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Chapter one

What is a contract?[/vc_column_text][vc_accordion active_tab= »false » collapsible= »yes »][vc_accordion_tab title= »PART 1″][vc_column_text]

Part 1 – Text 1 – information

Introduction to contracts

A contract can be distinguished from a simple agreement by the fact that its terms are enforceable in law. Consequently, failure by one party to respect the terms of a contract will give the other party to the agreement a right of action before the courts.

Four basic requirements are needed for a contract to come into existence:

  • an offer There must be an offer made by the offeror to another party referred to as the offeree;

  • acceptance There must be clear and unqualified acceptance of the offer by the offeree;

  • consideration Each party must offer the other party a benefit in return for entering into the agreement; that benefit is referred to as consideration;

  • an intention to create legal relations The parties must demonstrate that they had an intention to create legal relations between them.

Can everyone enter into a contract?

Only parties possessing the necessary capacity are thought to be able to enter into a contract. In most common law jurisdictions, only people over the age of eighteen1 and in sound mental health are capable of entering into a contract. Minors and the mentally ill are not normally considered as having the necessary capacity to enter into a contract as they do not have a sufficient understanding of the consequences of their acts.

What is an implied contract?

Even though the parties have not expressly entered into an agreement, the courts sometimes nonetheless consider that they are contractually bound. They are said to be in an implied contract. As we have seen, an implied contract is deemed to exist even though the parties did not expressly agree to enter into the agreement. The common law recognizes two principal categories of implied contract:

  • contracts implied by fact resulting from the behavior of the parties For example, where the parties continue to perform a previously existing contract that has in fact come to an end, the court will consider that the parties have entered a new implied in fact contract, based on their behavior. The terms of the new implied contract will normally be the same as the previous express contract that came to an end;

  • contracts implied by law A contract implied by law, also known as a quasi-contract, may be implied by the courts as a means of preventing unjust enrichment by one party over another. In such cases, it is not the behavior of the parties that brings the contract into effect; rather the contract is implied because the courts consider that in the circumstances of a particular case, a party should be required to act in a certain way.

Are there any restrictions concerning the subject matter of a contract?

In most western democracies, the parties to a contract are free to make any agreement they wish, as long as the subject matter of the contract is not illegal. If the content of the agreement is illegal, the contract is considered to have no existence in the eyes of the law.

Classification of a contract

Depending on the status of its legality, a contract can be classified as a(n):

  • enforceable contract An enforceable contract is one that is valid in law meeting all the requirements of a legally binding agreement;

  • unenforceable contract An unenforceable contract is an agreement between parties which is not considered to be binding as one or more of the four ingredients necessary for the formation of the contract are not present. For example, an agreement where one of the parties failed to provide consideration for the other party;

  • void contract A void contract is one that is validly constructed, i.e. all the four ingredients necessary for a contract are present; however its subject matter is not valid. For example, the case of an illegal contract in which the parties agree to defraud the tax authorities. In such a case, it does not matter that a correctly formed legal agreement exist between the parties as such agreements are considered void and have no existence in the eyes of the law;

  • voidable contract A voidable contract is a contract that is binding on only one of the parties to the contract and where the other party has the choice to enforce it or not. For example, a contract entered into by a minor. In the case of such contracts, the minor has the right, either to enforce the agreement or alternatively to consider the agreement unenforceable.

Vocabulary

Term – disposition/clause

In law – en droit

Failure – non respect/manquement à

Party – partie

Respect (to) the terms of a contract – respecter les dispositions d’un contrat

Party to the agreement – partie à l’accord/contractante

Right of action – droit d’ester en justice

Requirement – condition

Offer – offre

Offeror – offrant

Offeree – destinataire de l’offre

Unqualified acceptance – acceptation inconditionnelle

Consideration – contrepartie

Intention – intention

Possess (to)être en possession de

Capacity – capacité

Sound – sain/bon(ne)

Minor – mineur

Mentally ill – malade mental

Understanding – compréhension

Implied contract – contrat tacite

Deem (to) considérer

Expressly – expressément

Contract implied by fact – contrat tacite résultant du comportement des parties

Behavior – comportement

Previously – antérieurement/auparavant

Contract implied by law/quasi-contract – quasi-contrat

Prevent (to) – empêcher/éviter

Unjust enrichment – enrichissement sans cause

Subject matter (of a contract) – objet (d’un contrat)

In the eyes of the law – aux yeux de la loi

Depending on – en fonction de/selon

Enforceable contract – contrat exécutoire

Valid – valide

Meet (to) the requirements – remplir les conditions

Unenforceable contract – contrat non exécutoire

Binding – juridiquement contraignant/obligatoire

Void contract – contrat nul

Defraud (to)frauder

Voidable contract – contrat annulable contre lequel une des parties peut intenter une action en nullité (1304 CC)

Part 1 – TEXT 1 – EXERCISES

1. Vocabulary test

Fill in the missing words using the vocabulary in Text 1

  1. A contract will not be considered ______ by the courts if one of the four basic ______ necessary for a contract is missing.

  2. Even where the parties have not expressly agreed a contract between them, the ______ may find that an ______ contract exists between them.

  3. When a contract is ______ ab initio it is said not to exist in the eyes of the ______.

  4. There are two types of ______ contract, contracts implied by law and contracts implied by ______. The former are also known as ______.

  5. Minors and the mentally ill are not considered as having the necessary ______ to enter into a contract and thus, they are not ______ by the agreements they make.

  6. A contract is said to be ______ when it meets all the conditions necessary to be considered a valid agreement. Where it does not, the contract is said to be ______.

  7. For a contract to be valid, it is necessary that the ______ to the contract exchange ______ between them, i.e. that each one receives a benefit in return for entering into the agreement.

  8. A contract is said to be ______ if it is void for one of the parties but may be ______ by the other party to the agreement.

  9. The courts will ______ a contract to exist in law in order to prevent unjust ______ by one of the parties.

  10. Once the ______ has made an offer to another party, there must be clear and unqualified ______ of the offer by the ______.

2. Vocabulary test

Write sentences with the following pairs of words. Your sentence should demonstrate your knowledge of the relationship between the words

  1. Valid/enforceable

  2. Consideration/benefit

  3. Capacity/intoxicated

  4. Void/voidable

  5. Implied contract/express

  6. Offer/offeree

3. Knowledge test

Each of the following statements is false; do you know why? Write a sentence stating why it is false

  1. The courts will consider an implied in fact contract to exist in order to prevent unjust enrichment by one party over another.

