Formation of a Contract/Incurring Obligations

Question 1

Who is the party raising an action and who is the opposite party?

Answer 1

The Pursuer and the Defender.

Question 2

Evaluate the strength of these negotiating positions:
1. Your client has the right claimed.
2. Your client clearly has the right claimed.
3. Your client clearly has no right.

Answer 2

1. Strong.
2. Strongest.
3. Weak.

Question 3

What does ‘Consensus in idem’ mean?

Answer 3

Meeting of the minds.

Question 4

Normally, what is consensus in idem agreeing on? (3)

Answer 4

1. The nature of the contract.
2. The subject(s) of the contract.
3. The price or consideration.

Question 5

What is a contract?

Answer 5

A legally binding agreement between 2 or more parties.

Question 6

What does ‘consensus is viewed objectively’ mean?

Answer 6

An outsider should be able to correctly assume what both parties are agreeing on. There should be no confusion.

Question 7

What happens if there is no consensus?

Answer 7

There is no contract - contract is void.

Question 8

What is the exception to there being no consensus in a contract?

Answer 8

If there has been performance.

Question 9

Who is the offeror and who is the offeree?

Answer 9

Offeror - Party making the offer.
Offeree - Party whom the offer is made to.

Question 10

When is a statement an offer?

Answer 10

When its terms are sufficiently clear to indicate intention of the offeror to be bound in contract on acceptance by offeree.

Question 11

Is an advertisement a contract? If no what is it?

Answer 11

An invitation to treat.

Question 12

When does an offer lapse? (3)

Answer 12

1. When it is rejected/met by a counter offer.
2. When it is revoked by offeror before acceptance.
3. When it is not accepted in time (if time is of the essence).

Question 13

Are promises unilateral or bilateral?

Answer 13

Unilateral.

Question 14

Do promises have to be in writing?

Answer 14

Yes, unless made in the course of business.

Question 15

What are the principles of a promise? (

Answer 15

1. Unilateral obligation.
   2.Must be made in writing, unless in the course of business.
2. There must be serious intention to be bound.
3. Must be communicated.
4. Irrevocable once made but may be rejected.
5. Needs no acceptance.
6. May be subject to a condition.

Question 16

Utility of a promise - Some use in commercial setting - Case.

Answer 16

Carlyle v RBS (2015) UKSC 13.

Question 17

Utility of a promise - Promise to keep an offer open - Case.

Answer 17

Littlejohn v Hadwen (1882) 20 SLR 5 (W&B 4.08).

Question 18

Utility of a promise - Rewards - case.

Answer 18

petrie v Earl of Airlie (1834) 13 S 68 (W&B 4.09).

Question 19

What are the 3 utilities of a promise?

Answer 19

1. Some use in commercial setting.
2. Promise to keep an offer open.
3. Rewards.

Question 20

What does acceptance do to an offer?

Answer 20

Makes it a contract.

Question 21

What may an acceptance be (2)?

Answer 21

1. Express.
2. Implied (by an action in conformity with terms of contract).

Question 22

What may the offeror stipulate? And what may they not stipulate by?

Answer 22

The mode of acceptance. They may not stipulate acceptance by silence.

Question 23

Stipulate mode of acceptance case.

Answer 23

Holwell Securities Ltd v Hughes (1974) 1 WLR 155 (W&B 2.27).

Question 24

Stipulate acceptance by silence case.

Answer 24

Felthouse v Bindley (1862) 11 CB NS 869.

Question 25

What is the general rule on the communication of acceptance? What is the exception to this rule?

Answer 25

That acceptance is effective on receipt. The exception being where an offer and acceptance conducted by post

Question 26

Case of acceptance being effective on posting.

Answer 26

Dunlop v Higgins (1848) 6 Bell’s App 195 (W&B 2.29).

Question 27

What is the postal rule?

Answer 27

Where acceptance and revocation of an offer cross in the post, the contract is concluded.

Question 28

What is the case concerning the postal rule?

Answer 28

Thomson v James (1855) 18 C 1.

Question 29

What is the case concerning consensus?

Answer 29

Muirhead and Turnball v Dickson (1905) 7F 686. 694 (W&B 2.03).

Question 30

What are the cases concerning counter offers?

Answer 30

1. Hyde v Wrench (1840) 3 Beav 334.
2. Wolf & Wolf v Forfar Co 1984 SLT 100 (W&B 2.05).

Question 31

What is the case concerning the reasonable passage of time?

Answer 31

Wylie & Lockhead v McEroy & Sons (1873) 1 R 41 (W&B 2.22).