features of a contract pacta sunt servanda – agreements must be kept legally binding agreement...

Features of a Contract

• Pacta sunt Servanda – “agreements must be kept”

• Legally binding agreement

• Does not have to be in writing; one exception being contracts to sell land

• Can be in writing, oral or inferred by conduct

• Bi-lateral or lateral

Types of contracts

• Can be classified into 3 types: business, consumer or private

• Can be defined according to subject matter: e.g., Sale of goods, Tenancies, Services, Employment

• Can be classified according to the way they are concluded: orally, in writing, by conduct

Freedom to contract (1)

• “…if there is one thing more than another that public policy requires, is that men of full age and competent understanding shall have the utmost liberty in contracting, and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by the Courts of Justice”

• Sir George Jessel in Printing and Numerical Registering Co. v Sampson (1875)

Freedom to contract (2)

• However, pure and unrestricted freedom to contract has recently been restricted by the Courts because of the inequality of bargaining power by some parties.

• Especially necessary for consumers, employees and tenants

Unilateral v Bilateral Contracts

• Unilateral – Promise for an Act

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

• Bilateral – Promise for a Promise

Requirements for a valid contract (1)

1. Offer2. Acceptance3. Intention4. ConsiderationAll MUST be present for the contract to be

valid

• Other requirements:• Capacity• Free Consent• Certainty of object• Possibility of performance

Requirements for a valid contract (2)

If the requirements are missing the contract can be:

Void – Was never valid (void ab initio)

Voidable – Binds one party; valid until the other party chooses to rescind

Offer

• A proposition made by one party to another on terms that are fixed or capable of being fixed, with the intention that it will be binding when accepted by the other person.

• “Do you want to buy my watch?”

Invitation to Treat

Fisher v Bell 1961

The stage of a transaction where one party invites the other to make an offer

Partridge v Crittenden (1968)The defendant placed an advert in a classified section of a magazine offering some bramble finches for sale

Engagement Ring Law

• According to the UK’s Law Reform (Miscellaneous Provisions) Act 1970 - Section 3(2); “The gift of an engagement ring shall be presumed to be an absolute gift; this presumption may be rebutted by proving that the ring was given on the condition, express or implied, that it should be returned if the marriage did not take place for any reason.”

In other words, the engagement ring is a gift and the ring-receiver is not obliged to return it. 

Nature of Agreement

Courts will take an objective approach to contracts – Reasonableness test

•Two exceptions:1.One party knows that the other party has made a mistake in the terms of the agreement – Hartog v Colin and Shields [1939]: 10c per lb instead of 10c per skin

2.One party should have known that the other party made a mistake – Scriven Brothers v Hindley ; Centrovincial Estates v Merchant Investors Assurance Ltd. [1983]

Auctions

Barry v Davies [2000] 1 WLR 1962

An auctioneer will make an invitation to treat, and bidders will make offers of what they are willing to pay. The auctioneer will then accept an offer and a contract is formed. There is, however, in cases not involving a reserve price, an obligation by the auctioneer to sell to the highest bidder. This obligation arises from a collateral contract between the auctioneer and highest bidder under which the auctioneer offered to sell to the highest bidder and the highest bidder accepts

Social agreement

A social agreement is an agreement not enforceable by law.

E.g.: John makes Jason his best man, so Jason promises to pay for John’s honeymoon. However, the two men had a disagreement at the wedding and Jason now refuses to pay sponsor the honeymoon.