Agreement Flashcards
What is an offer?
An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed
In terms of the intention that it will become binding as soon as accepted, is the approach to intention subjective or objective?
The approach is objective - so the court looks at what was said and done between the parties from the perspective of a reasonable person - what would a reasonable person think was going on? Would they think that it will be binding as soon as accepted ?
The 5k vs 6k motorcycle example?
Because a reasonable person would assume that 5k was the intended asking price
What does ‘the person to whom it is addressed’ mean in the definition of an offer?
It can be a person, a class of people or even the whole world. The point is that you can only accept an offer that was addressed to you
What is an invitation to treat?
A preliminary statement that invited negotiation
Eg I may sell you my car for £2000
I am thinking of selling my car for £5000
Is picking up goods in a shop accepting an offer?
No - the goods in the shop are an invitation to treat.
When you go to the checkout you are offering to buy the goods and it is up to the shop keeper to decide if they are going to accept that offer
Are adverts for goods or services (in a newspaper or tv commercial or on a website) offers or invitations to treat and why?
They are invitations to treat because if they were offers then anyone asking for the advertised things would be accepting and that would be a problem if the advertiser had ran out of stock
Are adverts for rewards offers or invitations to treat?
They are offers so it encourages people to come forward and give the information
Are adverts to do something offers?
Yes eg buy x and you get £100 if you then get the flu - accepted at the point of purchasing it
It’s a unilateral contract
In an auction when is an offer accepted?
When the auctioneer’s gavel goes down - that is acceptance of the last bid, the last offer from a bidder.
The auctioneer inviting bids is simply an invitation to treat
What is the significance of having an auction without a reserve price?
If the auctioneer does not accept the bid even if it’s low, it will be a breach of a unilateral contract - the claimant should sue the auctioneer as it’s pointless to sue the owner of the property because the auctioneer didn’t accept the bid so there was no contract of sale with the owner
Is it a breach of a contract not to except a response to an advert for tender at the lowest price?
Yes
Can a company sue for loss of opportunity if their bid that is given on time is not considered
Yes as this is a breach of an implied promise to consider all bids that happen on time.
The example in the textbook is someone who had to put a tender in a letter box by noon, they do it at 11am and comply with the conditions of the offer but the offer isn’t collected by the post man that day - they can claim for loss of opportunity
What must an offer be to be valid
An expression of assent which is unqualified
As
What happens in the battle
Of the agreements
The last shot wins
In a battle of the forms if there is no acknowledgment slip and the seller just supplies the product?
It could be said that delivery of the machine might be regarded as acceptance by conduct of the last set of standard terms to be offered
What is the postal rule and where does it apply?
It only applies to acceptance
It means that a letter of acceptance will be effective when posted even if the letter is lost in the post
What are the conditions that must be satisfied in order for the postal rule to apply?
a) it was reasonable in all the circumstances to use the post
b) the letter was properly addressed, stamped and posted
And
c) the postal rule had not been excluded by the offeror
What did Holwell say about the postal rule?
That by using the word ‘notice in writing to the seller’ the offeror had impliedly excluded the buyer - it meant the acceptance actually had to reach the seller in order to be effective
Can an offer be accepted after being terminated?
No
What are the four ways of terminating an offer?
Counter-offer
Lapse of time
Withdrawal by the offeror
Express rejection by the offeree
How can rejection happen by the offeree?
Either expressly or impliedly by giving a counter-offer ?
Can an offer be revoked any time before the offer has been accepted?
Yes - even if the offeror has promised to keep the offer open.
The exception to this is that if someone has paid to keep the option open for a period of time (even a nominal amount like £1) then the offer is not revocable
Can an offer for a unilateral contract be revoked?
Generally it would be unfair to mean that a unilateral offer has only been accepted when you complete it - eg someone could revoke your offer of £100 to walk from Belfast to Dublin when you’re 2 miles from Dublin
So the courts make it that there are two offers in that situation. The express offer and the implied offer not to revoke if the specified act is started within a reasonable time. The acceptance and consideration for the implied promise is the commencement of the act
Must revocation be communicated to the offeree in order to be effective?
