Contract Law

Question 1

What is an offer?

Answer 1

An expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepte

Question 2

What forms can an offer take?

Answer 2

Letter, newspaper advert, email, text message, conduct

Question 3

What is an invitation to treat?

Answer 3

Not a formal offer and a mere invitation to negotiation.

Question 4

Can goods in a shop be constituted an offer?

Answer 4

No - the goods are on display as an invitation to treat to select which goods you want and then you offer to the cashier (who in turn accepts by selling to you).

Question 5

Can advertisements be constituted as an offer?

Answer 5

They are generally invitations to treat, however they can sometimes be seen as unilateral contracts (i.e. where one party is making the contract but no one is bound to do a specific act).

Examples include offers of rewards.

Question 6

Can auctions be constituted as offers?

Answer 6

The bids are seen as offers and the auctioneer’s gavel is the acceptance of the last bid.

However, sometimes a unilateral contract is created when an auctioneer may make certain statements (e.g. ‘to the highest bidder’ or ‘this will sell today’)

Question 7

Are tenders constituted an offer?

Answer 7

They are likely an invitation to treat and the tender will be an offer to do the work. However if the company promised to consider all conforming tenders, there is a unilateral contract. If they do not offer to the lowest tender offer this may be a breach of contract.

Question 8

What constitutes an acceptance of an offer?

Answer 8

An unqualified expression of assent (i.e. must be communicated and cannot contain any additional conditions)

Question 9

How can acceptance be communicated?

Answer 9

It must be clearly communicated to the offeror or their agent. Examples include letter, conduct and even silence in some circumstances (if coupled with conduct).

Question 10

What is the postal rule?

Answer 10

When a letter of acceptance will be effective when posted even if the letter is lost. There are specific criteria to be satisfied for this to apply.

Question 11

What are the criteria for the postal rule to apply?

Answer 11

It must be reasonable to use the post in the circumstances

The letter was properly addressed

The postal rule had not been excluded by the offeror

If the offeror had stipulated it needed to be notified or ‘told’ of any acceptance

Question 12

When can an offer be terminated?

Answer 12

Revocation by the offeror

Rejection by the offeree (also in the case of a counter-offer)

Lapse of time

Question 13

What is an exception to terminating via revocation?

Answer 13

Where the offeree gave something to keep the promise of the offer open. For unilateral contracts, termination but be communicated to the offeree in order to be effective.

Question 14

What is certainty in a contract?

Answer 14

Whether or not parties have reached complete agreement in relation to the material terms of the deal.

Question 15

What is judged to determine whether parties have understood and reach complete agreement?

Answer 15

Whether the parties are in the same trade

Trade usage

Whether the agreement has been acted on for any length of time

Whether there is an objective mechanism for resolving any uncertainty such as an arbitration clause

Question 16

Do legal intentions apply in a commercial context?

Answer 16

The law presumes that the agreement is intended to be legally binding even if the subject matter is trivial.

A clear express statement to exclude legal intentions would suffice.

Question 17

Do legal intentions apply in a domestic context?

Answer 17

The law presumes the agreement is not intended to be legally binding unless the facts show otherwise.

Question 18

What is consideration?

Answer 18

Something which you have agreed to provide in return for a promise (the price of the promise).

Question 19

What is a bilateral contract in the context of consideration?

Answer 19

An exchange of promises.

Question 20

What is a unilateral contract in the context of consideration?

Answer 20

A promise in return for an act.

Question 21

Does consideration need to be of a particular value?

Answer 21

Consideration does not need to be adequate, only that it is of some value (e.g. £1).

Question 22

Is past consideration valid?

Answer 22

No - the general rule is that performance of a gratuitous act or promise not deemed to be consideration for a later payment.

There are exceptions to this rule.

Question 23

What is the exceptions to past consideration?

Answer 23

All the following must be satisfied:

The past act/promise was done at the promisor’s request

There was a mutual understanding between the parties that the act/promise would be compensated for in some way

Had the promise been made in advance, with legal relations, the contract would have been legally enforceable

Question 24

What is the general rule on consideration where a party offers to pay more to meet an agreed deadline on an existing agreement?

Answer 24

This is deemed not good consideration because one party will suffer a detriment and confers a benefit on the other side.

Question 25

Is there consideration if the parties wish to vary their agreement i.e. more money to work to a closer deadline?

Answer 25

Yes - they are both receiving a benefit.

Question 26

Are there any exceptions to the rule where if the promisee confers a practical benefit it constitutes consideration?

Answer 26

If it was under duress, any variation will not be binding.

Question 27

Is part payment of a debt consideration?

Answer 27

No, only if a new element is given in addition to part payment (e.g. offering to pay earlier).

Question 28

What is promissory estoppel?

Answer 28

The idea that:

If you have made a promise not to enforce your legal rights; and

Someone has relied on that promise, even though they have not provided anything in return; then

if you try and enforce your promise your legal rights will be estopped.

Question 29

In court proceedings, how can promissory estoppel be used?

Answer 29

Only as a defence when a party brings an action at common law to enforce their legal rights