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66 Chapter 2Making a contract

Formalities

In general, contracts can be created without the need for any special formalities. The

types of contracts which can be made only if certain formalities are observed are as

follows.

Figure 2.6 The effect of the CRTPA 1999

The promisor (in the above example Chas) will also have available defences, rights of

set-off and counterclaims which did not arise in connection with the contract, if these

would have been available against the third party if the third party had been a party to

the contract.

Example

Bert agrees to sell 50 bicycles to Chas. A term of the contract provides that Chas is to pay

the price of £5,000 to Dan. Bert delivers 50 bicycles to Chas. Dan owes £1,000 to Chas in

connection with a contract made last month. Chas is entitled to set-off the £1,000 and pay

Dan only £4,000.

Figure 2.6 gives an overview of the Contracts (Rights of Third Parties) Act 1999.