Yes
If a revocation is sent via electronic communication - when is it said to be received?
When it should have been read - which means when it is received if it was communicated in an instant way where a person should see it immediately in the ordinary course of business, but for their failure to act in a normal business like manner
How can an offeror revoke an offer made to the public at large?
The best they can do is to make an advert to the effect of revocation in the same way (like the same newspaper)
What are the differences in communication of acceptance and revocation?
Acceptance must be communicated by the offeree or an authorised agent whereas a notice of revocation can be given by the offeror or a reliable third party (someone objectively considered to be reliable)
The postal rule does not apply to notices of revocation
Must a contract be certain and complete
Yes - parties just reach a clear and complete agreement - so for example saying you’re happy to buy a car on ‘hire purchase agreement terms’ isn’t certain enough if you’ve not seen the terms
Is an agreement to buy ‘timber of fair specification’ too vague?
It seems vague but the court held there was a binding contract on the particular facts of a case. The parties dealt with eachother in the past, they were well acquainted with the timber trade and bad far as the parties concerned there was no uncertainty
If an offer is revoked for a higher offer what process does the court use to calculate damages
To compensate the offeree for loss of Bargain so the difference in their offer and the new offer that the seller received
Why are saying ‘would you be interested’ or ‘I may sell for £x’ NOT offers?
They are invitations to treat because they are not clear and certain.
They are invitations to make offers that the seller can then choose to accept or not
When are adverts not just invitations to treat?
If there is a clear set of instructions on what the customer needs to do, in return for those actions the customer gets a reward (eg money) and that reward has been set aside/deposited by the company making the advert to show an intention to be bound
When is an invitation to tender more than just an invitation to treat?
1) if they say they’ll accept the lowest or highest bid - that’s a unilateral offer and the offeror must accept the highest bid submitted
Or
2) the tender is made to a specified number of parties and contains clear conditions setting when and how the bids should be submitted (like a time limit and a method for posting). This is a unilateral offer to consider the bid (NOT accept) if it is submitted in the correct way stated. The seller does not have to accept the bid but must at least consider it and cannot completely ignore it
Why are statements of price examples tricky when deciphering between invitations to treat and offers?
Because it looks like an invitation to treat but it isn’t
If a party states the lowest price they would sell something at is inviting an offer from the buyer.
For example Adam says to bob that he will sell his lion for the lowest price bob is willing to offer. Bob states that that price is £400. Adam says he accepts - but there is no contract.
Bob only invited Adam to make an offer of the £400 which Adam now needs to accept or not
What is the effect of a counter-offer?
It ends the original offer - by giving a counter-offer you are rejecting the original offer - the new terms become a new offer that the original offeror can accept or reject
When will the general rule that the last shot wins in the battle of the forms not apply?
If a party fires the first shot by sending a document with terms attached to the counterparty and that counterparty signs the document (but then proceeds on new terms), the courts will hold the first party’s terms to govern the contract
When does a lapse of offer happen?
If acceptance is not made within a time that the offeror states it must be accepted or there is no set period for acceptance given but acceptance is not made within a reasonable time. A reasonable time depends on the circumstances - a perishable good like ice or where price fluctuates like shares - the time that is reasonable will be pretty short
Will the offer lapse if the offeree dies?
Yes - the offer will lapse and the offeree’s personal representatives cannot accept it
Does the death of the offeror cause the offer to lapse?
If the offeror dies before the offeree has accepted the contract may still be binding unless it involves the offeror’s personal service, and/or the offeree has been notified of the death
Can the offer lapse if the condition of acceptance is not satisfied?
Yes - this is a condition precedent
Can the offeror revoke a bilateral contract?
Yes the offeror can revoke an offer at any time before acceptance - once an offer has been accepted the offeror is bound by the terms of the offer
What is the exception to the rule that an offeror can revoke an offer any time before acceptance?
The exception is if the offeree pays the offeror to keep the option open, a separate contract is made to do that, called an option
Must revocation be communicated and when is it effective
Yes and at the time it reaches the offeree
Does the postal rule apply to revocation?
