Law Unit 5

Law Unit 5: Section 5.1 What is Contract Law What is Contract Law? Contract law belongs to the area of private or civil law in the English legal system. It governs how individuals and organisations interact with each other regarding rights and obligations in agreements. Definition of a Contract: A contract is an agreement between two or more parties that is intended to be legally binding. This means if someone breaks the agreement, the other party can take them to court to enforce it or claim damages. A written contract is not always necessary for a contract to be valid. An oral agreement can also be binding if it includes the essential elements of a contract. Written contracts are often used as evidence of what was agreed. A contract is sometimes described as "an agreement that the law will enforce". You enter contracts every day, often without even realising like buying a newspaper, riding a bus, shopping online, or getting a car repaired. These are consumer contracts, and contract law ensures that goods/services are provided fairly and legally. Contract law provides certainty and structure for businesses, especially in long-term planning and commercial transactions. Sources of English Contract Law English contract law originally comes from Common Law (judge-made law) since courts made most of the rules of contract law. In the last 100 years, Acts of Parliament (Statute Law) have become more important. While the last 40 years, European law has also had influence. Judicial decisions (case law/Judicial Precedent) Judges have refined rules through precedents on contract formation, breach consequences and remedies. For example, when a party breaches a term or fails to perform obligations, courts use precedents to decide the consequences and remedies. Some contracts must be in writing to be valid: • Contracts to sell land – must be written under the Law of Property (Miscellaneous Provisions) Act 1989. • Contracts to obtain credit – must be written under the Consumer Credit Act 1974..

[Audio] The main elements essential for a valid contract are the offer and acceptance, consideration, intention to create legal relations, capacity of the parties, lawful purpose, genuine consent, and terms of the contract. These elements ensure that the agreements between individuals and organizations are enforceable in the English legal system. The "meeting of the minds" is created when the offeror provides a clear offer and the offeree accepts it without any changes. Without this agreement, a contract is not binding. Consideration refers to the exchange of something of value between the parties, and a promise made without this exchange is not legally binding. The intention to create legal relations means both parties must intend to be legally bound and be willing to go to court if necessary. This separates business agreements, which are legally binding, from social or domestic agreements, which are not. The capacity of the parties, lawful purpose, genuine consent, and terms of the contract are also crucial for a valid contract. The terms of the contract define the obligations and expectations of each party and must be fulfilled to make the contract enforceable. It is important to thoroughly consider these elements when entering into a contract in the English legal system..

[Audio] Section 5.2 of the presentation is focused on Agreement and Contractual Intention in the English legal system. This section covers the important elements of offer and acceptance, as well as the intention to create legal relations. An offer is a clear declaration of terms, showing the person making the offer's willingness to be bound by those terms upon acceptance. In order for an offer to be legally valid, it must demonstrate the intention to be bound by the acceptance. Offers can take various forms, including verbal, written, or through actions. They can be directed towards specific individuals or to the general public. It is crucial to differentiate an offer from an invitation to treat in order to avoid legal complications. For example, in the case of Partridge v Crittenden, a man was charged with "offering for sale" under the Protection of Birds Act 1954 for advertising wild birds in a magazine. The High Court determined that the advertisement was an invitation to treat, and not an offer, as advertisements cannot bind the advertiser to unlimited sales. Similarly, in the case of Pharmaceutical Society of Great Britain v Boots, the question was whether a contract was formed when customers took drugs from the shelves of a self-service store. The court ruled that the goods on the shelves were invitations to treat, and it was the customer who made the offer at the checkout. The store then had the option to accept or reject the offer. These cases, along with others, demonstrate the significance of understanding the distinction between an offer and an invitation to treat in the English legal system. This ensures that individuals and organizations can enter into valid and enforceable agreements, and have legal recourse in case of any breaches. This concludes the section on Agreement and Contractual Intention..

