CL: The Nature Of The Agreement: Offer & Acceptance

Question 1

4.1: what is a contract ?

Answer 1

A bargain made between 2 or more person which is legally binding

Question 2

4.1: what is essential elements of a valid contract ?

Answer 2

• Agreement : offer and acceptance of definite terms
• Consideration: a promise to give, do, refrain from doing something in return for a similar promise
• An intention to create legal relations
• Compliance with required formalities where applicable
• Capacity to contract

Question 3

4.1: what is the source of contract law

Answer 3

Case law and legislation

Question 4

4.2.3: what is standard form of contract?

Answer 4

The terms of the contract are set out on a standard written document prepared by the organisation
- A person wishing to contract can accept the terms stated or refuse the contract but can’t negotiate different terms

Question 5

4.2.3: What is an example of standard form contract?

Answer 5

A contract to fly economy class with an airline
Purchase of electricity from an electricity supplier
- The customer is not in a position to negotiate for amended terms

Question 6

4.2.3: What acts of parliament regulate the contents of standard form contracts ?

Answer 6

Consumer Credit Act 1974
Unfair Contract Terms Act 1977

Question 7

4.2.4: What is implied terms and an example of it ?

Answer 7

Terms are sometimes implied into contracts by statute or common law, contractual parties are bound by these terms even though they did not agree to them.
- Fitness for the purpose for which goods are sold and the quality of goods are implied into consumer contracts ( consumer rights act 2015)

Question 8

4.2.5: What is unenforceable clauses ?

Answer 8

Certain statutes prohibit some types of contractual clauses and if such clauses are included in a contract document they will have no legal effect.

Question 9

4.2.5: what is the unfair contract terms act 1977?

Answer 9

Clauses in contract that seek to exclude a party’s liability for death or personal injury through negligence are ineffective ?

Question 10

4.2.5: what is an example of the unfair contract term act 1977?

Answer 10

A coach company would not be able to escape legal liability for injury caused to passengers through carelessness of staff, even if tickets contained a clause stating ‘ this company accepts no legal responsibility for injury to passengers caused through the inexperience and carelessness of the driver ?

Question 11

4.3: what are the 3 basics issues that contract law is concerned with?

Answer 11

1. Is there a contract?
   - contract must have the 5 elements present to be legally binding
2. Is the agreement one which the law recognises
3. When do the obligations of the parties to the contract come to an end and what remedies are there if one of the parties break some or all of the contract ?

Question 12

4.3.2 How does a contract become void, voidable or unenforceable

Answer 12

If one or more of the essential elements are not present

Question 13

4.3.2 what is a void contract ?

Answer 13

It’s not a contract and so has no legal effect
A contract transferring ownership of goods from party Z to party Y that is void will mean that the ownership of goods never and any further contracts passing good from party y to party x will also be void

Question 14

4.3.2: what is a voidable contract ?

Answer 14

It is a contract that is binding on one party but the other party has the option to set it aside
- until the contract is set aside, it is treated as and goods can be legally transferred under it

Question 15

4.3.2: Give an example of void and voidable contract

Answer 15

Ali has a computer system, Tim pays for it for £6,000 with a forged cheque ( contract 1)
Later, Tim sells the computer system to Brenda for £5,000 ( contract 2)
Tim disappears with Brenda’s £5,000, Ali tries to recover his computer system

• If contract 1 is void then ownership can’t pass to Tim meaning contract 2 is void. Ali will be able to recover the computer system which legally belongs to him.
• If Contract 1 is voidable, then ownership of the computer oases to Tim until it is avoided by Ali, this hasn’t happened therefore contract 2 is valid and Brenda owns the computer system

Question 16

4.3.2 what is an unenforceable contract?

Answer 16

It is a valid contract that the parties are at liberty to carry out, but if one party refuses to carry out their side of the contract the courts will not enforce it
- it only causes problems when it is breached

Question 17

4.3.3: What is a bilateral contract ?

