Contract law week 1

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Contract Law Week 1

Formation

“Agreement between two or more parties having the capacity to make it, in the form demanded by law to perform on one side or both acts which are not trifling indeterminate  impossible or illegal”

Unilateral Contracts V Promise (Pre-contractual negotiations)

No contract = no liability (case)

UC = agreed between the parties

UP= undertaking by one party (case)

To create a contract

  1. Full agreement of important aspects ( consensus in idem)
  2. Consent of the parties ( agreement to be legally bound)
  3. Capacity to contract
  4. Formality
  5. Not prohibited by law/unenforceable

Formation of a contract

Consensus in idem “ A contract is formed when the parties have reached agreement on the essential terms of the contract always provided that they have the intention to create legal obligations”

Agreement

What is an essential term?

Certainty (case)

RTS Flexible systems LTD v Molkerei Alois Muller gmbH 2010

“It depends not upon their subjective state of mind upon consideration of what was communicated between them by words of conduct, and whether that leads objectively that they intended to create legal relations”

Essential Terms

Wight v Newton 1911 SC 762

  • Tenant (W) offered lease (in writing)
  • W in possession before lease executed
  • Draft had been prepared by Landlord (n) but not adjusted
  • When entered possession repair clause in dispute
  • After 3yrs possession W brought an action to have lease executed ( as adjusted by him – repair clause in favour)
  • N argued – no agreement on repair clause = no contract

 

Held, “ it was argued for the pursuer that the four essentials of a lease, namely the parties thereto the subjects, the duration and the rent, having been proved or admitted to have been agreed on between the parties, he was entitled to ask the court to remit to a  man of skill to determine whether *772 the particular clause should be inserted in the lease as one of the usual and necessary clauses of such a lease” – Essential terms may vary depending on the type of contract being negotiated.

 

Agreement as to form

Agreement reached but provision re writing = Not binding till in writing (Case)  K seeking specific implement re exclusive distribution

 

Subjective v Objective

Muirhead and Turnbull v Dickson 1905

  • Piano merchant ( M&T) practise of sale, hire-purchase and hire
  • Oral offer to D “at value of £26, payable 15s. per month”

“Now, of course, if the matter really was as to what in their inmost hearts people thought, I think that, taking these people as honest people on both one side and the other, what they thought would have lead me to the conclusion at which sheriff has arrived, namely, the Grant thought he was selling on HP system, and the other person thought he was buying upon some instalment plan. Commercial contracts Cannot be arranged by what people think in their inmost minds. CC are made according to what people say”

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