Agreements Flashcards
What does an agreement consist of
Offer and acceptance
What is an offer
A promise to be bound
What is an invitation to treat
Invite to make offer or begin negotiations
Is a reply to an invitation to treat ever an acceptance
No it will be an offer or an invitation to treat
Does an offer always need to be communicated to offeree
Yes
Does an acceptance always need to be received by offeror
Yes
Silence not enough
Postal rule is exception
Dispatch rule / postal rule
Acceptance complete as soon as letter posted even if never received
What does the postal rule apply to
Acceptance only
Not offer or revoke offer
Can the postal rule be excluded
Yes with words such as notice in writing or send your response to
In which jurisdiction is the contract made
The jurisdiction in which the offer is received
Can an offer be revoked in a bilateral agreement
Before acceptance
Not once it’s accepted
Can an offer be revoked if you promise to keep it open until a certain date
Yes unless consideration was provided
Is an offer revoked even if it is communicated through a third party
Yes
What is a unilateral agreement
Promise in exchange for an act
What is a bilateral agreement
A promise in exchange for a promise
What is an acceptance
Final, unqualified agreement to all terms of the offer. Must be in response to an offer
Requirements for an acceptance
Mirror image rule
Prescribed method rule
Cross offers rule
What is the mirror image rule
Acceptance must correspond with the offer. Any new terms makes a counter offer
Effect of a counter offer
Eliminates original offer
Is a request for further info a counter offer
No
Can cross offers form an agreement
No
What is a cross offer
Two people offering each other the same thing at the same time but without knowing
What is the prescribed method rule
The response must follow any mandatory method of acceptance
If method specified but not mandatory can used another method if fulfils purpose of prescribed method in a way that is no less advantageous
If method was for benefit if offered they can waive benefit and use a less advantageous method
When is a unilateral agreement enforceable
When act is performed
What constitutes acceptance for unilateral agreements
The performance of the Act
No need to communicate intention to try to perform act
Can a unilateral offer be revoked
Yes Any time before performance of even after performance but that might give rise to damages
How to revoke a unilateral offer
Same method of communication as used for offer. Doesn’t matter if not seen
What kind of agreement if a promise to accept the lowest tender
A unilateral offer which must be upheld
Will courts enforce an uncertain agreement
No. It will be void
Will the court ever fill in the gap where an essential term is vague to prevent the contract being void for uncertainty
Only if there is a clear commercial practice and the agreement has been relied upon
Can an uncertain term be severed to keep the rest of the contract valid
Only if the term is uncertain AND meaningless
When will statute fill in the gaps in a contract
Price:
Sale of goods act 1979 s8 goods and s15 services B2B
CRA 2015 s5- services B2C
This applies when the contract is silent as to price and provides for a reasonable price. Does not apply where contract states price but this has failed for some reason
What legal device requires payment for performance under an uncertain contract
Quantum meruit
Reasonable value of services
When will quantum meruit apply to an uncertain contact
Performance was specifically requested by the other party
Are gratuitous promises enforceable
Only if in a deed
When does an agreement become a contract
Consideration and intention to be legally bound
What is a formation promise
A promise on the formation of a contract
What is an alteration promise
A promise which alters the terms of an existing contract
Effect of a contract made through threats and extortion
Voidable. Cannot rescind if affirmed it
When if a contract voidable due to economic duress
When there is illegitimate threat or pressure vitiating consent
Illegitimate threat or pressure must be reason why they agreed to make the promise
Voidable
Affirmation is loss of resision
Is intention to be legally bound presumed
In commercial relationships yes
Not in social relationships
How to tell if there is intention to be legally bound
Certainty of terms and reliance
Would reasonable person think it was binding
Is consideration always needed
Unless it is a deed
What is consideration
What is asked for or given in exchange for promise
What is the consideration in a bilateral agreement
Each party’s promise is the consideration.
