Essential Requirements of a Contract

Question 1

What are the 2 elements of an agreement

Answer 1

• Offer
• Acceptance

Question 2

Things about an offer

Answer 2

• Must be a valid offer for an agreement
• An offer cannot be accepted without communication
• Changing terms of offer makes a counter-offer and ends original offer
• Making enquiries does not amount to a counter-offer

Question 3

Describe ‘invitation to treat’

Answer 3

• Is negotiation about offer
• Goods on display is invitation to treat, not an offer
• Media ads is an invitation to treat, not an offer

Question 4

Describe ‘counter-offer’

Answer 4

• When terms of original offer change, makes a counter-offer
• Counter-offer ends original offer
• Making enquiries may not amount to counter-offer

Question 5

Things about acceptance

Answer 5

• Silence does not amount to acceptance
• If specific acceptance is requested, then it must be carried out in that way
• Acceptance must be communicated to the offeror
• Postal rule = acceptance valid as soon as posted, not recieved

Question 6

What is the Postal Rule

Answer 6

• Acceptance is valid as soon as posted, not when item is received

Question 7

What is consideration?

Answer 7

• Is the proof that the acceptance exists
• Is further evidence that the parties intended to create a legally binding contract
• E.g. ‘A’ gains benefit of £3000 when selling car, but to the detriment of giving ownership of the car to ‘B’

Question 8

What is privity of contract?

Answer 8

• Contracts are usually only enforceable to people in the contract
• BUT, if another party gains a benefit from the contract then this may be unfair, as they are not bound to the contract, but still gain from it
• Exceptions to the general rule:
  > 3rd parties
  > Statute
  > Applications of the Law of Property Act 1925

Question 9

What are the exceptions to the general rule of privity of contract?

Answer 9

• 3rd parties
• Statute
• Applications of the Law of Property Act 1925

Question 10

What is intention to create legal relations?

Answer 10

• Social and domestic agreements = presumption of no intention to create legal relations, unless proven otherwise
• Commercial or business agreements = presumption there is intention to create legal relations, unless proven otherwise

Question 11

What is the presumption of social and domestic agreements

Answer 11

Presumption of no intention to create legal relations, unless proven otherwise

Question 12

What is the presumption of commercial and business agreements

Answer 12

Presumption on intention to create legal relations, unless proven otherwise