Agreement

Question 1

What are the requirements of a binding contract?

(a) 
Offer, acceptance, agreement, and consideration

(b) 
Offer, acceptance, and intention to create legal relations

(c) 
Offer, acceptance, consideration and intention to create legal relations

(d) 
Offer and acceptance.


Answer 1

(c) 
Offer, acceptance, consideration and intention to create legal relations


Question 2

Which of the following best describes an ‘offeree’?

(a) 
The person to whom an offer is made

(b) The person who breaches a contract

(c) 
The reasonable person

(d) 
The person who makes an offer

Answer 2

(a) 
The person to whom an offer is made

Question 3

What approach does the court take when determining whether an agreement exists between the offeror and offeree?

(a) 
An objective approach by reading their written contract

(b) 
The court will take evidence from an expert in contract law.

(c) 
An objective approach, by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances

(d) 
A subjective approach by asking the parties to explain what the intention in their minds was

Answer 3

(c) 
An objective approach, by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances


Question 4

What are the requirements of a valid offer?

(a) 
The offer must be clear, certain and binding.

(b) 
The offer must be clear, certain and accepted.

(c) 
The offer must be clear, certain and supported by consideration.

(d) 
The offer must be clear, certain and show an intention to be bound.

Answer 4

(d) 
The offer must be clear, certain and show an intention to be bound.

Question 5

A man is showing off his rare first edition book to his neighbour when he says, ‘I might consider selling this book for a five-figure sum’. The next day, the neighbour tells the man that he accepts his offer and gives him a cheque for £10,000. Which of the following options best describes whether the man made a valid offer to his neighbour?

(a) 
No, because the statement was not clear about the price, nor did it show an intention to be bound.

(b) 
No, because his statement was not clear and certain about the book and price.

(c) Yes, because his statement was clear and certain about the book and price.

(d) 
No, because he did not mention the title of the book in his statement.

Answer 5

(a) 
No, because the statement was not clear about the price, nor did it show an intention to be bound.


Question 6

Which of the following is correct regarding a bilateral contract?

(a) 
Only the party making the offer assumes an obligation.

(b) Each party assumes an obligation to the other party.

(c) Each party makes an offer to the other party.

(d) 
The offer is accepted by performance of the required act.

Answer 6

(b) Each party assumes an obligation to the other party.


Question 7

Which of the following is correct in relation to an invitation to treat?

(a) 
An invitation to treat displays an intention to be bound

(b) 
An invitation to treat is the final step in forming a contract

(c) 
An invitation to treat can be accepted to form a binding contract

(d) 
An invitation to treat cannot be accepted to form a binding contract

Answer 7

(d) 
An invitation to treat cannot be accepted to form a binding contract

Question 8

Which of the following is not an invitation to treat?

(a) 
An auctioneer’s request for bids in an auction sale

(b) 
A dress displayed for sale in a shop window

(c) 
A notice on a tree offering a reward for the return of a missing cat

(d) 
A car advertised for sale on a website

Answer 8

(c) 
A notice on a tree offering a reward for the return of a missing cat


Question 9

The general rule that an advertisement is an invitation to treat does not apply where the advertisement amounts to a unilateral offer. What is a unilateral offer?

(a) 
An offer which prescribes an act which, when performed, constitutes acceptance.

(b) 
An offer to one party only.

(c) 
An offer that is not sufficiently clear and certain.

(d) 
An offer that originates from a manufacturer of goods.

Answer 9

(a) 
An offer which prescribes an act which, when performed, constitutes acceptance.


Question 10

Which of the following is not a valid means of an offer terminating?

(a) 
Rejection

(b) 
Revocation

(c) 
Breach
(d) 
Lapse

Answer 10

(c) 
Breach

Breach normally relates to the non-performance or defective performance of a contractual obligation or promise


Question 11

Which of the following is not an example of how an offer can come to an end?

(a) 
A request for further information
(b) 
Following revocation by the offeror

(c) 
Following the death of the offeree

(d) 
By making a counter-offer


Answer 11

(a) 
A request for further information

A request for further information does not change or reject the offer. The original offer remains open and capable of acceptance.


Question 12

Which statement is a correct description of the difference between a counter-offer and a request for further information?

(a) 
A request for further information terminates the original offer but a counter-offer does not.

(b) 
A request for further information can be made by the offeree but a counter-offer cannot

(c) 
A counter-offer prevents the offeree from changing their mind and accepting the original offer but a request for further information does not.
(d) 
A counter-offer does not change the terms of the offer but a request for further information does.

Answer 12

(c) 
A counter-offer prevents the offeree from changing their mind and accepting the original offer but a request for further information does not.

