Contract Formation 1 Flashcards
What are the components of a binding contract?
Offer and acceptance
Consideration
ICLR
How does a court judge whether an agreement has been reached between two parties?
Objective test: Considers what a reasonable person would say was the intention of the parties, considering the circumstances
What do offer and acceptance actually need?
A clear and certain offer displaying an intention to be bound + unequivocal acceptance
If someone says I ‘may’ be prepared to sell does this show an intention be bound?
No - Gibson v MCC
What is a unilateral contract?
A contract which makes an offer / proposal in terms which call for an act to be performed by one or more other parties.
Only actual performance of the act constitutes acceptance
Can an invitation to treat be accepted to form a binding contract?
No
Are adverts offers or ITTs?
ITT
What is the exception to the general rule on adverts?
Where the advert amounts to a unilateral offer (e.g. performing an act)
Displays of goods: offer or ITT?
ITT - this also includes in a self-service store and websites
Are invitations to tender an offer or an ITT?
ITT
What are the two exceptions when an invitation to tender is considered an offer?
1) Where the tender has expressly undertaken to accept the highest or the lowest bid
2) There can be an obligation to CONSIDER [not accept] tenders when:
- Tenders are solicited from specified parties known to the requesting party
-There is an absolute deadline for submission
-Party requesting tenders had laid down absolute and non-negotiable conditions for submission
What is the general rule for auctions?
ITT not offer
What shows acceptance of the bidder’s offer in an auction?
Fall of auctioneer’s hammer
What are the rules regarding an auction without reserve?
If the auctioneer refuses to sell to the highest bona fide bidder they can be sued for breach of contract and can get damages but not the goods themselves.
How can an offer come to an end?
Rejection, revocation, lapse
When does rejection of an offer take effect?
When it is actually communicated to the offeror
What happens to the original offer when a counter offer is made?
Original offer is considered rejected.
What is the difference between a counter offer and an RFI?
RFI is clarification on the extent and the terms of the offer or regarding ancillary aspects of the offer.
When does an offer lapse?
If acceptance is not made within the prescribed time period
If no period is set out, where acceptance is not made within a reasonable time
What happens if a party dies and an offer is pending?
If the offeror dies and the offeree knows, the offer lapses. If unaware, it will not lapse.
Death of the offeree causes offer to lapse; offer can’t be accepted by posthumous representatives.
When can an offer be revoked?
At any time before acceptance but only valid on actual notice of it reaching the offeree.
Can an offer be revoked by a third party?
Yes, and the means of communication do not matter
Can a unilateral offer be revoked?
Yes, at any time prior to the completion of the prescribed act unless obligation is partly complete and offeree is willing and able to complete.
Can you revoke a unilateral offer to the whole world?
No, because no way of notifying everyone
What are the four key rules regarding acceptance?
Acceptance must be in response to the offer
Acceptance must be unqualified (mirror image rule)
It might be necessary to follow a prescribed mode of acceptance
Acceptance must be communicated
If an offeror wants to make their particular mode of acceptance mandatory, what would this need?
Particularly clear words
If the mode of acceptance is not made mandatory, what will be accepted?
Any other mode of acceptance “which is no less advantageous to the offeror”
What is the postal rule?
If post is deemed a proper means of communication, acceptance of an offer takes effect from the moment the letter of acceptance is properly posted - not from when it is received.
What does ‘properly posted’ mean for the purposes of the postal rule?
When it is in a letter box or given to someone authorised to receive letters
Under what condition does the postal rule still apply?
When the acceptance is delayed / lost in the post
Under what condition does the postal rule not apply?
If its not contemplated that post would be used (e.g prompt acceptance required)
If the letter is revoking an offer
If the letter is incorrectly adressed
If disapplied by the offeror (interpreted broadly by courts)
What is the general rule if acceptance is made by instantaneous means of communication?
Acceptance takes place when the acceptance is recieved by the offeror.
What is the rule re. acceptance and emails?
Postal rule does not apply - email acceptance only is effective when email arrives on offeror’s email server
How are ‘ordinary office hours’ interpreted?
Depends on the context of the communications - has been held to not include weekends etc.
How is an agreement considered sufficiently certain?
The court applies an objective test, asking whether in all the circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations.
What is an example of an insufficiently certain agreement vs sufficiently certain?
One on ‘hire-purchase’ terms vs ‘timber of fair specification’
Courts will try to enforce agreements where possible
