26100 Lecture Notes - Lecture 8: Specific Performance, Unconscionability, Collateral Contract
Lecture 8: Contracts
A contract is a WRITTEN or SPOKEN legal agreement between parties
and is enforced by law.
Contract can be:
1. Express (written or verbal) e.g. when sign a paper for an agreement
this is written OR when u tell someone to clean your room for $50
this is verbal contract.
2. Implied (through conduct) e.g. hailing a taxi- when u put your hand
and wave for a taxi you are doing an action or indication for the taxi
driver that he will drive you and you will give them money (THIS IS
A CONTRACT BETWENE YOU AND THE TAXI DRIVER)
There are 2 methods of establishing a contract:
1. Take it OR leave it e.g. when u buy something online and it tells you
to either accept the terms and conditions or you can’t buy.
2. Negotiated e.g. when you do meetings, chats, agreements this is a
negotiated contact.
There are 6 rules or elements of contracts:
1. Intention: is determined by objectively observing whether this was
commercial/ business (as opposed to domestic or social) – (to
create legal relations.)
SOCIAL AND DOMESTIC AGREEMENTS – there is a presumption that these are
NOT binding.
Social – made between friends, domestic – made between members of
family/household. Reason for presumption is simple. The courts would be
flooded with complainants if every social or domestic agreement gave rise to a
legally enforceable obligation.
E.g. Refer to Balfour v. Balfour [1919] 2 KB 571 – husband promised to pay his
wife monthly as maintenance while he was away from home. Defendant
breached this agreement and his wife sued him, alleging breach of contract.
Decision – court held that the agreement was not a
contract.
2. Agreement: there must be a meeting of minds, where there is an
offer and acceptance. The parties must agree on the same thing(s).
The offer and acceptance must be about the same subject matter
exactly.
A person must make a proposal to enter a legally binding contract –
this is called an offer.
However, if if the statement only encourages others to make an
offer, it will be an invitation to treat and not an offer.
An invitation to treat invites people to make offers – the main
difference between offer and invitation to treat is that a person
making an offer intends to be bound, whereas a person making an
invitation to treat does not intend to be bound.
An offer is not required to be in any particular form – can be
written, oral or made by action. The person who makes offer =
offeror and the person to whom the offer is made = offeree.
If a counter offer is made – a counter offer is a rejection of an offer
by the putting of an alternative offer.
E.g. Hyde v Wrench (1840) – defendant offered to sell estate to
plaintiff for certain price. Plaintiff replied with an offer of a lower
price which defendant refused. The plaintiff then agreed to pay
original price.
The defendant, although he had not withdrawn his offer at this
stage, neither agreed to nor rejected this proposal, but he
subsequently refused to go through with sale. The plaintiff sued.
Court said plaintiff’s actions showed he intended to reject the
defendant’s offers and this meant he was no longer able to recover
them by changing his mind and making a subsequent acceptance –
once counter offer is made, the original offer lapses.
An acceptance occurs when the offeree agrees to the proposal of
the offeror on the terms required by the offeror.
Document Summary
A contract is a written or spoken legal agreement between parties and is enforced by law. A contract betwene you and the taxi driver) There are 6 rules or elements of contracts: intention: is determined by objectively observing whether this was commercial/ business (as opposed to domestic or social) (to create legal relations. ) Social and domestic agreements there is a presumption that these are. Social made between friends, domestic made between members of family/household. The courts would be flooded with complainants if every social or domestic agreement gave rise to a legally enforceable obligation. Refer to balfour v. balfour [1919] 2 kb 571 husband promised to pay his wife monthly as maintenance while he was away from home. Defendant breached this agreement and his wife sued him, alleging breach of contract. Decision court held that the agreement was not a contract: agreement: there must be a meeting of minds, where there is an offer and acceptance.