  2. An agreement without consideration is classified as a void contract.

  3. Once a person is intoxicated, it is impossible for them to be deemed capable of entering a contract.

  4. The offeror is the person to whom an offer is made.

  5. Another name given a contract implied by fact is a quasi-contract.

Answers Chapter 1 – Part I – Text 1 – Exercise 1

a) Enforceable, requirements. b) Courts, implied. c) Void/illegal, law. d) Implied, fact, quasi contracts. e) Capacity, bound. f) Enforceable/binding, unenforceable. g) Parties, consideration. h) Voidable, enforceable. i) Imply, enrichment. j) Offeror, acceptance, offeree.

Answers Chapter 1 – Part I – Text 1 – Exercise 2

a) No, a contract to prevent unjust enrichment is not based on the behavior of the parties but is an implied in law contract, created by the courts in order to prevent a party gaining an unfair advantage over the other. b) No, an agreement without consideration is not a contract and thus is deemed to be an unenforceable agreement; it cannot be considered to be a void contract as it is not even a contract c) No, an intoxicated person is thought capable of entering into a contract where it can be shown that (s)he understood the nature of his/her commitment despite the intoxication. d) No, the offeror is the person who makes the offer and the offeree is the person to whom the offer is made. e) No, a quasi-contract is the name given a contract implied in law.

Part 1 – Text 2 – More information

Introduction to contracts

In the common law, a contract can be compared to a form of private law, whereby the signatories to the agreement undertake to carry out acts or duties in anticipation of the rewards set out therein2. A contract can be distinguished from a simple agreement between friends by the fact that it is enforceable in law. Indeed, the failure by one party to respect the terms of the contract will give the other party to the agreement a right of action before the courts. However, for an agreement to be considered a contract and thus enforceable in law, it must respect certain rules and conditions. It is for this reason that businesses normally request a lawyer to draft important agreements for them. Under the common law, four basic requirements must be met in order for a contract to come into effect. There must exist:

  • an offer made by the offeror;

  • acceptance of the offer by the offeree;

  • consideration provided by both parties, i.e. some kind of payment or exchange of value, not necessarily money; and

  • an intention to create legal relations, i.e. proof that the parties intended to enter into a legally binding contract.

When these four elements are present, a meeting of the minds is said to have occurred between the parties, resulting in the creation of a binding agreement.

What is an offer?

The first requirement for the formation of a contract is the existence of an offer made by the offeror to the offeree. An offer must be distinguished from an invitation to treat. An invitation to treat is merely an indication by one party that they are interested in doing business with the other party, but it falls short of being an actual offer. Often this is because it lacks sufficient detail to allow a real acceptance by the offeree. For example, if X, who has three cars, offers to sell Y “his car” without specifying which of the three cars he is referring to, it will be impossible for Y to accept this offer as he does not have enough information for real acceptance to take place. In a case such as this, X will be said to have made an invitation to treat. For example, calls for tender are normally classified as invitations to treat; thus, the party replying to the tender will be considered to have made an offer, which may then be accepted by the party that issued the tender. In the same way, at an auction, when the auctioneer places the goods for auction, he is said to be making an invitation to treat and it is the party who makes the bid and thus not the auctioneer that is thought to make the offer; the offer may then be accepted or not by the auctioneer. Thus, by presenting the goods for auction the auctioneer is normally considered to be making an invitation to treat. However, if the auction is advertised as being without reserve, i.e. that there is no reserve price under which the goods will not be sold, then there is case law that suggests that in such cases the auctioneer is making an offer to whoever makes the highest bid during the subsequent auction3. It is important to remember that there is no hard and fast rule distinguishing an offer from an invitation to treat and each situation is decided on its facts. For example, it is a general rule of the common law that an advertisement offering something for sale is not an offer but merely an invitation to treat. However, an advertisement may be construed as an offer, where there is sufficient certainty in the advert. For example, where the following conditions are met an advertisement may be considered to amount to an offer:

  • the advertisement is precise as to the price and quantity of the goods for sale;

  • the advertisement is definite insofar as the offeror clearly indicates his willingness to be bound by the offer in the advertisement and a timeframe is specified as regards the duration of the offer.

In distinguishing between an offer and an invitation to treat, the courts look to the facts of each case and apply an objective test, asking themselves what a reasonable person would consider to have occurred, i.e. whether an offer or an invitation to treat has been made. Where the transaction is occurring between professionals, normal industry practice will be significant, i.e. what people in the relevant industry would consider appropriate behavior.

The general rule is that an offer may be withdrawn by the offeror at any time prior to acceptance by the offeree. However, the revocation of the offer must be communicated to the offeree; if not, then the offer will remain operative.

Acceptance

Once an offer is made by the offeror to the offeree, there must be clear and unqualified acceptance of the offer by the offeree, if a contract is to come into effect. It is for the offeror to prescribe the manner of acceptance.

However, the offeror is not allowed to force a contract into existence. For example, imagine X writes an e-mail to Y:

I offer you my Ford car for sale. If I do not hear from you within ten days, I will presume that you have accepted the contract”.

Will Y be bound by contract with X if he does not contact X in the prescribed ten day period? The answer is that he will not be bound. X has no right to force a contract on Y and make Y perform an act in order to avoid its formation. Thus, Y may ignore such an e-mail without incurring any legal liability toward X.

Moreover, if the offeree (Y) seeks to modify the terms of the offer made by X, he is said to have made a counteroffer, which will bring X’s original offer to an end. For example, X might offer to sell his car to Y for €5,000. If instead of accepting the offer Y chooses to offer X €4,500 for the car, he is said to have made a counteroffer. The effect of a counteroffer is to bring X’s original offer to an end. Thus, if X refuses Y’s new counteroffer of €4,500, Y cannot then go back and seek to accept X’s original offer at €5,000, as it has been extinguished by Y’s counteroffer. Y’s belated acceptance of X’s offer to sell the car for €5,000 is considered to be a new offer made by Y to X, an offer that X is free to accept or reject. Thus, attempts by Y to seek a better bargain by automatically offering X less money for the car can cost Y the deal. However, it is important to distinguish between a counteroffer and a request for information concerning the original offer made by X. For example, Y has the right to inquire as to whether or not delivery of the car to Y’s home by X is included in the offer to sell the car for €5,000. A request for information by Y seeking to clarify the offer that has been made, but not seeking to change the terms of that offer is not considered to be a counteroffer and thus does not bring X’s offer to an end.

