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Philosophy 2080 Contract Law.doc

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Philosophy 2080
Jeannie Gillmore

CONTRACT LAW Contract Law -Every right you have is granted by law -Black letter law – something written down -Is no law unless it is written by a recognized body – positivism -Implied, verbal and written agreement -Formal contracts must be in writing -ex. Land contracts, some employment contracts 1. Intention to create ‘legal’ relations 2. Offer – made by offeror 3. Acceptance – must be communicated by offeree 4. Consideration – thing of value, (worth trading), benefit given, detriment suffered 5. Capacity – Legal, mental, physical, age 6. Legality – law will not endorse certain contracts -Surrogate parenting, sexual Unilateral offer – no acceptance communication necessary Contract Notes • The law of contacts is concerned with expectations induced by the conduct of others. • Promises are a fundamental idea in contract. A promise is an undertaking as to the future of conduct of the party promising, the promise, with respect to the part to whom the promise is given, the promisee. The former agrees to the act, or refraining from an act, to the advantage or for the benefit of the latter. Offers • An offer is an expression by one party of his assent to certain definitive terms, provided that the other party involved in the bargaining transaction will likewise express his assent to the identically same terms. • An offer must be an expression of will or intention. It must be an act that leads the offeree reasonably to believe that a power to create a contract is conferred upon him. It is on this ground that we must exclude invitations to deal or acts of mere preliminary negotiations, and acts evidently done in jest. • An expression of willingness to make a contract is not operative as an offer unless it is made in such a manner as justifies another person in thinking that it is directed at him for his acceptance. • In order to be legally operative and to create a power of acceptance, it is necessary that the offer shall contain all the terms of the contract to be made. It is not enough for one party to say what he himself will promise to do, he must also say what he will do it for, that is, what the other party must do in exchange. If A says B: “ I will send and convey blackacre to you,” and B replies, “I will pay you $5000,” no contract has been made yet. th November 18 2009 Contract as a promise essay Detrimental reliance: a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when the following elements are proven: A promise was made relying on the promise was reasonable or foreseeable there was actual and reasonable reliance on the promise Enforcing the promise can only prevent injustice. • Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case by case-basis, taking all factors into consideration. Detrimental means that some type of harm is suffered • Comes from tort law. • Negligent misrepresentation • If that were what they were all about it would be the same as tort law. Expectation damages: are damages recoverable from a breach of contract. Expectation damages are composed of incidental damages and consequential damages. • The purpose of expectation damages is to put the non-breaching plaintiff in the position he would have occupied had the contract been fulfilled. Expectation damages are to be contrasted with reliance damages and restitution damages, which are limited to, or by, incidental damages. • To put the plaintiff in the position they would have been if there were a contract  what were your expectations? • Individual promise. Offer and Acceptance Pharmaceutical Society v. Boots Cash Chemist • Famous English contract law decision on the nature of an offer. • The court distinguished the display of a product in a store with a price attached is not sufficient to be considered an offer, but rather an invitation to treat. • Initiation to treat: an expression of willingness to negotiate. A person making an invitation to treat does not intend to be bound as soon as the person to whom the statement is addressed accepts it. It is distinguished from a binding offer, which can be accepted to form a contract. Facts: • Boots cash chemist had just implemented a new method for its customers to buy certain medicines. They would let shoppers pick drugs off the shelves in the chemist, and then pay for them at the till, rather than require all medicines to be behind a counter and for an assistant to have to get what they requested • The pharmaceutical society of Great Britain objects, and argued that under the pharmacy and poisons act, this was an unlawful practice. • A pharmacist needed to supervise at the point where “the sale is effected”, when the product was one listed on the 1933 act’s schedule of poisons. • The society argued that displays of goods were an offer and when a shopper selected and put the drugs into their shopping basket this was an acceptance. • Therefore because no pharmacist had supervised the transaction at this point, Boots was in breach of the Act. • Boots argued that the sale was still only effected at the till where a pharmacist was present if required. • Not suing for breach of contact, want to protect “little guy”  argue Boots model goes against Poison act. • Bad argument: if