Topic 23 contract and contract making

Contract and Contract making What is a contract? A contract is a legally binding agreement between two or more parties What form does it take Writing Oral Partly oral and partly written Conduct Content : total terms and conditions/ clauses/ provisions regulating parties’ rights and obligations What is a contract? A contract is a legally binding agreement between two or more parties What form does it take Writing Oral Partly oral and partly written Conduct Content : total terms and conditions/ clauses/ provisions regulating parties’ rights and obligations Source of Law Local Law International Law  1980 United Nations Convention on Contracts international Sale of Goods – CISG  UNIDROIT Principles of International Commercial Contracts 2004 – PICC (UNIDROIT : International Institute for Unification of Private Law) For the Vienna Convention 1980 Came into force in 1988 Is the work of more than 62 states and international organizations Incorporates rules from all the major legal systems Include parts General provisions Formation of contracts Rights and obligations of buyers and sellers Ratification and the entry into force Essential Elements Of A Valid Contract   Agreement Capacity Legality Consent Making Contract   Offerer -Offeree Makes offer to    Accepts        Agreement Offer An offer is a legally binding promise made by one party to another party Hint: the offer was clear, definite, explicit and left nothing open to negotiation Offer occurs when if reaches the offeree See case Lefkowitz v Great Minneapolis Surplus Store, 251 Minn 188 86 N.W 2d 689 (1957) Great Minneapolis Surplus Store (D) published advertisements in a newspaper for a sale on fur coats, mink scarves, and lapin stole Each of the advertisements indicated that the sale items would be sold on a first come first served basis, stated the quantities of each item available, and stated that they would be sold for one dollar each Lefkowitz(P) was the first customer to present himself and offer the one dollar price per the terms of the advertisement The defendant refused to sell the sale items to Lefkowitzto on the basis that it was a ‘house rule’ to sell only to female customers The claimant brought a claim for breach of contract, contending that the defendant was bound by its ‘first come first served’ promise Issue The issue was whether the advertisement constituted an offer of sale (in which case the contract was completely formed upon the claimant’s acceptance) or merely an invitation to treat (in which case there was no contract) Held Allowing the claim, the court held that a binding obligation on the defendant arose from the specific language of the advertisement The test applied to distinguish an offer from an invitation to treat was that of mutuality of obligation: whether, on the facts of the case, a performance had been promised in return for a performance which was requested In this case, the advertisement was an offer that the defendant would transfer the goods to the first person to respond, and as such, its terms could not be changed once it had been accepted and the contract was formed without the agreement of the other party The defendant therefore did not have the right to impose new conditions which were not contained in the published offer after acceptance Offer ≠ Invitation To Treat   Displaying goods for sale with the price attached Advertising good for sale through catalogue/media Tenders/auctions Preliminary enquiries          Invitation to treat   Offer or not?? See more in ACT 14.1 CISG Offer ≠ Invitation To Treat Fisher v Bell [1961] QB 394 FORMATION OF CONTRACT Facts The defendant shopkeeper displayed in his shop window a flick knife accompanied by a price ticket displayed just behind it He was charged with offering for sale a flick knife, contrary to s (1) of the Restriction of Offensive Weapons Act 1959.  Offer ≠ Invitation To Treat Issue The issue was whether the display of the knife constituted an offer for sale (in which case the defendant was guilty) or an invitation to treat (in which case he was not) Offer ≠ Invitation To Treat Held The court held that in accordance with the general principles of contract law, the display of the knife was not an offer of sale but merely an invitation to treat, and as such the defendant had not offered the knife for sale within the meaning of s1(1) of the Act Although it was acknowledged that in ordinary language a layman might consider the knife to be offered for sale, in legal terms its position in the window was inviting customers to offer to buy it The statute must be construed in accordance with the legal meaning, as “…any statute must be looked at in light of the general law of the country, for Parliament must be taken to know the general law” (per Lord Parker C.J at para 4) It is well established in contract law that the display of an item in a shop window is an invitation to potential customers to treat The defendant was therefore not guilty of the offence with which he had been charged The Fate of the Offer  Offeror may withdraw the offer   Offeror may revoke the offer  OFFER Offeree may reject the offer    Offeree may accept the offer    Offer may lapse due  to passing of time  contract Withdraw / Revoke the Offer Offer can be withdrawn prior to their reaching the offeree Offer can be revoked anytime before acceptance Withdrawal and revocation must be communicated to the offeree in some reasonably reliable manner Rejecting an Offer Offer can be rejected expressly or by implication How can be understood “implication”        Offeree’s conduct           Clarification of the terms Offeree’s counter offer Reply with any changes Acceptance of the Offer Only the offeree may accept the offer Acceptance must be final and unconditional Acceptance must be communicated to the offeror          Silence does not amount to acceptance     Offeror cannot force acceptance upon the offeree When is the contract made?   Stated on the intention of the parties If not, when communication is opened in the ordinary course of business Over the internet, when it enters an information system Postal Rule Acceptance occurs when the letter is posted Same to public telegraph and publc telex Not apply to instantaneous mode of communtication Evidence for the postal rule-is in need ... of contracts Rights and obligations of buyers and sellers Ratification and the entry into force Essential Elements Of A Valid Contract   Agreement Capacity Legality Consent ? ?Making Contract. .. regulating parties’ rights and obligations What is a contract? A contract is a legally binding agreement between two or more parties What form does it take Writing Oral Partly oral and partly written...What is a contract? A contract is a legally binding agreement between two or more parties What form does it take Writing Oral Partly oral and partly written Conduct Content : total terms and conditions/