Consideration

Consideration is the exchange of value or benefit that each party gives the other in return for their respective promises under the contract. Frequently, the consideration people offer is money, but it can be anything on which a value can be placed. People normally enter into a contract in order to receive something from the other party and whatever it is that they receive will be the consideration. If there is only consideration flowing from one of the parties and none coming from the other party, then the courts will consider that the offer of a gift has been made and they will refuse to enforce the offer of a gift. Consequently, if X offers Y his car and Y accepts without offering any consideration in return, X will not be bound by his offer. Without an exchange of consideration from both parties, an agreement is not considered to be a binding contract.

Imagine that X wins the lottery and immediately promises to give Y €10,000. Two weeks later, Y asks X for the money and X refuses, saying that he has changed his mind. Can Y sue X for the €10,000? No, because Y has offered X nothing in return for the €10,000, i.e. he has offered him no consideration and as a result there is no binding agreement between them. In legal terms X is said to have made Y a bare promise that is not enforceable in law. In fact X has made Y a promise of a gift, which he is free to withdraw at any time.

However, once the existence of consideration between both parties is established, it is a general rule of the courts not to concern themselves as to whether the consideration given by each party is adequate. People are free to do business on the terms of their own choosing. Thus, if A wants to sell B his convertible Rolls Royce for a reduced price of €5,000, the common law courts will not prevent the contract coming into effect. The €5,000 offered by B will be considered sufficient consideration to enforce the contract. Thus, the law requires the existence of consideration but is not inclined to consider whether it represents good value.

For the consideration offered by the parties to be considered valid, it must not be something that a party is already bound to do. For example, a policeman who arrests a criminal may not normally collect the reward offered for finding the criminal. Why? Because a policeman is already under a duty to find criminals and is already paid for this job. However, if he dedicated his free time to finding the criminal, then he probably would be able to receive the reward, as he will have gone beyond the duty for which he is paid.

The common law rule requiring the existence of consideration has been slightly modified by the courts ruling in Equity. Under the equitable doctrine of promissory estoppel, an offer made by X to Y may be enforceable by Y, even where Y fails to provide consideration. However, for promissory estoppel to apply, it is necessary for Y to show that:

  • X, the offeror knew that Y, the offeree would rely on his promise; and that

  • reliance by Y on X’s promise was reasonable in the circumstances.

Where these two criteria are fulfilled, the court applying promissory estoppel may decide that it is not necessary for Y to have provided consideration for X, in order for Y to enforce X’s promise. However, it is important to remember that the doctrine of promissory estoppel is an equitable remedy and its application is in the discretion of the courts; thus it will only be applied in limited circumstances. Indeed, the doctrine of consideration is a fundamental requirement of contract law and exceptions to its application are very rare indeed.

Intention to create legal relations

Finally, in order for a contract to come into effect between the parties, the courts require that the parties demonstrate that when entering the agreement they had an intention to create legal relations.

If there is a dispute between the parties as to whether this intention existed, the courts will look to the:

  • context of the agreement, for example whether it was a business agreement or an agreement between friends; and

  • subject matter of the agreement, i.e. the content of the agreement. For example, whether it is an agreement to meet for a drink or an agreement to guarantee a loan.

Moreover, there is a rebuttable presumption of an intention to create legal relations as regards agreements of a commercial character and that in the case of domestic agreements, for example an agreement between a couple, there is a corresponding rebuttable presumption of no such intention.

Can everyone enter a contract?

Only parties possessing the necessary capacity are able to enter into contracts. In most jurisdictions, only people over the age of eighteen and in sound mental health are thought to have the necessary capacity to enter into a contract. Companies having a recognized separate legal personality are also considered as having capacity and thus may enter into contracts in their own name. Minors and the mentally ill are not normally thought to have the necessary capacity to enter into a contract, as the law considers that they do not have sufficient understanding to appreciate the consequences of their acts. However, a minor will be liable in contract for goods that are deemed to be necessary for his everyday life; for example, food, water, electricity, etc. People under the influence of drugs will not be considered as capable of entering a contract where the level of their intoxication is such that they do not understand the nature of the contract.

What is an implied contract?

An implied contract is a contract that is deemed to exist by the courts even though the parties did not expressly agree to it. There are two types of implied contract:

  • contract implied by fact Such contracts result from the behavior of the parties. For example, where the parties continue to perform a fixed-term contract that has actually come to an end, the courts would probably imply a contract to exist between the parties based on the fact of their continued performance;

  • contract implied by law A contract implied by law, also known as a quasi-contract, is implied to exist because the courts consider it to be appropriate. For example, a contract may be implied to exist as a means of preventing unjust enrichment by one party over another. Thus, if a doctor finds an injured person by the side of the road and gives them medical assistance, the courts will imply a contract to exist between the patient and the doctor as regards the doctor’s reasonable medical expenses and fees.

Are there any restrictions on the subject matter of a contract?

In most common law countries, the parties to a contract are free to make any agreement they wish between them, as long as the subject matter of the contract is not illegal. If X agrees to pay €100 to Y under the table in return for Y painting his house, the contract will be considered illegal as an attempt to defraud the tax authorities. As a result, despite having painted the house for X, Y will not be able to sue X for payment for the work done, as the agreement will be thought to be illegal and thus will have no existence in the eyes of the law. The subject matter of a contract will be illegal in two circumstances, where it violates:

  • the provisions of case law or statute For example, an agreement between undertakings to restrict competition violating the US Sherman Act or the provisions of both United Kingdom and European Union competition law; or more generally

  • public policy For example, a contract that discriminates against people of a specific racial background.

Depending on its status, a contract can be classified as a(n):

  • enforceable contract An enforceable contract is one that is valid and meets all the requirements of a legally binding agreement;

  • unenforceable contract An unenforceable contract is an agreement between the parties where one of the four ingredients necessary for a contract is not present; for example an agreement in which one of the parties fails to provide consideration. In this case, although there is an agreement between the parties, it will not be considered enforceable by law;

  • void contract A void contract is an agreement that has no standing in law and thus in reality is not a contract at all. For example an illegal contract is considered to be void ab initio4 despite the fact that it is validly constructed, i.e. all the four ingredients necessary for a contract are present5;

  • voidable contract This is a contract that is potentially void for one of the parties, depending on the choice of the other party who is free to decide whether to enforce it or not. For example, if a record company enters into a contract with Y, a sixteen-year-old singer, the contract will be considered voidable for the minor. Thus, for the record company the agreement is void unless the minor decides to enforce it. However, for the minor Y, the agreement is voidable, i.e. Y may choose to enforce the agreement or not after receiving advice from a qualified advisor.