Answer 17

Each party takes on some sort of obligation usually promising to do something in return
- Both parties exchange promises to perform specific actions

Question 18

4.3.3: what is a unilateral contract ?

Answer 18

A one-sided agreement in which the offer or promises to pay only after the offered completes a task
Eg: Carl offers to pay a reward if his list pet python is returned

Question 19

4.3.4: what is a simple/patrol contacts ?

Answer 19

Contracts that can be made in any form
Eg: by word of mouth, conduct, writing etc

Question 20

4.3.4: what is is a speciality contracts?

Answer 20

Certain types of contracts have to be in particular form, in writing or in deed to be legally enforceable by the courts

Question 21

4.3.4.1: What is a deed?

Answer 21

A type of written agreement that states it is a deed
It must be signed by the person making it, in the presence of a witness
- If a person promises to give a gift without anything in return, it’s only legally enforceable if the contract has been made by deed
- The transference of land must be written in deed, however the selling of land doesn’t but needs to be written to become legally enforceable

Question 22

4.4: How is an agreement shown in a contract

Answer 22

Offer and acceptance
One party makes an offer setting out the terms of the contract and the other party accepts

Question 23

4.4: What does a valid offer contain ?

Answer 23

What the party intends to do and what the other party agrees to do in return

Question 24

4.4: what are the names of the parties involved in offer and acceptance

Answer 24

Offeror: the person who makes the offer
Offeree: the person who accepts the offer

Question 25

4.4: if an offer is not intended how is it decided whether it’s still an offer?

Answer 25

A court will consider the intentions of the parties - the fact that parties refer to a statement as an offer doesn’t mean it’s an offer

Question 26

4.4.1: what does it mean by an offer must be clear

Answer 26

The terms of an offer must not be too vague Eg: Guthing vs Lynn (1831) the court stated that a promise to pay an additional sum for a hoarse if it was ‘ lucky’ was too vague to be open to acceptance

Question 27

4.4.1: what happens if an offer is incomplete or vague ?

Answer 27

Then the relevant details may be inferred, making the terms definite enough to be an enforceable contract Terms which are imprecise may be discovered from previous dealings between the parties and trade custom.

Question 28

4.4.1: what is an example of an offer being vague

Answer 28

Hillas vs Arcas (1932) - a contract for the supply of wood did not specify what type or quality of wood will be supplied when buyer was to purchase the wood the following year - decision : the details of the option offered could be obtained from previous dealings and the custom and practice in the timber trade,

Question 29

4.4.2.1: what is an invitation to treat?

Answer 29

Not an offer that is capable of being accepted by other party. It is an indication that a party is open to negotiation - party A is asking party B if they would like to make an offer which party A may accept or refuse - The party making the first statement expects further negotiations before a contract is formed Eg: Gibson vs Manchester City Council

Question 30

4.4.2.1: Explain invitation to treat in shops

Answer 30

A shopkeeper is not contractually bound to sell an item that a customer wishes to purchase Eg: Pharmaceutical society of Great Britain vs Boots Cash Chemist Eg: Fisher v Bell

Question 31

4.4.2.1: Explain advertisements being an invitation to treat

Answer 31

Advertisements placed in newspapers, magazines or posted on websites are invitations to treat even if they are headed ‘offer for sale’. - The customer makes the offer to buy the goods or services and the business advertising may accept or reject the offer Eg: Patridge V Crittenden

Question 32

4.4.2.1: Give an example where an advertisement was a definite offer and not an invitation to treat

Answer 32

Carlin v Carbolic Smoke Ball Company - The advertisement was an unilateral offer, it was a promise by one party in return for an act by the other party - The completion of the action was both acceptance and consideration - The deposit of £1,000 showed that the defendants had an intention to pay claims

Question 33

4.4.2.1: Applications inviting tenders, catalogues and prospectuses

Answer 33

These are invitations to treat A tender is where a person seeking to have work carried out issues a statement inviting interested parties to submit the terms on which they are willing to carry out the work The person making the tender is the offeror and the other party can accept or reject the offer Eg: Business Insight eTendering

