October 2014 – Offer & Acceptance & Consideration

Question one

The issues of contract law relevant to Maire are offer & acceptance &
consideration.

An offer is defined by Clark as a clear and “unambiguous statement of the

terms that the offeror is willing to contract under, should the offeree accept.”
In Dodey v Egan, offering a medical cabinet “for immediate acceptance only”
was clear and unambiguous and constituted an offer. The opposite was held in
Leonard v Pepsi Co.

In Walker v Glass, the defendant offered to sell property and acceptance had
to be communicated through an attached form along with a deposit in a
certain specified time. The offeree attempted to accept the offer through a
different method therefore the offer was never validly accepted. Acceptance of
an offer does not become valid until it is communicated to the offeror. In
Entores v Miles Far East Corporation, Lord Denning held that where
acceptance is not received, through no fault of the offeree, then it is effective.
This was upheld in The Brimmnes, communication of acceptance was sent to
the offeror during office hours but was not read until the next day this was
through no fault of the offeree so acceptance was valid. The Electronic
Commerce Act 2000 holds that offer and acceptance and revocation etc may
be made by electronic means.

In Walker v Glass, as the offeree failed to pay the deposit, there was no
consideration provided for a valid contract, and more particular to the present
scenario, no consideration was provided in order to enforce a promise to keep
the item on hold for a certain length of time.

An offer can be revoked by the offeror before the valid acceptance of a

contract. Communication of revocation can be express or implied. In Dickinson
v Dodds, the plaintiff heard from a 3rd party that the property had been sold to
somebody else before they validly communicated acceptance. Nevertheless
they had been given notice of revocation, the offer was validly revoked.

It is clear that Maire has made an offer in the present case. In applying Walker,
it is clear that Jim’s acceptance is not valid as it was not supported by the
deposit as consideration. This also applies when determining that Maire is
under no obligation to hold the car for Jim as he has not provided
consideration. When Jim tries to offer her 500€ in person, Maire is not obliged
to accept it as her initial offer has already been validly revoked by being
communicated to Jim.

An invitation to treat is merely an offer inviting offers and is not intended to be

contractually binding should the other party agree to its terms. The general
rule for advertisements is that they are invitations to treat, as seen in Bayers v
Duke, otherwise the offeror would be contractually obliged to contract with
the entire public. The exception to this rule is with unilateral offers which are
capable of being accepted by an act of acceptance as seen in Carlill v Carbollic
Smokeball.

Display of goods will also generally be regarded as invitations to treat. In

Pharmaceutical Society of Great Britain v Boots, it was held that where drugs &
medicines were displayed on a shop floor, these were invitations to treat. The
offer would be made at the counter. MoDermott opines that this rule is
designed to protect shopkeepers from being obliged to sell to anybody who
sees goods in a shop window.

In Leftkavitz v Great Minneapolis Stores it was held that an advertiser can

modify his offer up to the point of acceptance, however once the offer has
been accepted the contract is made and does not have the right to impose
new conditions not made in that offer.

The car that was displayed with a price tag will be deemed an invitation to
treat, whereby the offeree can then disclose their interest in what is displayed
and right up until the point it is communicated as accepted by Andy, he can
modify the price whichever way he likes. Maire therefore cannot insist on the
price of €8000 as it was not a valid offer capable of acceptance.

In conclusion, Jim will not be capable of enforcing a contract of sale for the car
of 5000 with Maire. Similarly Maire will not be capable of enforcing the sale of
the car with Andy at €8000.

Addition Points.

Auctions & Tenders

Displaying an item for auction will generally be regarded as an invitation to
treat that can be accepted or rejected. The same rules apply to tenders. The
exception that applies to both is where it is advertised as being held “without
reserve” (will be sold to highest bidder). It may then be held to be a unilateral
offer. In Smart Telecom v RTE – a bid saying 5% higher than the next highest
bidder. The Irish courts appear to have taken the clauses that they will have to
expressly permitted beforehand and a clear gross figure may have to stated in
the bid.

Fact of Acceptance – Battle of the Forms.

When an offeree rejects an original offer he cannot latter change his mind and
accept it on those terms if new terms have been offered. In Butler Machine
Tool v Ex-Cell-O-Corp, the sellers of a machine tool sent a form to the buyers
offering certain terms. Buyers sent back a form with other terms (counter
offer). Sellers accepted this but thought the buyers were accepting under the
original offer. The buyers counter offer was what was accepted. Lord Denning
departed from ordinary offer & acceptance rules (offer & acceptance must
mirror each other) in favour of common sense approach.