[Audio] In the previous section, we discussed the legal concept of an offer in the English legal system. We will now delve deeper into the different types of offers and how they can be terminated. This will provide a better understanding of our rights and responsibilities when entering into agreements. Turning our attention to slide number 4, we find the famous case of Fisher v Bell. In 1960, a shopkeeper displayed a flick knife with a price tag, which was deemed a violation of the Restriction of Offensive Weapons Act 1959. The court considered whether this display constituted an offer and ultimately ruled that it was an invitation to treat, not a binding offer. Next, we come to the concept of a unilateral offer, where an advertisement may be considered a legally binding offer to the public. A notable example is the case of Carlill v Carbolic Smoke Ball Co. In 1893, the company advertised their product and promised £100 to anyone who used it and still got ill. Mrs. Carlill accepted the offer and claimed the money, which the company refused, leading to a court ruling that it was indeed a unilateral offer and Mrs. Carlill was entitled to the reward. Continuing with the topic of offers, we see that they can be terminated in various ways. Rejection, counter-offers, revocation, and expiration after a reasonable amount of time have passed are all valid means of ending an offer. Moving on to auctions, the auctioneer's call for bids is considered an invitation to treat, and the bidders make the offer. Acceptance occurs when the hammer falls, concluding the auction. Finally, we have acceptance, which is a final and unqualified agreement to all terms of the offer. It must match the offer precisely, following the mirror-image rule. It is also important to note that a request for information does not destroy the offer, as seen in the case of Stevenson v McLean. That concludes our discussion on slide number 4..

[Audio] This training video will cover the English legal system and its interactions between individuals and organizations. The concept of counter offers and requests for information will be discussed, beginning with the case of Hyde v Wrench (1840). In this case, Wrench offered to sell for £1000 and Hyde made a counter offer of £950. However, Hyde later attempted to accept the original offer, leading to the question of whether the original offer was still valid. The decision was that the counter offer had invalidated the original offer, resulting in no contract. Another case, Stevenson v McLean (1880), involved a request for information and not a counter offer, leading to a valid contract and a breach by McLean. The "Battle of the Forms" is another concept to be explored, where conflicting terms on standard documents may still result in a contract being formed. Communication of acceptance is also crucial, and can be conveyed in various ways, except for silence, as seen in Felthouse v Bindley (1862). Finally, the postal rule is an exception to the rule that acceptance must be received, and applies to non-instantaneous forms of communication. Thank you for watching and stay tuned for the next slide..

[Audio] Slide 6: Case Study: Example of Email In the previous slide, we discussed the Adams v Lindsell case, which established the postal rule for forming contracts in the English legal system. Now, we will look at how the rules differ when it comes to using instantaneous methods of communication, such as email. The case we will be examining is Thomas v BPE Solicitors (2010). In this case, an email acceptance was sent at 6 PM on a Friday. The legal issue was whether the acceptance was valid at the time it arrived or when the offeror could reasonably have read it. The court held that the email was not effective until the start of the next working day (Monday), as it was sent outside of normal working hours. While email generally follows the same rule as other instantaneous methods, where the acceptance is valid upon receipt, the court will also consider the overall context and expectations of the parties. If the email is received outside of normal office hours, it is considered communicated at the start of the next working day. However, the definition of "normal" office hours and the extent of the sender's knowledge about the recipient's office hours remain uncertain. This case underscores the importance of understanding the rules surrounding email acceptance and the need for clear communication between parties. In the next slide, we will discuss other forms of instantaneous communication and how the rules may differ..

[Audio] Slide 7 discusses the concept of intention to create legal relations in agreements. For a contract to be enforceable, it must be clear that the parties intended to create legal obligations. The nature of the relationship between the parties is taken into account in determining the enforceability of the agreement. The court uses presumptions to aid in this decision-making process. In the case of social and domestic agreements, such as Balfour v Balfour (1919) and Jones v Padavatton (1969), it is presumed that these agreements are not intended to be legally binding. This is to protect personal and family relationships from outside interference. On the other hand, in commercial agreements, such as Rose and Frank Co. v Crompton (1925), there is a presumption that the parties do intend to create legal relations. However, this presumption can be rebutted. To illustrate the difference between social, domestic, and commercial agreements, two case studies are examined. In Balfour v Balfour, a wife sued her husband for money under a monthly allowance agreement. The court ruled that this was a domestic arrangement and not a contract, as the couple was living amicably at the time the agreement was made. However, in Merritt v Merritt (1970), the couple was no longer living together and the husband had left his wife. He promised to transfer the house in her name once the mortgage was paid off, but later refused to do so. In this case, the court ruled in the wife's favor and deemed the agreement legally binding because the couple was not in a friendly domestic situation. The key difference between Balfour and Merritt is that in Balfour, the couple was still together and living amicably, whereas in Merritt, they were separated and dealing with financial arrangements. This highlights the importance of the intention behind the agreement in determining its enforceability. In conclusion, it is important to consider the intention to create legal relations when entering into an agreement, especially in situations involving personal and family relationships. Understanding the presumptions and the differences between social, domestic, and commercial agreements is crucial in determining the enforceability of a contract..

