Formation Flashcards
What are the requirements for a formation of a contract
For a contract there must be an agreement comprising an offer that has been accepted, intention to create legal relations and consideration.
What is the difference between an offer and an invitation to treat
An offer is expressed in a contract on certain terms made with the intention that it shall become legally binding as soon as it is accepted by the offeree. Whereas an invitation to treat is not a legal obligation e.g advertisements/display of goods.
What’s the difference between a bilateral contract and a unilateral contract
Bilateral contract is a promise in return for a promise whereas a unilateral contract is a promise in return for an act
What is the requirement of acceptance
Must be unconditional and communicated by words or conduct, but if the postal rule applies, a letter of acceptance will be binding when it is posted
What is the postal rule and what conditions need to be met in order to satisfy it
Postal rule is a letter of acceptance that will be effective when posted even if the letter is lost in the post.
(A) it was reasonable in all the circumstances to use the post.
(B) the letter was properly addressed, stamped and posted.
(C) the postal rule has not been excluded by the offeror.
In what ways can an offer be terminated
(A) rejection by the offeree - can be done expressly or impliedly, can also be rejected if they make a counter-offer.
(B) revocation - offer can be withdrawn any time before acceptance unless the offeree gave something in return for the promise to keep the offer open. Withdrawal of the offer needs to be communicated in order for it to be effective.
(C) lapse of time -offer will lapse after a specified time/reasonable time.
Is there an intention to create legal relations when it comes to commercial agreements and domestic agreements
Commercial - there is a strong presumption that the parties intended their agreement to have legal consequences
Domestic - presumption that the parties did not intend to create legal relations
What is consideration
In order to be able to hold the other party to a promise, you must have agreed to provide ‘something in return’ for that promise i.e consideration
What is the difference between executory consideration and executed consideration
The ‘something in return’ may be a promise (bilateral contracts involve exchange of promises) - executory consideration.
Executed consideration is an act - unilateral contracts involve a promise in return for an act
Why does consideration not have to be adequate
The law is not concerned whether what is provided in return is of the same value as the promise for which it is given as long as it has some value e.g a £1
What type of consideration is sufficient
What is sufficient - Money, goods and services.
What is not sufficient - love and affection, to stop complaining.
Why is past consideration not good consideration and what are the exceptions to this rule
An act or promise is not deemed to be consideration for a later promise of payment. It’s just simply a favour e.g looking after someone’s cat and when the owner returns they promise to give you £30 - this is not enforceable because you did not look after the cat in return for payment.
Exceptions:
(A) the past act or promise was done at the promisors request.
(B) there was a mutual understanding between the parties that the act/promise will be compensated.
(C) had the promise been made in advance it would have been enforceable.
What is a contractual variation
Where both parties agreed to change or end the contract and intend it to be legally binding
What do you need to vary a contract and ensure that the variation will be legally binding and what are the difficulties in doing so
You need agreement, consideration, intention to create legal relations.
Only difficulty is consideration because usually variation is one sided - only one party is suffering a detriment or conferring a benefit on the other party.
Can a party ask for more money when performing an existing contractual duty that is owed
No unless they exceed the contractual obligation
