Microsoft_Word_-_Revised_Law_of_Contract_Lecture_Notes_2010 (1)

Microsoft_Word_-_Revised_Law_of_Contract_Lecture_Notes_2010 (1)

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1 UNIVERSITY OF TECHNOLOGY, JAMAICA SCHOOL OF BUSINESS ADMINISTRATION BUSINESS LAW UNIT 2 – LAW OF CONTRACT Definition A contract is a legally binding agreement between two or more parties which is essentially commercial in nature. Not all agreements are considered legally binding. For an agreement to be considered legally binding, the parties must intend legal consequences to follow their actions. Essentials of a binding contract A. Offer An offer may be defined as a clear statement of the terms on which the offeror is prepared to do business with the offeree. An offer may be bilateral (i.e. a promise made in return for a promise) or unilateral (i.e. a promise made in return for the completion of a specified act). For an offer to be valid, it must: 1. Have clearly stated terms (it must be definite) Gunthing v Lynn 2. The offeror must have an intention to do business Carlill v Carbolic Smoke Ball Co. Ltd. 3. The offer must be communicated square4 Invitation to treat is not an intention to do business – Fisher v Bell , Pharmaceutical Society of Great Britain v Boots Cash Chemists , Patridge v Crittenden, Grainger v. Gough square4 Statements of negotiation are not intentions to do business – Harvey v Facey Offer must be communicated square4 Offer may be communicated verbally, in writing or by conduct – Note – Invitation to submit tenders are generally considered invitation to treat, although it may also be considered an offer by the advertisers to consider any offer submitted to them. ( Blackpool v Blackpool Council )
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2 Termination of offers square4 By refusal and counter offer – Hyde v Wrench , Stevenson v McLean square4 By lapse of time – Ramsgate Hotel v Montefiore square4 By revocation – Dickinson v Dodds square4 By death where contract involves personality of the offeror The effect of a promise to keep the offer open for a certain time or to give someone the right of first refusal- This will not be legally binding unless the offeree gave some payment to the offeror in return for the promise. Routledge v Grant c.f. Dickenson v. Dodds B. Acceptance This is an agreement to be bound by all the terms of the offer. To be valid, an acceptance must: square4 Be exactly on the same terms of the offer and must not be varied otherwise it would be considered a counter offer – Hyde v Wrench square4 Be certain and definite square4 Be communicated in the manner implied or expressed in the offer and this may be verbal, in writing or by conduct – Powell v Lee , Brogden v Metropolitan Railway , Entores v Miles Far East Corp . square4 Silence does not mean consent- Felthouse v Bindley , Instantaneous communication –acceptance is not communicated until received Communication by post – (The Postal Rule)- acceptance is valid once the letter is posted- Adams v Lindsell & Household Insurance v Grant Contrast Holwell Securities v Hughes Also note that acceptance cannot be withdrawn or revoked unilaterally.
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