[Audio] Slide number 8 out of 18 of our presentation on the English legal system will discuss a landmark case that has had a significant impact on the way agreements are enforced. The case of Rose and Frank Co. v Crompton, decided in 1925, involved a commercial agreement that explicitly stated it was not subject to legal jurisdiction. This raised the legal issue of whether or not the parties intended for the agreement to have legal relations. After careful consideration, the court decided that the presumption of legal relations was rebutted due to the express wording in the agreement. This means that the agreement was not legally binding and therefore not enforceable. We will also provide a brief overview of the three main types of contracts - unilateral, bilateral, and collateral - and a summary table of key cases that have established important principles still applicable in our legal system. These include the Adams v Lindsell case, which established the postal rule for acceptance of an offer, and the Entores v Miles Far East case, which determined that instant communication requires receipt for acceptance to be valid. Other important cases include Thomas v BPE, which established the context and office hours as factors in the validity of email acceptance, Balfour v Balfour, which showed that in a domestic setting there is usually no intention to create legal relations, and Merritt v Merritt, where the written agreement rebutted the presumption of no intention. In terms of family arrangements, Jones v Padavatton has shown that they are usually not legally binding, and in the case of Rose and Frank Co. v Crompton, the commercial agreement was rebutted by the express wording. Moving on to the topic of advertising, we will provide further information on this in the next slide..

[Audio] sick and dying" husband promised to give his wife his house in return for £1.Fifth section of the book " Section 5.3 goes into detail about what makes a contract legally binding. It emphasizes the importance of consideration in creating enforceable agreements. Consideration is when one party gives something of value to another in exchange for a promise. This transforms a simple promise into a legally binding contract. The presence of consideration shows that both parties intended to be legally bound by their agreement. In fact, it is often referred to as the "badge of enforceability" and without it, a court will not uphold the terms of the agreement. It is essential to note that a promise without consideration, such as a gift, is not legally binding. For a promise to be enforceable, the receiver must give something of value, known as consideration, to the person making the promise. This can be in the form of payment or another valuable item. However, in some cases, existing obligations can serve as valid consideration. For instance, if a promise results in a practical benefit for the person making the promise, their existing duty may count as valid consideration. The rules of consideration have been established through case law. The first rule is that consideration must come from the promise. This means that the person trying to enforce the promise must have provided the consideration themselves. A third party who has not provided consideration cannot enforce the contract. For example, in the case of Tweddle v Atkinson (1831), two fathers agreed to pay money to a married couple, but the groom, Tweddle, was unable to sue the father's estate for the payment because he did not provide any consideration himself. The third rule is that consideration must be sufficient, but does not have to be adequate. This means it must have some value in the eyes of the law, even if it is small or symbolic. The amount of consideration does not have to match the actual value of the promise. For further clarification, the case of Thomas v Thomas (1842) illustrates a sick and dying husband promising to give his wife his house in return for £1. This promise was considered valid consideration, despite the small amount..

[Audio] Slide number 10 of our presentation will cover the concept of consideration in the English legal system. Consideration refers to the exchange of something valuable for a promise or act and is essential for a legally binding contract. The case of White v Bluett (1853) illustrates the significance of consideration, as a promise without economic value was deemed invalid. On the other hand, in Chappell v Nestle (1959), the exchange of three chocolate wrappers for discounted records was deemed valid consideration, even though the wrappers may have been worthless to Nestle. It is also important to note that consideration cannot be a past act, as seen in Re McArdle (1951), where a promise made after the work was completed was deemed unenforceable. However, there is an exception to this rule, as shown in Lampleigh v Braithwaite (1615), where a promise made after a past act was found to be enforceable as it was done at the promisor's request. In conclusion, consideration is a crucial element in contract formation as it ensures that promises are supported by something valuable..

[Audio] Slide 11 out of 18 discusses the legal principle of the performance of an existing public duty. This means that an individual who is already obligated to do something cannot use that act as valid consideration. An example of this is seen in the case of Collins v Godefroy (1831), where a police officer named Collins was promised payment for testifying in court, but the court ruled that he was already under a legal duty to attend court, making the promise of payment invalid. The next slide discusses an exception to this principle, as seen in the case of Glasbrook Bros Ltd v Glamorgan County Council (1925), where the court ruled that the promise of extra pay for police protection during a strike was valid consideration as it went beyond their normal duty. Moving on to our next principle, the performance of an existing contractual duty, it is stated that if an individual is already contractually obligated to do something, doing just that cannot be considered as valid consideration for a new promise. This was seen in the case of Stilk v Myrick (1809), where the captain promised extra wages to the remaining crew if they sailed the ship home, but the court ruled that the sailors were already bound by their contract. However, there is an exception to this as well, as seen in the case of Hartley v Ponsonby (1857), where the court ruled that the promise of extra pay for the remaining crew was enforceable as they faced greater danger and went above and beyond their regular duties. Finally, in the case of Williams v Roffey Bros (1990), the court ruled that a contractor's promise to pay their subcontractor extra money to complete the job on time was enforceable as it went beyond their existing contractual duty. In conclusion, the performance of an existing duty has its limitations and exceptions that are important to consider..

