Contract Law Flashcards
How can an offer be distinguished from an invitation to treat?
Offer - involves an expression of willingness to contract on certain terms, made with intention to be legally binding once accepted (can often answer yes!).
Invitation to treat - cannot be accepted and involves conditional wording. Likely to lead to contract at a later date.
List some common examples of invitations to treat?
- Displays of goods (offer made at checkout).
- Websites
- Tenders
- Auction sales (auctioneer inviting bids).
When will advertisements not be considered an invitation to treat?
Unilateral advertisements; where an offeror makes a promise in exchange for the offeree performing an act (e.g. promise of a reward for the person who finds a lost cat).
When is an offer accepted at auction?
When the auctioneer’s gavel goes down. At this point, a bilateral contract has been entered into and auctioneer drops out the picture.
When will an auction not be an invitation to treat?
When the auctioneer advertises the auction as being ‘without reserve’ (promise to sell to the highest bidder).
When will tenders not be an invitation to treat?
When the tender promises to accept the most competitive bid amounts; and promise to consider bids that conform to the tender conditions.
Are goods displayed by vending machines offers or invitations to treat?
Offers; a person paying then accepts the offer to form a legally binding contract.
What is the difference between a bilateral and unilateral offer?
Bilateral - offer or promise in exchange for an offer or promise.
Unilateral - offer in exchange for a specified act, made either to a specific person, or to wider public.
How can an offer be accepted?
- By an expression of assent (communicated by the offeree or their authorised agent, by words or conduct - not silence).
- Which is unqualified (conditional response will not amount to acceptance but counter-offer).
What is the effect of a counter-offer?
Destroys the original offer and represents a new offer that the other party is free to accept or reject.
What is ‘battle of the forms’?
Both sides passing their Ts & Cs to the other side for agreement as counter-offers.
The last shot wins.
Is a request for flexibility in payment terms a counter-offer?
No; it leaves original offer open to accept.
When will a letter of acceptance be effective when posted?
- When reasonable to use post.
- The letter was properly addressed, stamped, and posted.
- The postal rule had not been excluded by the offeror (other form of acceptance stated).
N.B. Offeree’s acceptance is effective as soon as the acceptance is posted, even if offeror never receives the acceptance.
When will acceptance be deemed communicated when sent via telephone and fax?
Receipt rule applies; when the offeror has received the acceptance (offeree is responsible for ensuring offeror has received the acceptance).
When will acceptance deemed to be received when sent outside ‘ordinary business hours’?
At the start of the following working day.
What are the 3 ways in which one can terminate an offer?
1) Rejection by the offeree (expressly or impliedly e.g. counteroffer).
2) Revocation (withdrawal) of the offer
3) Lapse of time - ‘reasonable’ time will depend on the circumstances.
When can an offer be revoked?
At any time before acceptance even if the offeror promised to keep the offer open for a certain period of time.
What is the exception to the rule that an offer can be revoked at any time before acceptance?
Where the offeree gives something in return for the promise to keep the offer open.
How can an offer made to the public at large be revoked?
By the offeror publishing a notice of revocation in the same place as the offer.
How is notice of revocation different to communication of acceptance?
Acceptance must be communicated by the offeree or an authorised agent and the postal rule does not apply to notices of revocation.
What factors are considered when judging whether parties have reached complete agreement in relation to the material terms of a deal?
- 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 a mechanism to resolve uncertainty e.g. arbitration clause.
In the absence of any further details about hire purchase agreement, would agreement to buy a car on ‘hire purchase terms’ be sufficient?
No as too vague. A contract can only be enforceable if its terms are certain.
What is the presumption RE intention to create legal relations in a domestic context?
Presumption of no intention to create legal relations, unless facts show otherwise to rebut presumption. E.gs;
- Parties expressly agree that agreement will be legally binding.
- 2 cousins selling house to the other.
What is the presumption RE intention to create legal relations in a commercial context?
Strong presumption that the parties intended legal relations (evidence required is small) but it may be rebutted if the agreement is stated to be ‘binding in honour only’.
Define consideration?
A benefit to one party or a detriment to the other.
What should be considered when assessing whether ‘consideration’ has been provided?
1) Consideration must be sufficient but need not be adequate (anything of value to meet seller’s request).
2) Consideration must move from the promisee (can move to promisor or 3rd party at promisor’s request).
3) Past consideration is not good consideration (exchange of value must occur reciprocally).
What are the 3 conditions to be satisfied as an exception to the ‘past consideration is not good consideration’ rule?
1) The past act/promise was done at the promisor’s request.
2) There was a mutual understanding between the parties that the act/promise would be compensated for in some way, and
3) Had the promise been made in advance it would have been legally enforceable.
What happens in cases where a contractual duty has been exceeded e.g. by working overtime, conferring a practical benefit?
Valid consideration as there is a clear detriment to the promisee and benefit to the promisor. Variation is binding in such cases.
Allowing shop e.g. to open on time for more £ is a practical benefit (obliged to pay).
What happens where there is duress?
Variation is voidable.
Is part-payment of a debt consideration for a promise to accept less?
No. Unless a new element is given in addition to part-payment.
When can promissory estoppel apply to prevent the enforcement of strict legal rights?
In circumstances where it would be inequitable to do so.
N.B. A party must have ‘clean hands’ to be able to use the doctrine.
List some limitations to the doctrine of promissory estoppel?
- It can only be used as a defence when a party brings an action at common law to enforce their legal rights.
- There must have been a promise to waive strict legal rights.
- The promisee (usually a debtor) must have acted on the promise but not necessarily to their detriment.
- With ongoing payments such as rent, the doctrine operates to suspend the strict legal right, which means the creditor can resume their right to full payment going forward by giving reasonable notice. BUT, cannot claim back any payments for the concessionary period.
What is the effect of duress on contract variation?
It makes a variation voidable.
Define privity of contract?
Only a contracting party can sue for breach of contract or be liable for a breach.
When may a third party acquire rights under Contracts (Rights of Third Parties) Act 1999?
- If the contract expressly provides that they may acquire a benefit OR
- The term purports to confer a benefit on them (must be identified by name or member of a particular class).
