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Law of Contract

The document discusses key elements of a valid contract under Roman Dutch law including justa causa, moral obligation, intention to create legal relations, domestic vs commercial contracts, and form of contract. It also covers the distinction between an invitation to offer and an actual offer.

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22 views5 pages

Law of Contract

The document discusses key elements of a valid contract under Roman Dutch law including justa causa, moral obligation, intention to create legal relations, domestic vs commercial contracts, and form of contract. It also covers the distinction between an invitation to offer and an actual offer.

Uploaded by

isurikaayeshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Justa causa consists of valuable consideration and moral obligation.

Therefore according to the Roman Dutch law moral obligation is


sufficient to create a valid contract.
Moral obligation
It means a party to the contract has a moral duty to enter into a particular
contract.
Eg:- A gift from parents to their child due to affection is treated as a
moral obligation. Therefore this contract has as a justa causa.
Intention to create legal relations
Another essential element of a contract is that the both parties should
have an intention to create legal relations at the time of entering into the
contract.
It means at the time parties enter into a contract, they should have an
intention to create a valid and legally binding contract. Therefore if one
party does not perform his part under the contract, other party is entitled
to file an action for a relief in the court of law.
In order to ascertain the intention of the parties to the contract, contracts
can be considered under two categories.

Domestic Contract.
These are agreements made among friends, family members or relatives.
The presumption in respect of a domestic contract is that the parties did
not have an intention to create legal relations at the time of making the
contract. However this presumption is a rebuttable presumption. It means
if a party may satisfy the court by evidence that they had an intended to
create legal relations, this presumption is rebutt. If a party can rebut the
presumption a valid contract is created between the parties.
Balfour vs. Balfour
Husband and wife both went to England on their vacation. But only
the husband returned to Ceylon for his employment, because of the
wife was ill. When he returned, he promised to pay her 30 pounds per
month. But he defaulted in payments. Wife filed an action for
damages.
Court held that, This contract is a domestic contract. Therefore a
rebuttable presumption applies as to parties did not have an intention
to create a legal relations at the time they were contracted. There is no

LAW OF CONTRACT – PART 02


any evidence to rebut the above presumption. Therefore the was no
valid contract between them.

Merit Vs Merrit.
The husband left matrimonial home which was in the join names of
the husband and wife. He started to live with another woman. One day
he met his wife and they were separated on negotiated terms.
Accordingly he agreed to pay her 40 pounds per month and out of
which she agreed to pay the outstanding mortgage payments on the
home. Further he agreed to transfer his ownership to wife after the
mortgage is paid off. However the wife refused to leave the car until
he is giving the promise in writing, then he wrote the same and signed
on a piece of paper and given to the wife.
After the mortgage was paid off he refused to transfer his ownership to
the wife. she sued the husband to breach of contract.
Court held that, this contract is a domestic contract. Therefore a
rebuttable presumption applies as to parties did not have an intention
to create a legal relations. But according to the circumstances of the
case, there are sufficient evidence to rebut this presumption. Therefore
the parties are bound by the contract. Wife is entitled for damages.
Commercial Contracts.
If the objective of a contract is to achieve a commercial benefit such as
maximizing profits or minimizing losses, such a contract is a commercial
contract. The presumption in respect of commercial contract is that the
parties had an intention to create legal relations at the time of contracting.
This presumption is also a rebuttable presumption.

Form of contract.
This element is not compulsory for all the contracts because as a general
rule parties can enter into any contract in any form. Therefore parties can
enter into contracts in writing, in words, by way of a deed or impliedly or
any other form.
However this rule is affected by some provisions contained in statutes. It
means some statutory provisions have laid down requirements with
regard to form.
Statutory provisions regarding to form of contract.

LAW OF CONTRACT – PART 02


1. Section 18 of the prevention of frauds ordinance provides. Where the
partnership’s opening capital exceeds Rs.1000/-, the agreement
between the partners should be in writing. (Therefore above section 18
will apply to the partnerships where the opening capital exceeds Rs
1,000/-. But if the opening capital is less than Rs 1,000/- partners need
not to have a written agreement. They can enter in to the partnership
agreement in any form.)
2. Section 02 of the prevention of frauds ordinance provides agreements
in regarding to immovable property (selling, lease, and Mortgage ect.)
to be made by way of a deed. Deed is a document which is attested by
a Notary public.
3. Section 19 of the general marriages ordinance provides in order to
recover damages for breach of promise of marriage, Such promise
should have been given in writing.

The Invitation to offer/treat.


An offer should be distinguished from an invitation to offer.
If an offer is accepted on agreement is made. But if an invitation is
accepted an agreement is not made. Invitation is a mere request to the
start negotiations with a view to enter into a contract in the future.

Examples for Invitations.


1) Goods are display in a shop window with price marked by the
shop keeper to be treated as invitation.
The customer who enters the shop, demands the goods tendering the price
is an offer. The shop keeper is free to accept or reject the offer.
Fisher Vs Bell.
Under a law “offer for sale” of a particular kind of knives were
prohibited. A shopkeeper displays these knives in his shop windows with
price tags for sale. Court held that, this is an invitation to offer. Therefore
he was not guilty to the offence.
2) Goods displayed on shelves with price marked in a self-service
shop is an invitation.

LAW OF CONTRACT – PART 02


Pharmaceutical Society of Grate Britain Vs Boots cash Chemist.
Under a law “sale” of certain drugs without the supervision of a qualified
pharmacist was prohibited. These drugs were displayed on shelves with
price marked by the defendant in his self service shop. A qualified
pharmacist was being only near the cashier’s desk but not near the
shelves. Therefore the supermarket was prosecuted for Victorian of the
Act.
Court held that Goods displayed on shelves with price mark is an
invitation. The customer puts the goods on the cashier’s desk to pay the
price is the offer. The receipt of money by the cashier is the acceptance.
Therefore the sale is taken place at the cashier’s desk and not near the
shelves. Therefore the company is not guilty for the offence.
3) Advertisements for sale of goods.
Advertisements are generally treated as invitations.
Partridge Vs Crittended.
The protection of birds Act provided a certain kind of wild birds cannot
“offer for sale”. Defendant advertised in a magazine that these wild birds
are available to sell and the prices of the birds. Therefore A was
prosecuted for violation of the Act.
Court held that, this advertisement is an invitation and not an offer.
Therefore “A” has not violated the act.

Harris Vs Nickerson.
An auctioneer advertised an auction. Later he cancels the auction. But
“B” who was unaware of the cancellation had travel to the place of the
auction. “B” claimed traveling expenses as damages from the auctioneer.
Court held that, Advertisement regarding to the auction was an invitation.
In an auction prospective buyer’s bid is the offer. The auctioneer is at a
liberty to accept or reject the offer. The offer is accepted by falling of the
hammer of the auctioneer.
How ever advertisements with regard to rewards for performing activities
to be treated as offers. (Advertisements with regard to rewards are
treated as offers.)

Carlill Vs Carbolic smoke balls company Ltd.

LAW OF CONTRACT – PART 02


In this case the company advertised, anyone who contracted
influenza after having use of the medicine will be rewarded 100 pounds.
Therefore this advertisement to be treated as an offer.

LAW OF CONTRACT – PART 02

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