Implied Acceptance through Conduct

Russel v Baird & Hoban – “if I do not hear back from you in 3 days.” Silence
cannot be deemed acceptance.

Tansey – student enrolled under terms of “2 free exam re-sits” – during a

changed to 1 – she didn’t know therefore couldn’t have accepted through
conduct.

Agreement to Negotiate
Walford v Miles – too uncertain
Gibson v Manchester City Co.

CS Trentham
 Where subcontractors (3rd parties) become parties during the performance
of the main contract (even though no offer & acceptance in place) – there
is still a contract in place.
 D liable for p.s penalty clauses under main contract.
Consideration from Estoppel March 2015
Question 6.

Consideration is a vital component in the contract, McDermott states that the

doctrine is a mechanism used by the common law to distinguish promises
which enforceable from ones that aren’t. in Thomas v Thomas the court held
that consideration must be “something of value in the eyes of the law moving
from the promises, either to his detriment or to the benefit of the promiser.”
Promising Estoppel is an equitable remedy used to estop a promisor going back
on his promise where no consideration has been provided in order to rectify
the wrong.

Consideration need not be adequate but must be sufficient. In Thomas v

Thomas the promisee paid 1 pound rent per annum and this was deemed to be
adequate consideration. In O’Neil v Murphy a builder carried out work in
return for prayers being said for him at church, this was not sufficient
consideration in the eyes of the law.

Where there is an already existing public duty: Harris v Sheffield United, or

already existing contractual duty as in Stille v Meryck, a contract for part
payment of an existing debt must be supported by fresh consideration, this is
known as the Pinnel Rule.

The rule seems to be struck out, however by the decision of William v Roffey
Bros, the plaintiff was a sub-contractor who agreed to carryout extra work for
extra payment as the job could not be completed otherwise. When the
defendant refused to pay the extra installments, arguing no fresh
consideration had been provided as the project needed to be done anyway.
The court held that he was estopped from going back on his promise as
without the extra work being completed he would not benefit commercially –
so the extra work constituted real consideration.

Acts of forbearance may constitute sufficient consideration i.e. where the

offeree has suffered some detriment. In Hamer v Sideway the offeree’s uncle
agreed to pay him a sum of money if he abstained from alcohol until he was
21, the offeree’s surrender of his legal right was detrimental to him and
constituted consideration. In O’Keefe v Ryanair, the offeree waved her right to
anonymity and this constituted adequate consideration.
Consideration must have passed from the promise to the promiser: Tweedle v
Atkinson, this must happen prior to the contract being formed. In Roscorla v
Thomas, the seller of a horse told the purchaser after the sale that it was free
from vice, this could not be a binding promise as it was made after
consideration had passed. An exception to this was seen in Lampleigh v
Braithwait where the promise travelled to London to obtain a royal pardon.
The promisor refused to pay him when he returned as he argued consideration
had not passed – it was however implied that he would be paid on return. If an
act is done before promise to pay at promisors request, may still constitute
consideration.

Promissory Estoppel is different as there is a requirement of an already existing

contractual relationship between the parties, such as in Coombe v Coombe
where a husband and wife already had a pre-existing contract i.e.
consideration had passed.

Promissory Estoppel occurs where no legally binding promise has been made,
it suspends rights under the contract but does not extinguish rights. For
example, in the High Trees case the plaintiff offered to reduce rent prices for
the defendant tenant during WWII. When the war ended the original rent price
was payable however the plaintiff sued for outstanding rent payable during the
war, he argued the agreement was not enforceable due to no fresh
consideration being offered. He was estopped from going back on his promise.
In The Barge Inn v Quinn, trading difficulties led to a temporary rent reduction
for the tenant, similarly to High Trees, the landlord then sought outstanding
rent due. Laffoy J set out 6 factors relevant for promissory estoppel;
1. There must be a pre-existing contractual relationship. This differs from
consideration in common las as consideration must have passed in
legally enforceable contracts: Roscorla v Thomas.
2. Must be an unambiguous representation
3. The promisee must have relied on the statement. In Daly v Minister of
Marine the plaintiff was mistakenly promised a fisheries grant but did
not rely on it. In The Barge, the promise relied on the promise.
4. There must be an unfairness
5. The remedy is at the courts discretion.
6. Finally, Promissory estoppel must be used as ‘a shield not a sword’ i.e. It
cannot be used as a cause of action. This differs from consideration in
the common law. In the Barge, the promisee could only rely on
promissory estoppel to shield him from the promiser going back on his
word. The recent Australian case of Walton Stores v Maher however has
 seen a shift by the common law courts, to perhaps doing away with the
shield not a sword caveat. The promisee demolished a building on his
land on foot of a promise that Walton would buy his land and was half
way through building store for Walton. He could rely on Promissory
estoppel as a right of action here.

