Cambridge A2 Level Law (9084) - Year 13

Nilou Phua, in collaboration with Areeba Mushtaq

The Whole of A2 Contract Law

This document consists of 27 printed pages. Any blank page(s) is/are indicated.

Syllabus up to 2023
 ADVISORY NOTES

(a) These notes pertain to Cambridge International A2 Law (Syllabus 9084).

(b) Please note that these notes were created under time constraints. Therefore, be mindful that
there might be occasional grammatical or spelling errors.
(c) Additionally, there might be instances of informal language used within these notes, which I
hope you'll overlook.
(d) Although the content has undergone thorough verification, it hasn't been exhaustively checked
for grammatical or spelling errors.
(e) This document is subject to copyright laws. Please refer to the very last page of this docu-
ment for more information.
(f) I am open to engaging in discussions regarding the contents of this document.
(g) However, I will not enter into discussions regarding the formatting or structure of this document.
(h) Some topics, like Tenders in Contract Law, are not covered in this document. Therefore, I rec-
ommend using this as a reference rather than relying solely on it for last-minute exam prepara-
tion.
(i) By continuing, you are consenting to all the aforementioned points.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 3

Offer

Principles and Evidence

The choice of words used can affect whether or not it is an actual offer.

Words Can Influence Contracts - Harvey v Facey

A prospective buyer asked the seller: ‘Will you sell me Bumper Hall Penn? Telegraph lowest price.’
The seller’s reply was: ‘Lowest price acceptable £900.’

It was held that the seller’s reply was merely a statement of price, not an offer open to acceptance.
If the buyer had said, ‘Will you accept £900 for Bumper Hall Penn?’, this would have been an offer.

Distinguishing Offers from Invitations to Treat1

It makes it difficult to decide whether A actually intends to make an offer or whether he was merely
inviting B to make him an offer (invitation to treat).

Why the Distinction is Crucial

It can affect B’s ability to create a binding agreement.

Example Shown
Amy says to Bernice: ’I am selling my pen for $2’

Possible Interpretations

Amy is offering her pen for sale to Bernice and Bernice need only accept the offer to create a
binding agreement.

Amy is inviting Bernice to make an offer to buy Amy’s pen. Amy may then accept Bernice’s offer
and create a binding agreement. Amy may also reject Bernice’s offer and sell her pen to another
or can decide to not sell it at all.

If it’s an ITT, one is not bound by/to a response. Which means that one can decide whether to
sell it or not. Furthermore, when it’s an ITT, it’s not binding.

Routes to an Agreement/Non-Agreement

Element Outcome
Offer + Acceptance Agreement
Offer + Rejection No Agreement
ITT > Offer + Acceptance Agreement

1
Invitations to Treat are usually abbreviated as ’ITT’
2
The year in which cases were established does not need to be remembered; this is a law exam, not a history exam.
4. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Gibson v Manchester CC
D (Council) sent the C (Gibson) a letter stating that the council ‘may be prepared to sell the house
to you at the purchase price of $2,725… if you would like to make a formal application to buy your
council house, please complete the form and return it to me as soon as possible.

Mr. Gibson completed and returned the form. The council then changed its policy on the sale of
council houses. Gibson was advised that the Council (D) was unable to proceed with his application.

Gibson brought the action claiming that the Council’s letter was an offer that he had accepted by
returning the application form.

From the letter, it could be seen that the phrase “may be prepared” is too vague. Furthermore,
the phrase highlighted in the previous sentence was just an invitation to treat. Hence, there was no
acceptance as there was no offer in the first place.

Gibson v Manchester CC - Decision

Court of Appeal (Lord Denning): thought that there was an agreement – and that there’s “no
need to look for strict offer and acceptance.”

House of Lords (Lord Diplock): Criticised Lord Denning’s approach – unable to find any matching
offer and acceptance.

Presumption - This is Important

Thinking point
Let’s say, you advertised your bike in a newspaper. Are you offering your bike or inviting
others to make an offer?

Do you want to be bound to sell your bike to every reader who replies to you? Reasonably, no. If
so, you will be in a legal complication, and you will also be bound to sell your bike to everyone who
replies to you.

For the sake of certainly, courts sometimes fall back onto a presumption: It is commonly presumed
that the vendor only intended to make an invitation to treat.

In your advertisement, if the wording of the ad is very clear that you’re making an offer, then the
courts do not need to fall back on the presumption that you are just making an invitation to treat.

(Advertisement) Partridge v Crittenden

Patridge placed an advert offering to sell a live wild bird (contrary to the Protection of Birds Act).
It was held that the advertisement was merely an invitation to treat.

The wording of the Ad: “Quality British ABCR… Bramefinch cocks, Bramblefinch hens 25 shillings
each.”

(Advertisement) Partridge v Crittenden - Decision

Magistrate’s Court: Held it was an offer (Contravened S6 of the Protection of Birds Act 1954).

The High Court said that the advert was an invitation to treat so it did not constitute an offer or
an offence under the statute.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 5

What Can We Learn From Partridge v Crittenden?

Firstly, it is essential to point out that if he was making an offer, he would have been in deep trouble. This
is because if he is making an offer, he is bound to provide that specific type of bird mentioned in the ad,
to EVERYONE who has accepted it. With that being said, it would be very absurd, and hence why most
advertisements are just invitations to treat and not an offer.

Contrasting Example
Lefkowitz v Great Minneapolis Surplus Store
An advertisement for three fur coats for $1 each, first come, first served, was held to be an offer.
NOT an invitation to treat.

Reason: It was reasonable to reject the usual presumption of an invitation to treat to and conclude
that the shopkeeper intended to make an offer to the first three customers. Had it not been limited
to the first three customers, then the court would have fallen back on the presumption. And it is
commercially unreasonable for the shopkeeper to provide the coat to the whole of the state.

