Contract

Question 1

What are the 3 things needed for a contract?

Answer 1

Offer, acceptance and intention to create legal relations

Question 2

What is an offer?

Answer 2

A definite promise to be bound by certain terms.

Question 3

What constitutes an expression?

Answer 3

This could be a letter, conduct, email, newspaper advert, text message.

Question 4

What type of approach does the court take to deciding whether there was agreement between the two parties?

Answer 4

They take an objective approach & look at what was said and done between the two parties from the view of a REASONABLE person.

Question 5

What is the difference between an offer and an invitation to treat?

Answer 5

The latter is a preliminary statement - not certain - “I am thinking of selling my car for £6,000”

Question 6

When is the offer made when dealing with goods on display?

Answer 6

Made at the checkout counter - before this point, they are simply invitations to treat.

Question 7

What are adverts categorised as - invitations to treat or an offer?

What is an exception to this rule?

Answer 7

Generally adverts are categorised as an invitation to treat.

However, exception to this is reward adverts which are considered to be offers.

Question 8

What is the definition of a unilateral contract?

Answer 8

This means only one party is making a promise - no-one is bound to do the act.

In Carlill v Carbolic Smoke Ball - this was seen as a promise in return for the specific act she had performed so was considered an offer.

Different to a bilateral contract where one party is making a promise for the promise of another.

Question 9

When is an offer accepted at an auction?

Answer 9

When the gavel goes down - this is the acceptance of the last bid which was the offer.

Question 10

When the auctioneer is inviting bids, is this an offer or an invitation to treat?

Answer 10

Invitation to treat.

Question 11

What is a reserve price? What is the consequence of this?

Answer 11

A reserve price is a minimum price that the auctioneer will not sell below.

If the bidding doesn’t reach the reserve price, the property will be withdrawn from the sale.

Question 12

What happens if there is no reserve price and the auctioneer refuses to sell it?

Answer 12

No reserve price = a unilateral contract to accept the highest bid.

Can’t sue the owner as the OWNER hadn’t accepted the offer.

But can sue the auctioneer as he’s the one who was going to sell it to the highest bidder - can sue for breach of contract?

Damages = difference between the amount of his bid and the total value of the machine - represents loss of expectation.

Question 13

How do tenders work regarding invitations to treat/offers?

Answer 13

An invitation to tender is an invitation to treat, doesn’t have to accept any of the offers.

HOWEVER, if the company has specifically promised to accept the lowest tender or at least impliedly promised to consider all conforming tenders - then there is a unilateral contract.

If the company inviting bids fails to consider a conforming tender (even if happens that the tender was lost in the post), as happened in Blackpool & Fylde Aero - then there is a breach of an implied unilateral contract to consider any conforming tenders.

Remedy = loss of opportunity.

Question 14

What is acceptance?

Answer 14

An unqualified expression of assent to the terms of an offer.

Question 15

Who must acceptance be communicated by?

Answer 15

The offeree or their authorised agent. This can be done through words or conduct.

Question 16

Can silence communicate acceptance of an offer?

Answer 16

General rule: Offeror can’t bind the other party to a contract by silence per say.

But if it is paired with conduct that objectively shows their acceptance when viewed objectively, this may amount to acceptance.

Question 17

Can a conditional response amount to acceptance e.g. Yes I’ll accept and can pay you £500 now and £500 next week.

Answer 17

No - this is regarded as a counter offer.

This counter-offer destroys the original offer and represents a new offer that the original party is free to either accept or reject.

Question 18

What does the battle of the forms refer to?

Answer 18

When companies are going back and forth with counter-offers attaching their Ts and Cs.

This leads to a battle of the forms where both sides will pass their own Ts and Cs to the other side for agreement. The last shot wins aka. the company who has their Ts and Cs agreed to.

Question 19

What is the general rule for acceptance and how does the postal rule vary this?

Answer 19

General rule = acceptance must be communicated.

Postal rule - A letter of acceptance will be effective WHEN POSTED even if the letter is lost in the post.

This is only true if the below conditions are met:
- It was reasonable in all circumstances to use the post.
- The letter was properly addressed, stamped and posted AND
- The postal rule had not been excluded by the offeror (which would be the case if the offeror said they need to be notified in writing or told of any acceptance).

Using the phrase ‘notice in writing’ impliedly excludes the postal rule.

Question 20

Can an offer be accepted once the offer has been terminated?

What are the 3 ways termination can happen?

Answer 20

No, an offer can’t be accepted once the offer has been terminated.

Termination can happen in 3 ways:
1) Rejection by the offeree - either an outright rejection or through making a counter offer

2) Revocation (withdrawal) from the offeror

3) Lapse of time

Question 21

What is revocation?

Answer 21

An offer can be revoked at any time BEFORE the acceptance even if the offeror promised to keep the offer open for a certain period of time.

Only exception to this is if there’s been consideration for return of that promise (e.g. the offeree paying £1 to keep the offer open for the agreed time).

Question 22

What about revocation in regards to unilateral contracts?

Answer 22

The general rule doesn’t apply - instead there is the suggestion that partial performance of a unilateral contract is sufficient to prevent revocation.

In addition to the express offer, there is an implied one NOT to revoke if the specified act is started within a reasonable time.

E.g. if they agree to pay you £100 for walking 100km, it would be unfair to revoke that offer when you’d walked 50km. Therefore, there is an implied promise not to revoke the offer and that partial performance of the act is sufficient to prevent revocation.

Question 23

How does revocation work in regards to electronic communications to a business?

Answer 23

Revocation will be effective when it SHOULD HAVE BEEN READ, not when it was actually read e.g. if a revocation came through at 5:35pm for a business, it is deemed to have been revoked then even if it wasn’t read until 10am the following morning.

Question 24

If the offer being revoked was made to the public at large, what is the best method to communicate revocation of the offer?

Answer 24

Publishing the notice of revocation in the same place as the offer and with the same prominence.

Question 25

Who can give notice of the revocation of the offer?

Answer 25

By the offeror or a reliable third party.

Postal rule doesn’t apply to notices of revocation.

Question 26

What is a lapse of time in regards to an offer?

Answer 26

An offer will lapse after a specified or reasonable time.

What constitutes as a reasonable time depends on the circumstances e.g. if buying perishable goods, this will be shorter.

Question 27

What 4 factors will determine whether the parties have reached a complete agreement in relation to the material terms of the deal?

Answer 27

This is generally judged objectively but facts are taken into context.

This depends on whether:
- The parties are in the same trade
- The trade usage
- Whether the arrangement has been acted on for any length of time.
- Whether there is an objective mechanism for resolving any uncertainty e.g. an arbitration clause.

Question 28

What happens when two parties disagree over whether an agreement was meant to be legally binding/they had the intention to enter into legal relations?

Answer 28

The court will have to decide whether the agreement was intended to be legally binding before it will enforce it.

The law operates on rebuttable presumptions - these differ based on whether the agreement is ‘commercial’ or ‘domestic’.

Question 29

What happens with commercial agreements vs domestic agreements?

Answer 29

There is a very strong presumption that the parties intended their agreement to have legal consequences (but can be rebutted).

Not many cases where this isn’t the case UNLESS there has been a clear, express statement to show the agreement was not meant to be legally binding.

With domestic agreements (between family of friends), presumption is that parties did not intend to create legal relations (but also can be rebutted).