Question 34

4.4.2.1: explain invitation to treat by prospectuses

Answer 34

A public company may send out prospectuses to potential shareholders inviting them to apply for shares in the company The application for shares us an offer that company may accept or reject

Question 35

4.4.2.1: invitation to treat in catalogues

Answer 35

Eg: an auction for sale of item , an auctioneer asking fir bids is an invitation to treat When the final bid us made the auctioneer bangs his hammer on the table, signifying that the offer has been made If an item has a reserve price and the bid did not meet that price the auctioneer has the option to refuse the bid however if it doesn’t the auctioneer has to sell it for the highest bid Eg: Barry v Davies

Question 36

4.4.2.2: Explain statements expressing intention

Answer 36

An offer must be made distinguished from a statement A statement that gives information of selling an item in the future is not an offer Stating a price of an item is not an offer to sell it at that price Eg: Harvey vs Facey

Question 37

4.4.2.3: Explain offers being distinguished from a mere puff or boast

Answer 37

An example ‘ X washing powder washes whiter than any other powder’ is a boast and not an offer In Carlill vs Carbolic Smoke Company the court decided that the claim the company made about their smoke ball preventing influenza was part of Ann offer and not a boast

Question 38

4.4.3: can a person accept an offer he doesn’t know about ?

Answer 38

No - there are very few cases where a party gives information before learning of the reward If a party has knowledge of a reward when they gave information they are contractually entitled to receive the reward Eg: Bloom vs American Swiss Watch Co

Question 39

4.4.4: Offers in unilateral contracts

Answer 39

In a unilateral contracts, offers made to world at large and a contract will be completed when a person fulfill the obligations set out in the offer Eg: Carlill vs Carbolic Smoke Compsny Bowerman vs Association of British Travel Agents

Question 40

4.4.5.1: what is termination by revocation ?

Answer 40

The offer to make a contract is withdrawn If a business has made an offer to sell their good to company X and the offer is not readily accepted, the company can withdraw and sell the elsewhere An offer may be revoked at any time up until it is accepted

Question 41

4.4.5.1: what is the exception of termination of revocation

Answer 41

If the offeror has promised to keep his offer open and the offeree has given something in return the the offeror is contractually bound to the promise Eg: Asha offers to sell her car to Brian as he has expressed interest in buying it she promised to not sell the car to anyone before Saturday and Brian pays £100 in return for this promise however Asha sells the car to someone before Saturday and therefore breaches the contract The withdrawal of the offer must be communicated to the offeree Eg: Byrne v Van Tienhoven

Question 42

4.4.5.1: who can communicate a revocation to make it effective ?

Answer 42

Revocation of an offer doesn’t have to be communicate by the offeror to the offeree to be fully effective It is effective if it communicated by a reliable 3rd party Eg: Dickinson vs Dodds

Question 43

4.4.5.2m can withdrawals take place in unilateral contracts

Answer 43

If the offeree has started performance there is an implied obligation on the offeror not to withdraw the offer The offeree should be given a reasonable time frame to complete the performance of the offer once performed has begun Eg: Errington v Errington and Woods If an offer has been made to the world at large then the withdrawal should also be informed to the world at large

Question 44

4.4.5.3: What is Termination by lapse of time ?

Answer 44

Sometimes an offer has a time limit and the offer will expire after that time limit If there is no time limit then the offer will expire at a reasonable time and this is dependent on different circumstances Eg: Ramsgate Victoria Hotel vs Montefiore

Question 45

4.4.5.4: does death terminate an offer ?

Answer 45

Yes the death of the offeree and offeror terminates the offer

Question 46

4.4.5.5: What is termination ?

Answer 46

Once offer is rejected us ceases to exist and can late be accepted

Question 47

4.4.5.5: What is termination by counter offer?

Answer 47

A counteroffer is a reply to an offer where the party made an softer but the other party negotiated different teens Therefore it is a rejection as it destroys the original offer Eg: Hyde vs Wrench