Chapter 1: Agreement

Question 1

What are the three requirements for a contract to exist?

Answer 1

Offer and acceptance, intention to create legal relations and consideration

Question 2

What are the requirements of a valid offer?

Answer 2

Must be clear and certain

Question 3

What are the two types of contracts?

Answer 3

Unilateral and bilateral

Question 4

What is a bilateral contract?

Answer 4

Both parties assume an obligation to the other by making a promise to do something e.g. goods for payment

Question 5

What is a unilateral contract?

Answer 5

One party offers to perform an action and once this is done, acceptance is given e.g. ‘If you deliver a watch to me, I will pay £100. Offer is only coming from one party

Question 6

What is an invitation to treat?

Answer 6

A first step in negotiations which may or may not lead to a firm offer - an invitation to make an offer

Question 7

Are advertisements considered offers?

Answer 7

No - an advertiser may have limited supplies of the goods in question

Question 8

What is the exception that advertisements are not considered an offer?

Answer 8

If it meets the criterion of a unilateral offer: a prescribed act for the consumer to do and a clear intention to be bound

Question 9

What is the exception to the rule that an advertisement cannot constitute an offer?

Answer 9

Where the advertisement amounts to a unilateral offer. Intention to be bound was present by depositing money in an account for this purpose and fulfilment of prescribed act is deemed the acceptance

Question 10

Are display of goods / websites for sale deemed an offer?

Answer 10

No for the reason that everyone who picks up an item from the shelf isn’t always entitled to buy that item and so are invitations to treat

Question 11

Are invitations to tender invitations to treat?

Answer 11

Yes as the requestor invites tenders to make a bid who can then accept or reject any tender

Question 12

When are invitations to tender considered a unilateral contract?

Answer 12

Where the invitation to tender expressly contains an undertaking to accept the highest or lowest bid

Question 13

When could an invitation to tender give rise to a binding contractual obligation or at least consider the compliant tenders?

Answer 13

Where the tenders were solicited from specified parties known to the parties, there was an absolute deadline for submission and the party requesting the tenders laid down absolute and non-negotiable conditions

Question 14

Is an auction with reserve an offer or invitation to treat?

Answer 14

Acceptance is when auctioneer falls his hammer and the bidder may retract the bid anytime before this

Question 15

What about auctions without reserve?

Answer 15

The highest bona fide bidder is entitled to the sale so if there is a breach, the bidder is entitled to be compensated with damages but not entitled to the goods

Question 16

In what ways can an offer be terminated?

Answer 16

Rejection, lapse or revocation

Question 17

How is an offer rejected and what is the effect of this?

Answer 17

It is rejected by the [intended] accepting party. For acceptance after rejection, the offer must be made again

Question 18

What is a rejection and counter offer?

Answer 18

Offeree makes a counter offer which rejects the original offer

Question 19

Is a request for information the same as a rejection?

Answer 19

No, the original offer will still remain open for acceptance

Question 20

When does an offer lapse?

Answer 20

Where acceptance is not made within a certain time prescribed by the offeror, not accepted within a ‘reasonable’ time or offeror dies and offeree knows the offeror died, or the offeree dies

Question 21

How is revocation of an offer effective?

Answer 21

Upon actual notice of the revocation, through words or conduct coupled with a clear intention to revoke reaching the offeree

Question 22

How must an offeror revoke a unilateral offer?

Answer 22

Once performance has commenced, there is an implied obligation on the offeror not to revoke. Otherwise, offeror must take reasonable steps to bring the revocation to the attention of all those who may have read the offer

Question 23

What are the four requirements of an unequivocal acceptance of an offer?

Answer 23

• Only the offerees can accept the offer
• Must be unqualified and correspond exactly with the terms of the offer
• To accept the offer in the mode prescribed, if there is one particular mode
• Must be communicated (if through a third party, they must be authorised)

Question 24

When does acceptance take effect if using post to deliver a letter of acceptance?

Answer 24

From the moment the letter is properly posted (official letter box/given to an authorised postal operative) even if it is delayed or lost

Question 25

When can the post be used for such acceptance?

Answer 25

Only where it was reasonable in all the circumstances that the offeree used the post

Question 26

When does acceptance take effect if using post to deliver a letter of revocation?

Answer 26

Once it has been received