No - a revocation letter is only effective when it actually reaches the offeree, not when it is posted
Can a unilateral offer be revoked before acceptance (completion of the act)?
Yes - as long as the person has not partly performed the act and is willing to complete it
Can a unilateral offer made to the world (like an advert to anyone) be revoked?
Yes if this is prior to anyone completing the act. You can revoke by taking reasonable steps to notify those who are likely to accept by using the same method to revoke as you did to make the offer. (Such as a new advert in the same newspaper if you made the offer by newspaper advert)
But if members of the public have already started to carry out the act and are willing to complete it, you can no longer revoke the offer - it is too late
Can a unilateral contract advertised to the world be revoked if members of the public have already started to carry out the act and are willing and able to complete it?
No - it is too late to revoke the offer
Can a third party accept an offer on behalf of someone?
Yes but only if they are authorised to do so
What is the impact of imposing a condition on an offer like saying ‘I will accept but only if’
That’s a counter offer
When is acceptance taken for emails?
When it is received into the offeror’s server - if it is stuck in the outbox, no acceptance.
If the email is received within office hours of 9-5, acceptance takes place on the same day. If outside office hours, acceptance is on the next business day.
Office hours can be later if parties often communicate or work late at night
When does acceptance happen if done over the phone?
It takes when the offeror hears the acceptance over the phone
If the line breaks or is so crackly that the offeror doesn’t hear the acceptance, there is no acceptance
Do you need to communicate acceptance to a unilateral contract?
No - you just need to perform the act that constitutes acceptance of the contract
Is acceptance by conduct an exception to the rule that acceptance must be communicated to the offeror?
Yes - this happens mostly in contracts for the delivery of goods. If there is no communication of acceptance but both parties purchase and deliver goods to one another on the basis of draft or agreed terms (even if oral), then a contract can be formed
What does it mean that post just be properly posted for the postal rule to apply?
It must be correctly addressed and either put in a post box or put in the hands of someone at the post office authorised to receive mail
does the postal rule apply if the letter is properly posted but the letter is lost in the post or destroyed and never reaches the offeror?
Yes
The postal rule won’t apply if it is unreasonable to use the post to accept the offer. When will that be the case?
It will be unreasonable where the offer has been made by a method which is a quick method of communication, such as email, but the offeree accepts by a slow method like post - so if you get an offer via email you can’t use the postal rule
How can the use of post be explicitly excluded by the offeror?
By stating the acceptance must be ‘notice in writing’ - or anything else that makes it clear that the offeror must actually receive the acceptance - the postal rule cannot apply and acceptance is on receipt of the letter or actual communication
What is the presumption regarding intention to create legal relations in commercial agreements?
There is a rebuttable presumption in favour of an intention to create legal relations. to rebut this presumption, the parties must have made it explicitly clear that they do not intend to create legal relations by inserting a clause, stating that the agreement is not intended to be legally binding, or to create legal relations
Stating that the agreement is subject to contract, will also report this presumption, as it means it is not binding as a contract until the contract has been concluded
What is the presumption regarding intention to create legal relations in social and domestic agreements, such as those forms between families, friends and spouses
There is a rebuttable presumption that there is no intention to create legal relations. This presumption may be regarded where monies have changed hands between the parties. They expressly agree they’re entering into a contract. The agreement is formally written down. The parties are dealing on arm’s-length or solicitors are involved.
What is the presumption regarding intention to create legal relations in advertisements?
The presumption is that there is no intention to create legal relations
adverts are usually treated as invitations to treat with any statements made in the adverts as mere puffs
Adverts are in fact unilateral contracts
Adverts offering to provide a certain amount of money, if something happens in a specified period of time will usually show an intention to create legal relations, if that amount of money has been separately, set aside, such as in the carbolic carcass

What is the general rule regarding capacity in contracts?
The general rule is that all adults of sound mind, or capable of entering into a contract
Rules of capacity, aim to protect the more vulnerable in society from entering into potentially onerous contracts
What is the general rule regarding whether minors are bound by contracts
The general rule is the minors are not bound by contracts. This applies, even if the country party did not know about their age, or the minor lied about it.
What are the exceptions to the rule that minors are not bound by contracts?
