Formation Flashcards
4 elements needed for a contract
Offer
Acceptance
Intention to create legal relations
Consideration
Advertisements
General rule - invitations to treat
Exception - Unilateral offers (an ad. can constitute an offer to the world).
Exception - Advertisement of reward will be classes as an offer
Self - service and shop windows
General rule - invitations to treat. The contract is formed when the goods are presented at the desk
Auctions
General rule - Invitations to treat
Exception - an auction without reserve is an offer to sell to the highest bidder and creates a unilateral contract
Invitations to tender
General rule - invitations to treat
Exception - person making the tender states they will accept highest offer or to accept lowest offer = offer
Mere statements of price
General rule - invitation to treat
Exception - the form of words used can render it sufficiently precise to be an offer capable of acceptance
Communication of offers
MUST be communicated to the offeree
Termination of offers - revocation - General rule
An offer can be revoked at any time before acceptance
Termination of offers - revocation - Exception
Paying a deposit (consideration) - usually can’t revoke
Termination of offers - revocation - Communication - General rule
Revocation must be communicated
Termination of offers - revocation - Communication - Exception
Revocation is effective if it’s left at the last known address and if the offeree simply chooses not to read it. Revocation can be made by a reliable 3rd party
Termination of offers - revocation - Offer made to the public
To revoke an offer made to the public - publish a sufficiently prominent notice of withdrawal
Unilateral contract general rule - can revoke until act is complete
Exception - implied promise not to revoke specified act is stated within reasonable
Termination of offers - rejection by the offeree
Expressly or implied. E.g suggesting something different - counter offer
Termination of offers - lapse of time
Lapse after a reasonable time
Termination of offers - failure to comply with a condition
Breach
Termination of offers - death of one of the parties
If offeree dies before accepting the offer terminates. However if they die after acceptance it passes to personal representatives
Counter offer
Regards acceptance - doesn’t amount to acceptance as it introduces new terms or tries to vary them - invalid
Requests for new information
Enquiry which isn’t acceptance but also isn’t a no
Standard form contracts
Each communication is treated as counter-offers therefore no valid agreement. There is a contract as soon as last forms are sent and no objection to them
Certainty in offer and acceptance
Courts may refuse to enforce them if there’s uncertainty
Capacity
MUST have capacity - minors can enter but can void till they’re 18
Exception - legally binding contracts on minors e.g work, service and apprenticeship
Minors - Clothes and resale
Contract for supply of clothes and resale are trading contracts and therefore do not bind minors
Minors - phone and lessons
These are contracts for necessities and are therefore binding
Communication of acceptance - General Rule
Acceptance has no effect until communicated
Communication of acceptance - Silence
Silence cannot amount to acceptance
Communication of acceptance - unilateral contracts
No need for communication
Communication of acceptance - Conduct
If parties act as though there is a contract then they’ve accepted through behaviour
Communication of acceptance - Stipulated methods of acceptance
If the offer stipulates a particular method of acceptance then any other method used is invalid
Communication of acceptance - Postal rule
Takes effect upon posting rather than delivery
To apply must satisfy:
- Must be stamped, addressed and posted
- Must not have been excluded
- Must be reasonable
If these aren’t met then it is accepted when they’ve received and read it
Communication of acceptance - instant messaging
Communications within office hours = actual communication - accepted once received
Intention to create legal relations - Social and Domestic
Presumption that there is no intention to create legal relations - can be rebutted
Intention to create legal relations - Commercial
Presumption that there is an intention to create legal relations - very clear words needed to rebut
Intention to create legal relations - advertisements
Not generally considered to create legal relations
Consideration must be sufficient but need not be adequate
To be sufficient must be tangible, real and valuable. Doesn’t have to adequately reflect the value of the promise. Doesn’t just mean money. Promising to give up a liberty won’t suffice
Consideration must not be past
General rule - Promise cannot be made after an act is done
Exception - 3 conditions: act must be done at promisor’s request, parties must have understood at the outset that act was to be rewarded and must be legally enforceable
Upwards variation - performance of an existing duty - General rule
Attempt to vary price upwards - e.g need more money to complete job. General rule - simply performing an existing contractual duty owed to the other party is insufficient consideration in exchange for a promise to pay more money.
Upwards variation - Performance of an existing duty - Exceptions
1) If you do something extra - exceed a contractual obligation which you owed me = good consideration for more money
2) If it confers a commercial/practical benefit
Downwards variation - part payment of undisputed debts - General rule
Price going dow - someone who owes money asks to pay a reduced amount. General rule - part payment of debt is not usually consideration for a promise to forgo balance due.
Downwards variation - Part payment of undisputed debts - Defence
The party who isn’t paying as much e.g wages or rent can rely on promissory estoppel - means the other party cannot revert back to full pay without notice. Will have to pay arrears/full pay going forwards but they need notice. Defence if you’re being sued for full rent.
General rule - Auctions
Normally at an auction bids = offers and fall of auctioneer’s hammer = acceptance. This will create a bilateral contract between client and owner.
Exception - Auction
If it’s stated that ‘goods will be sold that day whatever price is fetched’ or it’s an auction without reserve, this is an offer of a unilateral contract from the auctioneer. It is a promise to sell to the highest bidder, if he doesn’t auctioneer can be sued for breach of unilateral contract and claim damages.
Bilateral contract - Definition
An agreement between at LEAST 2 people
Unilateral contract - Definition
An action by one person. E.g ad. for £100 to anyone who finds your dog, you’re the only one who has taken any action as no on person is specifically responsible for finding the dog
Elements needed for a binding variation
All 4 contract elements - offer, acceptance, intention and consideration
Part payment of debt - Exception
Provided a debtor gives the creditor something (other than just part payment) in return for creditor’s promise to forgo balance then that something will be consideration. E.g payment in advance E.g something other than money - in addition to money
Party binding itself by silence
An offeree can bind itself by silence. A party can bind itself to a contract by silence
