Contract law concerns enforceable promises, and can be summed up in the Latin phrase pacta sunt servanda (agreements must be kept).[42] In common law jurisdictions, three key elements to the creation of a contract are necessary: offer and acceptance, consideration and the intention to create legal relations. In Carlill v Carbolic Smoke Ball Company
a medical firm advertised that its new wonder drug, the smokeball,
would cure people's flu, and if it did not, the buyers would get £100.
Many people sued for their £100 when the drug did not work. Fearing
bankruptcy, Carbolic argued the advert was not to be taken as a serious,
legally binding offer. It was an invitation to treat, mere puff, a gimmick. But the court of appeal held that to a reasonable man
Carbolic had made a serious offer. People had given good consideration
for it by going to the "distinct inconvenience" of using a faulty
product. "Read the advertisement how you will, and twist it about as you
will", said Lord Justice Lindley, "here is a distinct promise expressed in language which is perfectly unmistakable".[43]
"Consideration" indicates the fact that all parties to a contract
have exchanged something of value. Some common law systems, including
Australia, are moving away from the idea of consideration as a
requirement. The idea of estoppel or culpa in contrahendo, can be used to create obligations during pre-contractual negotiations.[44] In civil law jurisdictions, consideration is not required for a contract to be binding.[45] In France, an ordinary contract is said to form simply on the basis of a "meeting of the minds" or a "concurrence of wills". Germany has a special approach to contracts, which ties into property law. Their 'abstraction principle' (Abstraktionsprinzip)
means that the personal obligation of contract forms separately from
the title of property being conferred. When contracts are invalidated
for some reason (e.g. a car buyer is so drunk that he lacks legal
capacity to contract)[46] the contractual obligation to pay can be invalidated separately from the proprietary title of the car. Unjust enrichment law, rather than contract law, is then used to restore title to the rightful owner
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