A counter-offer has the effect of terminating the original offer and that offer cannot subsequently be accepted. A request for further information on the other hand has no effect on the original offer and that offer remains open. Revisit this element and consider the section ‘Rejection – distinguishing a counter-offer from a request for further information’


Question 13

Who can accept an offer?

(a) 
The person / people to whom the offer was made

(b) 
Anyone.

(c) 
The person / people capable of performing the obligations under the contract.

(d) 
The person / people who have notice of the offer.

Answer 13

(a) 
The person / people to whom the offer was made


Question 14

What is the meaning of the rule that acceptance must be unqualified?

(a) 
Only the person/people to whom the offer was made can accept the offer.

(b) The acceptance must follow the mode prescribed by the offeror.

(c) 
The acceptance must be made by words.

(d) 
The acceptance must correspond with the offer.

Answer 14

(d) 
The acceptance must correspond with the offer.

Question 15

A farmer telephones his neighbour on Monday and offers to sell him three ducks for £50. The neighbour responds that he will pay £40 for the ducks. Later that evening, the neighbour informs his brother of the farmer’s offer. The brother immediately telephones the farmer and informs him that he accepts the farmer’s offer. On Tuesday morning, the neighbour telephones the farmer and says he has changed his mind and he accepts the offer of £50. Is there a contract formed?

(a) 
Yes, there is a contract between the farmer and his neighbour for £40.

(b) 
Yes, there is a contract between the farmer and the brother because the brother accepted the farmer’s offer.

(c) Yes, there is a contract formed on Tuesday between the farmer and his neighbour for £50.

(d) 
No, there is no contract between the farmer and the brother because the farmer did not accept the brother’s offer.

Answer 15

(d) 
No, there is no contract between the farmer and the brother because the farmer did not accept the brother’s offer.

The brother’s acceptance was not a valid acceptance as it was not made in response to the farmer’s offer. The brother’s statement was a valid offer which the farmer did not accept.


Question 16

What is the effect of a counter-offer?


(a) The original offer is terminated.

(b) 
The original offer remains open.

(c) 
It mirrors the terms of the original offer.

(d) 
The original offer can be subsequently accepted.


Answer 16

(a) The original offer is terminated.


Question 17

A woman offers by email to sell her snooker table to a man for £3,500. The man replies that he is happy to pay £3,500 for the snooker table but wants the cues, balls and framed O’Sullivan picture included for that price. The woman is happy to go ahead with that suggestion. What is the effect of the man’s reply?

(a) 
It amounts to a counter offer.
(b) 
It amounts to an effective acceptance.

(c) 
It amounts to request for further information.

Answer 17

(a) 
It amounts to a counter offer.

To be an effective acceptance, the acceptance must be unqualified. This is not an unqualified acceptance because the man has introduced additional terms relating to the balls etc.


Question 18

What is the postal rule?

(a) 
Where acceptance is communicated by post, the contract is formed as soon as the postman delivers the letter of acceptance to the offeror.

(b) 
Where acceptance is communicated by post, the contract is formed as soon as the letter of acceptance is properly posted.

(c) 
Where acceptance is communicated by post, the contract is formed as soon as the offeror reads the letter of acceptance.

(d) 
Where the revocation of an offer is communicated by post, the revocation takes effect as soon as the letter is properly posted.

Answer 18

(b) 
Where acceptance is communicated by post, the contract is formed as soon as the letter of acceptance is properly posted.


Question 19

In which situation will the postal rule apply?

(a) 
Where the offeror states that they must receive the acceptance.

(b) 
Where the letter accepting an offer is lost in the post.

(c) 
Where the letter accepting an offer is posted by being placed in the hands of a postman who is only authorised to deliver letters.

(d) 
Where the offeror posts a letter revoking an offer.


Answer 19

(b) 
Where the letter accepting an offer is lost in the post.


Question 20

A binding contract requires all material terms to be certain and complete.

(a) 
True.

(b) 
False.

Answer 20

(a) 
True.


Question 21

What test does the court apply to determine whether the parties have reached an agreement on all material terms?

(a) 
An objective test.

(b) A subjective test

Answer 21

(a) 
An objective test.


Question 22

The courts will readily strike down an agreement if it lacks certainty.

(a) 
False
(b) 
True

Answer 22

(a) 
False

This is seen as a last resort and the courts will look to enforce the agreement, reflecting the intentions of the parties, where this is possible.


Question 23

What are the three elements for a binding contract?

Answer 23

1. Offer and acceptance
2. Intention to create legal relations
3. Consideration

Question 24

What is the difference between offeror and offeree?

