Features of a Valid Contract

Law of contracts

During post-war 1945 till today consumers were identified as an important interest group due to their negotiating power and courts, therefore, felt the need to protect consumer’s interest through clauses or particular exclusions from the “small print” found in contracts. A case example was this was applied was in The Suisse Atlantique 1967. It can be implied that much of the modern day law of contract was developed as a result of the middle ages and throughout the 19th century. (Macdonald and Atkins, 2014, p. 1) define “a contract as a legally enforceable agreement giving rise to obligations for the parties involved”. Additionally, “the law of contract, it will determine which agreements are enforceable and regulate these agreements by providing remedies if promises are broken”. Contracts have become a matter of importance in our everyday lives. It may not be in a formal document such as an employment contract or a deed on a house. However, the everyday life of examples such as buying groceries or taking the train all constitute as some form of contractual relationship that took place. In order to enter into a contract, however, the following is seen as a basic outline of formation of a contract by Macdonald and Atkin (2014), stating that an agreement should have an offer and acceptance. This offer and acceptance take place when a contractual agreement was reached by both parties. This is referred to as ad idem, “a meeting of the minds”. There should also be the intention to create legal relations, which will allude to phrases that qualify it to be a contract e.g. ‘subject to contract’ or ‘no prejudice’. The capacity of the individuals should be distinguished e.g. someone sober and someone who is under the influence. Finally, there should be a consideration, this is an unusual English Law concept, but it basically deals with the element of consideration that one party gives to the other. It results in finding ways to settle when an obligation is not fulfilled, e.g. giving up ones right to sue.

The law, however, draws a separation between terms and representation of contracts, whereby terms refer to any statement made by the parties with the intention to be bound and form part of the contract. If they do not comply with there is a breach of contract. Alternatively, representation is a statement made during the negotiation stages of the contract, it may also have certain legal consequences if certain circumstances are met, however it does not form part of the contract Turner (2014). In Bannerman v White (1861), the statement made was important and the promise would not have agreed to the contract without it, it will, therefore, be interpreted as a term. The defendant wanted hops for brewing and he had asked the plaintiff whether the hops had been treated with Sulphur. The plaintiff gave a false statement that they had not been treated with Sulphur and therefore the defendant bought the hops. The defendant later discovered that they had been treated with the Sulphur and refused to accept them. It was held that the plaintiff’s statement regarding the Sulphur was an essential term, therefore the defendant could repudiate the contract Slapper and Kelly (2010). Moreover, when there is a timed lap between the statement and the making of the contract, the statements will be treated as representation, as in the case of Routledge b McKay (1954) on 23 October, the defendant told the plaintiff that a motorcycle was a 1942 model. On 30 October a written of sale for the bike made reference that the bike model was actually 1930. The statement about the age of the bike was a pre-contractual representation and the plaintiff could therefore not sue for damages Slapper and Kelly (2010). It can be understood that statements made during negotiations leading up to the contract may not attach any liability. Representations do carry with it consequences such as trade puffs, which are boasts or unsubstantiated claims that are made by individuals or advertisement of products and services. E.g. Carlill v Carbolic smoke Ball co ltd [1893] 1 QB 256. Another consequence could be the mere opinions made by a party to the contract that has little legal significance. An opinion would not carry any legal significance because it would not be based on any facts e.g. Bisset v Wilkinson [1927] AC 177. A final consequence of representation could be misrepresentation which results when one party makes a false statement towards the other before the time of contracting in order to persuade the other party to the contract, however, the statement is intended to not form part of the contract Turner (2014).

When the decision is made that a statement is a term rather than a representation, it needs to be determined what remedies are in place for breach of contract. The distinction between condition and warranties needs to be established. Conditions are an essential part of the contract. Being in breach of a contract allows the innocent party the right to terminate the contract and not fulfil any performance on their part as well as sue for damages. Whereas with warranties, it is seen as a minor obligation and not important to the whole agreement and therefore does not destroy the value of the contact. Being in breach of warranty does not give a right to cancel the contract. The innocent party will still have to complete their part of the agreement and can only sue for damages Slapper and Kelly (2010). The following cases demonstrate the difference between conditions’ and warranties. Poussard v Spiers and Pond (1876) because the plaintiff was ill, she was unable to sing in an opera as she had agreed. Thus the defendant could refuse her services when she recovered due to the breach of condition. Furthermore, in Bettini v Gye (1876), the plaintiff agreed to be in London 6 days before the opening performance. However, due to illness, he only arrived 3 days before the opening and the defendants refused his services. It was held that there was a breach of warranty. This means the defendants were entitled to damages however they could not terminate the contract Slapper and Kelly (2010) and Tuner (2014).

References

• Macdonald, E. and Atkins, R. (2014) Law of Contract. 8th ed. Oxford: Oxford University Press
• Turner, C. (2014) Unlocking Contract Law. 4th Ed. New York: Routledge.
• Slapper, G and Kelly, D. (2006) English Law. 2nd ed. Oxon: Routledge
• Slapper, G and Kelly, D. (2010) English Law. 3rd ed. Oxon: Routledge-Cavandish