This proves why most advertisements are generally invitations to treat and not offers. Making an offer in
an advertisement shows a magnitude of risks and legal complications

Displays are usually ITT

Pharmaceutical Society of Great Britain (PSGB) v Boots Cash Chemist
Display of certain poisons without supervision.

Boots did not have any supervision at the display, so people could easily go and take the poison and
go to the cashier. But at the point of the cashier, Boots had proper supervision. PSGB claimed that
the sale took place when the customer put the item in the shopping cart. But Boots claims that
the sale takes place at the cashier register. The court sided with Boots and agreed that displays
are only invitations to treat.

Fisher v Bell
The display of a flick-knife at the shop window when it was a criminal offence to offer flick-knifes
for sale.

The court sided with the defendant and said that displays are an invitation to treat and not an offer
and therefore, there was no offence.

Auctions are usually ITT

Auctions are generally governed by the same rule as a display of goods at a shop window.

Types of Auctions
Auctions with Reserve is where the window bid is set and the minimum price must be met.
Auction w/o Reserve is where the item is given/sold to the highest bidder.

Display here is made in the auction room or an internet site.

3
You can read up on the case of Fisher v Bell as it’s quite interesting.
6. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Example of an Auction

EBay (auctioneer) acts as your agent and only makes an invitation to treat and the bidder makes the offer.
The highest offer is accepted in the case of an auction w/o reserve.

The auctioneer4 can withdraw the goods at any time before a bid is accepted.

Interpretation
One (an auctioneer), is legally bound to sell the item to the highest bidder.

Auctioneer's Capacity

An auctioneer, working as an agent of the seller (makes an invitation to treat).

An auctioneer, working in a personal capacity (makes an offer)

Capacity Outcome
Working as an agent of the seller Invitation to Treat
Working in a personal capacity Makes an offer

Contrasting Example
Thinking Point
But what if the seller removes the item, after the highest bid but before the auctioneer accepts it?

Sellers are under no obligation as the auction was an invitation to treat. An auctioneer, on the other hand,
can be obligated to sell as he made an offer to sell to the highest bidder in his personal capacity. The
buyer cannot sue you, but the buyer can sue the auctioneer.

Collateral (or side) Contract

Warlow v Harrison
In the case of Warlow v Harrison (Look at the obiter dicta of the case) - The claimant had sued
the seller.

The court decided that no seller had made an invitation to treat, but the court, in the obiter dicta,
stated that if the claimant had sued the auctioneer, they would have been successful.

Additional Notes:

My notes for Tenders are not available. I request you to refer to another source.

Overleaf for Acceptance

4
See the case of British Car Auctions v Wright.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 7

Acceptance

Responses to an Offer
Response Outcome
where the offeree says “thank you, but no thank you.” – The
Rejection
original offer is rejected and no longer exists.
When the offeree changes the terms of the offer and sends it
Counter Offer back to the offeror to accept. This is when the offeree becomes
the offeror, like negotiation.
The inquirer does not intend to bounce back an offer but simply
Inquiry wants to know more about the offer. It does not reject the
original offer. The inquirer can later accept the original offer.
Acceptance by the offeree brings the offer to an end and creates
Acceptance
an agreement.

Distinguishing Counter Offers and Acceptance

If someone offers you something, your acceptance MUST mirror the offer. Eg, someone wants to
sell you a kitten for $400, and you say “Yes, I would like to buy the kitten for $400”.
This is called the Mirror Image Rule

Counter-offer case: Hyde v Wrench

D offered to sell C a farm for $1000 and C made a counter-offer of $950 (thus rejecting the first
offer). D rejected the counter-offer and C then tried to accept the original offer – and upon D
refusing, C sought an order for ‘specific performance of a contract’. The court found in favor of D.

Ratio Decidendi of Hyde v Wrench

‘The defendant offered to sell it for $1000, and if that had been at once unconditionally accepted,
there would undoubtedly have been a perfect binding contract; instead of that, the plaintiff made
an offer of his own, to purchase the property for $950, and he thereby rejected the offer previously
made by the defendant.’

Any attempt to change the terms of an offer is a counter-offer and not an acceptance.

Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation

C sent a quotation including C’s T&C, which included a price variation clause. D placed an order,
using their own order form with his own T&C, which allowed for no price variation clause. D’s
order sheet contained a tear-off confirmation slip and C’s provided D’s order and completed tear-off
confirmation slip. C’s later attempted to vary the price, however, D’s T&C wouldn’t allow that.
The court ruled in favour of the D’s

Ratio Decidendi of Butler Machine Tool

‘The sellers had expressly accepted the buyer’s terms when they completed and returned the ac-
knowledgment slip.

Principle: Any acceptance must be unconditional for it to be valid and legally binding.
5
Ratio Decidendi means ’The rationale for the decision (relating to the case)’
8. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Communication of Acceptance
General Rule
Acceptance must be communicated to the offeror (must come to his attention).

Carlill v Carbolic Smoke Ball Co

A medical firm advertised that its new wonder drug, a smoke ball, would cure people’s flu, and if
it did not, buyers would receive £100. When sued, Carbolic argued the ad was not to be taken as
a serious, legally binding offer. It was merely an invitation to treat, and a gimmick. But the court
of appeal held that it would appear to a reasonable man that Carbolic had made a serious offer.
People had given good “consideration” for it by going to the “distinct inconvenience” of using a
faulty product.

Court’s Statement
As a general proposition, when an offer is made, it (the general rule) is necessary in order to make
a binding contract, not only it should be accepted, but the acceptance should be notified.