In conclusion, promissory estoppel suspends existing contractual rights but

does not extinguish them. Rules of consideration in the common law are
certain, and courts are strict in their enforcement of promissory estoppel so as
to not undermine certainty. There has been a shift by the courts to becoming
less strict on certain aspects of rules under both consideration and promissory
estoppel. Most notably in relation to the Pinnel’s rule and to ‘shield not a
sword caveat.’
Contract – March 2019 – Q5
Interpreting contractual documents

The courts’ approach to interpreting express terms in contracts has changed in

recent years. The UK and Irish courts have traditionally been very literal in their
approach to interpreting the meaning of terms in contract, ignoring the
context in which the contract was constructed.

In Arnold v Britten, Lord Newberger stated that “unlike commercial common

sense and the surrounding circumstances of parties, the parties have control
over language used in the contract.” The interpretation of contractual terms
will arise where there is ambiguity in the term, the idea of contextualizing the
surrounding circumstances of the contract in order to ascertain the true
meaning of the parties was first mentioned by Lord Hoffman in investors
compensation Scheme Ltd v West Bromwich building society.

The implication of a contractual term is a product of the correct interpretation

of the surrounding circumstances. Words on their own may have one meaning,
however in Rainy Sky v Kockmin Bank it was held that where that meaning is so
inconsistent with the terms in rest of the contract the courts should not
interpret that meaning. Where the contract is being assessed objectively by
reference to the contract as a whole, in Rainy Sky Lord Clarke states that
reasonableness as to how it should be interpreted can be drawn from such
factors as industry standards and commercial norms. Where there are two
possible constructions the courts are now entitled to prefer that which is
consistent with business common sense.

In Flynn v Breecia there was ambiguity concerning a term in the contarct

regarding the sale of shares. The court endorsed the approach taken in West
Bromwich and contextualized the circumstances surrounding the formation of
the contract in order to determine whether the reasonable man may have
implied a certain term into the contract. Ultimately the courts were
unconvinced that the term could be implied, given regard to business common
sense. The level of professionalism and detail that was put into the formation
of the contract was a major factor in the courts refusing to depart from the
natural meaning of the words used. Lord Hoffman had previously stated in AG
of Belize v Belize Telecom that the courts cannot imply a term lightly so as to
make it more fair and reasonable.
In Woad v Capita (2017) the UK court interpreted an indemnity clause in an
agreement for sale and purchase of shares in an insurance company. The court
again departed from the traditional Literal approach to contractual
interpretation by looking at the contract as a while in order to ascertain
whether to give more or less weight to elements in the wider context of the
contract. Similarly to Flynn v Breccia, the courts had to strike a balance
between the indications given by the language sued and indications of
competing constructions more in line with business common sense. The courts
again felt that the level of professionalism and detail put into the formation of
the contract meant that the natural meaning given to the words used could
not be departed from.

The Irish courts again affirmed this approach to interpreting contractual terms
in Law Society of Ireland v MIBI (2017). The question arose as to whether a
term entered into between MIBI and the minister for transport was to be read
literally or with regard to the contract as a whole. Clark J in the supreme court
asserted that the contract was to be interpreted with regard to surrounding
circumstances and therefore the true meaning of the term could be
interpreted in favour of MIBI that they did not intend to be liable for the
outstanding insurance claims of insolvent insurers.