[Audio] Slide number 12 of our presentation on the English legal system discusses the importance of consideration in legal agreements. Consideration is a key principle that governs interactions between individuals and organizations, ensuring that agreements are enforced and individuals can take legal action for breaches or failure to fulfill obligations. Consideration refers to something of value, such as a promise, act, or payment, exchanged between parties in a legal agreement. Both parties must provide consideration for a legal agreement to be valid. Important rules and cases revolving around consideration can be found in the summary table. One such rule is that consideration must come from the promisee, as established in the case of Tweddle v Atkinson. This leads to the principle that only those who give consideration can sue, as shown in the case of Thomas v Thomas. Emotional promises do not count as valid consideration, as determined in the case of White v Bluett. Symbolic things, like wrappers, can be considered valid consideration, as seen in the case of Chappell v Nestlé. However, past consideration, meaning something already done, is not considered valid, as established in the case of Re McArdle. There are exceptions to this rule, such as in the case of Lampleigh v Braithwaite, where a promise made after an act is not binding, but if the act was done at the request of the promisee, it can be considered valid consideration. It's also important to note that public duty is not considered valid consideration, as shown in the case of Collins v Godefroy..

[Audio] "In this section of our presentation, we will discuss contractual terms. These terms govern the interactions between individuals and organizations in the English legal system and ensure that agreements are enforced. Contractual terms can be classified into two categories: express terms and implied terms. Express terms are legally binding obligations within a contract, and the innocent party has the right to sue for damages or terminate the contract in case of a breach. Implied terms, on the other hand, are not explicitly stated in the contract but are understood to be included by law, custom, or previous dealings between the parties. Additionally, there are representations, which are statements made during negotiations to encourage the other party to enter into the contract. However, they are not legally binding within the contract itself, and remedies for false representation may include rescission or damages, but not a breach of contract. In disputes, courts will closely examine statements to determine intentions, with certain factors considered to distinguish between a term and a representation. The first factor is whether the statement is reduced into writing, with only written statements in a contract seen as terms. In legal proceedings, written evidence carries more weight than oral evidence. To illustrate, the case study of Routledge v McKay (1954) involves an oral statement by the seller about the model year of a motorcycle, which was not mentioned in the written contract. The court determined the statement to be a representation. Another significant case is L'Estrange v Graucob (1934), where the buyer signed a contract for a vending machine..

[Audio] Slide 14 discusses the crucial role of statements in defining the classification of a term in a contract. In the case study of Birch v Paramount Estates (Liverpool) Ltd (1956), the court determined that the assurance given by the seller, of the house being "as good as the show house," was a contractual term as it played a crucial role in the buyer's decision. Similarly, in the case of Couchman v Hill (1947), the court deemed the assurance about the virginity of a heifer to be a term, as it was a key factor in the sale. However, if the person making the statement has more knowledge or skill in the subject matter, it is more likely to be considered a term, as seen in Oscar Chess Ltd v Williams (1957) where the court classified a private seller's misrepresentation of a car's year as a representation rather than a term, based on the buyer's professional expertise. A similar case is that of Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965) where the seller's statement about the mileage of a car was deemed a term due to the dealer's specialist knowledge. Ultimately, the importance and expertise of the person making the statement greatly affects its classification as a term in a contract, and must be carefully considered in any agreement to ensure proper fulfillment of obligations..

[Audio] In this section of the presentation, we will discuss the two types of contractual terms: Express and Implied. Express terms are those that are explicitly stated and agreed upon by both parties in either a written or oral contract. It is important to note that only the terms included in a written contract are considered valid and previous statements or agreements not included in the contract are not considered terms. This is governed by the Parol Evidence Rule, which states that oral evidence cannot contradict or change the written terms. However, there are exceptions to this rule. One exception is the use of oral evidence to interpret unclear terms. Another exception is to prove a mistake in the written terms, and it can also be used to show fraud, duress, or misconduct in the formation of the contract. Additionally, oral evidence can be used to prove that no payment was made or to identify the parties and subject matter in the contract. It can also be used to make changes to the contract, as long as permitted by the contract itself, and to prove a condition precedent. Lastly, oral evidence can be used to add implied terms based on custom or past dealings, as long as it is referenced in the written contract. Now let's move on to implied terms. Sometimes, the law may add terms to a contract that were not explicitly agreed upon by the parties. This can happen in three ways. The first is through long-standing customs. However, for a custom to be considered a term in a contract, it must be well known and consistent. An example of this is the case of Hutton v Warren, where a tenant was allowed to claim an allowance for seed and labor based on the local custom. The second way is through the courts, also known as common law, in order to make the contract more effective..