Any acceptance must be unconditional6 for it to be valid

Request for further information

Stevenson v McClean (1880)
Ds offered to sell goods at a set price. Cs replied inquring whether delivery could be made over two
months. No reply was received, but the Cs accepted the offer. It was held that there was a binding
contract.

Held: The court said that there was no counter-offer as the terms7 of the offer stayed the same.

A request for further information is not a counter-offer, and the offer can still be accepted. If it is a request
for information, you can still accept the offer.

Silence in the Rule of Acceptance

Felthouse v Brindley
A man had negotiated the sale of his horse with his uncle. The uncle wrote to the nephew saying:
‘If I hear no more from you, I shall consider the horse to be mine.’ The nephew did not respond.
The nephew’s property went to auction but the auctioneer failed to withdraw the horse from the
auction and it sold, despite the nephew’s instruction that it be withdrawn. The uncle’s auction to
sue the auctioneer failed as the nephew had never actually accepted his offer.

Principle
Silence does not amount to acceptance - Acceptance MUST be a positive act

Overleaf for Forms of Acceptance

6
Acceptance must be voluntary and not forced.
7
The ’terms’ refer to the price and the sale of the goods.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 9

Specific Forms of Acceptance

Sometimes, when there is an offer, the offeror would like the offeree to accept the offer in a specific way.

Yates Building Co v Pulleyn Ltd

A piece of land was offered for sale, with the statement that, if purchasers wished to make an option
to purchase, it had to be done in writing and sent by ‘registered or recorded delivery post.’ The
offeree sent his option by ordinary post and the courts held that the communication was not valid
because it did not comply with the method of communication stated in the offer.

Acceptance is invalid if it does not comply with the specific form required by the offer

Battle of the Forms

Butler Machine Tool v Excell-O-Corp
Ex-Cell-O purchased a machine from Butler. Each exchanged slips with their (own) terms on.
The contract was concluded on Ex-Cell-O’s terms since Butler signed the acknowledgement
slip accepting those terms.

Where there is a battle of the forms whereby each party submits their own terms, the last shot
rule applies whereby a contract is concluded on the terms submitted by the part who is the last to
communicate those terms before performance of the contract.

The Postal Rule

Where it is agreed that the parties will use the post as a means of communication, the postal rule
will apply.

General Rule
Where a letter is properly addressed and stamped, the acceptance takes place when a letter is placed
in the postbox.

Adams v Lindsell
D wrote to C offering to sell them some wool and asking for a reply ‘in the course of post.’ The
letter was delayed in the post.

On receiving the letter, C posted a letter of acceptance the same day. However, due to the delay
the D’s assumed C was not interested in the wool and sold it on to a third party. C sued for breach
of contract.

Court’s Statement on Adams v Lindsell

The court held that there was a valid contract that came into existence the moment the letter was
placed in a post.

The Postal Rule Means That...

There is a valid acceptance the moment that a letter of acceptance is placed in a post box.

See Overleaf for Continuation

10. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Continuation of the Postal Rule

Household Fire Insurance v Grant
D offered to buy shares in C’s company. C allotted shares to D and sent him a confirmation letter,
which was lost in the post

Key Idea of The Postal Rule

The postal rule applies even where the letter of acceptance is lost. Acceptance is valid on posting.

So even if the letter of acceptance never arrives or it gets destroyed or wtv, that doesn’t matter. The
acceptance is valid the moment it goes in the post box. Regardless of whether if it gets there or not.

Reversal of The Postal Rule

However, it is relatively easy for parties to avoid the postal rule:

Holwell Securities v Hughes

D offered to sell his house to C but required ‘notice8 in writing’. D had specified that he had
to actually receive the communication and had therefore excluded the postal rule. Actual
communication was required.

Key Idea on the Reversal

Parties can avoid the postal rule by stating that the letter must be received.

Postal Rule and Modern Communication

Regarding Telex
Entores v Miles Far East Corporation
Denning LJ found that the regular postal rule did not apply for instantaneous means of communi-
cation such as a telex

For Telex, Denning held that acceptance occurs when the message of acceptance is read.

Regarding Emails
Principle in Thomas v BPE Solicitors
The Postal Rule is likely to apply to email, but the outcome in each case will depend on the context
and its facts.

It would seem likely, but it really depends on the case.

8
’Notice in writing’ means that the party actually have to receive, have notice of it (the acceptance), and/or read the
communication.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 11

Mini Scenario Question for Offer and Acceptance

Question

Jess wanted to buy a car. She went to Baz’s garage and saw a car that she liked. It has a price sticker on
the windscreen for $1999. Jess asked Baz whether the price could be reduced. Baz said, “No”.

Jess then asked Baz how much the new car would cost if she gave her own car in part exchange. Baz said,
“$1750”. Jess said, “I’ll give you $1500”. Baz said that he would accept $1600, but before Jess agreed,
Baz said – “but it would have to be through my finance company”.

Jess did not want to use Baz’s very expensive finance company, so she siad “OK, I’ll give you $1750”.

Advise Jess in whether she has entered a contract to buy a car.

Analysis

Jess wanted to buy a car. She went to Baz’s garage and saw a car that she liked. It has a price sticker
(Invitation to treat) on the windscreen for $1999. Jess asked Baz whether the price could be reduced.
Baz said, “No”. (Nothing has happened, no offer but we have an ITT)

Jess then asked Baz how much the new car would cost if she gave her own car in part exchange. Baz
said, “$1750” (He has answered her qn, she wants that to be an offer, but he is just responding
to a question. This is likely a statement of minimum price, but could be an offer). Jess said, “I’ll
give you $1500” (This is the first offer being made). Baz said that he would accept $1600 (This is a
counter-offer), but before Jess agreed, Baz said – “but it would have to be through my finance company”.

Jess did not want to use Baz’s very expensive finance company, so she siad “OK, I’ll give you $1750”.