Answer 24

Offeror: person making offer
Offeree: person to whom offer is made

Question 25

What are the two elements needed for valid acceptance and is the court’s approach objective or subjective?

Answer 25

1. Clear and certain offer displaying intention to be bound and
2. Unequivocal acceptance

When determining whether agreement exists, court is not concerned with inward mental intent of parties but rather with what a reasonable person would say was the intention of the parties, having regard to all the circumstances

Question 26

What does intention to be bound mean?

Answer 26

Offeror must also show intention to be legally bound

Gibson: shows important of intent - may be prepared deemed to lack requisite intention be legally bound

Question 27

What is the difference between bilateral and unilateral contracts?

Answer 27

Bilateral: Each party assumes obligation to other party by making promise to do smth, eg to sell an item to other party in exchange for payment

Unilateral: One party makes offer or proposal in terms which may call for act to be performed by one or more parties - Does not involve mutual promises, only one party making offer assumes obligation - Only actual performance of required act will constitute acceptance

Question 28

What are invitations to treat and how are the four categories under it treated?

Answer 28

= first step in negotiations which may or may not lead firm to offer by one of parties - usually takes form of invitation to make offer

1. Advertisements:
   - General rule: regarded as statements inviting further negotiations or invitations to treat (Patridge v Crittenden)
   - Exception to general rule: where advertisement amounts to unilateral offer
2. Display of goods for sale:
   - General rule: price-marked goods displayed in shop window are not offer for sale but invitation to treat (Fisher v Bell) - regardless of whether shop actually expressly designates that goods are offer
   - Same general principle applies equally to goods displayed on shelves of self-service store
   - Websites regarded as equivalent to display of goods and so invitation to treat
3. Invitations to tender:
   - Used where party (usually co or public body) wishes to purchase major item or service - requestor invited tenders (offers) from those interested in supplying goods or services required
   - General rule: deemed as invitation to treat (Spencer v Harding) ie invitation to interested parties to make offers to be considered - requestor can accept or reject any tender
   - Exception to rule: where invitation to tender expressly contains undertaking to accept highest/lowest bid
   - invitation to tender could give rise to binding contractual obligation to consider tenders in circumstances where:
   (a) The tenders had been solicited from specified parties who were known to requesting party
   (b) There was absolute deadline for submission
   (c) Party requesting tenders had laid down absolute and non-negotiable conditions for submission
4. Auctions:
   - General rule: auctioneer’s request for bids is an invitation to treat (Payne v Cave (1789))
   - Bidder makes offer which auctioneer is then free to accept or reject - acceptance will be indicated by fall of auctioneer’s hammer - consistent with rules of revocation of offer
   - Auctions without reserve (=seller promises to sell to highest bidder whatever the bid turns out to be) - Auctioneer in this case may be sued for breach of contract if they refuse to sell to highest bona fide purchaser

Question 29

How can an offer be terminated?

Answer 29

1. Rejection
2. Lapse
3. Revocation

Question 30

When does rejection of offer occur?

Answer 30

Once offer is rejected, it cannot then be accepted (unless offeror makes same offer again)

Rejection does not take effect until it is actually communicated to offeror - only then will offeror know that they are free from offer

Question 31

What is a counter-offer?

Answer 31

Attempt to accept offer of new terms may be rejection of offer accompanies by counter-offer - where offeree makes counter-offer, original offer is deemed to have been rejected and cannot be subsequently accepted (Hyde v Wrench)

Where counter-offer is accepted, terms become terms of contract - not terms of original offer

Difficulties can occur where offer is made on standard terms of offeror and purported acceptance is made on standard terms of offeree - if these are different in any way, offeree has in fact made counter-offer - person who last asserts their own terms and conditions should be likely to prevail

Question 32

What is the difference between a counter-offer and a request for further info?

Answer 32

If offeree responds seeking clarification of extent and terms of offer or to ascertain if offeror would consent to changing certain ancillary aspects of offer, then offeree’s request may be construed as request for further info - in this event, original offer remain open for acceptance since there has been no counter offer made

Question 33

How may an offer lapse?

Answer 33

1. Passage of time
   (a) Where acceptance is not made within period prescribed by offeror
   (b) Where no period is prescribed and acceptance is not made within reasonable time - what is reasonable will depend on circumstances of case
2. Death of party
   (a) Death of offeror: if offeree knows that offeror has died, offer will lapse - if offeree is unaware of offeror’s death, it probably will not
   (b) Death of offeree will cause offer to lapse - offer cannot be accepted after offeree’s death by offeree’s representatives

Question 34

What is needed for revocation of contract?

