Contract Flashcards by Devangi Dave

What must an offer be distinguished from?

An invitation to treat

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What are goods on display or websites?

Invitations to treat

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What are adverts?

Generally invitations to treat UNLESS offer reward for clear prescribed act, in which case unilateral contract

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With auctions, what is the invitation to treat?

Auctioneer inviting bids

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What is acceptance with auctions?

Fall of hammer, revocation can happen anytime before then

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What is a reserve price?

Minimum price below which auctioneer will not sell property

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An auction without reserve is…

Unilateral contact to sell to highest bidder

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What are tenders?

Generally invitations to treat unless company promised to accept lowest or highest tender ==> offer of unilateral contract

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When can an invitation to tender give rise to a binding contractual obligation to consider tenders?

(1) the tenders had been solicited from specified parties who were known to the requesting party;
(2) there was an absolute deadline for submission;
(3) the party requesting tenders had laid down absolute and non-negotiable conditions for submission.

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What are 3 conditions for acceptance

(a) an expression of assent
(b) which is ‘unqualified’ & correspond exactly with terms of offer

Must be in response to offer.

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Can acceptance be communicated by silence?

No ==> must be communicated by offeree or authorised agent by words or conduct

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What is the mirror rule/ rule regarding counter-offers?

Acceptance must mirror offer exactly. Conditional response/counter-offer destroys original offer & represents new offer.

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When acceptance made by instantaneous mode of communication, when does acceptance take place?

Moment acceptance received by offeror

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When does acceptance take place when via email?

Email effective when received during working hours

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What is the postal rule?

Letter of acceptance effective when posted.

Applies even if acceptance delayed/lost in post

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Conditions for postal rule

1) Reasonable to accept by post
2) Properly stamped, addressed, posted
3) Rule must not have been excluded (e.g. offeror stipulated/implied they needed to be notified in writing → letter only effective when received /incorrectly addressed/)

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Does postal rule apply to letters revoking offers?

No - must be received to be effective

How can an offer be rejected?

An offer can be rejected expressly or impliedly. If the offeree makes a counter-offer, it implies rejection of the original offer.

When can an offer be revoked?

Any time before acceptance, even if the offeror promised to keep it open for a specified period, except when the offeree provided consideration to keep the offer open.

Revocation in unilateral contracts

acceptance occurs upon performance.

There’s an implied promise not to revoke if the specified act is started within a reasonable time.

How must revocation be communicated?

Revocation must be communicated directly to the offeree to be effective.

An email sent to a business is effective when it should have been read.

It’s also effective when communicated by a third party.

What steps are necessary in revoking unilateral contracts?

For unilateral contracts, the offeror must publish the notice of revocation in the same place and with the same prominence as the offer. They must also take reasonable steps to bring the revocation to the attention of those who may have read the offer.

EXCEPTION: part performance of obligation + willing & able to complete ⇒ implied obligation to not revoke & performance embarked on

notice of revocation

Notice of revocation can be given by the offeree or an authorized agent, and the postal rule does not apply to notices of revocation.

Two ways in which offer can lapse

Passage of time (acceptance not made within prescribed time OR reasonable time if no period prescribed)
Death of one of parties. Offeror dies ==> lapses where offeree knows offeror has died

What are four conditions for consideration (ASPM)

- Need not be adequate - Must be sufficient (i.e. some fresh benefit/detriment) - Past consideration not good consideration - Must move from promisee (i.e. party who has not provided consideration may not bring action to enforce contract)

When is past consideration good consideration

1) Past act/promise done at promisor's request 2) Mutual understanding between parties that act/promise compensated for in some way 3) Had promise been made in advance, would have been legally enforceable (i.e. necessary intention to create legal relations)

Are existing obligations under public duty enough consideration? i.e. what happens if police officer provides info that leads to arrest of individual for reward?

England v Davidson ⇒ D offered reward for info leading to conviction of particular criminal. Police officer gave relevant info but D refused to pay, alleged police officer by supplying info as doing no more than public duty. Held duty of police officer = prevention of crime ⇒ not under duty to provide info to private individual, went beyond public duty.

Are existing obligations to 3rd party valid consideration?

New Zealand Shipping Co ⇒ Lord Wilberforce makes the point that a party offering this sort of consideration is offering to put itself at risk of double liability – if it fails to meet its obligations, it will face action from two parties.

What is the presumption regarding the intention to create legal relations in commercial agreements?

In commercial agreements, there is a strong presumption of an intent to create legal relations. This can be rebutted with a clear, express statement that the agreement is not meant to be legally binding.

Is the same presumption applied to domestic agreements?

Presumption of no intention to create legal relations unless rebutted

How is certainty judged in contracts?

Certainty in contracts is judged objectively based on whether parties have reached a complete agreement on material terms. Considerations include trade usage, mutual understanding, and an objective mechanism for resolving uncertainties.

What are the general rules regarding minors' capacity in contracts?

Generally, minors are not bound by contracts unless the contract involves necessaries. Contracts of service beneficial to minors are also binding.

What are contracts for necessaries?

What is ‘necessary’ for a particular minor will depend to an extent on their social status and their actual requirements at the time of purchase. Nash v Inman ⇒ waistcoats supplied to minor who was undergrad = not necessary, had sufficient clothing

If contract for necessaries, minor must pay...

Reasonable price

Can contracts with mentally impaired or drunk individuals be valid?

Contracts with mentally impaired or drunk individuals are generally valid unless the person was incapable of understanding the transaction at the time, and the other party was aware of it. Such contracts are voidable. Person without capacity still liable to pay reasonable price for necessaries