A minor can be bound by two kinds of contracts
1) to purchase necessaries, if the necessaries are for the miners benefit, and the miner must pay a reasonable price for the necessaries rather than the actual cost
Necessary is there anything the minor needs and which they don’t already have?
2) a minor will be bound by a contract of employment, if it is done for their benefit
For example, if a football club has a young footballer that child will only be bound by the contract, if the if the club can provide him with the benefit, such as training, education, or other things that will improve the career
Would a trading contract qualify as necessaries
No
Are people with mental incapacity bound by contracts?
People of unsound mind to count make decisions for themselves are not bound by contracts. They enter if the other party knew there of unsound mind. The contract is avoidable, meaning it can be terminated at any time.
An exception is that a person of unsound mind is bound by a contract to purchase necessaries and pay a reasonable price for them
Are People here drunk or high from drugs, bound by contracts
If someone is so drunk or high from drugs that they do not understand what they are doing, they’re not bound by any contract than 20. If the other party knows they are intoxicated when entering the contract and exception is the necessary exception.
The contract is avoidable rather than void, meaning that the drunk party sobers up, and then realises that he actually does want to enter into the contract, he may ratify it as then binding 
What is the impact of a registered Company on contractual capacity
If a company is registered under the companies act an act undertaken by the company with an outsider such as entering into a contract, cannot be challenged if it is beyond the powers granted in the companies constitution
That means a contract between a company and another party that exceeds the powers granted in a companies constitution is binding on the company - so directors are not bound by the companies constitution
Does the altar of the race doctrine regarding contractual capacity apply to statutory corporations?
Yes, this means that companies that are created by statute, cannot enter into contracts outside of the stated powers, as these would be declared ultra vires and therefore void
Do you limited liability companies have unlimited contractual capacity
Yes, even though they are created by the limited liability partnership act 2000, they do benefit from unlimited capacity and so the ultra vires doctrine does not apply
What is the impact of illegality on a contract?
Contracts which arise from illegal or a moral conduct are void
What is illegal or immoral conduct for the purposes of contractual illegality?
The purpose, performance or formation of a contract involves criminal conduct or conduct that is contrary to public policy
Conducted is contrary to public policy means any conduct that should be deterred -in other words, people shouldn’t be doing it, even if it is not technically illegal
Will the courts ever enforce an illegal contract?
The courts take a discretionary approaches to whether to grant a remedy to claimant Andrena legal contract, looking at the nature of the illegal conduct, public policy considerations, and whether any of the law will be undermined. In fact I ever the courts are very unlikely to grant a claim under an legal contract and would only do so if the illegality is trivial or not a substantial part of the contract and the claimant was unaware of the illegality. This would be exceptional.
Does the doctrine of severability apply to contractual illegality?
Yes, the court may sever the legal part of the contract from the rest of the contract. If it does not render the remaining part of the contract radically different from what the parties agreed on and intended it does not add anything to the contract and the severance is not contrary to public policy.
Are restraint of trade clauses illegal
Restraint of trade clause is exist for example in employment contracts were clauses which prevent the employee from having another job after they leave their previous job are illegal, unless
I) there is a legitimate business interest to protect trade secrets AND
II) The restraint is reasonable in terms of geographical area, duration, and scope.
Our contracts with minors void or voidable
Void
What are the two rules regarding contractual certainty?
The contract is complete and new essential term is lacking
Their agreement is not uncertain, vague, or ambiguous
What is the test used to determine contractual certainty?
The reasonable businessman test - with a reasonable person of business Visa terms are sufficiently certain to form a clear and binding contract
Can I contact the binding of certain terms are not finalised
Yes, provided that the essential times required to make a contract are clear and there was intention to create legal relations
Can a court implied terms into a contract to fill in any gaps
Yes, they can do so using a reasonable business test - asking what time is required for the contract to function as the parties intended it
This is only if it is reasonable for the courts to do so - if the contracts to uncertain vague, it will be unenforceable, but the courts are often reluctant to render a contract unenforceable for the egg times, and will more likely try and read terms into a contract using a reasonably business Person test or strike out the uncertain time
What is consideration?
