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Contract Law

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Contract Law Coursework 2001-2002 Introduction This scenario presents different aspects of Contract Law, though the underlying points made are that consideration must not be past, identifying the offer and acceptance in a contract and the use of estoppels. A contract is a legally binding agreement enforceable in a court of law. However, not every agreement between two parties is a legally binding contract. The law imposes certain requirements on contracts. The fundamental requirements for forming a binding contract are: * offer * acceptance * consideration The first part of the scenario clearly identifies a simple offer and acceptance. Tim offers Mary to repair her bike and she accepts. This now creates a contract between Tim and Mary. Each contract requires an offer and acceptance of that offer. "... to constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. A mere statement of a person's intention, or a declaration of his willingness to enter into negotiations is not an offer and cannot be accepted so as to form a valid contract"1 An offer must be an understandable, explicit and direct approach to another party to contract. For this reason, advertisements, catalogues or store flyers are not offers. Nor is a "for sale" sign on a used car. The law calls these "invitations to treat"; essentially invitations to the general public to make an offer on a particular item.


Tim cannot then ask for money for his past deeds, as again, past consideration is not valid under contract law. Yet, if this argument is still taken, then the opposition could disagree, by using the case of Dawson v Helicopter Exploration Co. (1955). This case illustrates how acceptance can be made by conduct, and not necessarily by stating ones acceptance of an offer. Therefore by doing the safety check on the bike, it could be argued that Tim was showing his acceptance of the new offer made by Mary, to include the safety check in the original contract for £100. With this argument Mary will only be liable to pay Tim £100 at the most, as his kindness is taken as a gift. Tim cannot claim for the £10 for the safety check, as that action was completed in the past, and as we are aware, past consideration is not legitimate4. The cases of Roscorla v Thomas and Re McCardle restate this point. It should be noted however that the courts have attempted to mitigate the sometimes harsh effect of the of past consideration rule by way of the implied assumpsit doctrine5. This doctrine was formed in order to alleviate the operation of the rule against past consideration where the act done by the promisee was at the request of the promisor and the promisor only promises to pay the promisee after the latter has completed the act requested - Lampleigh v Braithwait.


Lord Scarman in Pao On v Lui Yu authoritatively stated the modern ambit of the rule. For a promise given after an act was done, to be legally enforceable three elements must be present: 1) The act of the promisee must be done at the promisor's request. 2) The parties must have understood that the act was to be remunerated by a payment or the conferment of some other benefit, and 3) The payment, or the conferment of benefit must have been legally enforceable had it been made in advance (i.e. the other elements necessary to make a binding contract must all be met). Lampleigh v Braithwait (1615) Hob. 105. Thomas Braithwait had killed Patrick Mahume. In desperation he asked Anthony Lampleigh to do all that he could to get a pardon for him from the King. Lampleigh acted upon this request riding between London and Newmarket at his own expense. Afterwards Braithwait promised Lampleigh £100 for his trouble. He failed to pay it. Lampleigh sued. One of the arguments used by Braithwait was that Lampleigh's consideration was past - the act was complete before the promise to pay £100 had been made. The Court rejected this argument - stating that where the act of the promisee had been done in response to a request by the promisor, subsequent to which the promise to pay had been made then it was possible to unite the request and the promise and treat them as part of the same transaction.

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