In conclusion, the courts have moved from a literalist approach to contractual

interpretation to striking a balance between the indications given by language
and the implications given by the reasonable man as to the objective
intentions of the parties by looking at the contract as a whole. The courts
should still give primary focus to the natural meaning of the words used, as
they must refrain from re-writing contracts. It is not the purpose of the court
to relieve a party from the consequences of entering into an agreement on
foot of poor legal advice. Where these words are ambiguous however, the shift
by the courts to this approach is favourable as it helps ascertain the true
objective of the parries when entering into a contractual agreement.
October 2019 Q8 (b)
Courts approach to implying terms

An implied term will not be expressed in the contract, however the courts may
intervene and imply certain terms into the contract. It is only after construing
the express words used in the contract that the courts may consider the
implication of a term. A term may only implied (1) as a matter of fact or a (2)
matter of law. The courts cannot simply imply a term because it would be
reasonable or fair.

Where terms are implied as a matter of fact, the court attempts to identify
what both parties have intended but not expressed in the contract. The three
test that are used are; (1) the officious bystander test, the (2) business efficacy
test and the (3) custom and practice test.

The officious bystander test is satisfied where terms are so obviously intended
by the parties that they need not be stated in the contract. The courts are
looking at the mutual and shared intentions of the parties, and not the
reasonable man as the name may suggest. This was used in Shirlaw v Southern
Foundations. In Horan v O’Reilly, the supreme court also used this test. There
were four men who formed a lottery syndicate, each paying €1.50 each for
weekly draws. The plaintiff managed the syndicate, he collected the money.
When the winning ticket was bought with €6, and not €7.50, the plaintiff
argues that because he covered one of the syndicate members arrears, he was
entitled to his portion of the winnings. In endorsing the officious bystander test
the court held that the contract could never have implied a term that the
plaintiff could vary the terms of the contract over arrears. In Flynn v Breccia,
the court also considered the test and found that it required two things; (1)
that reasonable people in the position of the parties would have agreed to the
terms and (2) that they would have without doubt have accepted the term.

The Business Efficacy test is used where it is presumed that the parties
intended that their agreement would be workable and effective. In ‘The
Moorcock’ the plaintiff entered into an agreement to have his boat docked at
the defendants wharf. The ship was damaged due to an uneven ridge and the
court held that in order to give business efficacy to the contract it would have
to be implied that the jetty was safe for the moong of boats. In Dakota
Packaging v Wyeth Ireland the plaintiff argues that a term be implied to a
contract of supply that where the defendant was changing supplier they would
give a 12 month notice of this and would be obliged to take a certain amount
of orders from them in that time. The supreme court held that this was a step
too far in giving a contract business efficacy as the arrangement was only for
individual order. In Baird Textiles v Marks and Spencer an agreement was in
place whereby the plaintiff would supply the defendant with ‘reasonable
quantities at a reasonable price.’ The court refused to imply a term as there
was no objective means of assessing ‘reasonable’ quantities or prices.

The custom and practice test is used where certain customs and practices are
prevalent in a particular industry. In O’Connail v Graelic Echo, a term was
implied into a journalists contract of employment that he would receive
holiday pay as it was customary in that particular industry.

Terms may also be implied in contracts as a matter of law. Terms may be

implied in light of the Irish constitution. In Glover v BLN, a term in an
employee’s contract was implied to avail of his constitutional right to fair
procedure where he is dismissed. In Meskell v CIE, the defendant was
prohibited from undermining the plaintiff freedom of association.

Terms may be implied under common law. The contract (1) must be of a
defined type and it (2) must be necessary to imply the term. In Liverpool City
Co. Vlrwin the defendant refused to pay rent as their apartment they were
tenants in was in a dilapidated state and the defendants argues there was ab
implied term that they could not live in such conditions. The court looked at
the unequal bargaining power of the contract and implied the term which
would require the council to fix the apartment and make the contract truly
bilateral.

Terms can also be applied under statute, such as the sale of goods and supply
of services Act 1980, the Employment Equality Act 1978 etc.

In conclusion, the courts have several methods of implying terms into

contracts as a matter of fact and as a matter of law. They will never simply
imply a term, as it would be reasonable to do so.
Misrepresentation – March 2019
Question 3

A statement which is made before a contract is concluded can form part of the
contract. If it does form part of the contract, and the statement turns out to be
false, then it is open to the party who has been misled to sue for breach of
contract and recover damages on fact of that breach.

