Contract Law

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Transcript of Contract Law


Trinidad & Tobago Hospitality & Tourism Institute Hospitality Law & Insurance: BC 229 Lecturer: Ms. V. Maharaj

Learning ObjectivesNature of Contract Offer & Acceptance Consideration Intention To Create Legal Relations Contract Terms & Exclusion Clauses

Nature of ContractA Contract is an agreement either written or oral by which two or more parties having legal capacity agree with sufficient certainty in accordance with terms and conditions that are express or implied to perform certain obligations (either for benefit or a detriment) that are not contrary to law or public policy.

OFFERAn offer is an expression of willingness to contract on specified terms, made with the intention that it shall become as binding as soon as it is accepted by the person to whom it is addressed. There is generally no requirement that the offer be made in any particular form; it may be made orally, in writing or by conduct.

OFFERAn offer must be distinguished from: The

mere supply of information; An invitation to the other party to enter into negotiations; An invitation to make an offer or invitations to treat.

McGowan & Co. v Gomes [1891-93] L.R.B.G. 171Facts A merchants stock was offered for sale in an advertisement headed highest offer gets it and in which tenders were invited. The Plaintiff made a tender; the defendants refused to sell at the price tendered, there being only one tender. Held The advertisement constituted an offer to sell, and there being no condition in the advertisement that there should be more than one offer, the plaintiffs tender was an acceptance which bound the defendant.

Carlill v C. Smokeball Co. (1893)In this case the manufacturers advertisement was construed as an offer, which was accepted when the plaintiff bought the product. It was an offer to the whole world which the P accepted, resulting in a unilateral contract.

Unilateral ContractA

contract based on an offer which was not made to one particular person but to the world at large. I offer $500.00 to the person who finds my lost dog, such offer is a unilateral offer. Offer is accepted as soon as person finds the dog.


INVITATION TO TREATAn invitation to treat is simply a willingness to enter into negotiations which, it is hoped, will lead to the conclusion of a contract at a later date. The distinction between the two is said to be one of intention: that is, did the maker of the statement intend to be bound by acceptance of his terms without further negotiation or did he only intend his statement to be part of the continuing negotiation process.

Counter-OffersWhen a person makes an offer and the person to whom the offer is made responds by proposing changes to the terms of the offer, the law considers the response of that party not as an acceptance but rather a counter-offer. The effect of a counter offer is to kill off the original offer so that it cannot subsequently be accepted by the offeree.

Hyde v Wrench [1840] 3 Beav. 334Facts The Defendant offered to sell some land to the Plaintiff for 1000 and the Plaintiff replied by offering to purchase the land for 950. The Defendant refused to sell for 950. So the Plaintiff then wrote to the Defendant agreeing to pay the 1000 but the Defendant still refused to sell. Held There was no contract between the Parties. The Plaintiffs offer was a counter-offer which killed off the Defendants original offer so as to render it incapable of subsequent acceptance.

Termination of Offer Lapse

of Time - where offer is expressed to last for a specified time.


offeror may revoke his offer at any time before acceptance. Rejection- offer can be rejected outright or by a counter-offer. Death-

death of both the offeree and the offeror terminates the offer, especially if offer involves a personal service such as teaching.

ACCEPTANCEAcceptance may be by express words or by action (and may even be implied from conduct) but it must be quite clear, the language used must be such as would convey to a reasonable person in the position of the offeror a clear and definite decision by the offeree to be bound by the terms of the offer leaving nothing further to be negotiated. An acceptance must be communicated to the The acceptance is generally only communicated when is actually brought attention of the offeror. offeror. validly to the


Acceptance is from the date of letter not when offeror opens. Thus, when a contract is made by post, it is clear law that the acceptance is complete as soon as the letter is put into the box and that is the place where the contract is made. So if it reasonable to reply to an offer by post, there will be a binding contract as soon as the letter is properly stamped, addressed and posted. Even if it never arrives. The postal rule does not apply in respect of instantaneous communications such as telephone or telex. Actual communication of an acceptance must be made.

ACCEPTANCETelex, Facsimile & Email Telex, Telegram, facsimile and email are considered as forms of instantaneous communications and they are treated in accordance with the general rule of acceptance which is that a contract is formed at the place where acceptance is communicated to the offeror.

CERTAINTYIn order to create a binding contract , the parties must express their agreement in a form which is sufficiently certain for the courts to enforce. May and Butcher v R [1934] 2 KB 17 The Parties entered into a written agreement under which the British Govt was to sell tentage to the Plaintiff and the agreement provided that the price shall be agreed upon from time to time It was held that the Parties not having reached an agreement on these matters , no contract had been concluded. The reasoning behind this judgment was that an agreement between two Parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all. To be a good contract there must be a concluded bargain, and a concluded bargain is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the Parties.

Dixon v Francis [1956-60] 7 J.L.R. I (C.A.)Facts The Appellant agreed that the Respondent would have the right to live in her house ad occupy the garage free of cost so long as he and his wife live together in peace. The question was whether this stipulation rendered the agreement void for uncertainty.

Dixon v Francis [1956-60] 7 J.L.R. I (C.A.)Held In order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty. The words so long as he and his wife live together in peace are uncertain and the proviso is void. There are two grounds on which a court ought to hold that there was never a contract. The first is that the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the Parties any particular contractual intention.

CONSIDERATIONThere are three fundamental aspects of consideration:iii.

Consideration must be sufficient but it need not be adequate; Past consideration is not good consideration; and Consideration must move from the promisee.

iv. v.

CONSIDERATIONSufficiency of consideration If the promisor gets what he asks for in return for his promise, he has received sufficient consideration and is bound. It is immaterial that his promise if far more valuable than the price he asked for it. The courts are generally concerned only with the question whether the promisor made a bargain, not whether he has made a good bargain. Mountford v Scott [1975] 1 All E.R. 198 (C.A.) In consideration for the payment of 1, granted in writing an option to O to purchase Vs house for 10,000, exercisable within six months. Before the option was exercised, V purported to withdraw his offer. P exercised the option and it was held that he was entitled to specific performance of the contract to sell the house. The offer was irrevocable even though the consideration for it might be described as token payment; and it as the contract for sale which was specifically enforced

CONSIDERATIONIntangible Returns Natural affection of itself is not sufficient consideration. White v Bluett [1983] 23 LJ Ex. 36 A sons promise not to bore his father with complaints about the fathers distribution of his property among his children was held not to be good consideration for the fathers promise not to sue his son on a debt owed by the son to the father. Held The son had no right to complain to his father, because it was for the father to decide how he wanted to distribute his property, and so in giving up his habit of complaining, he had not provided any consideration.

CONSIDERATIONDuty Under Law If a party is under an agreement to perform a duty by virtue of a legal obligation then the performance of such a duty is not good consideration to create an enforceable legal obligation. Collins v Godefroy [1831] K.B. Godefroy brought an action against one Dalton, and caused Collins to be subpoenaed to attend. Collins who attended for six days, but was no called, demanded for Godefroy six guineas as his fee for attendance. Held If it be a duty imposed by law upon a Party regularly subpoenaed to attend from time to time to give his evidence then a promise to give him remuneration for loss of time incurred in such attendance is a promise without consideration.

Glasbrook v Glamorgan County Council [1925] A.C. 270 The appellants were the owners of a valuable group of mines about two miles from Swansea that was the subject of industrial action. Picketing which was not of a peaceful nature took place and as a resul