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Contract Law > Contract Formation > Flashcards

Contract Formation Flashcards

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1
Q

What is the objective test in offer and acceptance?

A

The objective test determines what a reasonable person would say were the intentions of the parties.

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2
Q

What is a requirement for a valid offer?

A

An offer must be clear and certain.

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3
Q

What case illustrates the lack of a binding contract due to uncertainty in an offer?

A

Gibson v Manchester City Council [1979] 1 WLR 294 illustrates that the Council’s letter stating it ‘may be prepared to sell’ was not a binding offer.

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4
Q

What must an offeror show regarding intention?

A

An offeror must show an intention to be legally bound.

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5
Q

How does Storer v Manchester City Council differ from Gibson?

A

In Storer v Manchester City Council [1974] 1 WLR 1403, the wording indicated a clear intention to be bound, unlike in Gibson.

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6
Q

What are the two types of contracts?

A

The two types of contracts are unilateral and bilateral contracts.

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7
Q

What characterizes a bilateral contract?

A

In a bilateral contract, each party assumes an obligation to the other by making a promise.

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8
Q

What is a unilateral contract?

A

In a unilateral contract, one party makes an offer that calls for an act to be performed by one or more other parties.

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9
Q

What is an invitation to treat?

A

An invitation to treat is not an offer and cannot be accepted to form a binding contract.

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10
Q

What is the general rule regarding advertisements?

A

Advertisements are generally considered invitations to treat, unless they amount to a unilateral offer.

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11
Q

What is the significance of an invitation to tender?

A

An invitation to tender is generally an invitation to treat, allowing the requestor to accept or reject any tender.

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12
Q

What happens in auction sales regarding bids?

A

In auction sales, the request for bids is an invitation to treat, and the bid is the offer.

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13
Q

What are the three rules in relation to acceptance?

A
  1. Acceptance must be in response to the offer. 2. Acceptance must be unqualified and correspond exactly with the terms of the offer. 3. Acceptance may be communicated in any manner unless specified otherwise.
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14
Q

What is the postal rule regarding acceptance?

A

Acceptance takes effect the moment the letter of acceptance is properly posted.

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15
Q

What must happen for revocation of an offer to be effective?

A

Revocation of an offer must be received in order to be effective.

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16
Q

When does acceptance occur in instantaneous communication?

A

Acceptance occurs at the moment the acceptance is received by the offeror.

17
Q

What is the objective test for certainty in agreements?

A

The court applies an objective test to determine if the parties have agreed on all material terms.

18
Q

What are the key principles of consideration?

A

Consideration must be executory or executed, must not be past, must move from the promisee, and must be sufficient.

19
Q

What is an exception to the past consideration rule?

A

An exception exists where a prior act was done at the promisor’s request with an understanding of reward.

20
Q

What is factual consideration?

A

Factual consideration acknowledges that nothing new is being promised but the party in receipt still gains something.

21
Q

What is the principle regarding existing obligations?

A

If a party offers something they are already obliged to do, it is generally not deemed good consideration.

22
Q

What is promissory estoppel?

A

Promissory estoppel allows a promise to be enforced despite not being supported by consideration.

23
Q

What are the requirements for promissory estoppel to apply?

A

There must be a clear promise, reliance on that promise, and the promise must affect legal relations.

24
Q

What is the significance of intention in contract law?

A

The intention to create legal relations is essential in contract formation. Without this intention, there is no contract.

25
Q

What is promissory estoppel?

A

Promissory estoppel is an equitable doctrine that prevents a promisor from going back on their promise if it would be inequitable to do so.

26
Q

What must a promisee demonstrate for promissory estoppel to apply?

A

The promisee must have relied on the promise or representation, influencing their conduct.

27
Q

Is detrimental reliance required for promissory estoppel?

A

Detrimental reliance is not required; a change of position in reliance on the promise is sufficient.

28
Q

What does ‘subject to contract’ imply?

A

‘Subject to contract’ indicates that the parties do not intend to be bound until a formal contract is executed.

29
Q

What are necessaries in contract law?

A

Necessaries are goods or services suitable to a person’s condition of life, including food, medicines, and accommodation.

30
Q

Can minors be bound by contracts?

A

Minors are bound by contracts for necessaries and contracts of employment, apprenticeship, or education if they are for their benefit.

31
Q

What happens if a minor ratifies a contract at age 18?

A

If a minor ratifies a contract upon reaching 18, the contract becomes binding.

32
Q

What defines a person lacking capacity under The Mental Capacity Act 2005?

A

A person lacks capacity if they are unable to make a decision for themselves regarding the matter at the time the contract is made.

33
Q

What is the liability of a person without capacity for necessaries?

A

A person without capacity remains liable to pay a reasonable price for necessaries.

34
Q

What is the effect of intoxication on capacity to contract?

A

An intoxicated person who does not understand their actions is not bound by contracts made, but must pay for necessaries.

35
Q

What is the general rule for contractual capacity for individuals over 18?

A

Persons over 18 have full contractual capacity if they are of sound mind and not impaired by factors such as drunkenness.

36
Q

What is the position of contracts made by drunken persons?

A

Contracts made by drunken persons are voidable if they can prove they did not understand their actions and the other party knew this.

Contract Law (6 decks)

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