Basic Principles of English Contract Law Allen and Overy

English contract law binds both England and Wales. This law shares a legacy with the commonwealth countries. To consider remedies for breach of contract in English law, you must understand the difference between common law and equity (Hill, 2001, p. 151). In the past, England had two legal systems that operated side by side and each had different rules. The common law was administered by the common and king`s bench courts, while equity was administered in the Court of Chancery under the chairmanship of the Lord Chancellor. Nevertheless, these two laws are now administered by the same court, although they are still two different doctrines (Halson, 2001, p. 2). Basic English Contract Law Modified by: BASIC PRINCIPLES OF ENGLISH CONTRACT LAW Prepared by lawyers from: ALLEN & OVERY www.a4id.org Formation of a contract □ □ □ A contract is an agreement that creates obligations that are performed or recognized by law.

In common law, there are 3 basic foundations for creating a contract: (i) the agreement; (ii) contractual intent; and (iii) considerations. The first requirement of a contract is that the parties have reached an agreement. In general, an agreement is reached when one party makes an offer that is accepted by another party. In deciding whether the parties have reached an agreement, the courts apply an objective test. OFFER□ □ An offer is the expression of the will to conclude contracts under certain conditions, with the intention that it will be binding as soon as it is accepted by the person to whom it is addressed. There must be an objective statement of intent by the bidder to be bound by the bid if it is accepted by the other party. Therefore, the supplier is bound if its words or conduct are likely to cause a reasonable external observer to believe that it intends to be bound, even if it does not actually have such an intention. This was considered the case when a university offered a place to a planned student due to a spelling mistake. Stover v Manchester City Council [1974] 1 WLR 1403 □ □ □ D sent P a document entitled Sale Agreement and a letter stating: If you sign and return the agreement, I will sign and return to you the agreement signed on behalf of the Council in exchange for P and return the sale agreement Labour Party has taken control of the Council and has not returned a signed copy, P refused to sell the property and filed a lawsuit for breach of contract. Was there an agreement? The court ruled: There was a binding obligation for D to sell: Lord Denning: Said: “. In contracts, one does not examine the real intention in a man`s mind.

You look at what he said and did. A contract is created when, by all appearances, there is a contract. A man cannot walk out of a contract and say, “I had no intention of making a contract” if he did it according to his words. objective. to a reasonable man, D`s letter seemed to commit to selling the property when P returned the documents. □An offer of a study site was acceptable, but an injunction was denied. The court provided guidance on how to decide whether leave was necessary to appeal to the Court of Appeal. 
 OFFER□ □ □ An offer can be addressed to a single person, to a specific group of people or to the world as a whole. An example of the latter would be a reward poster for the return of a lost animal. An offer can be made explicitly (by words) or by behavior. An offer must be distinguished from an invitation to treatment in which one person does not make an offer, but invites another party to do so. Whether a statement is an offer or an invitation to treatment depends mainly on the intention with which it is made.

INVITATION TO PROCESSING □ An invitation to processing is not made with the intention that it be binding as soon as the person to whom it is addressed gives his consent to its conditions. INVITATION TO PROCESS PROCESSING □ Common examples of processing invitations are advertising or displaying goods on a shelf in a self-service store. Partridge v Crittenden (1968) 2 All ER 421 □ The defendant placed an advertisement in a small part of a magazine offering blackberry stench for sale. Section 6 of the Bird Protection Act 1954 criminalizes offering such birds for sale. He was charged and convicted of the crime and appealed his conviction. The court ruled: The accused`s conviction was quashed. The announcement was an invitation not to process an offer. The literal rule of legal interpretation has been applied.

□ boots introduced the new self-service system in its stores, where customers picked up the goods from the shelves, added them to their cart, and then took them to the checkout to pay. The PSGB brought an action for a declaration of the legality of the system as regards the sale of medicinal products which had to be sold in the presence of a pharmacist under the law. Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd [1953] 1 QB 410 □ The court therefore had to determine where the contract was concluded. The court ruled: The goods on the shelf represent an invitation not to process an offer. A customer brings the goods to the checkout and makes an offer to purchase. The seller then chooses whether or not to accept the offer. The contract is therefore concluded at the caisse in the presence of a pharmacist. Carlill v Carbolic Smoke Ball Company [1893] 2 QB 256 □ A medical company announced that its new drug, a ball of carbolic smoke, would cure the flu, and if it didn`t, buyers would receive £100.