or an invitation to treat?

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Offer

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Carbolic Smoke Ball Company’s arguments

The advertisement was an invitation to treat

No specific offer was made to any one person

The advertisement, therefore, cannot be accepted

Carbolic Smoke Ball Company had no intention to create legal relations

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Offer

The advertisement is not an invitation to treat. It is an offer.

The advertisement’s wording, together with actions of company, amounted to a clear promise to pay £100 to anyone who used its product according to the specified directions but contracted influenza

Offer was made to “world at large”

Mrs C accepted the offer by doing what is requested in the reward advertisement (unilateral contract)

Offer Acceptance

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Decision

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Offer

Action of the company in placing £1,000 in bank account showed that the company was prepared to be bound by its promise (See Unit 5)

Consideration in a unilateral contract is executed (See Unit 5)

Intention to create legal relations Consideration

Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256

Decision

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Offer

Section 18 of the Competition and Consumer Act 2010 (Cth) prohibits misleading or deceptive conduct (See Unit 10)

Would CCA have assisted Mrs Carlill in her case against the Carbolic Smoke Ball Company?

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Offer

Offer may be made to a specific person or persons, or to a

class of persons, or to the whole world

Offer must be clear, certain and final

Offer must be communicated to offeree

All terms must be brought to notice of offeree

Offer may be revoked prior to acceptance

Offer may lapse

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Offer

Responses to an offer

Accept the offer

Reject the offer

Make a counter-offer (See Slide 28)

Take no action

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Acceptance

Acceptance must be

absolute/unqualified/unconditional

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Acceptance

Counter-offer

Hyde v Wrench (1840) Beav 334

Facts

Wrench offered to sell land to Hyde for $1,000.

Hyde responded by offering to buy the land for $950.

Wrench refused to sell at that price and Hyde said he would pay $1,000. Wrench refused to sell.

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Acceptance

Hyde v Wrench (1840) Beav 334 Issue

Was there a contract?

Decision

No. Hyde’s offer to buy for $950 was a counter-offer A rejection of the original offer A new offer was made An offer once rejected cannot be revived by subsequent acceptance

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Acceptance

Acceptance must be made in reliance on the offer

R v Clarke (1927) 40 CLR 227

Facts

Reward of £1,000 (Offer) – provide information to police

Clarke had not seen the offer of a reward, gave information

Clarke later tried to claim the reward

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Acceptance

R v Clarke (1927) 40 CLR 227

Issue

Was there acceptance by Clarke?

Decision

Clarke had acted in ignorance of the offer

No valid acceptance

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Acceptance

Acceptance must be communicated to offeror

Acceptance must be communicated in the method

prescribed

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Acceptance

Acceptance can only be made by party/parties to

whom offer was made

Acceptance cannot be revoked without consent of

offeror

Acceptance must be made within time prescribed

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End of Lecture

Students must:

Read prescribed reading for Unit 4 (Contract Law)

Attempt Tutorial Exercises BEFORE going to Tutorial in Week 5

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