Parties are bound on exchange of promises even if they’re not carried out yet
What is the consideration in a unilateral contract
Performance of requested act is consideration and not bound until performed
Does consideration need to match value of promise
No, need not be adaquate but must be sufficient
What cannot be consideration
Sentimental motives
Anything incapable of expression in economic terms
Passed consideration
Performance of existing duty (contractual or legal)
Is performance of an existing contract with a third party good consideration
Yes
Does an alteration promise need consideration
Yes unless it is a deed
What is consideration for an alteration promise to pay more
Go beyond original duty
Factual or practical benefit
What is consideration for an alteration promise to accept less
Practical or factual benefit
Is part payment of debt or part performance of duty consideration for alteration promise to accept less
No
Elements of promissory estoppel
Promise intended to bind and intended to be acted upon
Reliance
Detriment
Inequitable to allow them to go back on promise
Can promissory estoppel enforce an alteration promise
Sometimes
What is doctrine of privity of contract
Only the parties to the contract can benefit from the contract, enforce it or rely on it
Remedies available to contracting party in respect of wrongs done to a third party
Specific performance
Damages
What does the contracts ( rights of third parties) act 1999 do
Allows contracting parties to confer rights to enforce the contract on a third party
When can a third party enforce a contract
Expressly provided for in contract or
Contract confers benefit on third party and contracting parties intended the third party to be able to enforce it (silence ok)
Benefit must be a purpose of the bargain not an incidental effect
How can a third party be identified in a contract to confer the right to enforce it
Name, class or description Need not exist at the time
When a third party has the right to enforce the contract can the contracting party alter or recind it
Not if third party has
Communicated assent
Relied on it and party is aware
Relied on it and party could be expected for foresee this
what sort of test is used to determine if the parties have reached an agreement?
objective
does consideration need to be adequate
no but it must be sufficient (the right type of thing)
is performance of a public duty consideration
no but exceeding it would be good consideration
what is past consideration and is it good consideration
it is when the promise of compensation is made after the act was carried out. not normally good consideration but exception if:
done at their request
mutual understanding of some compensation
intention to create legal relations
can an individual bring an action in promissory estoppel
no - it is a defence only
can promissory estoppel end payment plan / on going payment of debt
no it can suspend payments but these can restart with reasonable notice. cannot reclaim past payments
do you need to have acted on promise to your detriment to rely on promissory estoppel
yes not enough just to rely on it but it must also be to your detriment. there must have been a promise to waive strict legal rights.
what is an agent
someone who has power to change the legal relations of their principal
when can an agent bind someone to a deal
when they have authority to do so (actual or apparent)
when is agency created
when the principal gives the agent authority to contract on their behalf
what is actual authority (agent)
express or implied
what they’ve said or done
what is apparent authority (agent)
appearance of authority created by principal with intention third party would rely on it and they did alter their position in reliance on it
is appearing to have authority enough for apparent authority
no
does an agent have any rights or obligations in a contract between principal and third party
no
who is the third party in a contract made by an agent on behalf of a principal
third party is the other party to the contract
when can a third party acquire rights under a contract
when the contract expressly provides they are to benefit or purports to confer a benefit on them
unless contract was not intended to be enforced by third party
are minors bound by contracts
only for necessaries for condition of life and employment with training if more beneficial than not
are mentally incapacitated and drunk people bound by contracts
yes unless they were incapable of understanding the nature of the transaction and the other party knew that. then it would be voidable.
can an unincorporated association be bound by a contract
only the person who entered into it and the person who gave authority can be bound. each individual member is not and nor is the unincorporated association
can LLPs be bound by contracts
yes
can registered companies be bound by contracts
yes. if they are ultra vires they still bind as long as other party acted in good faith
are statutory corporations bound by contracts
only within limits given in statute. If ultra vires they are void
When is acceptance deemed communicated
When it is reasonable for the offeree to expect it to be read (eg an email sent in office hours as it is reasonable to expect them to read emails in normal office hours)
Who must communicate revocation
Offeror or a reliable third party
When must acceptance be communicated
Before revocation
Impact of stating that a contract is ‘binding in honour only’
This rebuffs the presumption that the parties in a commercial context intended to create legal relations
How to rebut an intention to create legal relations in a commercial context
Clear words
How to rebut the presumption that the parties did not intend to create legal relations in a social context
A number of factors including how close the parties are and amount of money at stake
What are commercial contracts
B2b but also all agreements not made between family and friends
When does implied actually authority exist
When the agent does something within the scope of the normal authority of their role even if the principal expressly prohibits them from doing it
E.g bar manager orders beer from supplier even though owner told them not to because it is within normal scope of duties of a bar manager
Limits on the postal rule applying
Is it excluded by offeror
Post must be a reasonable means of communication
The letter must be properly addressed and posted etc
