The Blip Blop Blog (Team Entity)

When the terms of a contract have been formalized by a written agreement, the general rule is that the terms cannot be changed by adducing extrinsic (external) evidence to alter the terms of the contract. This is known as the Parol Evidence rule. In Henderson v Arthur (1907) the defendant was party to a lease that stipulated that rent should be paid in advance. However, prior to that there was an oral agreement whereby the parties agreed that the rent could be paid in arrears. The rent was outstanding and the plaintiff brought an action against the defendant. The defendant argued that there was a prior agreement that allowed him to pay the rent in arrears but the Court of Appeal held that an earlier oral agreement could not replace the terms of a later written agreement and the Parol Evidence rule prevented the earlier agreement from altering the terms of the new agreement. There are however certain exceptions to the rule and instances or circumstances where the rule will not app

Almost all written contracts these days are formalized by signatures which reflect the intention of the parties to be bound by the terms of the contract. There are instances however when parties to a contract sign the agreement without reading the terms that have been laid out. In Thompson v London, Midland and Scottish Railway (1930), the plaintiff purchased a ticket from the railway company and thereafter boarded a train. On the ticket, which was obtained at the time of the purchase there was a clause (an exclusion clause) that stated that the Railway Co. will not be liable for any personal injury incurred during travel. The plaintiff was unable to read the clause because she was illiterate. The plaintiff was injured during her journey and brought an action against the Railway Co. who relied on the exclusion clause to escape liability. It was held that the clause was a valid term of the contract and the fact that the plaintiff could not read did not make a difference. In L’Estr

Now that we have identified the prerequisites to a contract, it is time for us to take a closer look at the terms in a contract, after it has come into existence. Terms may be either express or implied. The terms in a contract can be made orally, in writing or part orally and part in writing. Whether an oral statement made prior to entering into a contract becomes a term of the contract or otherwise is dependent on the facts of the case. When a statement is made, without which the parties would not have entered into the contract to start with, the statement becomes a part of the contract. In Bannerman v White (1861), the plaintiff (claimant) agreed to purchase some hops from the defendant for brewing purposes. The plaintiff stipulated that the hops must not be treated with sulphur prior to the purchase because it was intended for use in the manufacture of a consumable product. The defendant assured the plaintiff that the hops had not been treated with sulphur but as it turned out

The next element in a contract is an intention to create legal relations. In most commercial transactions, there is a presumption that the parties intended to create a legal agreement unless it can be proven otherwise. In Sandler v Reynolds (2005) the plaintiff had entered into an oral agreement with the defendant in that the plaintiff would be the ‘ghost writer’ of the defendant’s autobiography. The plaintiff had gone as far as proposing the title and outlining the first chapter when the defendant changed his mind and entered into an agreement with another writer. It was held that there was an intention to create legal relations based on the facts of the case and that the advance of £70,000 was to be shared equally between the plaintiff and the defendant. However, if it is clearly stated or stipulated that the agreement was binding in honor only and that there was no intention to create legal relations than it would be deemed that there was no intention to create legal relations a

Having identified the first two elements in a contract, offer and acceptance, let’s move on to the third, consideration. Consideration can be in the form of abstaining from performing an act, it could be in the form of performing an act or acts stipulated by the offeror as in the case of Carlill v Carbolic Smoke Ball Co. (1893), it could be inferred or implied by conduct as in the case of Brogden v Metropolitan Railway Co. (1877) and it could be part consideration provided in lieu of completing the terms stipulated in a contract, Dahlia v Four Millbank Nominees (1978). In Currie v Misa (1875) it was held that consideration from the perspective of the law may consist of some right, benefit, interest or profit accruing to the party or some loss, sufferance, detriment, or responsibility incurred by the party. Consideration must be distinguished from an outright gift and therefore it has to be either expressly or impliedly requested for by the promisor. In Dahlia v Four Millbank Nomine

An acceptance is an unconditional willingness to be bound by the terms of an offer. The acceptance can be in terms of performing an act, say for example painting a house for remuneration or abstaining from watching one’s favorite television show for a reward, as in instances of unilateral contracts. An acceptance can also be inferred or implied by conduct as in the case of Carlill v Carbolic Smoke Ball Co. (1893) or without the formalization of an existing agreement as in the case of Brogden v Metropolitan Railway Co. (1877). As a general rule an acceptance must be communicated to the offeror. There are however certain exceptions for example when the performance of an act constitutes an acceptance like in the case of Carlill v Carbolic Smoke Ball Co. (1893). When it comes to communications by post, it is deemed that the offeror is given sufficient notice of the acceptance as soon as the letter of acceptance is posted. In Adams v Lindsell (1818), the defendant wrote to the plainti