Contract law - review of cases.

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Law is such a big word which includes a system of rules enforced by members of a particular state. In order to run a good business, it is essential to know as much laws as you can. And contract law is one of law’s issues. Contract is “an agreement which legally binds the parties to it” (BPP Learning Media, 2010). The contract law aims to build a clear understanding between parties about what they agree to.

According to a comment of a Vietnamese lawyer, there are countries which are really good at enforcing contracts, while some others do not. And in the list of good countries, she stated Australia, United States, Germany, and France. Asking for the reason, she said that it could be because of the high disciplined culture within countries. In addition, under her point of view, the commercial contract is the most difficult and complicated contract. Normally, its impact is big that requires the court to have the fairest decision to all parties.

In this report, the basic knowledge about contract law is shown in clear order. To make every point be clear, the researcher cited a lot of lawsuits followed each factor of the laws mentioned. Due to the limitation of work, all summaries with analysis and decisions of several cases are mentioned in the appendices.

(All the cases which are cited in this report are in the appendices)


A valid contract has several elements, including offer and acceptance, intension to create legal relationship, consideration, capacity, and privity. It is very important to understand clearly about these factors in order to run a business with a good performance.

  1. Offer and acceptance

Firstly, a contract is started when there is an offer and acceptance. An offer is “an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed, the “offeree”. And an acceptance is a final and unqualified expression of assent to the terms of an “offeror” – the person who gives out an offer” (Treitel, 2005).  An acceptance is valid when there is a communication and certainty. That means the offeror must receive the acceptance before the offer is effective. Also, all the terms parties agree to have to be understood exactly and clearly.

There is a group of terms following an offer. The first term is the “invitation to treat”. It is considered as a sign, not an offer, from an offeree that he is ready to negotiate a contract with the offeror. Such as in the case Harvey v Facey (1893), the statement of Facey answered Harvey about the lowest price was considered as an invitation to treat. It simply stated information about the price. It did not create any implied contract. The next factor is “revocation of offer”. The offeror can only revoke his offer before the offeree accepts (case Dickinson v Dodds – 1876).

About acceptance, it can be sent to offeror in many ways. And there is a rule called “postal acceptance rule” in which an acceptance is sent through a mail. It helps to indicate the time when all parties create or revoke a contract through mail, and does not apple to option contracts (case Adams v Lindsell – 1818) in the appendix). In this rule, “the performance is a means of acceptance” (, 2001).  

Unilateral contract

A unilateral contract is the case in which there is an offer and a person who performs an act fulfilling all the terms of the offer in the ignorance of that offer. In this case, only offeror is bound by the promise that he gives. No one is bound to do what he requires, but if there is a person who has seen the offer and does an action as an acceptance to the offer, then the offeror is entitled to the contract. For example, in the case R v Clarke (1927), the claim of Clarke was resisted because he required the reward (offer) before had an action which was arresting the murder (himself).

  1. Intention to create a legal relationship

In order to reduces the number of cases that are solved by the court. It will be considered whether parties of the contract intend to be legally bound. This leads agreements to binding contracts.

  1. Consideration

Consideration is another factor that contributes to a binding contract. There must be an exchange of promises between promisor and promisee. Each of them will get a benefit and also suffer a legal detriment. Especially, the value of things that both parties give out will not be considered whether they have the same value or not. It only requires that both of these things have a specific value. Then, there is a consideration.

There will be no consideration if the performance is illegal, public duty, impossible, illusory, and under of control. Also, it does not count for something has been done or something was committed in the past. And if after having offer and acceptance, the offeror wants to add a value to his offer, that will not be considered as a consideration.

There is a doctrine related to consideration called “promissory estoppel” (case Ward v Byham – 1956). This case often occurs when promisee in reliance on the promise made by promisor suffered a detriment. It requires four requirements. First, the statement of the promisor (can be express or implied) must be clear and unambiguous showing the unwillingness to enforce his legal rights. Second, this promise made by the promisor must be acted by the promise. “Third, it would be inequitable for the promisor to renege on his promise and claim his strict legal rights after the promisee had relied on it. Finally, it cannot be enforced against the promissor. Thus it can be used only as a defence and thus cannot be used as a sword” (Law Teacher, 2003).

  1. Privity of contract

“The doctrine of privity means that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it" (Treitel, 2005). There are some points that need to be clear. The obligation cannot be enforced to a third party. Also, this party cannot claim for the benefits. In conclusion, privity means that only parties who have their consideration on the contract have the right to sue (case Jackson v Horizon Holidays – 1975).

  1. Apply the elements of contract in given cases in the scenario

Case: Mrs. Williams v EZ Cooking

Analysis: In this case, there were two different contracts. The first one is the advertisement which was an implied contract. There was an offer from the company about the 50% refund of the item’s value and the acceptance from the husband is an action buying the item. There is an argument that the advertisement here is an invitation to treat. However, there was a same case in which the court held the advertisements as offers, such as the case Carlill v Carbolic Smoke Ball Co (1893). About the consideration, the company increased sales. Mr. Williams paid for the item to have a gift for his wife on her birthday. In this point, EZ Cooking failed in late delivery which reduced the value of the consideration.

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The second contract is the written contract which was conducted at the time the husband bought the item was broken. It was stated in the contract the delivery date, but the company failed to do what they promised.

About the privity, Mrs. Williams is the third party. Some people may think that she does not have the right to claim for anything related to the contract. However, in the case of marriage, husband and wife are considered as one party. That means Mrs. Williams can sue for her husband.

Decision: The wife wins. And the company has to ...

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