A contract is a legally binding agreement, of which there are two types;
1. Speciality contracts made under seal - no consideration required
2. Simple contracts - covers almost all contracts
Simple Contracts
Three elements are required:
1. offer and acceptance
2. Consideration
3. Intention to create legal relations
May also have to show
· Certainty as to the terms of the agreement
· Both parties have capacity to contract
· Both parties enter contract of their own free will
· Contract was legal
· Written evidence
Agreement
Unilateral Contract - single, one-sided, usually an offer to the world
These offers can be accepted by performance of an act e.g.Offer of reward of £50 for recovery of lost Dog, contract will not be accepted until the Dog is returned
Authority:
Carlill v Carbolic Smoke Ball Co (1893)
The Carbolic Smoke Ball Company, during an influenza epidemic, placed an advertisement indicating that they promised to pay £100 to anyone who caught influenza after using their ball as indicated for two weeks. They had deposited £1000 in a bank account as a gesture of good faith. Mrs Carlill purchased the ball, used it as directed, but caught influenza and suffered a prolonged bout of illness. The court awarded Mrs Carlill £100.
Points of Law During the case:
i. A suggestion that the offer was too vague to form the basis for a binding agreement, in that it had no time limit, was rejected by the court, which felt that the ball must have been intended to protect its user during the two week prescribed period of use.
ii. The court viewed the deposit of the £1000 as evidence of an intention to pay any claims and therefore rejected the notion that the offer was simply an advertising gimmick.
iii. The proposal that it is impossible to make an offer to the world at large was also rejected; the contract that arises from such an offer will be unilateral.
iv. The use of the product was deemed sufficient consideration. Communication of acceptance, in unilateral contract of this kind, may be made by conduct.
Bilateral Contract - two-sided contract, an exchange of one promise for another promise
Offeror: the party who makes the offer.
Offeree: the party to whom the offer is made.
An offer may be oral, written or implied. (Implied, meaning an action makes an offer without anything being said)
Wilkie v London Passenger and Transport Board (1947)
Discussion as to where a contract is made on a bus, debate over where offer and acceptance took place. It was said that it was the actions of the parties not what was anything that was said specifically on each bus journey. Obiter, the bus driving around is an implied offer, you getting on the bus is your acceptance thus if before you pay you have an accident on the bus, the bus company can be sued for breach of contract. Point of law an offer may be implied.
