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ICAEW Law 01: Contract formation. > 01. STUDY MANUAL questions on Contract formation. > Flashcards

01. STUDY MANUAL questions on Contract formation. Flashcards

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1
Q

A purported contract in which there is clear agreement between the parties on all terms and they intend to create a legally binding agreement but there is no consideration is …

A

void

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2
Q

A purported contract between parties, one of whom is aged 17 is …

A

voidable

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3
Q

A purported contract which is an agreement to defraud HMRC is …

A

void

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4
Q

A purported contract made orally providing for Graham to pay Harry the debt owed to Harry by Imran is …

A

unenforceable

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5
Q

Bianca sees the following notice in a newspaper “20 orthopaedic beds, £100 each.” Under contract law this would be deemed an …

A

invitation to treat

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6
Q

T/F: The postal rule applies to acceptance.

A

TRUE

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7
Q

T/F: The postal rule applies to revocation.

A

FALSE

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8
Q

T/F: £10 and the loan of a car is sufficient consideration in return for the loan of that car.

A

TRUE

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9
Q

T/F: after Barry had cleaned the car, he could not offer to do so as consideration to support a future contract.

A

TRUE

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10
Q

T/F: The loan of a car for a week rather than a day is sufficient consideration to support the waiver of the £5.

A

TRUE

Barry was not entitled to a week’s hire, only a day’s.

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11
Q

T/F: acquaintances cannot form a valid contract.

A

FALSE

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12
Q

Subsequent haggling over delivery (does / does not) allow the terms of a valid contract for sale to be varied.

A

does not

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13
Q

T/F: if delivery is neither expressly mentioned nor implied in a contract for sale then the vendor can demand additional consideration.

A

TRUE

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14
Q

Standard form contract.

A

A document put forward for a customer’s signature by a supplier of goods in which pre-printed contractual terms are set out.

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15
Q

A document put forward for a customer’s signature by a supplier of goods in which pre-printed contractual terms are set out.

A

Standard form contract.

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16
Q

A valid contract MUST contain …

A

an agreement (offer and acceptance)
consideration
an intention to crate legal relations

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17
Q

T/F: a voidable contract is not a contract at all

A

FALSE

it is a contract however one party may set it aside

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18
Q

A … contract is binding unless and until one party chooses to avoid it.

A

voidable

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19
Q

A voidable contract is binding …

A

unless and until one party chooses to avoid it.

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20
Q

An … contract is valid but the parties cannot be held to its terms.

A

unenforceable

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21
Q

An unenforceable contract is valid but …

A

the parties cannot be held to its terms.

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22
Q

A … contract is not a contract at all. Neither party is bound.

A

void

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23
Q

A void contract is …

A

not a contract at all. Neither party is bound.

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24
Q

In the law of contract the circulation of a price list is …

A

an invitation to treat.

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25
Q

As a general rule, acceptance must be …

A

communicated to the offerror and is not effective until this has been done.

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26
Q

An … is a definite promise to be bound on specific terms.

A

offer

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27
Q

An offer is

A

… a definite promise to be bound on specific terms.

28
Q

An offer must be distinguished from both a … and an …

A

supply of information, invitation to treat

29
Q

A counter-offer acts as a … of the original offer.

A

rejection

see Hyde v Wrench.

30
Q

T/F: advertising an auction is an offer to sell.

A

FALSE

see Harris v Nickerson.

31
Q

The three classic examples of invitations to treat are …

A

advertisements (although not those offering a reward)
goods on display, for example on a shelf or in a shop window
price lists and catalogues

32
Q

T/F: As a general rule, silence cannot constitute acceptance.

A

TRUE

see Felthouse v Bindley.

33
Q

Postal rule.

A

An offer is deemed to be accepted as soon as an offeree places written communication of acceptance into the postal system; provided that it is properly stamped and addressed and written acceptance is in the reasonable contemplation of both parties.

34
Q

An offer is deemed to be accepted as soon as an offeree places written communication of acceptance into the postal system; provided that it is properly stamped and addressed and written acceptance is in the reasonable contemplation of both parties.

A

Postal rule.

