Chapter 7Introduction to the law of contractNote that the postal rules only apply to the commun-
ication of acceptances: offers and revocations of offers
must be communicated to be effective.
The Electronic Commerce (EC Directive) Regulations
2002 (SI 2002/2013) provide a legal framework for the
conclusion of contracts by electronic means. The regu-
lations, which came into force in August 2002, apply
to on-line trading and advertising using the Internet, e-
mail or mobile phones. This kind of business is referred
to as ‘information society services’. The regulations pro-
tect consumers but may apply to business customers
unless they agree otherwise. Regulation 9 provides that
where a contract is to be concluded by electronic means
(but not by exchange of e-mails), the service provider
must, prior to an order being placed, provide to the
recipient (the consumer) the following information in
a clear, comprehensible and unambiguous manner:
■the different technical steps to follow to conclude the
contract;
■whether the concluded contract will be filed by the
service provider and whether it will be accessible;
■the technical means for identifying and correcting
input errors before the order is placed;
■the languages offered for conclusion of the contract.
In addition, the service provider must:
■indicate which relevant codes of conduct he sub-
scribes to and how they can be accessed electronically;
■make available any terms and conditions, provided in
a way which allows the recipient to store and repro-
duce them.
If the recipient places an order electronically the service
provider must acknowledge receipt of the order without
undue delay and by electronic means and make avail-
able appropriate, effective and accessible means to allow
the recipient to identify and correct input errors before
placing the order. Acknowledgement of the order is
deemed to be received only when the recipient is able to
access it. A consumer will be entitled to rescind a con-
tract where the service provider has not made available
the means of identifying and correcting input errors.
Other breaches of the regulations may give rise to an
action in damages for breach of statutory duty against
the service provider.Consideration
On the previous pages we have seen how an agreement
is formed – the requirements of offer and acceptance –
but the mere fact of an agreement alone does not make
a contract. The law concerns itself with bargains. This
means that each side must promise to give or do some-
thing for the other, although it does not appear to be a
requirement that the parties must be conscious that they
are providing a benefit or suffering a detriment (Pittsv
Jones(2007)).
The element of exchange is known as ‘consideration’
and is an essential element of every valid simple con-
tract. A promise of a gift will not be binding unless made
in the form of a deed. Consideration can take two forms:
executed or executory. What is the difference between
them?
1 Executed considerationis where one party promises
to do something in return for the act of another, e.g.
reward cases.Promise Act£10 reward offered for the David sees the advert in
return of ‘Lucky’ – black the local paper. He finds
and white cat. Ring Mrs the cat, returns it to Mrs
Smith (01308 215 8793). Smith and claims the
reward.‘Cash with order’ terms are an example of executed
consideration.2 Executory consideration is where the parties ex-
change promises to perform acts in the future, e.g. ‘cash
on delivery’ terms.215Holwell Securitiesv Hughes(1974)Dr Hughes had agreed to grant Holwell Securities Ltd an
option to buy his premises. The option, which would
constitute the acceptance, was exercisable ‘by notice in
writing’ to the doctor within six months. The company
posted a letter of acceptance but it was never delivered.
The Court of Appeal held that no contract had been
formed. Since Dr Hughes had stipulated actual ‘notice’
of the acceptance, the postal rules did not apply. The
acceptance would only be effective when received by
the doctor.