English Law of Contract

This document discusses the English Law of Contract and its elements such as offer, acceptance, and invitation to treat. It provides rules and applications through case studies. The document also explores the entitlement of parties and the validity of contracts.

English Law
of Contract
Running Head: ENGLISH LAW OF CONTRACT 0
5 / 1 5 / 2 0 1 9
Student’s Name

English Law of Contract 1
Issue 1
In the first case presented in the scenario, the issue of the case is to check
whether a lawful contract exists between Alan and Brian or not.
Rules 1
A valid contract consists of some elements and offer and acceptance are two
out of them. Offer is a very first element of each contract. It is a proposal to
do or not to do something in exchange for consideration1. When an offeror
makes an offer to another party, then such other party is required to accept
that offer in order to develop an agreement. Here this is to mention that
every offer is not a valid offer and some requirements are mentioned there
which an offer needs to be fulfilled, then only the same can be treated as a
valid offer. It was given in the case of Harvey v Facey 2 that a valid offer
must show the intention of the offeror to bind the other party i.e. offeree.
Similar to the offer, another term is also there in cases of contract, which is
closely resemble to offer and known as an invitation to treat. The term is
very confusing, people often think that offer, and invitation to treat is a
similar thing. Nevertheless, this is not true. An invitation to treat is only an
invite for offers. It means it comes before the offer and in this manner, it is a
different concept. It is not necessary for an invitation to treat to exist in each
contract. In reply to an invitation to treat, an offer comes and in reply to an
offer, acceptance comes. It means not similar to an offer, an invitation to
treat cannot be accepted3. In general, advertisement, and quotation are an
invitation to treat and therefore do not have the capability of an offer.
1 Smallbusiness.findlaw.com, ‘What Is an Offer?’ (Findlaw, 2019) <
https://smallbusiness.findlaw.com/business-contracts-forms/what-is-an-offer.html> accessed
15 May 2019
2 Harvey v Facey [1893] UKPC
3 Ewan MacIntyre, Essentials of business law (Pearson UK 2018)

English Law of Contract 2
However, Megalift v Terminals4 [2009] NSWSC 324 is the leading case to
study here. In this case, it was provided that even a price quotation can be
treated as an offer in some situations depending on the intention of parties
and circumstances of negotiations between the parties. In situations where
the quotation is not general and is developed considering the requirements
of parties, the same is treated as offer and not the invitation to treat.
Moving the discussion towards another element of contract i.e. acceptance,
this is to state that it is a consent that offeree gives in respect to offer made
by offeror. Similar to offer, requirements are also specified for valid
acceptance. The first requirement is that consent must be communicated to
the offeror as decided in the case of Entorres v Miles Far East5. Further terms
of the same must be similar to the terms of the offer and the third
requirement is that the agreement must be certain. It means acceptance is
treated valid when the same is communicated to the offeror without making
any changes in the terms mentioned under offer. Now another question is to
check the time of effectiveness of acceptance. In general, acceptance seems
to be completed when the same comes into the knowledge of offeror.
However, there is an exception to this rule, which is related to postal rules.
As decided in the case of Adams v Lindsell6, whenever parties choose the
postal mode for communication, then acceptance is treated as complete at
the moment when the offeree drops acceptance letter to post box and not at
the event when offeror receive such acceptance7. If parties want then they
can exclude the applicability of postal rules from their transactions. An
offeror can revoke the offer until the moment when appetence is not
complete. It means once acceptance is completed then offeror cannot revoke
his/her offer.
4 Megalift v Terminals [2009] NSWSC 324
5 Entorres v Miles Far East [1955] 2 QB 327
6 Adams v Lindsell (1818) 106 ER 250
7 James Holland and Julian Webb, Learning Legal Rules: A Students' Guide to Legal Method
and Reasoning (OUP Oxford 2013)