Vocabulary

Whereby – par lequel

Signatory – signataire

Undertake (to) something – s’engager à faire quelque chose

Carry (to) out – effectuer/réaliser

Act – acte (un document légal)

Duty – obligation/devoir

In anticipation – dans l’attente/d’avance

Reward – récompense

Set (to) out – établir

Therein – en son sein

Enforceable agreement in law – accord exécutoire en droit

Failure – non respect/manquement à

Respect (to) the terms of a contract – respecter les dispositions d’un contrat

Party to an agreement – partie à un accord/contractante

Right of action – droit d’ester en justice

Draft (to)rédiger

Basic requirement that must be met – condition de base qui doit être satisfaite

Offer – offre

Acceptance – acceptation

Offeror – offrant

Offeree – destinataire de l’offre

Consideration – contrepartie

Provide (to) – stipuler

Intention to create a legal relation – intention de créer une relation juridique

Meeting of the minds – rencontre des volontés

Invitation to treat – pourparlers

Merely – simplement/seulement

Fall (to) short – ne saurait suffire à (idée d’insuffisance, de négation)

Tender – appel d’offre

Classify (to) – classifier/catégoriser

Auction – enchère

Bid (to)faire une offre

Auctioneer – commissaire-priseur

Without reserve – sans réserve

Hard and fast rule – règle stricte

Construed (to be)être interprété 

As to – concernant

Insofar – dans la mesure

Revocation – révocation

Operative – en vigueur

Once – dès que/une fois que

Unqualified – inconditionnelle

Prescribe (to) the manner – prescrire la manière

Bound (to be) (to bind) – être juridiquement lié

Avoid (to) – éviter

Incur (to)encourir

Legal liability – responsabilité juridique

Moreover – de plus/en outre

Counteroffer – contre-proposition

Choose (to)choisir

Extinguish (to) – mettre fin à/éteindre

Belated – tardif

Bargain – occasion/affaire

Cost (to) somebody the deal – faire perdre l’affaire à quelqu’un

Request for information – demande de renseignement

Respective promises – promesses respectives

Frequently – souvent/fréquemment

A value can be placed on something – objet dont la valeur peut être estimée

Flow (to) – circuler/s’écouler de (ici)

Binding contract – contrat juridiquement contraignant

Imagine (to) – imaginer

Bare promise – simple promesse

Adequate – adéquate/suffisante

Prevent (to) – empêcher

Valid – valable

Rule (to) in equity – statuer en équité

Promissory estoppel – préclusion promissoire

Enforce (to) – réaliser/mettre en œuvre

Demonstrate (to) – démontrer

Context of the agreement – contexte de l’accord

Subject matter (of the contract) – objet (du contrat)

Guarantee (to) a loan – se porter garant pour un prêt

Rebuttable presumption – présomption réfutable

Possess (to) – posséder/être en possession de

Capacity – capacité

In their own name – en leur nom propre

Understanding – compréhension

Level of intoxication – degré d’ivresse

Contract implied by fact – contrat tacite résultant du comportement des parties

Deem (to) – considérer/estimer

Contract implied by law/quasi-contract – quasi-contrat

Unjust enrichment – enrichissement sans cause

Fees – honoraires

Under the table – dessous-de-table

Attempt to defraud – tentative de frauder

Despite – malgré que/en dépit de

Sue (to)faire un procès

In the eyes of the law – aux yeux de la loi

Undertaking – entreprise

Sherman Act – loi Sherman

Provision – disposition

Competition law – droit de la concurrence

Violate (to) public policy – violer l’ordre public

Depending on – selon/en fonction de

Enforceable contract – contrat exécutoire

Meet (to) (the conditions) – remplir (les conditions)

Unenforceable contract – contrat non-exécutoire

Void contract – contrat nul

Something has standing in law – quelque chose est juridiquement contraignant (no standing – juridiquement non contraignant)

Voidable contract contrat contre lequel une des parties peut intenter une action en nullité (1304 CC)

Part 1 – TEXT 2 – EXERCISES

1. Definitions

Write a sentence defining each of the following terms – one sentence per term

  1. Quasi-contract

  2. Consideration

  3. Counteroffer

  4. Enforceable agreement

  5. Voidable contract

  6. Capacity

  7. Liability

  8. Invitation to treat

2. Sentences

Write sentences with the following pairs of words demonstrating your knowledge of the relationship between them

  1. Offeror/offeree

  2. Consideration/binding

  3. Invitation to treat/offer

  4. Acceptance/counteroffer

  5. Implied in law contract/equity

  6. Enforceable/sue

  7. Revocation/offer

  8. Voidable/enforce

  9. Minor/capacity

  10. Intention to create legal relations/subject-matter

3. Fill in the missing words

Using the vocabulary in Text 2, fill in the missing words

  1. An offer may be revoked by the ______ as long as it has not been accepted by the ______.

  2. Minors do not normally have the necessary ______ to enter into contracts and thus any agreement that they make is not considered to be ______.

  3. If an agreement has an illegal subject matter it is said to be ______ and if it can only be enforced by one of the parties, it is said to ______.

  4. Should the offeree make a ______ in place of accepting the offer made to him, the original ______ will be brought to an end.

  5. Even where there is no express agreement between the ______ the courts are sometimes willing to find that there is an ______ contract between them. Such contracts can be implied in law or depending on the behavior of the parties, sometimes they may be said to be ______.

4. Knowledge test

The following questions may be answered in writing or by way of class discussion

  1. Does the law in your jurisdiction require consideration? If not, is there any equivalent to the consideration requirement?

  2. Why do you think a counteroffer by the offeree has the effect of extinguishing the first offer? What is the situation in your jurisdiction?

  3. Explain what you understand by the notion of an invitation to treat.

  4. Do you think it is unfair that a person who performs work pursuant to an illegal contract has no right to be paid for the work he has done?

Answers Chapter 1 – Part I – Text 2 – Exercise 3

a) Offeror, offeree. b) Capacity, binding/enforceable. c) Void, voidable. d) Counteroffer, offer. e) Parties, implied, implied in fact.

Footnotes

1 21 years of age in some common law countries.

2 The rewards set out by the terms of the contract.

3 See discussion in translation section.

4 Void from the beginning, i.e. from the moment the agreement was made.

5 The four ingredients being offer, acceptance, consideration and an intention to create legal relations.

[/vc_column_text][/vc_accordion_tab][vc_accordion_tab title= »PART 2″][vc_column_text]

Part 2 – Quick look grammar revision – tips and hints

Modal Auxiliaries

1. Modal Auxiliary + the base form of the verb

Can: I can drive a car.