Consideration is something of value
In a bilateral contract, this is a promise (executory consideration) (I promise to fix your bike if you promise to pay me)
In a unilateral contract, it is an act (executed consideration)
Why are promises in bilateral contract termed executory consideration?
Because in a bilateral contract, the parties must exchange promises - I promise to do something in return for a promise that the other party will do something else such as pay - this is executory consideration because it is an exchange of promises for things in the future
Why is consideration in a unilateral contract deemed executory?
Because the parties exchange, a promise for an act - one-party promises to give something if the other party performances certain act - this is known as executed consideration, because the act has been done in the past to make the contract binding
What does the phrase past consideration is not good consideration mean
This means that you can’t do something without someone else’s knowledge and then ask for payment
If one party has done something before the other has promised to pay, that act is not consideration
If Satan sanitiser is clean, Lucifer is circus when Lucifer is away then the invoice Lucifer there is no consideration because Lucifer cannot pay for something done in the past that Lucifer had not promised to pay for before it was done
What is the exception to the rule the past consideration is not good consideration
All three must apply
1) the act must’ve been done at the request of the other party
2) the parties must’ve understood throughout the act that it would be rewarded by payment
3) if the promise to pay had been made, it must’ve been legally enforceable -this means that there must be intention to create legal relations
What does it mean? The consideration must be exchanged.
This means that if a promises made to a person only there in force the promise if they have given something of value in exchange
You can’t force a contract we haven’t given anything in return for the Promise
If Angel promises to pay £50 in exchange for Lucifer, handing over the line Angel van has to Dashaway Lucifer keeps the lion angels. Best friend cherub cannot enforce the contract and get Lucifer to handover the lion because he has not given anything only Angel can force the contract as he has given in consideration via the promise to pay in exchange for the promise to handover the lion.
What does it mean? Consideration does not have to be adequate, but it must be sufficient.
This means that the price of the consideration is immaterial
As long as some value in the eyes of the law is identifiable, the consideration is sufficient, and thus valid
The bar is pretty low basically as long as you give or receive something real and at least a bit valuable you have consideration
This allows someone to be stupid enough to sell a house in Cheshire for a handshake with the Man City. Captain
Would a promise for natural love and affection, or to stop complaining about being disinherited be subject to proper consideration
No
Wait, a promise to stop swearing gambling drinking alcohol and smoking tobacco be proper consideration
Yes, because of the public policy rationale that people are for setting the right to drink alcohol, and they should be positively encouraged to do so
What is the general rule regarding pre-existing obligations and consideration?
The general rule is that if a party has done no more than what the obligations already are under the contract, there is no consideration and they must do more in order to get more money
Can a party ask to be paid more if they go above and beyond the current contract and exceed their existing contractual duty
Yes they can they must to be on the original bargain and they must’ve done something which is actually above with the contract already applied for them to do
Doing more, may mean, providing an extra service with them in doing what you promised to do originally, but with much more effort than originally envisaged
Remember that one of the parties must still have offered to pay more for the others extra services - a party come Justin Moore under a contract without the other, realising it, and then clean extra payment. They must still be an offer to do more and Alex and acceptance to do more.
What is the practical benefit rule in consideration?
The rule is that if one party provides a practical benefit to another party by completing a pre-existing obligation on time at the other parties, promise to pay more in return, resulting in another party, gaining a benefit or avoiding a penalty This practical benefit amounts to consideration and must be paid for in addition to any payment owed under the contract
What is the rule regarding obligations under a public duty and consideration?
Nearly carrying out your Judy under public law will not amount to any consideration and therefore will not entitle extra payment
This rule applies when a public servant like a police officer claims they should be paid more for going above and beyond their day-to-day job. If they’re only doing their job, they will get extra money.
But if the public servant does go beyond their day-to-day job and gives more than obliged to exceeding their public Judy, they will be entitled to extra payment
What is the rule regarding pre-existing obligations to a third-party within consideration?
Pre-existing obligations to a third-party can make a valid contract
This is because the third-party will have a right to directly sue the intermediary, which is valid consideration and a valid contract is formed
