Law of Contract an der International Islamic University

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

Oral, writing, conduct or combination of all method

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

• Offer**
• Acceptance**
• Consideration**
• Intention to create legal relation
• Agreement
• Capacity
• Freedom
• Certainty of contract

• 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.

Similarities: 

• Both can be breached.
  Unilateral: you offer $100 for the return of your dog, but then refuse to pay because you think the person who brought the dog back stole him.
  Bilateral: a coworker refuses to complete his or her portion of a job; when an employee does something prohibited by his or her job contract.
  In court, prove that: 
• The contract existed.
• The contract was broken.
• You suffered a loss.
• The person you're challenging was responsible.
  
  Differences: 
• number of people or parties promising an action
• what's being offered. (In unilateral contracts, one offering the deal promises to pay when a certain act or task is complete, but bilateral contracts allow for an upfront exchange.)

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)