The Law of Contract will cover the fundamentals of contract law in Ireland. No specific contracts (e.g. FIDIC, Insurance) will be dealt with as this is a first year course.
Topics covered (in order):
- Contractual intent
- Offer & Acceptance
- Contractual Form
- Express and Implied Terms
- Exclusion Clauses
- Discharge of Contracts
- Capacity to Contract
- Misrepresentation and Mistake
- Inequality of Bargaining Power
Topic 1 – Contractual Intent
General Presumption: No agreement will be enforced unless that was what the parties intended.
Corollary to this, some other presumptions exist:
- Commercial agreements are presumed to be enforceable
- Family agreements are not presumed to be enforceable
But, subject to the above two presumptions, how do we know what the parties intended?
- An objective test is applied (e.g. would the reasonable third party believe there was an intent for the agreement to be enforceable?)
Let’s apply these concepts to some factual matrices.
A) Case Law in the Circumstances
i) Commercial Agreements
Presumption: Commercial agreements are meant to be enforceable.
- **Edwards v Skyways  1 WLR 394 – This case set down the presumption regarding commercial contracts. The presumption is hard to rebut.
- ***Commodity Broking v Mehan  IR 12 – Here, a personal promise to pay money owed in the purchase of land was held to be enforceable.
So, what do the courts look for in deciding whether there was intent in commercial contracts?
- If there was serious intent
- Awareness of legal consequences
- Wording of agreement
More importantly, since the presumption is hard to rebut, what do the courts look for when determining if their was a lack of intent?
- Vague agreement
- No serious intent
- Now awareness of consequences
- Wording of agreement
The strongest way of showing a lack of intent is an express statement in the contract precluding enforceability of the agreement. See *Jones v Vernons Pools  2 All ER 626.
What about a promise to negotiate?
- This may be used tactically in business transactions. Generally, a promise to negotiate is just that; it lacks intent to be enforceable.
- However, the court will have to decide when an agreement may become enforceable having regard to ‘subject to contract’ and ‘preliminary agreement’ clauses. This is because the lack of enforceability may be used tactically to injure another party.
ii) Labour Contracts
Presumption: Employment contracts are meant to be enforceable (this is obvious).
But what about collective agreements? (Collective agreements are between employers and labour unions – See more here)
- ***Chemicals v Bolger  IR 211 – This case found that collective agreements are presumed to be enforceable. This can be rebutted though, having regard to the four criteria above. (vague agreement, no serious intent… etc.)
iii) Domestic Cases
Presumption: There is a strong presumption against the enforceability of family agreements.
- ***Fleming v Beevers  1 NZLR 385 – Here, a couple decided to leave their share of the house to the other upon death. This was seen as enforceable. (NOTE: This is a case from New Zealand )
- *Courtney v Courtney – Here, an agreement made between a husband and wife who had decided to solve their matrimonial differences by living apart was upheld as legally binding.
What about agreements between parents and children?
- Presumption remains the same, but the court will take into consideration: 1) Reliance on the agreement, and 2) How precise it was.
- ***Jones v Padavatton  1 WLR 328 – Mother promised £200 pm and bar fees if daughter moved to London to study for the bar. This contract held not enforceable.
- See also **Rogers v Smith (mother promises son part of will if he takes care of her until her death), **Haggar v de Placido (son promises mother money for care during injury), **Hamer v Sidway (uncle promises nephew $5,000 if he refrains from smoking, drinking, gambling etc.)- These cases affirm the presumption – All find that the agreement is unenforceable.
- *McCarron v McCarron – Court ordered specific performance where plaintiff worked long hours for the deceased for 16 years without reward, where there was a promise to make the young man rich one day. This is an exceptional case however.
But what about domestic, commercial contracts.
- ***Leahy v Rawson  3 IR 1 – agreement between siblings to construct house – presumed to be enforceable – they were professionals in their fields.
And the case of lottery tickets? –
- Historically the presumption is against (**Simpkins v Pays  3 All ER 10), however the more recent case of ***Horan v O’Reilly  IESC 65 assumes the contract is binding.
- **Apicella v Scala (1931) 66 ILTR 33- Here, an arrangement between plaintiff and defendant designed to enable all parties to take a share in sweepstake tickets to be purchased by the defendant was described as “a conditional or revocable decision”
- The SCt decision is likely to be followed in future cases.
We have now dealt with some traditional case law on the subject of contractual intent. Now we shall turn to the issue of vagueness.
- Vagueness = (is evidence of) a lack of serious intent. (Remember that when trying the rebut the presumption afforded to commercial contracts etc. the courts will take into consideration the vagueness of the contract and the seriousness of intent).
- Also, if an agreement is too vague (or too uncertain), then it will not be enforceable (for obvious reasons).
i) Illusory Promise
- ***MacRobertson Miller v Tax Commissioners (1975) 133 CLR 125 – A ticket issued by an airline with an unreserved right to cancel was found to be making no serious contract – lacking intent.
Contrast this case with ***O’Mullane v Riordan (unrep. 20 April 1978), where a buyer of land agreed to pay £1,500 per acre, or more at his discretion. Nothing uncertain or illusory about this – contract was valid.
These cases may be distinguished however. MacRobertson may be to the detriment of one party whereas the terms in O’Mullane would only serve to satisfy the other party or benefit them more than they would have expected. These are quite different cases in fact.
ii) Contracts to Negotiate
Presumption: Contracts to negotiate are held to be illusory. (Illusory: adjective;– based on illusion; not real)
- ***Cadbury Ireland v Kerry Co-Op  ILRM 77 – An agreement to supply milk where the clause was 1) unspecific, and 2) the parties did not rely upon it to determine their rights and obligations after the agreement was signed, choosing instead to negotiate subsequent contracts for the supply of milk. Held – not enforceable. See also **Bula v Tara Mines (unrep, 6 February 1997).
- ***Rooney v Byrne  IR 609 – An agreement to buy land subject to an advance on the property was held to be enforceable and put a duty on the buyer to reasonably seek an advance.
iii) Missing Terms
- ***Central Meat v Carney (1944) 10 Ir Jur Rep 34 – There was an agreement to sell cattle, but there was no agreement as to quality or price. This was seen as too vague/uncertain a contract to be enforceable.
iv) Implied and Express Terms
- Implied –> ***Sudbrooke v Eggleton  3 WLR 315 – Here a lease gave tenant a right to buy premises at valuation – this was enforeable subject to the valuation being objective and independent.
- Express –> ***Rose & Frankton v Crompton  2 KB 261 – An express statement precluding legal effect will subsist.
C) ‘Subject to Contract’ Clauses
Presumption: Using ‘subject to contract’ in an agreement precludes a presumption of enforceability (*Boyle v Lee  IRLM 65).