Idea - There will be a binding contract between Jess and Baz if there is a valud offer and acceptance.

Definition - An offer is a statement of willingness by the offeree to enter into a legally binding agreement.
The contract is formed when these terms are accepted.

Explanation and Evaluation - An invitation to treat is not an offer, as proven in Fisher v Bell. Auctions.
Auctions applies to British Car Auctions v Wright; with tenders being applied in Harvela Investments. A
statement of price is not an offer as proven in Harvey v Facey. An offer must be communicated as shown
in Taylor v Laird in certain terms - Byrne v Tienhoven. An offer can also lapse as seen in Ramsgate
Victoria v Montefiori. Acceptance must be unconditional (or a mirror image) as shown in Hyde v Wrench.
Requesting for further information is not an offer as proven in Stevenson v McClean. An acceptance must
be communicated as shown in Felthouse v Brindley. There are specific forms of acceptance as shown in
Yates Building Co v Pulleyn. A battle of forms can also occur sometimes as shown in the case of Butler
Machine Tool. The postal rule can sometimes apply when the mode of communication is agreed to be by
post as shown in Adams v Lindsell, Household Fire Insurance, and Holwell Secuirties.

Analysis and Application - The car with sticker is an invitation to treat and is not an offer, this was seen
in the legal case of Fisher v Bell. When Jess asks for a reducation in price, it is merely an enquiry and
there was no offer. Baz stating ‘no’ has no legal effect because there is no offer yet. When Jess asks ‘how
much for a part exchange’, this is a request for information. Baz makes a statement of minimum price
when he says $1750 (as seen in Harvey v Facey). When Jess says $1500, this is the first offer. When Baz
says $1600 with conditions, this is a counter offer. $1750 from Jess is a new offer (not an acceptance of
Baz’s statement of minimum price - which cannot happen). There is no apparent acceptance from Baz.

In conclusion, there was no offer and acceptance, which means to say that there was no contract as the
whole thing is still in the process of negotiation and there was no contract.
12. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Intentions to Create Legal Relations (ITCLR)

Types of Agreements and Presumptions

Type of Agreement Presumption
The presumption is in favour of the intention to create legal
Commercial and/or Business
relations.
The presumption is against the intention to create legal rela-
Social and Domestic
tions.

In order to determine ITCLR, the court distinguishes between 2 types of agreements

Commercial and Business Agreements

Edwards v Skyways
Facts: A redundancy agreement provided that an ex gratia payment was to be made to an employee.
The company went back on their promise relating to the ex gratia payment. The claimant could
therefore enforce the agreement and was entitled to the money.

Principle
Agreements made in a business context raise a strong presumption that the agreement is legally
binding.

The court held that there was an intention to create legal relations between the company and
employee. Because employments made in a business context, raise a strong presumption that the
agreement is to be legally binding.

Esso Petroleum v Commissioners of Customs and Excise - Facts

Esso was giving away a free World Cup coin with every 4 gallons of petrol purchased at its pumps.
Millions of these coins were distributed. Customs and Excise tried to claim that the coins were
being ‘sold’ and it could therefore claim purchase tax from the transaction.

Since Esso was trying to gain extra business from the promotion of the free coins, there was an
intention to be legally bound by the agreement.

Principle
Offers to give away free gifts to promote a business create a presumption in favour of the intention
to create legal relations.

This is showing us that if it’s a business or if it’s a commercial agreement, that even if something
that looks like a bit of fun, an offer or a giveaway, they’re designed to promote a business and these
sorts of offers and giveaways and gimmicks, still create a presumption in favour of the intention to
create legal relations, and generally, they’re going to be enforceable.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 13

Rebutting the Presumption for Commercial and Business Agreements

Jones v Vernon’s Pools
Facts: Vernon’s Pools (a type of lottery) inserted a clause onto its coupons (tickets) stating that
the transaction would be ‘binding in honour only’ and would not give rise to any legal relationship.
C sent in his winning coupon but it was lost. He tried to make a claim for his winnings but
failed because of the insertion of the clause onto the coupon prevented any claim as it negated the
intention to create legal relations.

Main Takeaway
Commercial agreements can rebut the presumption that they are legally binding, by specifically
stating that it is not binding.

For the purpose of this case, ‘binding in honour only’ means that the company were not expecting this to
give rise to any legal relationship.

Confetti Records v Warner Music UK Ltd (2003)

Facts: D wanted to use a song owned by the C on a compilation album. After negotiations, he
sent a fax to the C containing deal terms, marked “subject to contract”. C faxed back a signed
copy and sent a CD of the track with an invoice. C then stated that they wanted to renegotiate
terms and that the track was not to be used yet. D’s compilation album had been recorded and
manufactured. C issued proceedings and sought to restrain use of the track.

Principle
The use of the phrase “subject to contract” on a document, acts as an exception to the general
rule that commercial agreements are intended to be legally binding.

The court looked at the facts and saw it “subject to contract”.

They held that the use of that phrase on a document acts as an exception to the general rule that
commercial agreements are intended to be legally binding. Should one party use that particular
phrase, they can easily avoid the intention to create legal relations.

Social and Domestic Agreements

Jones v Padavatton
An agreement was unenforceable between mother and daughter.

There was not a legally binding agreement between a mother and daughter, it was merely a family
agreement not intended to be binding.

The court held that there is a presumption that family arrangements are based on mutual trust and familial
ties and that there should be no intention to create legally binding contracts capable of enforcement in
the court.

The Presumption on Social and Domestic Agreements

In general, agreements between parents and children or family relations are not intended to be
binding.
14. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Marriage and ITCLR

Balfour v Balfour
There was no intention to create legal relations where an agreement was made between a
husband and wife who were happily married.

