Formation of a contract

Question 1

Privity of Contract

Answer 1

The rule of privity of contract states that only the parties to a contract are bound by it. This means that a third party cannot bring a court action to enforce the contract.
(Dunlop Pneumatic Tyre Co Ltd v Selfridge)

Question 2

The rights to a third parties act 1999

Answer 2

s1 of the act states that a third party can enforce the terms of a contract if:
- They are expressly identified by name
- The contract states they can
- The contract benefits them

Question 3

Person Making the offer

Answer 3

Offeror

Question 4

Person Accepting the offer

Answer 4

Offeree

Question 5

The offer itself is a

Answer 5

statement of intent made by the offeror to be legally bound by the terms of the offer if it is accepted by the offeree

Question 6

An invitation to treat is a

Answer 6

mere request to others to make an offer or to open negotiations
An invitation to treat is not an offer and therefore cannot be accepted

Question 7

Goods on a shelf - ITT

Answer 7

The contract is not formed until the customer gets to the ill and offers to buy the goods from the shop. (Pharmaceutical Society of Great Britain v Boots Cash Chemists)

Question 8

Goods in a shop window - ITT

Answer 8

(Fisher v Bell)

Question 9

Requests for Tenders

Answer 9

When a company wants something for the business they will send out letters asking to tender, these letters are classed as invitations to treat.

Question 10

Statements of Price

Answer 10

If a party indicates a price at which he/she may be prepared to sell this is an ITT not an offer (Harvey v Facey)

Question 11

Auctions

Answer 11

Putting something up for offer - ITT
Person Bidding - Offer
The hammer being brought down - Acceptance
(British Car Auctions v Wright)

Question 12

Advertisements

Answer 12

Generally, ITT with the potential purchaser making the offer to buy
(Partridge v Crittenden)

Question 13

Advertisements making a unilateral offer

Answer 13

If a person places an advertisement promising to pay in return for a course of action then he/she is bound by this promise
Offeree does not have to accept the offer only perform the required course of action
(Carlill v The Carbolic Smoke Ball)

Question 14

An Offer can be made

Answer 14

-Orally
-In Writing
-By Conduct

Question 15

The offer must be communicated to the offeree

Answer 15

Otherwise the offeree cannot accept it. However words do not have to necessarily be used.

Question 16

An offer can be made to one person or the whole world

Answer 16

(Taylor v Laird)

Question 17

The terms of the offer must be certain

Answer 17

If the words of the offer are too vague then the parties might not know what they are contracting for and should not therefore be bound.
(Guthing v Lynn)

Question 18

Termination of Offer

Answer 18

Offer is revoked and revocation is communicated to the offeree
(Routledge v Grant)
Time for acceptance lapses
Reasonable time has elapsed
One of the contracting parties dies

Question 19

Acceptance must be communicated to the offeror

Answer 19

Acceptance of the offer must be a positive act
(Felthouse v Bindley)

Question 20

Acceptance can be in any form

Answer 20

However if the offer states that acceptance must be done in a specific way then it must be done in that way for it to be valid acceptance
(Yates v Pulleyn)

Question 21

Acceptance must be unconditional

Answer 21

Otherwise this would be classed as a counter offer which terminates the original offer which can then no longer be accepted unless the offeror offers it again
(Hyde v Wrench)

Question 22

Enquiries

Answer 22

Do not count as a rejection

Question 23

The Postal Rule

Answer 23

When the offeree accepts the offer by post then the offer is accepted then the acceptance is posted in a post box
(Adams v Lindsell)

Question 24

Modern Methods of Acceptance

Answer 24

(Brinkibon)
If the acceptance is received during office hours - there and then
Outside office hours - when the office opens

Question 25

Excecuted Consideration

Answer 25

an act in return for a promise . Excuted consideration occurs when a aprty performs his/her part of the contract at the moment they enter into it.
The consideration is the thing that he/she does

Question 26

Executory Consideration

Answer 26

a promise in return for a promise
occurs when a party promises to perform a future obligation
the consideration is the promise to do the future thing

Question 27

Consideration need not be adequate but must be sufficient

Answer 27

The parties can contract on any terms they choose so the courts are not interested if the parties have a good ‘deal’
(Thomas v Thomas)

Question 28

The consideration must be sufficient

Answer 28

it means the consideration must be real and of some value
(White v Bluett)

Question 29

Past Consideration is no consideration

Answer 29

Re Mcardle

Question 30

Exception to this rule

Answer 30

If payment is not disclosed it is usually implied that payment will be required on the basis that people don’t work for free
(Lampleigh v Braithwait)

Question 31

Consideration must move from the promisee

Answer 31

means that the parties to the contract must themselves provide the consideration
consideration is not something that can be done by a third party
(Tweddle v Atkinson)

Question 32

Performing an existing duty cannot be the consideration for a new promise

Answer 32

(Stilk v Mryrick)

Question 33

Unless X does more than could be expected from duty

Answer 33

(Hartley v Ponosby)

Question 34

A promise to accept part payment cannot be enforced as there is no consideration

Answer 34

(D and C builders v Rees)

Question 35

Social and Domestic Agreements

Answer 35

In social and domestic arrangements, it is assumed by the court that there is no intention to be legally bound by the agreement. However, if there is evidence that the parties did intend to be legally bound then the courts will find as such
(Merritt v Merritt)

Question 36

Commercial and Business agreements

Answer 36

In these agreements it is assumed that the parties do intend to be legally bound, unless the facts suggest otherwise
(Mcgowan v Radio Buxton)