35
Q

Terminations of offer …

A

Acceptance
Rejection
Revocation
Counter offer
Lapse of time
Failure of a condition precedent

36
Q

… consideration is an act in return for a promise.

A

executed

37
Q

Executed consideration is …

A

an act in return for a promise.

38
Q

… consideration is a promise in return for a promise.

A

Executory

39
Q

Executory consideration is …

A

a promise in return for a promise.

40
Q

T/F: Past consideration, as a general rule, is not sufficient to make a promise binding.

A

TRUE

see re. McArdle and Roscorla v Thomas

41
Q

Consideration need not be … but it must be …

A

adequate, sufficient

see Thomas v Thomas and Chappell v Nestle.

42
Q

T/F: A promise of additional reward for existing duties is not generally binding.

A

TRUE

see Ward v Byham, Collins v Godefroy, Glasbrook v Glamorgan

43
Q

T/F: in the context of contractual considerations, payment of a lesser sum cannot be satisfaction for the whole sum unless something is added to it, such as earlier payment, or payment by a different method.

A

TRUE

see Pinnel and Foakes v Beer

44
Q

Governing clause.

A

An express clause typically incorporated into an international contract and which specifies which country’s law will apply to any dispute under it.

45
Q

An express clause typically incorporated into an international contract and which specifies which country’s law will apply to any dispute under it.

A

Governing clause.

46
Q

A governing clause is also known as a … clause.

A

choice of law

47
Q

T/F: Where a contract is in writing the court will never allow the parties to rely on any terms that are agreed between them but not embodied in the contract.

A

FALSE

If it can be shown that the document was not intended to comprise all the agreed terms then orally agreed terms may be relied upon.

See SS Ardennes

48
Q

The general rule regarding orally agreed terms outside a written contract is…

A

that they cannot be admitted to add to, vary or contradict written terms.

49
Q

T/F: an agreement NOT to pursue a legal action can be valid consideration.

A

TRUE

forebearance of an existing right

(presuming that no duress exists e.g. D&C v Rees)

50
Q

T/F: A ‘tenancy’ agreement between parents and child involving a separate property and a written contract is likely to be deemed legally binding.

A

TRUE

there is probably sufficient evidence to rebut the presumption that it is not in a social, domestic or family arrangement.

51
Q

T/F: As a general rule, a party can recover goods from a third party where the contract turns out to be void.

A

TRUE

52
Q

T/F: As a general rule, a party can recover goods from a third party where the contract turns out to be voidable.

A

FALSE

53
Q

T/F: In order to be legally binding, a contract for the sale of goods must be in writing.

A

FALSE

54
Q

T/F: A consumer credit agreement, governed by the Consumer Credit Act 1974, must be in writing.

A

TRUE

55
Q

A contract for the transfer of land …

A

must be in writing.

56
Q

A debt guarantee …

A

must be in writing or evidenced in writing.

57
Q

T/F: An advertisement in a newspaper can never constitute a valid offer, as it is merely an invitation to treat.

A

FALSE

see Carlill v Carbolic

58
Q

T/F: An offer can be made to the world at large.

A

TRUE

see Carlill v Carbolic

59
Q

Goods on a market stall are …

A

invitations to treat.

60
Q

A counter offer …

A

is a rejection of the original offer.

61
Q

T/F: As a general rule, is revocation sent by letter effective on posting?

A

FALSE

the postal rule applies only to acceptance, not to revocation.

62
Q

T/F: Must a revocation be made expressly in precisely the same manner as the original offer in order to be effective?

A

FALSE

63
Q

In terms of acceptance of offer, silence …

A

can not constitute a valid acceptance.

see Felthouse v Bindley

64
Q

The ‘postal rule’ does not apply when the offeror …

A

demands acceptance ‘in writing’.

65
Q

T/F: An offeror can impliedly waive the need for acceptance to be communicated to him.

A

TRUE

see Carlill v Carbolic

66
Q

T/F: If an offeror sends an offer by letter but does not prescribe a particular method for
communicating acceptance, the offeree is obliged to reply by the same method.

A

FALSE

ICAEW Law 01: Contract formation. (8 decks)

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