Agreement/ Consideration

Question 1

What are the five features of an agreement in order for it to be a valid contract?

Answer 1

Offer
Acceptance
Intention to create legal relations
Consideration
Certainty

Question 2

Define contract

Answer 2

Contracts are voluntary obligations undertaken by two or more parties which is supported by consideration

Question 3

What is Treitels definition of an offer

Answer 3

An offer is an expression of willingness to contract on specified terms, with the intention to become legally binding as soon as it is accepted by the person whom the offer is addressed to

Question 4

What is the case of Carlill v Carbolic Smokeball Company 1892

Answer 4

Carbolic smoke ball company placed an advertisement offering to pay up to £100 for anybody who contracted influenza after using their smoke ball 3 times daily for 2 weeks. Ms Carlill used it mid-November to 17th Jan and suffered influenza.

Question 5

Who are the three judges who opined on the Carlill case and what did each conclude?

Answer 5

Lindley - not a mere puff as they deposited £1000 to a bank, acceptance was the performance of the acts and consideration is the fact the defendant gets an advantage
Bowen - dismisses the need for a time restraint or that the contract is too vague
Smith - agreed with the above

Question 6

In the Carlill case, what type of contract did Finlay and Terrell allege had been made and why did they argue no binding contract had been made?

Answer 6

An insurance policy or wager, acceptance had not been properly communicated and the wording of the advertisement was too vague

Question 7

What are three features of a valid offer?

Answer 7

Must be addressed to the addressee
Must have intentions to create legal relations
Be certain

Question 8

What is the case of Gibson v Manchester City Council 1979 and how does this oppose to Storer v Manchester City Council 1974?

Answer 8

Mr Gibson wanted to buy his rented council house in alignment with the Conservative party policy. He wrote to the local authority and they responded with a form and said if he was to fill the form out they may sell him the house. The authority changed to labour who refused to sell. The HOL decided that due to the word ‘may’ there was a lack of certainty.
The same scenario occurred in Storer but due to wording being certain, a contract had been formed.

Question 9

What is a case which supports that adverts are not offers?

Answer 9

Partridge v Crittenden 1968
Protection of Birds Act 1959 prevented the sale of wild birds. There was an advert selling Bramblefinches. Judge Parker held that it was an invitation to treat and not an offer as it does not make sense for adverts to be offers in the business world.

Question 10

What is an invitation to treat?

Answer 10

An invitation to negotiate an offer

Question 11

What is the case of Pharmaceutical Society v Boots 1953?

Answer 11

It was an offence for drugs to be sold without the supervision of an assistant. The defendant made a self-serve store and the Pharmaceuticals society argued displaying the goods was an offer which was accepted by picking up the product. Somerville concluded it is not until the consumer picks the products up that an offer is made which is accepted by the cashier selling the product under the supervision of an assistant.

Question 12

What is the case of Fisher v Bell 1961

Answer 12

The defendant had a flick knife on show in his shop window. The Restriction of Offensive Weapons Act 1959 restricted the sale of flick knives. The court held that a display of goods is not an offer.

Question 13

R v Clarke?

Answer 13

Clarke gave important information about a murder in order to clear his name. Two police officers were killed and the government offered a reward to anyone who brought information and lead to a conviction. As Clarke did not know about the offer at the time, acceptance can not have occurred as he did not have the intention to create a legal relationship.

Question 14

Hyde v Wrench

Answer 14

Wrench had some land, Hyde wanted to buy some land. Wrench said he would sell his land for 1000, Hyde proposed 750. When Hyde finally agreed to 1000, Wrench decided he no longer wanted to sell it to him as he didn’t like his conduct. Hyde took Wrench to court where it was held that because he counter-offered Wrench’s proposal, the initial offer was no longer standing so no valid contract had been made

Question 15

What is the general rule of acceptance?

Answer 15

Acceptance is only in place once communicated to the offeror

Question 16

What are the exceptions to the rule of acceptance?

Answer 16

Postal rule - when the letter is posted not received
Telephones do not follow the postal rule
Emails are when they land in the inbox not when they are read

Question 17

Barry v Davies 2000

Answer 17

Barry went to an auction to buy an engine tuning machine which were to be sold for 14,000 if bought normally. The auction was without reserve but Davies refused to sell when the highest offer was £200. Davies later sold them for 750 each. It was held that Davies was in breach of contract as it was held without reserve

Question 18

How can an offer be communicated

Answer 18

In writing
Orally
By conduct

Question 19

When does an offer cease to exist

Answer 19

Only when it is terminated

Question 20

How can an offer be terminated

Answer 20

Counter offer
Revoking an offer before acceptance
Death
Delays
Non fulfilment of a condition

Question 21

What is a unilateral contract

Answer 21

The offeror promising to provide benefit when a certain act is completed - a one way promise

Question 22

What is a bilateral contract

Answer 22

Both parties make promises

Question 23

Adams v Lindsell 1818

Answer 23

Lindsell made an offer for wool, Adams accepted but by the time the letter was received the wool had already been sold. Due to the postal rule, Lindsell was in breach of contract

Question 24

Entores v Miles 1955

Answer 24

Entores made an offer to a Dutch company through Teltex, a form of instantaneous communication, and it was accepted. Miles did not fulfil its contractual obligations. The court ruled that regular postal rule does not apply to instantaneous communication.

Question 25

Does a bad deal count as consideration

Answer 25

The consideration has to have some value but does not need adequate value. Chappell & Co v Nestle 1960 - just 3 wrappers was enough consideration despite the other party obtaining copyright royalties

Question 26

Is past consideration enough?

Answer 26

No, something done in the past cannot be used as consideration

Question 27

Exception to past consideration

Answer 27

Lampleigh v Braithwaite 1615 - unspoken understanding that payment of some kind would be made

Question 28

Can an existing duty amount to consideration

Answer 28

No, an existing obligation cannot be moved along to another contract. stilk v myrick 1806, 2 men left so stilk promised to pay additional money to the remaining 8 to finish the job but did not pay. Their existing duties were under the initial contract

Question 29

Exception to existing obligations?

Answer 29

Williams v Roffey Bros 1991 - Williams backed out as they couldn’t afford, roffey bros would have to pay a penalty if they did not achieve the deadline, roffey agreed to pay extra. Williams adopted new work styles therefore roffey had extra benefit so contractual duty changed therefore had to pay

Question 30

Part payment of a debt does not end liability for the full amount, provide a case

Answer 30

Pinnel’s case; despite early part payment, not consideration