[Audio] This training will cover the English legal system and its implications for individuals and organizations, with a focus on the important role of statutes. Statutes are crucial in regulating agreements and ensuring enforcement, as well as providing legal recourse for individuals in the case of a breach. We will cover three main statutes: the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, and the Consumer Rights Act 2015. The Sale of Goods Act 1979 applies to business-to-business sales, while the Supply of Goods and Services Act 1982 pertains to business-to-business services. The Consumer Rights Act 2015 only applies to business-to-consumer contracts and ensures that products are of satisfactory quality and fit for purpose. Digital content, such as apps and eBooks, are also covered by this act. In the event of a contract ending or being breached, courts will consider the type of term that was breached to determine the appropriate remedy. Three types of contractual terms are conditions, warranties, and innominate terms. A breach of a condition allows for termination and damages, while a breach of a warranty only allows for damages. Innominate terms are unclear and the court will consider the effect of the breach before determining any remedies. Exclusion clauses, also known as exemption clauses, are clauses that limit or exclude liability and will also be discussed..

[Audio] The rule of construction is that any ambiguity should be resolved against the party who seeks to rely on it." We will be discussing the principles of incorporation, sufficiency of notice, the requirement for clauses to be included in the contract, and the contra proferentem rule in this training video on common law control of exclusion clauses. Let's continue on slide number 17. Incorporation means that an exclusion clause must be a part of the contract, agreed upon by both parties. This can be done through signature or reasonable notice. In L'Estrange v Graucob, the court ruled that signing a document means agreeing to its terms, even if they have not been read. It is important to carefully review and understand contracts before signing. If a clause is incorporated through reasonable notice, it is the responsibility of the party relying on it to inform the other party. The case of Olley v Marlborough Court Hotel highlights the importance of giving notice before or at the time of contracting. Sufficiency of notice means that an exclusion clause must be clearly and prominently displayed for the average person to notice and understand. In Parker v South Eastern Railway, a luggage ticket with an exclusion clause on the back was considered sufficient notice if the company took reasonable steps to inform the customer. The clause must also be included in a document expected to contain the terms of the contract. In Chapelton v Barry UDC, an exclusion clause found on a deckchair receipt was not considered a contractual document and therefore deemed invalid. Lastly, the contra proferentem rule states that in cases of ambiguity, the clause will be interpreted against the party relying on it. As stated by Lord Denning in Thornton v Shoe Lane Parking, "The rule of construction is that any ambiguity should be resolved against the party who seeks to rely on it..

[Audio] Our presentation on the statutory control of exclusion clauses in the English legal system has now come to an end. As we have discussed, the Unfair Contract Terms Act 1977 plays a crucial role in regulating the relationships between individuals and organizations. This act ensures that agreements are upheld, and individuals have the right to take legal action in the event of a breach or failure to fulfill obligations. It specifically applies to business-to-business contracts, and certain clauses are deemed void while others must pass a test of reasonableness. The reasonableness test, outlined in section 11 of the UCTA, takes into account various factors such as the bargaining power of each party, their awareness of the clause, previous dealings, trade context, and whether the goods in question are custom-made. The party relying on the clause must demonstrate its reasonableness. In summary, we have covered the concept of exclusion clauses, important points to remember, an example case, and the distinction between a term and a representation. We have also discussed the various types of terms, including express and implied terms, conditions and warranties, and innominate terms. It is crucial to understand the significance of each type and how they are treated in the event of a breach. Furthermore, we have delved into the requirements for an exclusion clause to be enforceable, which include being incorporated, clear, and reasonable. We have highlighted a few cases that demonstrate the significance of these requirements, such as Olley v Marlborough Court, Chapleton v Barry, and Thornton v Shoe Lane Parking. It is important to keep informed about any changes in legislation, as we have also discussed the impact of the Consumer Rights Act 2015 on exclusion clauses. Thank you for listening to this presentation on the statutory control of exclusion clauses. We hope it has provided you with a better understanding of this crucial concept in the English legal system. If you have any further questions, we encourage you to seek advice from a legal professional. Thank you..