Creation of Contract: Offer & Acceptance

Question 1

Define a contract

Answer 1

A legally enforceable agreement which gives rise to obligations for all parties involved

Question 2

What did Nicolas J McBride say about the law of contract?

Answer 2

It aims ‘to facilitate the orderly workings of the marketplace, where people can trade whatever can be lawfully traded’

Question 3

Define an offer

Answer 3

A proposal or a communication from one party setting out terms, indicating an intent to be bound by acceptance of it by the other.

Question 4

What are the six elements of an offer?

Answer 4

What is the contract about?
What are the obligations/ promises/ undertakings of the parties?
What is the price paid or what is required in exchange?
To whom is the offer made?
One person: only one person can accept the offer
If essential elements are missing, it’d seen as an invitation to treat (showing willingness to negotiate key & definite terms of the offer)

Question 5

What is the objective test for acceptance?

Answer 5

Whether the reasonable recipient of the communication would understand the statement as an offer to be bound; the reasonable person has to be in the same line of business

Question 6

Identify two ways in which an offer can end & two cases to exemplify

Answer 6

Revocation, but needs to be communicated to offeree in Dickinson v Dodd’s (1875-6)

A counter-offer terminates the original offer and the original offer cannot be accepted in Hyde v Wrench

Question 7

Identify three means of communication

Answer 7

1. Postal rules
2. Email
3. Silence

Question 8

Identify two features of unilateral contracts

Answer 8

Offer by one party (no promise by the runner)
Performance is acceptance

Question 9

Identify two features of bilateral contracts

Answer 9

• Involves offer & acceptance by both parties
• Performance simultaneous or needs to be completed in the future