English Law of Contract 3
Application 1
In the provided case Alan is a retailer who is engaged in the business of eco-
friendly office furniture. Brian visited his store and asked for the quotation in
respect to refurnishing of his business’s office space. He asked quotation for
20 reclaimed oak office chairs. Here Alan prepared the quotation specifically
for Brian considering details provided by him. Alan provided this quotation on
Monday. Here this is to say that the quotation does not seem to be an
invitation to treat. Applying the provisions of Megalift v Terminals, this is to
say that the quotations will be treated as an offer as the same was specific
and had the capacity to be accepted as an offer. Further, this offer had the
intention to bind another party i.e. Brian. As this was an offer, the same was
required to be accepted by Brian. Later on Wednesday, due to increase in
prices of chairs, Alan decided to revoke the offer made to Brian. He sent a
voicemail as well as e-mail to him. On the same morning, he received an
acceptance letter from Brian as he selected postal mode for communication.
This letter contained a date of the day before i.e. of Tuesday. It means Brian
posted the subjective appetence letter on Tuesday that Alan received on
Wednesday morning. Applying the provisions of the postal rule and the
decision of Adams v Lindsell, acceptance of the case will be treated as
complete and communicate on Tuesday as Brian posted a letter on this day.
A valid contract became develop between Alan and Brian on Tuesday and
therefore Alan cannot revoke the offer on Wednesday.
Conclusion 1
In this case, a valid contract does exist between the parties and they have
rights and obligations to each other. Alan cannot revoke the offer on
Wednesday as the contract was developed on Tuesday.
Issue 2

English Law of Contract 4
The second case is related to the revision of prices and the issue is to check
whether Alan was entitled to deny selling desks to Chris at the rate of £200
per desk.
Rules 2
As mentioned in Rule 1, an offer and invitation to treat are different and
therefore same rules are applicable to them. The facts and decision of the
case Pharmaceutical Society of Great Britain v Boots8 are necessary to study
here. In this case, a business introduced a self-service system where
customers were required to take the goods from the shelf and to bring them
to the cash counter9. It was given in the decision of this case that the goods
placed in the shelf will be merely an invitation to treat and will not be treated
as an offer. A customer takes the goods and this makes an offer that
business is further required to accept. In a commercial transaction, many of
the times it happens that seller put incorrect price label on goods or prices
get revised later on. In this situation, if the goods displayed in shelf or price
chart of goods would be considered as an offer, there are the chances that
anyone can accept such offer and seller of the goods can face heavy losses.
To eliminate all such situations, and to protect the interest of sellers,
contract law provides that goods mentioned in price cards or displayed in the
shelf are only invitation to treat that demand another party to make an offer.
It means if other party shows interest in buying such goods then that
communication is treated as an offer that can be accepted or rejected by the
party who made the invitation to treat. If the party reject such offer then the
offeror cannot bring any action against the offeree.
8 Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
9 Andy Gibson and Douglas Fraser, Business Law 2014 (Pearson Higher Education AU 2013)

English Law of Contract 5
Application 2
In the provided case, a person named Chris went into Alan’s showroom on
Monday and picked a price list, placed on the counter. He said nothing that
time and moved. He again went to Alan’s showroom on Wednesday and
asked for 10 space-saver maple desks c. The rate was mentioned in the price
list reviewed by him earlier. As the rates were revised, Alan apologized him
saying that the rate mentioned in the price list is incorrect and the same is
£200 per desk. Here this is to mention that the price list available on the
counter was only an invitation to treat and not an offer. Applying the
provisions of the Pharmaceutical Society of Great Britain v Boots,
communication of Chris will be treated as an offer and not the acceptance as
an invitation to treat cannot be accepted. When Chris asked 10 space-saver
maple desks, it was an offer that Alan was required to accept or reject. As
Alan did not accept the same, he has not entered into any contract with
Chris.
Conclusion 2
Alan was entitled to say no to Chris, as a communication made by him was
an offer and not the acceptance. No contract is there and hence parties have
no right and obligation to each other.
Issue 3
Alan entered into a contract with David and later on asked for additional
money. The issue is to check whether Alan could do so or not.
Rules 3

