Law of Contract an der International Islamic University

- Agreement between two or more parties that is legally binding
- Agreement enforceable by law

• Bilateral contracts are those involving promises made by all parties (2 or more), whereas unilateral contracts involve promises made by only one of the parties.
• Bilateral: promising a certain action to another person or party in response to that person or party's action. Unilateral:  You're the only person who has taken any action in this contract, as no one is specifically responsible or obligated to accept your offer.
• Bilateral: make a purchase at your favorite store, order a meal at a restaurant, receive treatment from your doctor or checkout a book at your library.
  Unilateral: reward contract, insurance contracts (, the insurance company will not compensate every time you pay for the insurance unless you have an accident.

Promisor: A person who make an offer

Promisee: Party accepting the proposal 

Facts: 

• Harvey was interested in buying a property owned by Facey. He sent Facey a telegram stating “Will you sell us Bumper Hall Pen? Telegraph lowest cash price – answer paid.”
• Facey responded stating “Bumper Hall Pen £900”
• Harvey responded stating that he would accept £900 and asking Facey to send the title deeds.
• Facey then stated he did not want to sell.
• Harvey sued, stating that the telegram was an offer and he had accepted, therefore there was a binding contract.

Issue: 

Was the telegram advising of the £900 lowest price an offer capable of acceptance?

Judgment:

• The House of Lords held that the telegram was an invitation to treat, not a valid offer. Therefore no valid contract existed.
• The telegram only advised of the price, it did not explain other terms or information and therefore could not create any legal obligation.
• Harvey’s telegram “accepting” the £900 was instead an offer which Facey could either accept or reject. He rejected it so there was no contract created.

An invitation to treat is a mere declaration of willingness to enter into negotiations; it is not an offer, and cannot be accepted so as to form a binding contract.

Offer: offer is a definite promise to be bound on specific terms. It is offer as it requires action/abstaining from the other party. 

Inv. to treat: an indication that someone is prepared to receive offers with the view of forming a binding contract. inviting people into making an offer. It is not offer since it requires intention from the other party.

•  E.g. An advertisement or a promotion, display of goods, tenders and auctions 
• an attempt to induce offers, Only when the customer indicates that they will pay for the goods at the advertised price has an offer been made. When goods are displayed in a store this constitutes an invitation to customers to make offers to purchase the items.

General offer: Offer is general as it is made into public (Carlill v Carbolic Smokeball Co.)

Specific offer: The offer can only be accepted by a person who has been offered (Boulton v Jones) 

Facts: Carbolic smoke Ball Co. Ltd., in its newspaper advertisement, promised to give £100 to anyone who purchased their smoke ball remedy for influenza, and caught illness within 14 days. The product was to be used three times daily, for two weeks, to prevent colds and influenza. To show good faith, the company deposited £1000 with a bank to meet any claims. Mr. Carlill bought the remedy, caught influenza and claimed £100. 

Issue:  whether the language in Defendant’s advertisement, regarding the 100£ reward was meant to be an express promise or, rather, a sales puff, which had no meaning whatsoever.

Held: Plaintiff was entitled to recover 100£. The Court acknowledges that in the case of vague advertisements, language regarding payment of a reward is generally a puff, which carries no enforceability.  In this case, however, Defendant noted the deposit of £1000 in their advertisement, as a show of their sincerity.  Because the Defendant did this, the Court found their offer to reward to be a promise, backed by their own sincerity.

S 2(a): When one person signifies to another his willingness to do or to

abstain from doing anything, with a view to obtaining the assent of that

other such act or abstinence, he is said to make a proposal
S 10(1):  All agreements are contracts if they are made by the free consent of

parties competent to contract, for a lawful consideration and with a

lawful object, and are not hereby expressly declared to be void

- Everyone is free to enter into any contract

- No pressure
- Free to decide the terms of the contract

Oral, writing, conduct or combination of all method

Facts: Boulton had taken over the business of one Brocklehurst, with whom Jones had previous dealings. Jones sent an order for goods to Brocklehurst, which Boulton supplied without informing Jones that the business had changed hands. When Jones found out that the goods had not come from Brocklehurst, he refused to pay for them and was sued by Boulton for the price.

Issue: Is whether Jones is liable to pay Boulton? Is it the duty of the Brocklehurst or Boulton to inform about the takeover of the business to Jones? Can Boulton claim the amount of the goods which was used by the Jones?

Held: Jones is not liable to pay for the good. It is a rule of law that if a person (Boulton) intends to contract with A (Brocklehurst), then B (Jones) cannot give himself any right under it (no involvement in the contract, only Brocklehurst can accept it).