essential requirements

Question 1

what are the three essential requirements of a contract?

Answer 1

-agreement (offer and acceptance)
-consideration (including privity of contract)
-intention to create legal relations

Question 2

what is an offer?

Answer 2

-the party making the offer is the offeror
-who its being made to is the offeree
-offerer usually states verbally/in writing that they will be bound to the terms following a valid acceptance, and they have ITCLR
-contract isn’t formed until offeree accepts the terms

Question 3

what is an invitation to treat in relation to goods on display in shops/on the internet?

Answer 3

-these items aren’t considered to be an offer
-taking it to the till is making the offer (pharmaceutical society of great britain v boots cash chemists ltd)
-same said about goods in shop window (fisher v bell)

Question 4

what is an invitation to treat in relation to goods or services advertised in newspapers, magazines and other media?

Answer 4

-advertisement isn’t an offer, its up to the person seeing it to accept (partridge v crittenden)
-some exceptions - advertisements offering reward, eg missing cat, which is known as a unilateral offer (carlill v carbolic smoke ball co)

Question 5

what is an invitation to treat in relation to traditional coin-operated machinery?

Answer 5

-eg car parking meters
-machine is the offer, inserting the coin is acceptance
-thornton v shoe lane parking

Question 6

what is meant by communication of offers?

Answer 6

offeree cannot accept an offer than hasn’t been communicated to them
taylor v laird

Question 7

what are the 4 ways an offer can be terminated?

Answer 7

1-counter-offer (hyde v wrench)
2-death of an offeror or offeree
3-lapse of time (ramsgate victoria hotel v montefiore)
4-revocation (offer cancelled at any time before acceptance)(dickinson v dodds)

Question 8

what are the three things an acceptance must do?

Answer 8

-mirror the offer and be certain (Sudbrook Trading Estate v Eggleton)
-not change the terms of the offer
-be communicated properly back to the offeror

Question 9

why must the acceptance be unconditional?

Answer 9

-Hyde v Wrench
-so it doesn’t alter the offer
-although, making enquiries about the offer may not amount to a counter-offer, so may not be taken as rejecting the original offer (Stevenson v McLean)

Question 10

what is meant by ‘battle of the forms’?

Answer 10

-companies draw up ‘standard forms’ which they use when making many similar offers, containing the terms and conditions they wish to contract on (usually to their advantage)
-if 2 businesses contract together and each have standard forms, which standard form should be used? (Butler Machine Tool Co. Ltd v Ex-Cell-O Corp.)

Question 11

what is meant by communication of the acceptance?

Answer 11

-contract is only formed if the acceptance is communicated back to the offeror
-generally acceptance can take any form, (bar silence) unless a specific method is stipulated
-usually accepted through conduct (Carlill v Carbolic Smoke Ball Co.) or an agreed method

Question 12

what is the postal rule?

Answer 12

(Adams v Lindsell)
-an acceptance is valid and the contract is formed when the acceptance letter is posted and not when it is received by the offeror
-rule is only accepted where it is agreed upon/is a normal method of communication for the parties

Question 13

what did Pretty Pictures v Quixote Films Ltd contribute to the postal rule?

Answer 13

-an exchange of emails wouldn’t amount to a binding contract where the parties intended their agreement to be conducted by post

Question 14

what did Greenclose v National Westminster Bank plc contribute to the postal rule?

Answer 14

-on balance, emails should not be subject to an equivalent of the postal acceptance rule

Question 15

where won’t the postal rule suffice?

Answer 15

-if it’s clear the acceptance must be communicated to the offeror before a contract is formed, by excluding the rule in the terms of the contract
-Holwell Securities v Hughes

Question 16

what did the Electronic Commerce Directive 2000 contribute to the postal rule?

Answer 16

where a contract is formed through electronic means, an offer is made when a consumer makes/sends an order

Question 17

what is a consideration?

Answer 17

the price an offeree pays for the goods/services
no consideration = an offer is unenforceable
-Currie v Misra - ‘benefit and detriment’

Question 18

how did Dunlop v Selfridge define consideration?

Answer 18

‘an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable

Question 19

what are the 5 rules for considerations?

Answer 19

-consideration must be sufficient
-consideration need not be adequate
-consideration must not be past consideration
-consideration must move from the claimant
-performance of existing obligations: an existing duty will not amount to valid consideration

Question 20

what is meant by ‘consideration must be sufficient’?

Answer 20

-must be a form which the courts accepted as ‘sufficient’
-must be real, tangible and have some inherent value
-Ward v Byham

Question 21

what is meant by ‘consideration need not be adequate’?

Answer 21

-if the price of goods/services doesn’t reflect the value, then in absence of duress or undue influence, the courts will seek t enforce the original agreements terms
-Thomas v Thomas

Question 22

what is meant by ;consideration must not be a past consideration’?

Answer 22

-eg if a voluntary agreement was struck with no mention of payment, then a later promise to pay is unenforceable
-Roscorla v Thomas
-exception = when a party has requested a service where there is a reasonable implication that a payment be made, even though it hasn’t been stated in the agreement (Lampleigh v Braithwaite)

Question 23

what is meant by ‘consideration must move from the claimant’?

Answer 23

-only the person that provoked the consideration can sue if they feel the agreement has been broken (no third party)
-however after the Contracts (Rights of Third Parties) Act 1999 was passed, its possible for a third party that has provided no consideration may sue to enforce the contract
-Tweddle v Atkinson could sue

Question 24

what is meant by ‘performance of existing obligations: an existing duty will not amount to valid consideration’?

Answer 24

-if a party is under an existing obligation to carry out something, they cannot use that promise as consideration for a new agreement
-Stilk v Myrick compared to Hartley v Ponsonby
-can also apply to legal obligations to carry out an act (Collins v Godefroy)
-however if a party does something extra than what was required in the original agreement, that may be considered to be a new consideration (hartley v ponsonby)

Question 25

what is meant by privity of contract?

Answer 25

-generally a contract is only enforceable by the parties to the contract, common law prevents others from enforcing it even if it was for their benefit (dunlop v selfridge)
-however if a benefit is bestowed from a contract onto a third party the basic rule seems unfair (tweddle v atkinson)

Question 26

what are the exceptions to the rule of privity?

Answer 26

-statute, eg application of s56 of the law of property act 1925 - beswick v beswick
-restrictive covenants - tulk v moxhay
-collateral contracts - shanklin pier v detel
-the contracts (rights of third parties) acts 1999

Question 27

what is intention to create legal relations?

Answer 27

both parties intend to be legally bound by the contract
contract law distinguishes between two types of contract in determining if there’s an intention to create legal relations, both formed with a rebuttable presumption

Question 28

what is a rebuttable presumption?

Answer 28

-an assumption in law unless a contrary view is expressed

Question 29

what are the two rebuttable presumptions on intention to create legal relations?

Answer 29

-social and domestic agreements - presumption between family and friends that there is no intention to create legal relations unless the contrary can be proved (balfour v balfour)(merritt v merritt)
-commercial or business agreements - presumption that there is an intention to create legal relations, unless the contrary can be proved (edwards v skyways)(jones v vernons pools)