Merritt v Merrutt
There was an intention to create legal relations where an agreement was made after a husband
and wife had already separated.

Principle of Marriage and ITCLR

If you’re happily married = No ITCLR
If you’re separated = ITCLR Present

Clarity and Certainty

Wilson v Burnett
Two women claimed they had reached an oral agreement with D that if any of them won more than
$10 at bingo they would share the winnings equally between them. D admitted she had discussed
this idea with the other two, but argued that no agreement had been reached.

Principle
There must be certainty and clarity to rebut the presumption that social agreements are not
intended to be legally binding.

There was a bit of a discussion, but there was no clarity so the presumption was still in place.

Simpkins v Pays
Facts: A lodger entered a competition with two members of the household. They each paid in, on
the understanding they would share any winnings. The agreement was enforceable because money
had exchanged hands.

Principle
Where parties have exchanged money, the courts are likely to believe there is an intention to create
legal relations.

Verify this page - There may be some missing information.

 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 15

Consideration

Defining Consideration

The exchange of benefits and detriments between parties.

English Law will not enforce a gratuitous or ‘bare’ promise. (A promise w/o consideration is a gift)

Principle in Dunlop v Selfridge

“An act of forbearance of one party, or the promise thereof, is the price for which the promise of
another is bought, and the promise given for value is enforceable”

Consideration = the price given in exchange for goods or services under a contract (either a detriment
incurred by the person making the promise or a benefit received by the other person).

Rules of Consideration
Consideration must be sufficient but need not be adequate

There is no requirement that the consideration must be of equal value to the item received.

A penny can be given in exchange for a Ferrari if both parties agree to it, that would be a valid
contract. Because courts are not concerned whether the parties have made a bad bargain. As long
as if something is given in exchange, that will be sufficient.

Thomas v Thomas
A man had expressed his desire that his wife be allowed to remain on his property on his death for a
very small payment of $1 per year. The executors did this for some years but then tried to dispose
of her.

Was There Sufficient Consideration?

The courts found that the $1 nominal payment was ‘sufficient’ consideration.

Chappel v Nestle
3 chocolate wrappers were sufficient consideration, even though they were then thrown away when
received.

For this first rule, we’re just looking for whether if something has been given in exchange but it does not
mean the item in exchange has to be of the equal value

This portion is intentionally left blank.

See Overleaf for the Rules of Consideration.
16. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

The Consideration Must Move From The Promisee

This rule is quite simple and straightforward.

General Rule
You have to show that you have provided considerations to enforce the contract.

Tweddle v Atkinson
Facts: A couple were getting married. The father of the bride entered into an agreement with the
father of the groom that they would each pay the couple a sum of money. The groom tried to
enforce the contract after both men died.

The claim failed. The groom was not party to the agreement and the consideration did not move
from him. Therefore, he was not entitled to enforce the contract

For example, the two fathers entered into a contract to give the groom a sum of money, but the groom
is not in that contract because he did not give anything in consideration. Though the contract benefited
the groom, the latter is unable to enforce the contract because he was simply not part of the contract in
the first place to begin with.

Existing contractual duty does not constitute consideration

Imagine if a teacher is contracted to teach on Friday, but for some reason, her boss thinks she’s not going
to be in, so he’s going to give her a promise “I’ll pay you $50 to teach that last lesson on Friday”. If she
comes in and teaches that last lesson on Friday, she can’t enforce his promise to pay her the $50 because
she is already contracted to teach. So she has not given any new consideration for this promise.

Collins v Godfrey
Facts: D promised to pay C a sum of money for giving evidence in a court action in which C had
already been subpoenaed (meaning he was already legally obliged to give that evidence).

Principle on The (Existing) Duty

As C was under a legal duty to attend court, it was held that he had not given consideration.

There was no consideration as he already had to give that evidence nevertheless.

Williams v Roffey Bros

W, a subcontractor, was contracted to do carpentry work for R, the main contractor responsible
for building a block of flats. W ran into financial difficulty, and R promised more money for prompt
completion to avoid a penalty clause.

R then refused to pay the extra amount, claiming that W had not given any consideration.

COA enforced the contract because R had a new practical benefit in avoiding the penalty clause.

Principle
Performance of an existing contractual duty can constitute valid consideration if it confers a practical
benefit to the other party.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 17

Part Payment of a Debt

The basic rule was first stated in Pinnel’s Case (1602): payment of a smaller sum than the debt itself on
the date due can never relieve the liability of the debtor to pay the whole debt.

Pinnel’s Case
Part-payment of a debt can never satisfy the whole debt. Any agreement to accept part-payment in
full satisfaction of the debt is unenforceable as there is no consideration. The creditor could always
sue for the balance owed.

What happens if the debtor pays not in cash but by a cheque? Is this a sufficiently different form of
payment to amount to good consideration, even though it does not represent the full amount of the debt?
This is unlikely, and the rule will not apply where the creditor is giving into pressure by the debtor to accept
less. This was shown in the case of D and C Builders Ltd v Rees (1965).

D and C Builders Ltc v Rees

The builders were owed £482 for work they had done. After several months of waiting for payment,
during which they suffered severe financial problems, the builders were asked to accept a cheque
from the defendant for £300 in final payment, which they reluctantly did. The builders subsequently
sued for the balance and were successful. They were not prevented by the agreement to accept less,
which in the event was extracted due to pressure.

Accord and Satisfaction

This is where a contract is discharged in return for a different consideration from the original
obligation.

Examples would include:

(a) When you buy my watch and make payment considerably early

(b) where I ask you to make payment to my brother in Australia

(c) where you have not paid for my car, but I agree to accept £490 instead of £500 from your
friend on the basis I will not sue you for the balance of £10.

Principle
It ends the contract by both parties agreeing to release each other from the obligations under
the contract.