Could: I could do it tomorrow.

May: It may snow tomorrow.

Might: It might rain today.

Should: Michael should speak English.

Must: I must study harder.

Will: I will go to London to live.

Would: Would you telephone me later today?

Note:

Most modal auxiliaries are single words: can, could, may, might, should, must, will, would are all invariable and are followed by the base form of a verb

They are not followed by “to”:

– I can speak English = correct

– I can to speak English = not correct

to” appears however in three modal auxiliaries – ought to, be able to and have (got) to.

Ought to is invariable, like the other modal auxiliaries listed above; be able to and have (got) to must be conjugated to correspond to the subject:

Have to: I have to work today / he has to work today.

Have got to: I have got to work harder / he has got to work harder.

Able to: He is able to do the job.

Ought to: I ought to work harder.

2. Expressing ability: can and could

Can expresses a general ability to do something in the present

John can speak English.

Note:

The negative form of CAN may be written in the following way:

– can’t: but not for formal writing and normally only in speech;

– cannot: for written English.

Note:

John can speak English = correct

John can to speak English = incorrect

John can speaks English = incorrect

Could is used to express such ability in the past

John could speak English when he left school; however, now he has forgotten how!

Note:

The negative form of COULD may be written in the following way:

couldn’t: but not for formal writing and normally only in speech;

could not: for written English.

3. Expressing possibility: can and could, may and might

i) Expressing possibility: can and could

Can and could may be used in general statements to say that a situation is (can) or was (could) possible.

You can learn English by attending this school.

The judge could be a bit of a bore at times.

ii) Expressing possibility: may and might

May and might can be used to express possibility in the present or future.

John may/might go to court tomorrow.

Why is John not in court today? I do not know; he may/might be sick.

It is only possible to use may to say that a situation is usual or common:

Contracts may be written or oral

Might is the past form of may, so it is used in indirect speech:

I may be late. He said he might be late.

Note:

The negative form of MAY is only written in the following way:

John may not go to the court today

The negative form of MIGHT is:

mightn’t: but not for formal writing and normally only in speech and even then

it may be better to say might not;

might not: for written English.

Note:

MAYBE spelt/spelled as one word is an adverb, for example:

maybe it will rain tomorrow;

maybe John is working.

MAY BE spelt/spelled as two words is the auxiliary with the verb, for example:

John may be sick.

4. Expressing permission: can and could, may and might

Can and could may be used to ask for permission, could being a politer way of so doing. Can (not) – and not could (not) – is used to refuse permission:

Can I have a bonus this year? Yes, you can. No, you can’t.

Could I have a bonus this year? Yes, you can. No, you can’t.

You cannot have a bonus this year unless you earn more money.

May can be used in more formal situation to ask for or give permission:

May I have a bonus this year? Yes, you may. No, you may not.

Might can be used to ask for, but not to give permission:

Might I borrow your pen for a few minutes, please? Yes, you may. No, you may not.

Part 2 – Grammar Exercises

1. “To” or not “to”

Add “to” where necessary

I have to go to work tomorrow.

John has to plead before the courts.

  1. Could you please ______ open the window?

  2. The lawyer must ______ learn all of the case tonight.

  3. Barbara has ______ do her work today.

  4. I think you should ______ take better care of your clients.

  5. I ought ______ go to the courthouse this evening.

  6. Would you ______ speak more slowly please?

  7. We may ______ bring the case before the court.

  8. John and I might ______ go to the courthouse tomorrow.

  9. I have got ______ go to the court tomorrow.

2. Oral or written exercise

Answer the following questions using could……

  1. What could you do when you were a school child that you cannot do now?

  2. What could you do when you were living at home that you cannot do now?

  3. What did you want to do last Saturday that were not able to do? Why were you not able to do it?

  4. The last time you missed work, why were you not able to go?

  5. What sports were you able to practice when you were young that you cannot do now?

3. Making sentences

Make sentences with may, might and maybe

Do you have any plans for the weekend?

I may go to see my parents.

I might go to the cinema.

Maybe I will (I’ll) do some work.

  1. It is nearly midday and your secretary is not here. Where is she?

  2. You are finishing an important business meal and you realize you forgot your wallet in the office. What are you going to do?

  3. You have an important court case tomorrow but you are feeling ill. What will you do?1

  4. It is late at night and you are alone in your office when you hear a strange noise. What would/will you do?

Answers Chapter 1 – Part 2 – Exercise 1

c), e) and i) take “to”.

1 An adjournment describes the fact of postponing a case that is due to be heard before a court. A lawyer is said “to ask the court for an adjournment”.

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Part 3 – audio and Oral – LISTENING and speaking

Listen to the following conversation and make notes of all the relevant facts and then answer the questions below. If you have trouble understanding, follow the conversation while also reading the text.

Conversation between Frank, a solicitor and his client Anne

Frank: “Hello Anne, nice to meet you.”

Anne: “Hello Mr. Fall, thank you for agreeing to see me so quickly.”

Frank: “No bother at all, it’s a pleasure and please call me Frank.”

Anne: “OK, Frank, thank you.”

Frank: “So what can I do for you?”

Anne: “Well, I entered into a contract with Mr. Rodgers, who turned out to be really dreadful and did not do half the things he promised to do and now he wants me to pay him money.”

Frank: “OK, let’s go slowly here. What exactly did you agree to do with Mr. Rodgers?”

Anne: “Well I am a singer and he agreed to be my manager; he said he would promote me and get me a record deal and everything. However, he only arranged a couple of shows for me in a local bar and he kept all the money; and that was a year ago. I stopped working with him afterwards and found a new manager. Now I have a record deal and suddenly Bob, or Mr. Rodgers has reappeared and he says he wants 10% of the money I received from the record company. That was the deal we made, he was to receive 10% of everything I made.”

Frank: “And tell me, did you record the contract with Rodgers in writing?”

Anne: “Yes, he had his solicitor draw up or draft the agreement and unfortunately I signed it. Oh I am such a fool.”

Frank: “And when you began to use your new manager, did you end your agreement with Mr. Rodgers?”

Anne: “Well no, you see he effectively stopped being my manager, he said I was no good. And at the time he refused to pay me the money I made, claiming that it was money he had invested in promoting me. But in fact he never did anything.”

Frank: “And did he actually write to you officially informing you of the fact that he would no longer be your manager?”