English Law of Contract 6
A valid contract is a legally binding agreement that gives rights to parties.
Once a contract is developed then parties become a bind10. Here binding
effect refers to a situation where parties have to perform their promises and
obligations. Here this is to state that once a contract is signed, parties
cannot alter the terms mentioned under the same. A contract can be
developed orally or in a written mode and both kinds of the contract have
the same impact that the parties cannot change the terms in a condition. If
any party insert, delete or modify any term after the development of
contract then such term is referred to as invalid and another party has the
option to force the contract in its original form. For the modification of any
term of contract requires the consent of all parties. In other words, this can
be stated that once a contract is developed it cannot be modified unless all
the parties of the same become agree to do so. Changes can be related to
any term such as time periods, exclusion or inclusion of liability, payment of
consideration and many others. In some of the contract, manner of
modification is written and parties have to follow the same if they want to
modify a contract later on. However, the issue comes in those cases where
the contract does not stipulate the manner of modification. In such cases,
parties have to ask other parties for modification or changes and after their
consent, only modification can take place. Many of the times, other parties
do not give their consent to modification and in those situations, the
previous party remain no option and the same has to perform the contract in
original form or can breach the same if performance is not possible without
modification11.
Application 3
10 Legalmatch.com, ‘Legally Binding Contracts’ (Legalmatch, 2019) <
https://www.legalmatch.com/law-library/article/legally-binding-contracts.html> accessed 15
May 2019
11 Brian Farkas, ‘Contract Modification: How to Alter a Contract's Terms Before or After
Signing It’ (Lawyers.com, 2019) https://www.lawyers.com/legal-info/business-law/business-
law-basics/contract-modification.html> accessed 15 May 2019

English Law of Contract 7
In the given case, Alan entered into a contract with David a month ago. In
this situation, it is clear that a valid contract existed between them. The
contract was related to the refurbishment of David’s office space. After
developing the contract, David felt that he quoted a low rate of the items
that were supposed to be imported and therefore he would suffer a loss. He
contacted David and told him that he wants to revise the prices that have
been agreed between them. David was not happy with this modification, as
because of the same he had to pay additional £4,000. Here to say that
applying the provisions of contract law, Alan could not do so without the
consent of David as the contract is already developed and Alan is required to
perform his obligation as per the conditions stipulated under original offer.
Conclusion 3
David has the right to deny condition put by Alan and can force him to make
the delivery of goods in consideration of £25,000.
Issue 4
The issue of the case is related to the transaction that developed between
Alan and Fred. The issue of the case is to check the entitlement of Alan.
Rules 4
Some requirements are there for a valid contract. Free consent is one of
them. Only consent is not necessary but the same must be free consent. It
means the consent should not be influenced by unfair factors such as fraud,
misrepresentation, undue influence, and others. Here misrepresentation is
one of the situations where a party to the case makes false
representation/statement of facts or law12. Various kind of misrepresentation
are there. The type of misrepresentation is required to be reviewed, as
different types of remedies are available in different cases. A
12 Upcounsel.com, ‘Misrepresentation Contract Law: Everything You Need to Know’
(Upcounsel, 2019) <https://www.upcounsel.com/misrepresentation-contract-law> accessed
15 May 2019

English Law of Contract 8
misrepresentation seems to be there when a statement turns out to be
untrue later on. For the existence of misrepresentation, some requirements
are needed to be there. Firstly, a false statement must be there. Such a
statement can be related to law or fact. In general, a statement of opinion
does not consider as misrepresentation. Nevertheless, it was given in the
case of Smith v Land & House Property Corp13 that statement of opinion is
treated as misrepresentation in those cases where representator knew the
true situation. Another condition has given in the case of Horsfall v Thomas14
that the innocent party must enter into the contract relying on
misrepresentation. Fraudulent misrepresentation is one of the important kind
of misrepresentation. It exists where representator knows that it is false and
still presents the same to the innocent party15. In order to discuss the
remedy of fraudulent misrepresentation, this is to state that the innocent
party can rescind the contract and also ask for damages.
Application 4
In the given case, Alan contracted with Fred to purchase his furniture. Alan
purchased the furniture from Fred in April for the consideration of £35,000.
Before this transaction, Alan visited the warehouse of Fred in January in
order to check the variety and quality of products held by him. Fred assured
Alan that he always keep goods in a safe and secure position and he always
stores furniture in a dry warehouse.
When in April, Alan again went to Fred’s warehouse and found that the same
was not dry and the redwood desk he was about to purchase was beyond
use. Alan was required to provide 10 Canadian redwood desks to George out
of such stock. Here consent of Alan cannot be treated as independent and
13 Smith v Land & House Property Corp (1884) 28 Ch D 7
14 Horsfall v Thomas [1862] 1 H&C 90
15 Roger LeRoy Miller and Gaylord A. Jentz, Cengage Advantage Books: Business Law Today:
The Essentials (Cengage Learning 2010)