The Doctrine of Promissory Estoppel - Short Introduction

This is the defence to a claim by a creditor for the remainder of the debt where part payment has
been accepted. The essential elements of the doctrine are:

(a) There must be an existing contractual relationship.

(b) The claimant must have waived some of their rights under the contract.

(c) The rights were waived knowing the defendant would rely on the waiver.

(d) The defendant relied on the promise to forego some of the debt.
18. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

The Doctrine of (Promissory Estoppel)

Promissory estoppel is an equitable principle

� Estoppel is something that stops person X from doing something after person Y has relied upon the
promise given to them.

� Thus, promissory estoppel is a situation where a promise is made, which is intended to bind and be acted
upon, and has been acted upon (Bingham from the case of Central London Property v High Trees (1947))
– in such a situation the person who made the promise cannot go back on that promise.

In other words, in very rough terms, if Emily promise to Tom that he can have a chocolate bar if he did
something for her, and Tom only acted in reliance of the promise of a chocolate bar, Emily would be
estopped from refusing to give Tom the chocolate bar at a later date. � Some people have criticised the
doctrine of promissory estoppel as undermining the requirement for consideration in contracts

Woodhouse A.C. Israel Cocoa Ltd S.A v Nigerian Produce Marketing Co. Ltd [1972]: Lord Hailsham said
the doctrine of promissory estoppel is not coherent and lacks systematic exposition

Still in Progress... Please come back later!

 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 19

Privity of Contract

Definition
Privity of Contract means that: Only parties to a contract can sue each other. Third parties cannot
sue on a contract to which they are not a party.

With Respect to Tweddle v Atkinson

A couple were getting married. The father of the bride entered into an agreement with the father
of the groom that they would each pay the couple a sum of money. The groom tried to enforce
the contract after both men died.

The claim failed. The groom was not party to the agreement and the consideration did not move
from him. Therefore, he was not entitled to enforce the contract

A father and father-in-law contracted to give C a sum of money. Because the contract was made
between the father and father-in-law, C could not enforce the contract even though he was to
benefit from the money.

With Respect to Dunlop v Selfridge

Dunlop contracted with Dew (wholesale distributors) to sell tyres at a discounted price on the
condition that they would not resell the tyres at less than the trade price. Dew sold to Selfridge,
and the contract between them said that Selfridge would not sell for a lower price. Selfridge sold
for a lower price, and Dunlop tried to sue Selfridge.

HOL enforced the privity rule. There was no contract between Dunlop and Selfridge and therefore
Dunlop could not sue. They were not a party to the contract between Dew and Selfridge.

Dew should not have allowed Selfridge to sell at a lower price.

Criticisms of the General Rule

(a) Denning said that anyone should be able to sue on a contract made for his benefit.

(b) Denning recognised the injustice of the rule and the commercial inconvenience of it.

(c) Denning tried to abolish the privity rule and the commercial inconvenience of it.

(d) Forster v Silvermere Gold (1981) Dillon J described the rules as ‘a blot on our law and most unjust’

(e) In 1996, a Law Commission Consultation paper also argued for reforming the privity rule.

Exceptions to The Privity Rule

The Pressing Question
Over the years, many exceptions to the rule have been developed. Because of this, it can be a
criticism per se because it begs the question: If a rule has so many exceptions, then why does the
rule even exist in the first place?
20. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Exception 1: Dunlop v Lambert

HOL held that, where goods had been lost at sea there was an exception to the privity rule.

Exception 2: Contracts (Rights of Third Parties) Act 1999 (Statutory Exception)

A 3rd Party can enforce the terms of a contract in one of two situations:

Situation(s)
S.1(1)(a) if the 3rd part is specifically mentioned; or
S.1(1)(b) if the contract purports to confer a benefit on them.

However, S.1(2) says that the 3rd party cannot enforce their rights if it appears that the parties did not
intend the term to be enforceable by the 3rd party.

Nisshin Shipping Co Ltd v Cleaves & Co Ltd

Cleaves was a company of brokers which negotiated for ship owners to loan their ships to charterers.
Although Cleaves was not a party to any of the contracts, the charterers had agreed to pay a
commission to Cleaves.

Cleaves could enforce the contract under the C(RTP) Act 1999 because the contract conferred a
benefit on him.

Exception 3: Other Statutory Exceptions

Married Women’s Property Act 1982
Allows the beneficiary of life insurance to enforce te terms, even though they are not parties to the
contract.

Road Traffic Act 1988

Requires all drivers to take out 3rd party liability insurance.

Exception 4: Collateral Contracts

Shanklin Pier Ltd v Detel Products
The Cs hired a contractor to paint Shanklin pier. The Cs told the contractors to use a particular
paint because the makers of the paint said it would last seven years. The paint only lasted a few
months.

Cs could not sue on the contract for the sale of paint, to which they were not a party, but could
sue Ds on a collateral contract arising from their promise as to how long the paint would last. (C’s
consideration to enforce this promise was causing the contractors to enter a contract to buy paint
from the Ds).

Exception 5: Agency
New Zealand Shipping v Satterthwaite
An IC wanted to rely on a clause in a contract made between A and B that no liability would be
held for damage by an independent contractor. The owner argued that the IC could not rely on
the clause as they were not privy to the contract.

There is an exception to the privity rule where an IC is acting as an agent. The ICs were agents
and had provided consideration in the form of services.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 21

Capacity (Minors Only)

Who is Considered a Minor?

Anyone below the age of 18.

The Common Law's Aim

Common Law Rule

Contracts do not bind minors, and others can be voidable at the minor’s option - which means that
minors can only make voidable contracts.

But, Why?
The law does not prevent minors from entering into contracts but essentially seeks to protect them
from unscrupulous business people and others who may take advantage of them.