you change your mind and put the item back on the shelf then the consumer is breaching contract. Judgment: • Both Queen’s Bench division and court of appeals sided with boots. • They held that the display of goods was not an offer. • By placing goods into the basket, it was the customer that made the offer to buy the goods. • The offer could either be accepted or rejected by the pharmacist at the cash desk. • The moment of the completion of contract was at the cash desk, in the presence of the supervising pharmacist. • Therefore there was no violation of this act. Invitation to treat: display of price on shelf. Offer: customer brings item to cashier and offers to buy Acceptance: owner of cashier rings item in. owner has final say, therefore it is the owner who accepts or does not accept the offer of the client. The transaction is not complete until it is passed through the cashier. Dickinson v. Dodds Facts: • On Wednesday June 10, 1874 Dodds (D) sent Dickinson (P) a memorandum in which he agreed to sell a specified piece of land for 900 pounds with the offer held open until 9am the following Friday. Dickinson alleged that he had decided to accept Dodds’ offer on Thursday morning but did not contact him because he thought he had until Friday. • On Thursday afternoon Dickinson learned that Dodds had offered or agreed to sell the land to a third party, Allen. Dickinson wrote a note to Dodds accepting the offer and delivered it to his home. Leaving it with his mother who forgot to give him the note. • On Friday morning before the original deadline to accept the offer, Dickinson and his agent gave Dodds a written acceptance of the offer but Dodds said it was too late. • Dickinson sued for specific performance. • Can the plaintiff accept a third party has accepted an offer after it? Side note: judges in this case = vice chancellors in the courts of equity. • If you could prove that law was inaccurate you could summon court of chancery. • Common law courts are comfortable with awarding damages • Equity: acts against people  makes people do certain things.  Equitable remedies. • Injunction: courts order you to do something Back to case • We are looking for equitable remedies • Bill in this suit prayed that Dodds would perform original contract. He wanted him to do what he said he was going to do. • Or he wanted to restrain from conveying property to Allen • Or for Allen not to do anything • And he wanted damages. Issue: whether a promise to hold an offer open is binding where the other party does not accept until after he learns that the offeror has already conveyed the property. Holding no, an open offer to sell terminated when the offeree learns that the offeror has already agreed to sell to someone else. Judgment • Trial: when the paper was dropped off it was an acceptance. • Appeal: no acceptance of offer on Thursday night because D did not receive it, so it was not communicated. Did receive it at 7AM the next morning but their minds were not together (consensus ad idem). • P knew that the offer was being negotiardd with someone else. • D revoked offer even if P heard from 3 party, it was a reliable source because he acted as if it was. • D did promise to keep offer until Friday morning and it was written, why wasn’t it binding? No consideration, nu diem pactum. • If he had given a dollar in the first offer it would have made it binding because of consideration. • Revocation of offer can be made by indirect communication. Offer can be terminated without formal notice. The plaintiff can sue for damages but not for specific performance. Consensus ad idem: meeting of the minds. A phrase in contract law used to describe intentions of the parties forming the contract. In particular it refers to the situation where there is a common understanding in the formation of the contract. This condition or element is often considered a necessary requirement to the formation of a contract. Nudum pactum: “bare of naked promise”. In common law it refers to a promise that is not legally enforceable for want of consideration. If an offer is made without consideration it may be revoked at any time by the offeror before acceptance by the offeree. Consideration: is the legal concept of value in connection with contracts. It is anything of value in the common sense, promised to another when making a contact. It can take the form of money, physical objects, services, promised actions, or even abstinence from future actions. If either promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense (like paying your income tax). Reasoning: the court stated that since Dickinson knew that Dodds’ offer had been implicitly withdrawn when he learned that he sold the property to someone else (through a reliable source), there was no meeting of the minds art the time acceptance was made and therefore a binding contract was not formed. Equitable Remedies Specific performance: an order of the court, which requires a party to perform a specific act, usually what is stated in contract. It is commonly used in the form of injunctive relief concerning confidential information or real property. It is usually used to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to contract. - Almost never ordered in contact for personal service because it would create a bad-working relationship. Even if u prove that money is