Anne: “No, I never heard from him, up until last week that is.”

Frank: “OK, do you have a copy of the agreement that you made with him?”

Anne: “Yes, I brought it with me, here it is.”

Frank: “Good, just give me a couple of minutes to quickly read it over.”

Anne: “Well, what do you think?”

Frank: “Mmnnn the contract at clause 10 does actually require written notice if the agreement is to be brought to an end; however, if Rodgers stopped working for you, we might have a case for constructive termination whereby he has brought the contract to an end as a result of his behavior. Sometimes the courts are willing to imply that a contract exists or no longer exists based on the behavior of the parties. But we would have to prove that. Has Rodgers actually done anything for you over the last nine months?”

Anne: “No, nothing at all.”

Frank: “And may I ask you your age Anne?”

Anne: “Yes, I’m seventeen years old.”

Frank: “So when you entered into the agreement with Rodgers you were a minor?”

Anne: “Well I’m not yet eighteen years of age if that is what you mean.”

Frank: “Wonderful Anne, I don’t think you will have any problem as a contract made with a minor is considered to be voidable and thus cannot be enforced by Rodgers. Only you can choose to enforce it, which I presume you do not wish to do?”

Anne: “Certainly not.”

Frank: “OK, I think I know how to deal with Mr. Rodgers. I will write him a letter explaining the situation to him.”

Anne: “Oh Frank, you are my hero!”

Part 3 – Audio Comprehension – Exercises

1. Comprehension

From the notes you have taken, answer the following questions

  1. Who did Anne enter into a contract with?

  2. What does Anne do exactly?

  3. Did Anne have a written agreement with Mr. Rodgers?

  4. What does Frank mean when he talks of constructive termination of the contract?

  5. Why does Frank ask Anne her age?

  6. What was the deal that Anne had with Mr. Rodgers?

2. Speaking practice

In the following series of conversation couplets develop suitable responses to the questions asked

i) Frank: “Hello Anne, nice to meet you.”

Anne: “______”

ii) Frank: “OK, let’s go slowly here. What exactly did you agree to do with Mr. Rodgers?”

Anne: “______.”

iii) Frank: “And tell me did you record the contract with Rodgers in writing?

Anne: “______”

iv) Frank: OK, do you have a copy of the agreement that you made with him.”

Anne: “______.”

v) Frank: “And may I ask you your age Anne?”

Anne:”______.”

vi) Frank: “When you began to work with your new manager, did you end the agreement with Mr. Rodgers.”

Anne: “______.”

vii) Frank: “So when you entered into the agreement with Rodgers you were a minor?”

Anne: “______.”

viii) Frank: “And did he actually write to you officially informing you of the fact that he would no longer be your manager?”

Anne: “______.”

3. Speaking practice continued ……

Create five other conversation using in each couplet at least one word from the vocabulary found in Part I, Text 1 or Text 2

4. Speaking practice continued ……

Listen to the suggested replies and repeat

i) Frank: “Hello Anne, nice to meet you.”

Anne: “Hello Mr. Fall, thank you for agreeing to see me so quickly.”

ii) Frank: “OK, let’s go slowly here. What exactly did you agree to do with Mr. Rodgers?”

Anne: “Well I am a singer and he agreed to be my manager; he said he would promote me, get me a record deal and everything. But he only arranged a couple of shows for me in a local bar and he kept all the money.”

iii) Frank: “And tell me, did you record the contract with Rodgers in writing?

Anne: “Yes, he had his solicitor draw up or draft the agreement and unfortunately I signed it.”

iv) Frank: “OK, do you have a copy of the agreement that you made with him?”

Anne: “Yes, I brought it with me, here it is.”

v) Frank: “And may I ask you your age Anne?”

Anne: “Yes, I’m eighteen years old.”

vi) Frank: “And when you began to use your new manager, did you officially end your agreement with Mr. Rodgers?”

Anne: “Well no, you see he stopped being my manager months ago.”

vii) Frank: “So when you entered into the agreement with Rodgers you were a minor?”

Anne: “I wasn’t yet eighteen years of age, if that is what you mean.”

viii) Frank: “And did he actually write to you officially informing you of the fact that he would no longer be your manager?”

Anne: “No, I never heard from him, up until last week that is.”

5. Class discussion

Discuss the following questions in class

  1. How would Anne’s case be dealt with in your country?

  2. Does the notion of constructive termination exist in your legal system?

  3. Is it possible for a minor to enter into a contract in your legal system?

  4. If Anne had been over eighteen years of age when she entered into her agreement with Mr. Rodgers, would she have had to respect her agreement with him?

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Part 4 – Translation exercises

When carrying out a translation it is not necessary to translate directly word for word; rather the emphasis should be on translating the sense of the text. English and French are not directly interchangeable and so direct translations do not always convey the meaning in the text.

Translate the following texts from English to French

A. Is it possible to accept an offer that is made to another person? – Boulton v Jones, 1857

Facts: Mr. Boulton bought a builders’ supply business from Mr. Brocklehurst. Mr. Jones, a customer of the business before it was sold was owed money by its previous owner Brocklehurst. Prior to selling the business, Brocklehurst had agreed with Jones that he would pay him back the money he owed by supplying Jones with free building goods. On the basis of that agreement, Jones addressed an order to Brocklehurst for some piping, not knowing that the business had been sold to Boulton. Boulton, the new owner, supplied the piping even though the order was not actually addressed to him and billed Jones for the goods supplied. Jones refused to pay indicating that he had made his offer to Brocklehurst with whom he had a set-off contra account1. Boulton sued Jones for payment for the amount of the goods supplied.

Held: In the opinion of the court, Jones specifically addressed the order to Mr. Brocklehurst and not Boulton. Consequently Jones was not liable to Boulton for the goods that Boulton mistakenly supplied.

A. Est-il possible d’accepter une offre faite à une autre personne ? Boulton c/ Jones, 1857

Faits: M. Boulton acheta à M. Brocklehurst une entreprise de distribution de matériaux de construction. Préalablement à cette vente, l’entreprise était débitrice d’une somme d’argent auprès de l’un de ses clients, M. Jones. Le propriétaire, M. Brocklehurst, s’était alors engagé à rembourser à M. Jones l’argent qu’il lui devait en lui fournissant gratuitement des biens de construction. Sur la base de cet accord, et ne sachant pas que l’entreprise venait d’être vendue à M. Boulton, M. Jones commanda à M. Brocklehurst, désormais ancien propriétaire, de la tuyauterie. Alors même que la commande ne lui était pas adressée, M. Boulton, le nouveau propriétaire, fournit à M. Jones la tuyauterie et la lui factura. M. Jones refusa de payer en arguant que l’offre avait été faite à M. Brocklehurst avec qui il avait bénéficié d’une reconnaissance de dette avec paiement en nature. M. Boulton poursuivit M. Jones afin que ce dernier paye le prix des biens fournis.

