A beginners guide

By Tatenda Kachembere LLB STUDENT

Understanding
contract law
WHAT IS A
CONTRACT ?
At its core a contract is an
agreement between two or
more parties that creates legal
obligations .
Sir Fredrick Pollock in his
writings defined a contract as
as an agreement between two
or more parties with the
intention that it shall be legally
binding and enforceble before
the courts.[ a promise or set of
promises for something of
value which the law will
enforce]
Key Elements: For a contract to be valid and
enforceable, it generally must contain four
essential elements:

• Agreement: A mutual understanding reached

through a valid offer and acceptance.
• Consideration: Something of value exchanged
by each party as an inducement to enter the
contract (e.g., money, goods, services,
promises).
• Intention to Create Legal Relations: The
parties must intend their agreement to have
legal consequences.
• Capacity: The parties must have the legal ability
to enter into a contract (e.g., not minors or those
deemed mentally incompetent)
Agreement is the first essential element of contract formation. A
binding agreement involves a meeting of the minds (consensus ad
idem) and a contract may be achieved by the acceptance of an offer

Defining an ‘offer’ An offer may be described as a final statement or

Agreement
proposal by one person (offeror) to another person (offeree). The
statement or proposal is usually made on certain terms and often follows
a process of negotiation. In other words, an offer only exists when there
is nothing further to negotiate – either the offer is accepted or it is
rejected. Whether a statement amounts to an offer depends upon
whether the offeree would reasonably interpret it as an offer. This is an
objective test and not a subjective test of what the actual offeree
thought. There are a number of rules that have been developed to assist
in determining whether an offer has been made. A valid offer:
• Must be communicated by the offeror to the
offeree; in this particular instance we make
reference to the case of R v Clarke (1927), an offer is
ineffective until it communicated by the offeror to
the [Link] the offeree is unaware of an offer, then
it would be impossible to accept it. In R v Clarke
(1927) (HC), the court held that Clarke could not
claim a reward for information he had given because,
at the time he gave the information, he was unaware
that a reward had been offered.
• OFFER MAY BE UNILATERAL :
This means a offer may be made to a particular person, a group of
persons, or to the entire world;
Read up on this case as the principle of unilateral offers is highlighted

In Carlill v Carbolic Smoke Ball Co (1893) (CA), the plaintiff (Carlill)

saw a newspaper advertisement placed by the defendant (Carbolic)
claiming that their ‘smoke ball’ would cure all sorts of illnesses
including influenza. More importantly, the advertisement also stated
that the defendants offered to pay £100 to any person who used one
of their smoke balls and then succumbed to influenza within a
specified time. The plaintiff purchased their smoke ball and
subsequently came down with a nasty bout of the ‘flu. She sued the
defendant for the £100. The defendant argued, inter alia, that an offer
must be made bilaterally (that is, an offer can not be made to the
entire world). The court disagreed and held that an offer can be made
unilaterally (that is, an offer can be made to the entire world).
• In contract law, a "mere puff" refers
to a statement that is so
exaggerated or obviously untrue that
no reasonable person would take it
seriously.
• Offers must be distinguished from
What is a non-promissory statements made
during the course of negotiations.
mere puff Objectively, these statements are
exaggerated and a reasonable
person would not expect them to be
true. For example, no reasonable
person would believe that a
toothpaste can really make teeth
‘whiter than white’.
Continuation

