Introduction to Contract Law Varsha Aithala Basics of

Introduction to Contract Law - Varsha Aithala

Basics of contract “A promise or set of promises for breach of which the law gives a remedy, or the performance of which the law regards as a duty” - Offer v/s Invitation to treat Example 1: Mr. A inserts a notice in Classified Advertisements section of a magazine ‘Bramblefinch cocks and hens, 25 shillings each’ - binding offer? Why? Example 2: A is a tenant of B’s house. Tenancy gets over after 1 year. A continues to live in the house and pays regular rent to B. B continues to accept the rent Example 3: On Aug 1, A offers to sell his house to B for $1000. On Aug 5, B replies and says he will purchase the house for $900. On Aug 7, A refuses the price. So, on Aug 8, B emails A that he is prepared to pay $1000. - Acceptance Example 4: Paul writes to John on 2 Feb offering to buy his horse for $30 and adding “If I hear no more about him, I consider the horse mine at that price’. John does not reply to this message. He then sells the horse on 20 Feb to Mary. Paul sues John. • Has a contract been formed? • What are the elements covered in both exchanges?

Contract formation - Consideration Example 5: A promises to pay B $100 to buy all the wine in B’s cellar – but B has no wine in her cellar! v/s B promises to deliver wine to A in future. - Intention to create legal relations Example 6: Pepsico ran an advertisement for a promotion in which a person could obtain “Pepsi points” by drinking Pepsi and then use them to purchase items from a catalogue. The back of the order form stated that a person could purchase Pepsi points for ten cents a point. The advertisement featured a Harrier Jet and said it cost 7, 000 Pepsi points. Plaintiff filled out an order form, asked for the Harrier Jet, sent in fifteen Pepsi points and approximately $700, 000. 00 in a check to Pepsi. Co and demanded the jet. Practice point: Be clear when writing a contract – certainty of terms

Types of contracts • Unilateral EXAMPLES: Reward for providing information or promotion contracts- to provide an item when a set of tokens collected are produced or when repeat goods are supplied in a long term contract to deliver goods, as and when ordered, etc. • Bilateral • Multilateral EXERCISE: Has a contract been made in each of these cases? • Chiara’s grandma has recently died and Chiara is selling her bungalow. She puts the house up for sale and Adele and Louis come to view the house. They like the house very much and offer Chiara £ 100, 000 for it. She wants a bit more money than that so she turns them down. They then offer her £ 105, 000 for the house. Chaira agrees and says she will see her solicitor in the morning.

• Arwen wants to sell her squash racquet. She knows her friend Ryan is a keen squash player. She thinks she will sell it to him for £ 5. She has not yet seen him to suggest this to him. • Heath is a very talented young football player. Manchester United want him to play for them. A representative from the football club takes a contract to his house. The contract says that Heath will play exclusively for the club for two years and they will pay him £ 5, 000 a month. Heath, who is 18 at the time, signs the written contract. • Kai wants to sell his Ferrari. It is in good condition and should sell quickly. He goes to the shop where he meets his friend Cyril. On hearing that the car is for sale Cyril immediately offers to buy it for £ 28, 000. Kai agrees and the two friends shake hands and then go for lunch to celebrate their deal. • Lillian wants to employ a new gardener. She sees her friend Ingrid when she is shopping in Morrisons on Saturday. Ingrid’s son is looking for a job. Lillian says to her friend ‘would your son like the job, its £ 40 a week’. Ingrid accepts this offer on behalf of her son.

Termination - Mistake 1. Mutual mistake: Example 7: A agrees to buy and B agrees to sell 700 bags of specific nuts lying in a particular warehouse. Unknown to both parties, 109 bags have been stolen prior to the sale!! 2. Unilateral mistake: Example 8: A buys B’s horse- he thinks it is sound and pays the price for a sound horse. He does not ask B whether the horse is sound. Now? ? - Misrepresentation “A person who makes a false statement intended to be acted on must make good the damage that naturally results from it being acted on” Example 9: Seller of goods deliberately concealed defects in them by nailing down planks and closing seams of a rotten ship. - Partial non-disclosure! Example 10: Laundry shop assistant made a customer sign a receipt for cleaning her dress – she told her the receipt excludes liability of the shop for any damage to beads and sequins in the dress. In fact, the receipt excluded all liability

• Duress Example 11: For a major international exhibition, A was to erect exhibitions stands for B for £ 3, 500. B had let out these stands to various exhibitors to use at the exhibition. One week before the exhibitions, A refused to work unless their pay was increased to £ 4, 500. B had to pay that amount to avoid further serious loss and claims by disappointed exhibitors. • Undue influence Example 12: A mother was forced to agree to a second mortgage on the family home as security to finance share purchases made by her son, under sustained pressure.

Discharge of parties - Impossibility Example 13: A had agreed to lease their stadium to B for the band ‘Guns & Roses’ to perform. Just before performance date, the stadium was declared unsafe because of some accident in it. No other venue could be made available due to short notice. B sued A for loss caused. A argued that accident was the reason for non-performance. The contract contained no express provision for such eventuality. - Frustration: Example: Coronation case https: //www. youtube. com/watch? v=Nc. PUr. SVOns. I - Breach - Agreement • Remedies: v Damages v Specific performance v Injunction

Quiz • The new law will reduce the time it takes to get from the ‘sale agreed’ stage to _______ of contracts. (? ) exchange trading conveyance • _______ of contract is the principle that a contract cannot give rights to, or impose obligations on, any person who is not a party to the contract. (? ) Privacy Primacy Privity • After _______, the company assumed liability for the contracts entered into by Ranger Ltd assignment assertion assumption • As used in this section, ‘total _______ paid includes money or anything of value which is paid or delivered in exchange for the sale (? ) compensation payment consideration • The two parties to the contract were located in India and Brazil, so two original, signed _______ of the contract were produced. (? ) counterparts pleadings provisions

• The UK airport operator has begun legal proceedings in the High Court to seek _______ of its contract with Eurotunnel. (? ) rescission remedy assertion • __________ are those damages awarded for losses suffered in reasonable reliance on a promise. (? ) reliance damages special damages expectation damages • They have yet to receive adequate legal __________ and financial compensation. (? ) Rebuff Reliance Redress • The parties came to a __________ settlement (=money paid when a case is settled). fiduciary pecuniary mercantile

• The company sought __________ relief in various member states against competing mobile device makers based on alleged infringements of certain of its patent rights. This would mean that these competing devices could no longer be sold. (? ) injunctive considerable temporary • The client could not __________ the contract in part by continuing the relationship but discontinuing employment. (? ) repudiate repatriate requisition • The parties were excused from performing the contract due to __________, as the painting in question had been destroyed by fire. (? ) mistake necessity frustration

Quick recap Contract – A legally binding agreement between two or more parties where all parties have given their consideration. Consideration - what people give or promise under a contract Offer – when the offeror sets out their terms Invitation to treat – an invitation to make an offer Acceptance – when the offeree agrees to the terms of a contract Rules on Offer v. An offer can be made orally, in writing or by conduct v. An offer can only be accepted by the person or group of people to whom it is made v. An offer must be communicated v. An offer must be distinguished from an invitation to treat