Décision : La cour affirma que M. Jones avait expressément adressé sa commande à M. Brocklehurst et non à M. Boulton. Par conséquence, M. Jones n’était pas tenu de payer à M. Boulton les biens que ce dernier lui avait fourni à tort.

B. The distinction between an offer and an invitation to treat – Heathecote Ball & Co. v Barry, 2000

Facts: Barry, an auctioneer advertised an auction offering to sell without reserve2 two new engines. The manufacturer’s list price3 for the two engines was £14,000. At auction a representative of the claimant Heathecote Ball & Co. bid £200 and as it was the only bid that was made, considered that he had accepted the auctioneer’s offer to sell the goods without reserve, i.e. he had made the highest offer. The auctioneer claimed that in putting the machines up for auction, he had made no offer to sell the goods but had merely made an invitation to treat. Consequently, in his opinion, it was the claimant that had made the offer to buy the machines at £200 that he, the auctioneer was free to refuse this offer or not and was thus free to withdraw the goods from sale. The complainant argued that use of the words “without reserve”, turned what would normally have been considered an invitation to treat into an offer.

Held: In the Court’s view, the use of the words “without reserve” amounted to an offer by the auctioneer Barry to sell to the highest bidder, no matter the amount of the actual bid.

B. La distinction entre une offre et des pourparlers: Heathecote Ball & Co. c/ Barry, 2000

Faits: M. Barry, un commissaire-priseur, annonça une mise en vente sans réserve aux enchères de deux nouveaux moteurs. Le prix recommandé par le fabriquant pour ces deux moteurs était de 14000£. Lors des enchères, un représentant de la partie requérante Heathecote Ball & Co. fit une offre de 200£ ; parce que ce fut la seule offre qui fut faite, ce dernier considéra qu’il avait accepté l’offre du commissaire-priseur de vente des biens sans réserve, c’est-à-dire au plus haut prix offert. Le commissaire-priseur prétendit qu’en mettant aux enchères les moteurs, il n’avait pas offert les biens à la vente mais avait simplement lancé une invitation en pourparlers. En conséquence, selon lui, c’est le requérant qui avait offert d’acheter les machines à 200£ mais il restait libre d’accepter ou de refuser cette offre et donc de retirer les biens de la vente. La partie plaignante argua que l’utilisation des mots « sans réserve » transformait ce qui aurait normalement été considéré comme des pourparlers en une offre.

Décision : La cour affirma que l’utilisation des mots « sans réserve » équivalait à une offre, par le commissaire-priseur M. Barry de vendre au plus offrant sans que le montant de l’offre faite importe.

C. Going beyond one’s normal duty is good consideration – Glasbrook Bros. v Glamorgan County Council, 1926

Facts: The owners of a coalmine requested police protection during a strike. The police agreed to patrol the premises but the owners afraid for their property requested that the police stay at the site of the mine and they offered to pay the police for the extra cost of this service. However, the mine owners subsequently refused payment on the basis that the consideration offered by the police, staying at the mine, was not good consideration as they were only doing their duty. In the opinion of the mine owners, the police already had a duty to protect the premises.

Held: According to the Court, performance of an existing duty will not be considered as good consideration to create a binding contract. However, on the facts of the present case, the Court was of the opinion that the police went beyond their duty by actually billeting police officers on the premises. Consequently, the mine owners had to pay for the extra service provided.

C. Aller au-delà de son devoir normal est une contrepartie valable: Glasbrook Bros. c/ Glamorgan County Council, 1926

Faits: Les propriétaires d’une mine de charbon demandèrent la protection de la police pendant une grève. La police accepta de patrouiller les lieux mais les propriétaires, craignant pour leur propriété, demandèrent à la police de demeurer sur le site de la mine et offrirent de payer le coût supplémentaire de ce service. Cependant, les propriétaires de la mine refusèrent ultérieurement de payer considérant que la contrepartie offerte par la police, demeurer à la mine, n’était pas une contrepartie valable car ils ne faisaient que leur devoir. Selon les propriétaires de la mine, la police avait d’ores et déjà le devoir de protéger les lieux.

Décision: La cour affirma que l’exécution d’une responsabilité existante ne doit pas être considérée comme une contrepartie valable permettant de créer un contrat juridiquement contraignant. Cependant, à l’aune des faits de l’espèce, la cour jugea que la police était intervenue au-delà de son obligation d’agir en affectant de manière permanente des officiers de police sur les lieux. Par conséquence, les propriétaires de la mine avaient l’obligation de payer la prestation de services supplémentaires ainsi fournie.

Translate the following texts from French to English

A. Une contrepartie antérieure n’est pas une contrepartie valable: ReMcArdle, 1951

Faits: Un mari et son épouse vivaient avec la mère du mari. Le fils entrepris d’importants travaux de rénovation dans la maison et la mère promit de lui payer une certaine somme d’argent après sa mort. Une fois celle-ci décédée, le fils chercha à obtenir le paiement de l’argent qui lui avait été promis. Cependant, l’exécuteur testamentaire refusa de le payer au motif que le patrimoine de la mère n’était pas juridiquement lié par la promesse faite. Selon l’exécuteur, la contrepartie offerte par le fils constituait une contrepartie antérieure car le travail avait été effectué avant que la mère ne promette de payer son fils.

Décision: La cour accepta ce raisonnement et jugea que la promesse de faire quelque chose en échange de quelque chose d’autre qui a déjà été fait n’est pas juridiquement contraignant. Ainsi, le patrimoine de la mère n’était pas lié par la promesse faite par cette dernière et, en conséquence, le fils ne pouvait pas recouvrir l’argent.

A. Past consideration is not good consideration – ReMcArdle, 1951

Facts: A husband and wife were living with the husband’s mother. The husband carried out extensive renovations to the house and the mother promised him payment of a certain sum of money after her death. After she died the son sought payment of the money promised to him. However, the executor of the will refused to pay the money to the son, claiming that the mother’s estate was not bound by the promise. In the executor’s opinion, the consideration offered by the son was past consideration as the work had been performed prior to the mother making her promise to pay the son.