The Legal Presumption Relating to Minors

The law presumes that certain people do not have the legal capacity to enter into a contract.

There is the legal assumption that a minor cannot fully understand the implications of a contract.
The presumption that a contracting minor does not fully understand the implications of entering
into the court is protected by the law, by being able to avoid the contract at any time – even if this
is to the disadvantage of the other party. In addition, the other party cannot cancel the contract.

Thinking Point
If the courts are so in favor of minors (who contract), what can we infer from this?

It shows that the law wants to punish those who contract (onerously) with minors.

The 3 Categories of Minors' Contracts

(i) Necessities; and

(ii) Beneficial Contracts of Service; and lastly
(iii) Voidable Contracts

Some Simple Explanations for Each Category

Necessaries are self-explanatory, these are your food, medical care, clothing, and things that you
need to survive in general.

Beneficial contracts of service cover education, training employment, and anything that can
benefit the minor.

Voidable contracts are contracts that contain onerous materials. Such examples include marriage
settlements, leases of property, shares, and partnerships.
22. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Category 1: Necessaries

As seen on the previous page:

(i) Minors should be allowed to enter contracts; and

(ii) minors should pay for goods and services that are supplied to them, and that is classed as
‘necessaries’ according to their station in life and according to their current needs.

Necessaries vs Necessities

’Necessary’ has a very specific legal meaning and does not mean the same as ’Necessity’.

’Necessary’ depends on the minor’s background: what is necessary for a prince may not be the same
as what is necessary for another child.

Chapple v Cooper - Facts and Decision

A minor whose husband had recently died instructed undertakers, whom she subsequently refused
to pay, claiming incapacity. The undertakers successfully sued her for payment: the funeral was for
her private benefit and deemed necessary, as she was under an obligation to bury her husband.

Category 2: Beneficial Contracts of Service

Education, Training and Employment

The right of minors is that they are entitled to financially support themselves and therefore require
the capacity to enter into contracts of employment.

However, even with that being said, the terms of the contracts NEED to (substantially) benefit the
minor in question.

Clements v London and North Western Railway Company

A minor was employed as a porter. He agreed to join the company insurance scheme, and by doing
so relinquished his rights under the Employers’ Liability Act 1880.

In the event of an accident, the statutory scheme would be more beneficial to the minor, as it
covered more types of accident but with less compensation.

When the minor tried to claim that he was not bound by the employer’s scheme, he failed, as on
balance it was more beneficial to him.

The "Benefit" For Minors

Doyle v White City Stadium Ltd
The principle was extended to cover a minor who was a professional boxer. Under the contract, the
boxer would lose his pay if he were disqualified.9 The contract was binding, as it encouraged the
boxer to be a clean and proficient boxer, which was to his advantage.10

9
The courts have become progressively more lenient as to what might be binding on a minor.
10
In this legal case, it was to the minor’s advantage for the contract to be binding.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 23

Category 3: Voidable (Continuing Obligations)

This category talks about certain contracts that young people (minors) can make, but they have
the option to cancel or reject these contracts while they are still young or for a short time after
they turn 18.

These contracts usually involve ongoing responsibilities and are related to things like renting
property, buying shares, forming partnerships, or making marriage agreements.

These contracts are considered ”voidable,” meaning they can be cancelled, because they might be
too demanding for someone who is still young. Whether a young person cancels the contract in
time depends on the specific situation and is decided case by case.

These contracts are known as contracts of continuous or recurring obligations.

Edwards v Carter
A minor tried to cancel an agreement they made when they were still young. In this agreement, they
promised to give money they would inherit from their father to trustees. After their father passed
away, and more than a year later, the person, now an adult for over four years, tried to cancel the
agreement. They said they didn’t cancel it earlier because they didn’t know how much money they
would inherit. However, the court decided that the attempt to cancel the agreement came too late.

Original Text
Where there are no obligations or conditions in force there is not a problem; the problem arises only
when the obligation has arisen. It is generally felt that the minor should be liable for debts that
have arisen before the obligation.

Simplified Text
If there are no rules or conditions to follow, everything is fine. Problems only come up when there’s
a duty or obligation in place. Most people think that young people should be responsible for debts
they’ve accumulated before they had a duty or obligation

This was clearly illustrated in the case of Steinberg v Scala (Leeds) Ltd

Steinberg v Scala (Leeds) Ltd

A minor bought shares that were to be paid for in two stages. She made the first payment but
could not make the second. The court held she could repudiate the contract and thus not have to
pay the second instalment, but she could not recover the sums paid in the first instalment.

The Definition of Ratification and Repudiation

Repudiation - Saying ”no”

The act of rejecting, disowning, or refusing to fulfill a contractual obligation. It essentially means
that one party involved in a contract refuses to abide by the terms of the agreement.

Ratification - Saying ”yes”

Definition: Ratification is the formal approval or acceptance of an action that was previously unau-
thorized or informal. In the legal context, it often refers to the confirmation of a previously unau-
thorized contract or agreement.
24. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Remedies Against Minors

Point 1
Usually, minors aren’t held responsible for contracts they make. However, if they agree to it later
(ratify), they can become responsible.

Point 2
Also, if they’ve already done what the contract says, they can’t take back what they gave to the
other person.

The Minors' Contracts Act 1987

This Act states that a contract made by a minor is unenforceable and cannot be binding.

This has the following implications:

(1) Even though the minor may not be bound by the contract, the other party will be.

(2) If the minor has already paid money under the contract, they may be able to recover it if no
consideration has been made to them.

(3) When the minor reaches 18, they can confirm the contract if they so wish.

(4) Ratification can be implied just by the minor continuing with the contract.