• Sometimes, things people say during negotiations aren't actually real promises.
• Think of it like advertising: When a company says their toothpaste makes teeth "whiter
than white," they're not making a serious promise you can hold them to in court.
• It's just a way of talking: They're trying to convince you their product is great, but they
don't actually mean your teeth will be literally whiter than white.
• A reasonable person wouldn't believe it: Anyone would understand that this is an
exaggeration for marketing purposes.
• In simpler terms: You shouldn't take every statement made during negotiations as a
serious, legally binding promise. Some things are just said to persuade you.
A request for further information is not an offer to contract. It
simply seeks more information about a potential deal, without
expressing a willingness to be bound by specific terms.
• Imagine you're interested in buying a car. You might text a friend who owns a car dealership
and ask, "Would you sell me your red sports car? If so, what's the lowest cash price you'd
accept?"
• This is a request for information – you're simply gathering more details. You haven't actually
offered to buy the car yet.
• The dealership's response with the price is merely providing the information you requested.
It's not an offer to sell the car.
Harvey v. Facey Illustrates This:
• In Harvey v. Facey, the plaintiff sent a cable asking, "Will you sell us Bumper Hall Pen? Telegraph
lowest cash price." This was a clear request for information – they wanted to know the lowest
price, not necessarily to buy the property at that price.
• The defendant's response, "Lowest cash price for Bumper Hall Pen £900," simply provided the
requested information. It didn't express a willingness to sell the property at that price.
• The plaintiff's subsequent cable, attempting to "accept" the £900 price, was actually a new offer
to buy the property. Since the defendant never made an offer to sell, there was no agreement.
• In essence: The Harvey v. Facey case highlights the distinction between a request for
information and a genuine offer to contract. It emphasizes that merely providing information
does not automatically create a binding agreement.
Invitation to Treat
• An invitation to treat is a preliminary communication that invites another party
to make an offer. It is not an offer itself and does not express a willingness to
be bound by specific terms. Essentially, it's an opening statement that initiates
negotiations.
Types of Invitations to Treat:
• Display of Goods:
• Concept: The display of goods for sale in a shop window or on shelves is
generally considered an invitation to treat.
• Case Law:
• Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953): This
landmark case established that the display of goods on shelves in a self-
service store constitutes an invitation to treat. The customer makes an offer
by taking the goods to the cashier, and the cashier accepts or rejects the
offer. This principle highlights that the act of putting goods on display is not
an offer to sell.
Advertisements:

• Advertisements:
• Concept: Advertisements in newspapers, magazines, or
online platforms are usually considered invitations to
treat.
• Exceptions: Unilateral offers, such as those offering
rewards for finding lost property or information, are
generally considered to be genuine offers.
Case Law for Advertisements:
• Partridge v. Crittenden (1968): This is a classic case illustrating that advertisements
are generally considered invitations to treat. In this case, the defendant placed an
advertisement in a magazine stating "Bramblefinch cocks, 25s each." He was charged with
unlawfully offering for sale a wild bird. The court held that the advertisement was not an
offer, but merely an invitation to treat. This ruling reinforced the principle that
advertisements typically do not constitute binding offers.
• Carlill v. Carbolic Smoke Ball Co. (1893): While generally advertisements are
invitations to treat, this case provides an important exception. The defendant, a
pharmaceutical company, advertised that their "smoke ball" would prevent influenza,
offering a reward to anyone who contracted influenza after using the product as directed.
The court held that this advertisement constituted a unilateral offer, which could be
accepted by performing the specified act (using the smoke ball and contracting influenza).
This case demonstrates that advertisements can, in certain circumstances, be considered
genuine offers.
• Key Takeaway:
• The general rule is that advertisements are invitations to treat. However, the Carlill case
highlights that advertisements can constitute offers if they clearly indicate an intention to
be bound and specify the terms of acceptance.
Auctions:

• Concept: The auctioneer's call for bids is an invitation to treat.

Each bid made by a potential buyer constitutes an offer, which
the auctioneer can accept or reject on behalf of the seller.
• Case Law:
• Payne v. Cave (1789): This case established that the auctioneer's call
for bids is an invitation to treat. The bidder makes the offer, and the
auctioneer accepts or rejects the offer by acknowledging the highest
bid.
• Harris v. Nickerson (1873): Held that an advertisement announcing an
auction sale is not an offer. It merely invites potential buyers to attend
the auction.
TENDER
• Concept: A tender is an invitation to submit offers. The
party inviting tenders (e.g., a government agency) is not
bound to accept any of the bids.
• Case Law:
• Harvela Investments Ltd v. Royal Trust Company of
Canada (1986): This case addressed the issue of
"referential bids" in tender processes. The court held that
where a tender invitation states that the contract will be
awarded to the highest or lowest bidder, a "referential
bid" (one that promises to exceed any other offer by a
certain amount) is not permitted.
Key Takeaways:

• An invitation to treat is not a binding offer.

• It initiates negotiations and encourages others to make
offers.
• The distinction between an invitation to treat and an
offer depends on the objective intention of the parties.
• Understanding the different types of invitations to treat
is crucial for determining the legal significance of
various communications in a contractual context.
THE
END !!!
!