English Law of Contract 9
free consent as it was influenced by a misrepresentation made by Fred. Here
to say that a false statement of fact was there and by relying on the same,
Alan made the contract with him. In order to discuss the type of
misrepresentation, this is to say that the same seems to be a fraudulent
misrepresentation as Fred knew that the statement made by him is not going
to be true in future and he knowingly made the misrepresentation.
Conclusion 4
Alan can sue Fred for fraudulent misrepresentation, can rescind the contract,
and can ask for the damages.
Issue 5
The case is related to the transaction developed between CFDL and Alan.
The issue of the case is to check the liability of CFDL to Alan for breach of
contract.
Rules 5
A contract can be discharged in many ways. Discharge by the breach is one
of them. In case of breach of contract, the defaulting party has some
liabilities. In those cases where a party breach a term of the contract then
innocent party gets right to repudiate the contract16. In addition to this, the
same can also claim damages. Some unfair terms are also there in the
contract. An exclusion clause is one such term that is there to exclude or
limit the liability of parties. It was given in the decision of the case of
L'Estrange v Graucob17 that parties of the contract are bind with unfair terms
16 Mbaknol.com, ‘Discharge of a Contract by Breach’ (MBA Knowledge Base, 2019) <
https://www.mbaknol.com/mercantile-law/discharge-of-a-contract-by-breach/> accessed 15
May 2019
17 L'Estrange v Graucob [1934] 2 KB 394

English Law of Contract 10
when the same sign written contract irrespective of the fact whether they
have read the same or not. Further, other rules related to the effectiveness
of unfair terms (exclusion clauses) are also there. As given in the case of
Thompson v LMS Railway18 parties who make such term must ensure that
they gave reasonable notice of the same to another party19. In other words to
say that the party who develop an exclusion clause must bring the same into
the notice of another party. Nevertheless, this rule has one exception. As per
this exception, the developing party of exclusion clause does not require to
bring the same into the attention of another party when previous dealings
are there. The court provided in the decision of Spurling v Bradshaw20 that in
those situations where parties dealt with each other before then such terms
can be introduced via these dealings even when the same has not took to
the attention of another party. However, for this, such previous dealings
must be consistent. It means the parties must have been deal on the same
terms every time in the past. It was provided in the case of Hollier v Rambler
Motors21 that term seems to be incorporated through the previous dealing if
sufficient numbers of transactions are there. When an exclusion clause is
there then, the claimant can only ask damages up to the limit mentioned in
such clause.
Application 5
In the provided case, Alan made a contract with CFDL. The contract was
related to purchase of sideboard that was expected to be delivered on 16
May but CFDL failed to make this delivery because of certain reasons. When
Alan called this party, then the same informed him that they cannot make it
deliver before 23rd May. Expecting this delivery, Alan planned to sell three
18 Thompson v LMS Railway [1930] 1 KB 41
19 Emily Finch and Stefan Fafinski, Law Express: Contract Law (Pearson UK 2018)
20 Spurling v Bradshaw [1956] 1 WLR 461
21 Hollier v Rambler Motors [1972] 2 WLR 401

English Law of Contract 11
sideboards to a customer. By denying the delivery on 16 may as decided
earlier, CFDL breached the contract. This firm had an exclusion clause in its
standard terms and conditions where the liability of CFDL in cases of the
breach was presented as limited to the contract price. In addition to the
damages, Alan also wanted the loss of profit that he could earn by selling
sideboards to customer. In order to check the validity of the exclusion
clause, the decision of the case of Spurling v Bradshaw is required to be
referred. Applying the provisions of this case, the subjective exclusion clause
will be held valid as Alan often received this terms and condition document
as the same dealt with CFDL many times in past and hence the clause was
valid.
Conclusion 5
An exclusion clause is valid and Alan has no right against CFDL more than
the amount of contract.
Issue 6
The case is related to a transaction that has been developed between Alan
and CFDL with respect to purchase five glass display cabinets. The issue is to
review the validity of the exclusion clause made by CFDL.
Rules 6
As mentioned under Rules 5, an exclusion clause is required to be properly
introduced in a contract in order to be held valid and binding. It is one of the
basic and important conditions of exclusion clause that the same must be
introduced before or at the time of development of the contract. It was given
in the case of Olley v Marlborough Court22 that notice of exclusion clause
seems to be ineffective when there is already a contract developed between
the parties. In such a situation, such a clause does not become part of a
contract. When an exclusion clause is not effective then parties cannot rely
22 Olley v Marlborough Court [1949] 1 K.B. 532