Section 2 of MCA87 - Guarantees

Original Text
Section 2 of the Act provides that where there is a guarantor to the contract, their liability will not
be avoided due to their guarantee of being a minor.

Simplified Text
If someone promises to back up a contract (a guarantor) and they’re a minor, they’re still
responsible according to Section 2 of the Act.

Definition of a Guarantor
A guarantor is someone who agrees to take responsibility for another person’s debt or obligations
in case that person fails to fulfill them. A guarantor acts as a co-signer or a backup for a contract,
ensuring that if the primary person can’t meet their obligations, the guarantor will step in to cover
the responsibility.

Section 3 of MCA87 - In Equity

Section 3 of the Act provides that where ‘it is just and equitable to do so’ (if it is the right thing
to do in a/the situation), the court may require the minor to transfer any property acquired by the
minor under the contract back to the original owner.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 25

Limits

Definition of ’Necessaries’
The term ’necessaries’ has a broad meaning. According to S3(3) of The Sale of Goods Act 1979,
it refers to goods suitable for the minor’s condition in life.

Minors and Employment Contracts

A minor can be bound by a contract of employment if the contract is generally beneficial to them.

Voidable Contracts
Some contracts with minors are voidable, not void. This means the contract is valid and binding
until the minor decides to repudiate or reject it. If the minor fulfills their part of the contract, it’s
unlikely the voidable contract can be made void.

Property Passing in Contracts with Minors

Contracts with minors are effective in transferring property to the minor. According to S3(1) of
The Minors’ Contracts Act 1987, it is also effective in transferring property from a minor.

Evaluation of the Law Concerning Capacity (Minors)

Normally, if a person is under 18 (a minor), they aren’t legally bound by the contracts they make.
So, it’s generally seen as a good idea to avoid making contracts with minors if you can help it.

However, there are some situations where a minor might be held responsible, and it’s harder for
them to fix things once the contract is done. The law tries to be fair to minors, but there’s a bit
of a question here. At 14 or even younger, someone can face criminal charges, but when it comes
to contracts, it’s like they’re not expected to fully understand until they turn 18 (presumption).

People often criticise the laws about minors because a lot of the rules were made over a hundred
years ago, and they mostly focus on people between 18 and 21. This is still the case because the
legal age for being considered an adult is now 18. Interestingly, even if you’re under 18, you can
apply to join the army or get married with your parents’ permission.

Key Cases and their Summaries

Case Summary
A young widow (minor) was successfully sued for payment of
Chapple v Cooper (1844)
her husband’s funeral as this was necessary.
A tailor successfully sued a minor, as the clothes were not
Nash v Inman (1908)
deemed necessary.
Clements v London and North A minor was bound by the employer’s scheme as it was bene-
Western Railway Company (1894) ficial to him.
De Francesco v Barnum (1890) A minor was not bound under the terms of her apprenticeship.
Doyle v White City Stadium Ltd The contract was binding, as it encouraged the minor to be a
(1935) clean and proficient boxer, which was to his advantage.
A man could not repudiate a marriage settlement drawn up
Edwards v Carter (1893)
while he was a minor, as it was too late.
A minor could repudiate the contract and thus not have to pay
Steinberg v Scala (Leeds) Ltd
the second instalment, but she could not recover the sums paid
(1923)
in the first instalment.
26. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Mini Stretch and Challenge

Question 1 - Favor and Biasness

Should the law be so heavily in favour of a minor, if that minor is aware of what they are doing
when entering into a contract?

In my humble opinion, no. When the question states that the minor is ”aware” of what they are
doing, I am going with the presumption that the minor is well aware of the consequences and/or
detriments the minor will have to suffer should they (the minor) not be able to fulfill the contract
- according to the contract’s terms.

Furthermore, with reference to the statement: ’aware of what they are doing’, this leaves room for
the minor to take advantage of and abuse the contracts’ benefits - as they can legally and unfairly
void the contract later on.

For certainty and clarity in the previous paragraph, ’contracts’ benefits’ refer to contracts with
continuing or recurrent obligations and do not apply to beneficial contracts of service.

While being able to contract on fair terms is pivotal to ensure fairness for all, minors have the
advantage as they can unfairly void contracts. This means that the adult (who contracted with
the minor) will be the one suffering the detriment - this only applies to contracts with continuing
obligations.

Question 2 - Injustice for Adults and Potential Exploitation

Injustice is caused by the rules relating to the capacity of minors to contract with adults. Critically
assess the extent to which the remedies that adults can obtain against minors mitigate this.

In the context of contracts with continuing/recurrent obligations, even the remedies against minors
cannot fully mitigate the unfairness. The main issue is that the law heavily favours minors - which
is very reasonable as the law’s aim is to punish those who contract with minors.

However, this means that the law may be too much in favour of the minors whereby even should
the minor be fully aware of what they’re doing, they can still legally and unfairly void the contract
later on if they regret it.

The law covering remedies against minors states that a minor can still incur liability if they ratify
the contract. In addition, should the minor have fulfilled the duties of the contract, they may not
be able to recover what is lost. But what about if the minor repudiates the contract? Wouldn’t
that be unfair as well considering how they won’t incur any liability?

With reference to the aforementioned, this is why companies and businesses would have to have
the minor’s parents sign the contract in lieu so they can be the ones to incur liability instead of
the minor. By doing so, this shows that even some companies and businesses are afraid to contract
with minors as they are able to escape liability at their own will.
 Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq. 27

You have come to the end of ”Formation of a Contract”.

The next following pages will discuss about the contents within a contract.
28. Nilou Phua’s Law Notes, in collaboration with Areeba Mushtaq.

Express Terms

Definition of "Express Terms"

Express terms are those agreed upon by the parties at the time in which the contract is formed -
either orally or in writing.
 BLANK PAGE

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