Held: The court agreed, considering that a promise to do something in return for something that has already been done is not binding in law. Thus the mother’s estate was not bound by her promise and consequently, the son was unable to recover the money4.

B. Les tribunaux sont parfois prêts à reconnaitre l’existence de clauses/obligations implicites/tacites dans un contrat aboutissant à l’existence d’un quasi-contrat – The Moorcock, 1889

Faits: La partie plaignante passa un contrat afin d’utiliser le quai appartenant à la partie défenderesse dans le but de charger son bateau. Le quai était situé sur la rivière Thames, près de l’océan, ce qui avait pour conséquence, lorsque la marée était descendante, que les bateaux amarrés au quai reposaient alors sur le lit de la rivière. Le lit de la rivière, à l’endroit où se situait le quai de la partie défenderesse, était bosselé/inégal et le bateau de la partie plaignante se cassa en deux lorsque la mer se retira (marée basse). La partie défenderesse soutint qu’elle n’était pas responsable de la perte de la partie plaignante car elle n’avait donné aucune garantie quant à l’état du lit de la rivière. La partie plaignante poursuivit la partie défenderesse au motif que leur contrat contenait une clause implicite/tacite selon laquelle le lit de la rivière était en condition raisonnable pour permettre l’exécution du contrat.

Décision: Les cours dégageront de l’économie générale du contrat. En conséquence, dans cette affaire il fut jugé que le contrat contenait une clause implicite selon laquelle le lit de la rivière devait être dans un état adéquat afin de permettre l’exécution du contrat.

B. The courts are sometimes willing to imply terms into a contract leading to the existence of a quasi-contract – The Moorcock, 1889

Facts: The plaintiff entered into a contract to use the defendant’s wharf to load his boat. The wharf was located on the Thames river close to the ocean and as a result when the tide was out, boats moored at the wharf rested on the river bed. The riverbed at the defendant’s wharf was bumpy/uneven and as a result the plaintiff’s boat broke in two when the tide went out. The defendant claimed he was not liable for the plaintiff’s loss as he had given no guarantee as to the state of the riverbed. The plaintiff sued the defendant on the basis that there was an implied clause in their contract that the riverbed was in suitable condition to allow the contract to be performed.

Held: The courts will imply such clauses into a contract where it is required for business efficacy. Consequently, in the present case, it was held to be a clause of the contract that the riverbed was in a condition necessary to allow the contract to be performed5.

C. Qu’est-ce que la loi Sherman?

La loi Sherman Antitrust autorise le gouvernement fédéral des Etats-Unis à enquêter sur toute entreprise soupçonnée de comportement anticoncurrentiel. Cette loi a été la première loi nationale de droit de la concurrence visant à limiter les cartels et les monopoles et constitue le modèle qui a inspiré la grande majorité des autorités de concurrence contemporaines. Adoptée en 1890, la loi Sherman interdit :

  • accords ou ententes entre entreprises qui cherchent à restreindre les échanges commerciaux;

  • de monopoliser ou de tenter de monopoliser les échanges commerciaux.

C. What is the Sherman Act?

The Sherman Antitrust Act authorizes the United States Federal government to investigate businesses suspected of anticompetitive behavior. It was the first national competition law that sought to limit cartels and monopolies and is the model used by most competition law authorities today. Passed in 1890, the Sherman Act prohibits:

  • agreements or conspiracies between businesses seeking to restrict trade;

  • to monopolize or attempt to monopolize trade.

Footnotes

1 A set-off contra account means that goods will be supplied free by the debtor until his debt is paid.

2 Without reserve meaning that there is no reserve price, i.e. no minimum price.

3 The term “list price” refers to the manufacturer’s recommended sale price.

4 Children do not have an automatic right to inherit from their parents in most common law countries.

5 Thus a clause was implied into the contract guaranteeing the “suitable” condition of the river bed for mooring boats. As the river bed was not in a suitable condition in the present case, the court considered that the defendant had breached the clause implied by the court into the contract.

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Part 5 – Advanced reading

What is consideration?

Consideration is anything of value promised to another party when making a contract. It can take the form of money, a service or a promise to do or not to do something. In common law it is a prerequisite that both parties offer some consideration before a contract can be thought of as binding. If A signs a contract to buy a car from B for €50,000, A’s consideration is the €50,000, and B’s consideration is the car. If one of the parties fails to supply the other with good consideration, then although there may be an agreement between the parties, there is no binding agreement, i.e. no contract.

Consequently, the offer of a gift that has been made by one party to the other may normally be withdrawn at any time without legal consequence. However, once the presence of consideration is shown to exist, the courts are not inclined to inquire into whether the parties received good value. The reason for this is that each party is free to enter into the contract of their choosing and it would be inappropriate for the courts to begin to decide for the parties the terms of the agreements they choose to enter into.

Prior to considering the different theories explaining consideration, it is worthwhile remembering the fundamental rule that consideration must be supplied by the parties to the contract. If it is not, then the party that has failed to actually provide consideration will not be able to sue the other under the contract. Keeping this basic point in mind, the traditional theory explaining the requirement of consideration is the benefit-detriment theory. According to this theory, a contract must involve a benefit for the promisor and represent a detriment for the promisee in order to respect the consideration requirement. However, this theory has been replaced in many common law jurisdictions by the bargain theory, pursuant to which the parties subjectively view the contract to be the product of an exchange or bargain. Frequently, these theories overlap, as in the normal purchase contract there will be a(n):

  • objective benefit and detriment, the buyer experiences a benefit by acquiring the product in question whilst the seller experiences a detriment by handing over the product; and

  • subjective notion of entering into a bargain.

The main reason behind the shift from the benefit-detriment theory to the bargain theory is to allow the court to avoid inquiries into whether the consideration supplied is adequate. Although the courts, as we said, do not inquire into the adequacy of consideration, some common law jurisdictions require that it be sufficient, i.e. be something that has a tangible commercial value.

Under the doctrine of promissory estoppel, equity may consider a promise for which no consideration was received to be binding, in circumstances where it would be unfair not to enforce the promise. Consequently, negotiation documents, such as letters of intent or comfort letters may be considered binding on the issuer, even if the recipient has not given any consideration in exchange, where it is felt the promissory character of the letter is such that it would be unfair not to perform the promise, the subject of the letter. This is controversial and renders the sending of such letters dangerous for the issuer, as (s)he may be considered contractually bound by a document that was probably partly issued so as to avoid this very consequence. Normally letters of intent are issued with the express purpose of avoiding making a formal legally binding offer, i.e., so as to limit contractual liability.

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