English Law of Contract 12
on the same and the defaulting party remains liable for the octal losses
irrespective of the limit mentioned under the exclusion clause.
Application 6
In the given case, Alan purchased five glass display cabinets and paid £3,000
each for each. Employees of the seller transported this cabinet to Alan’s
place in a lorry. In transportation, the driver and employee of cabinet
crashed the lorry. Because of this crash, cabinets destroyed. As per one of
the terms made by seller, the liability of the same in respect to losses
occurred by its employees or agent was limited up to £2,000. Nothing is
mentioned that when such terms brought into the notice of Alan. He only
selected cabinets and paid amount for the same when visited showroom of
the seller and it is to assume that the seller provided these terms and
conditions at the time of delivery of goods. A contract was developed
between Alan and seller at the moment of payment of money. Applying the
provisions of Olley v Marlborough Court, this clause will be treated as
invalid23.
Conclusion 6
The exclusion clause has been introduced after the development of contract
and therefore was invalid. Alan can claim damages for the price of all five-
glass cabinets.
23 E-Lawresources.Co.Uk, ‘Olley v Marlborough Court [1949] 1 KB 532’ (E-
Lawresources.Co.Uk, 2019) <http://e-lawresources.co.uk/Olley-v-Marlborough-Court.php >
accessed 15 May 2019

English Law of Contract 13
Bibliography
Case Laws
Adams v Lindsell (1818) 106 ER 250
Entorres v Miles Far East [1955] 2 QB 327
Harvey v Facey [1893] UKPC
Hollier v Rambler Motors [1972] 2 WLR 401
Horsfall v Thomas [1862] 1 H&C 90
L'Estrange v Graucob [1934] 2 KB 394
Megalift v Terminals [2009] NSWSC 324
Olley v Marlborough Court [1949] 1 K.B. 532
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Smith v Land & House Property Corp (1884) 28 Ch D 7
Spurling v Bradshaw [1956] 1 WLR 461
Thompson v LMS Railway [1930] 1 KB 41
Books/Journals
Andy Gibson and Douglas Fraser, Business Law 2014 (Pearson Higher
Education AU 2013)
Emily Finch and Stefan Fafinski, Law Express: Contract Law (Pearson UK
2018)
Ewan MacIntyre, Essentials of business law (Pearson UK 2018)
James Holland and Julian Webb, Learning Legal Rules: A Students' Guide to
Legal Method and Reasoning (OUP Oxford 2013)
Roger LeRoy Miller and Gaylord A. Jentz, Cengage Advantage Books:
Business Law Today: The Essentials (Cengage Learning 2010)
Other Resources
Brian Farkas, ‘Contract Modification: How to Alter a Contract's Terms Before
or After Signing It’ (Lawyers.com, 2019)

English Law of Contract 14
https://www.lawyers.com/legal-info/business-law/business-law-basics/
contract-modification.html> accessed 15 May 2019
E-Lawresources.Co.Uk, ‘Olley v Marlborough Court [1949] 1 KB 532’ (E-
Lawresources.Co.Uk, 2019) <http://e-lawresources.co.uk/Olley-v-
Marlborough-Court.php > accessed 15 May 2019
Legalmatch.com, ‘Legally Binding Contracts’ (Legalmatch, 2019) <
https://www.legalmatch.com/law-library/article/legally-binding-
contracts.html> accessed 15 May 2019
Mbaknol.com, ‘Discharge of a Contract by Breach’ (MBA Knowledge Base,
2019) < https://www.mbaknol.com/mercantile-law/discharge-of-a-contract-
by-breach/> accessed 15 May 2019
Smallbusiness.findlaw.com, ‘What Is an Offer?’ (Findlaw, 2019) <
https://smallbusiness.findlaw.com/business-contracts-forms/what-is-an-
offer.html> accessed 15 May 2019
Upcounsel.com, ‘Misrepresentation Contract Law: Everything You Need to
Know’ (Upcounsel, 2019) <https://www.upcounsel.com/misrepresentation-
contract-law> accessed 15 May 2019