There are several elements of a statement that must be satisfied for it to form
part of the contract, in order to then be an actionable misrepresentation. (1)
The statement made must be one of fact, not a mere opinion or intention. If a
statement of intention (2) is honestly held at the time of the contract then it
cannot be false and will be an innocent misrepresentation. In Esso Petroleum v
Marsden, the defendant had particular expertise regarding projected sales of
oil in a particular area. Due to this it was reasonable that the plaintiff would
rely on this misrepresentation. The defendant was in a much better position to
verify his statement, so this amounted to an actionable misrepresentation. In
Hummingbird Motors v Hobbs, the representee had been represented that the
car he was contracting to buy had a certain mileage. This turned out to be
incorrect, however the defendant honestly held this belief at the time and was
in fact in no better position than the representee to verify the car’s mileage.
His statement therefore did not amount to a misrepresentation.

Esso will certainly apply to the current situation as Invest Ltd, being an
investment firm are in a better position than Peter to verify statements such as
those on retail space and planning permission availability. Even though these
statements were not mentioned in the contractual documentation, it is
reasonable to say that Peter relied on the statements given by Invest Ltd in the
brochure.

The representation (3) must induce the representee to entering the contract.
In Smith v Chadwick, the representee did not rely on the statement in question
therefore there was no actionable misrepresentation. In Edington v Edington,
the statement only partially induced the representee, this was still actionable.
In Darlington v Meath, the representee bought land on foot of a statement
from the country council that the land would have planning permission to build
an entrance onto a main road. The representor gave this planning permission
to somebody else. The statement induced the plaintiff to enter the contract
and therefore amounted to a misrepresentation.
Given that the square footage and planning permission of the shopping centre
are fundamental specifications, it should be found that the statements by
Invest Ltd in their brochure induced Peter into entering the contract.

Contracts Uberrimae Fides are generally in the form of Insurance contracts,

they are agreements of good faith and it places an obligation on one party to
disclose all relevant material information to the other party when entering a
contract. In Kelleher v Irish Life and Aco Road v Insurance Corp of Ireland the
Irish courts have used the reasonable man test to objectively determine what
facts must be disclosed to the other party, in other words, what facts are
material to the contract. In Coleman v New Ireland Insurance the plaintiff
failed to disclose that she had been to a specialist about her eyesight 8 years
before entering an insurance contract. This did not amount to
misrepresentation as she believed at time she had disclosed all material and
relevant information.

There are 3 types of misrepresentation, Fraudulent, negligent and innocent.

1. Fraudulent misrepresentations are made where the person knows or is

reckless as to whether the statement is true. In Fenton v Schofield, the
seller of land knew his statement was false when he represented that a
river running through the land would yield 400 salmon a year.
2. Negligent misrepresentations are when the maker of the statement is
careless as to whether it is true or not. In Esso, did not deliberately make
a false statement but did so carelessly.
3. An innocent misrepresentation is neither fraudulently or negligently
made but is nevertheless untrue.

The details of size and planning permission will definitely be regarded by the
court as material to the contract. We do not know if Elaine purposely made
these false statements, nevertheless she should have taken greater care in the
details of the brochure and a negligent misrepresentation looks likely. Elaine
may argue that at the time she made the statement, the shopping centre did
technically have planning permission. She may argue that she did not have
knowledge of its expiration in April, however again as a person of expertise in
the area she should have acted with greater care.

Where a misrepresentation is established rescission is an equitable remedy

which allows the other party to avoid the contract. As it is an equitable remedy
it will be awarded at the courts discretion and other factors will be taken into
account. Where the contract is rescinded it is as if the contract had never
existed and seeks to put the parties back in the position they were in before
entering the contract. Peter must not wait too long as rescission will only be
granted in good time: Leaf v International Galleries. If Peter does not seek to
rescind upon finding the misrepresentation he will affirm the contract and will
lose his right to rescind.

In conclusion, Peter has a strong case for rescission on foot of

misrepresentation, and his right to rescind will depend on how promptly he
acts in seeking rescission.

Additional:
Silence as a misrepresentation
Cs Gill v McDowell
 Saying nothing about true breed of bullock

Cs Spice Girts v Aprilia

 Saying nothing about 1 member leaving while at same time filing
endorsement of products.

Basis of the Contract Clause

 Insurance
 All answers must be true and complete
Cs Keenan v Shield Insurance
 One small mistake by insured in form
 Harshness means be viewed contra-proferantem.