Answer 34

Offeror may revoke offer at any time before acceptance but once valid offer has been made, offeror is bound by terms of offer

Revocation is only effective upon actual notice of it reaching offeree
Where revocation is communicated by post it takes effect from the moment it is received by offeree and not from time of posting

Provided offeror has shown, by words or conduct, a clear intention to revoke their offer and notice has reached offeree, revocation is effective
Means of communication do not matter, so revocation will be effective if communicated by TP

Question 35

How does revocation of a unilateral offer occur?

Answer 35

Acceptance perceived as complete performance of acts - remains possible to revoke any time before completion of required act

Exception: where offeree has partly performed obligation and is willing and able to complete it - would cause hardship to offeree to allow offeror to withdraw offer - may be dealt with under implied obligation not to revoke offer once performance has commence so implied promise to start performing act

Unilateral contracts made to whole world: Where such offer has been made, offeror may well have no knowledge of who or indeed, how many, potential offerees may be responding to offer - Communication of revocation here is almost impossible and it seems likely that revocation will be effective if offeror takes reasonable steps to bring revocation to attention of all those who may have read the offer

Question 36

What are the four aspects to identify whether there has been communication of acceptance?

Answer 36

1. Acceptance must be in response to offer
2. Acceptance must be unqualified
3. It may be necessary to follow prescribed mode of acceptance
4. Acceptance must be communicated

Question 37

What does rule that acceptance must be in response to offer mean?

Answer 37

Only person/people to whom offer is made can accept offer

Where offer is made generally to world at large then everyone with notice of offer is ‘offeree’ and valid acceptance may be made by any person with notice of offer (Carlill)

Question 38

What does the rule that acceptance must be unqualified mean?

Answer 38

Must be unqualified and must correspond exactly with terms of offer (Hyde v Wrench) ie ‘mirror image rule’

Assent which is qualified in any way does not take effect as acceptance

Question 39

When will a prescribed mode of acceptance be binding?

Answer 39

Generally, offeree may decide for themselves manner of acceptance but - if offeror prescribes mode of acceptance, question arises as to whether communication of acceptance in any other manner will suffice

If offeror makes it clear that they will not be bound unless acceptance is communicated in precise way and by no other then —> only acceptance by that mode will suffice

However, unless prescribed mode of acceptance is made mandatory, another mode of acceptance which is no less advantageous to offer will bind them (Tinn v Hoffman)

Question 40

What does the rule that acceptance must be communicated mean and when does acceptance apply?

Answer 40

General rule: acceptance must be communicated to the offeror - acceptance applies from moment it is communicated

Where offeree merely intended to accept, but did not communicate intone to offeror, there is no contract - mere mental assent is not sufficient

Question 41

Can silence amount to acceptance?

Answer 41

No

Question 42

Can a TP communicate acceptance?

Answer 42

Where TP has informed offeror of fact of acceptance

Possible

No contract will arise if communication is made by TP without authority of offeree, in circumstances indicating that offeree’s decision to accept was not yet regarded by them as irrevocable

Question 43

What does the postal rule mean and when does it apply

Answer 43

Further exception to rule that acceptance has to be communicated to offeror

Held that: where post is deemed to be proper means of communication, acceptance takes effect from moment letter of acceptance is properly posted - not from the moment it is received by offeror

Letter is properly posted when it is put into official letter box or in hands of postal operative who is authorised to receive letters

Applies even where acceptance is delayed or lost in post

Does not apply:
1. If not contemplated post would be used
2. To letters revoking offers
3. If incorrectly addressed
4. If disapplied by offeror: Always open to offeror to address imbalance of postal rule by requiring actual communication - if offeror sets outside postal rule, letter of acceptance would only be effective if and when it is received

Question 44

What about acceptance by instantaneous means?

Answer 44

General rule: acceptance takes place at moment acceptance is received by offeror

Person sending message here knows or ought to know whether message has been received - where message has not been received, without any fault on part of offeror, no contract has been concluded

If acceptor however, reasonably believes that they have communicated their acceptance but this is not so bc of fault of offeror then offeror may be prevented from saying they did not receive acceptance (e.g. they do not hear the entirety of the acceptance due to their poor mobile reception but do not ask for it to be repeated)

Question 45

Is communication needed for unilateral contracts?

Answer 45

No - communication is waived for unilateral contracts

Performance is sufficient in itself to amount to acceptance and no need for separate notification of acceptance

Question 46

What are the requirements for certainty?

Answer 46

Only agreement which is sufficiently certain can be enforced by court

Court applies objective test, asking whether, in all circumstances of case, parties have agreed on all terms they considered to be a precondition to creating legal relations

Courts will not enforce agreement if it’s too vague or ambiguous

However this is seen as last resort and courts will look to enforce agreement, reflecting intention of parties, where this is possible