not enough etc… courts can still say no. Trustee: a holder of property on behalf of a beneficiary. A trust can be set up either to benefit particular persons, or for any charitable purposes. Williams v. Carwardine • Concerns how a contract comes about through the offer of a reward. It also raises interesting questions about the necessity of reliance on an offer in the formation of a contract. • Must show offer, not necessarily be motivated by it. Facts: • Walter Carwardine was murderer. • The plaintiff, Mrs. Williams, gave evidence against two suspects, but did not say all she knewthThe suspects were acquitted. • On April 25 , the victim’s brother and defendant, Mr. Carwardine, said he would give 20 pounds for information that would lead to the killer’s arrest. • Mrs. Williams gave more information, which led to the conviction of 2 men (1 being her husband) and claimed the reward. • Mr. Carwardine refused to pay. At the trial her motives were examined. • It was found that she knew about the reward, but that she did not give information specifically to get the reward. It was apparent that after the 1 trial her husband beat her and she didn’t want to die without telling the cops the truth about what happened. • Did the handbill constitute an offer and was Williams entitled to the reward as she did fulfill all the requirements stated by the handbill? Judgment • At trial: Parke said, “The motive was the state of her own feelings. My opinion is, the motive is not material.” He held that she was entitled to the award. Asked jury to examine what her motives were. • The plaintiff wanted to be a decent person, motive not money, wanted to do the right thing. New trial ordered. • Kings bench: held that the plaintiff was entitled to reward. The advertisement amounted to a general promise of contract to pay the offered reward to any person who performed the condition mentioned in it, whoever gave the information. • Two judges stated the motives were irrelevant. • “We cannot go into the plaintiff’s motives” • Williams is entitled to the reward as she did know of it and she did fulfill the requirements. • To accept a reward you must know of the offer but it is not necessary to be motivated by it. Clarke v. R • Proclamation of money leading to the capture of criminals • Australia high court. • Acceptance must be related to offer, ignorance same as not hearing it. Facts • The claimant wanted to compel the crown to pay a reward if had offered for information leading to the conviction of a murderer. • The claimant gave the information but gave it while he was under investigation for the murder. At first he lied but when he knew he could get pardoned for giving information he told the police. • Told the police “exclusively to clear him himself”. • It was uncertain whether he was thinking about the reward at the time or just being pardoned. • Is Clarke entitled to the reward even though he did not have knowledge of it and did not fully satisfy the conditions? E43 Judgment: • In trial court the plaintiff succeeded on the basis of the Williams case. • Appeal: forgot about the reward, his evidence showed no knowledge of reward so it is therefore not the same as Williams because she knew and Clarke didn’t. • There was no meeting of the minds. • Clarke could have received the award but he openly admitted that he had forgotten all about it. • Cannot accept an offer without knowing about it. Ignorance of offer is same as never hearing it; acceptance must be connected with offer. • Obiter = Clarke did not strictly meet with terms of offer. Hyde v. Wrench • Leading English contract law case on the issue of counter offers and their relation to initial offers. • Lord Langdale ruled that any counter offer cancels the original offer. Facts • Wrench offered to sell his farm to Hyde for 1200 pounds, an offer which Hyde declined. • Wrench later wrote to Hyde’s agent offering to sell the farm for 1000 pounds, stating that it was the final offer and that he would not alter from it. • Hyde offered 950 pounds, and after examining the offer wrench refused to accept, and informed Hyde of this. • Later Hyde agreed to buy the farm for 1000 pounds without any additional agreement from wrench, and after wrench refused to sell the farm to him he sued for breach of contract. Judgment • I think there is no valid binding contract between the parties for the purchase of this property. • The defendant offered to sell it for 1000 pounds and if that had been at once unconditionally accepted there would undoubtedly have been a perfect binding contract • Because he counter offered he thereby rejected the offer previously made by the defendant. • I think that it was not afterwards competent for him to revive the proposal of the defendant, by tendering an acceptance of it. • There is no obligation of any sort between the parties. Brinkbon LTD v. Stahag Stahl • Leading decision of the House of Lords on the formation of a contract using telecommunication. Facts • Brinkbon was a London company that purchased steel from Stahag, a seller based in Austria. Brinkbon sent their acceptance to a Stahag offer by telex to Vienna. • Brinkbon was acting for an undisclosed principle and Sthag found out. They had never heard of the company and didn’t like liars so they didn’t want the co
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