Formation of a Contract Test

Question 1

Difference between offer and invitation to treat?

Answer 1

Offer = Specific
ITT = Non-specific. Can end in negotiations, offers etc.

Question 2

Principle of Boots v Chemists (1953).

Answer 2

Goods on a shelf in a supermarket are an invitation to treat

Question 3

Principle of Fisher v Bell (1961).

Answer 3

Goods in a shop window display are an invitation to treat

Question 4

Principle of Partridge v Crittendon (1968).

Answer 4

Newspaper and magazine advertisements are an invitation to treat

Question 5

Principle of Carbolic Smoke Ball Co.

Answer 5

An advertisement in a newspaper/magazine with detailed specifics becomes an offer

Question 6

Principle of Routledge v Grant (1828).

Answer 6

An offer is terminated if properly withdrawn before the offer has been accepted.

Question 7

Principle of Montefiore (1866).

Answer 7

An offer is terminated if a reasonable time has passed.

Question 8

Principle of Hyde v Wrench (1840).

Answer 8

Offer terminated if the offer is rejected or a counter-offer is made,

Question 9

Principle of Guthing v Lynn (1831).

Answer 9

The terms of an offer cannot be vague

Question 10

Define acceptance.

Answer 10

An unconditional agreement to all the terms of the offer.

Question 11

Principle of Hyde v Wrench (1840).

Answer 11

If the offeree makes a counter-offer, then the original offer is terminated

Question 12

Principle of Stevenson v McLean (1880)

Answer 12

A request for additional information doesn’t revoke the offer

Question 13

The postal rule.

Answer 13

States that a letter of acceptance takes affect from the moment of posting

Question 14

Case for the postal rule.

Answer 14

Adams v Lindsell (1818)

Question 15

Principle of Thomas v BPE Solicitors.

Answer 15

As regards emails, the courts will decide when acceptance has taken place on a case-by-case basis, taking into account context, reasonableness and sound business practice.

Question 16

Case that demonstrates the principle that, provided there has been no misrepresentation, the courts do not concern themselves with the adequacy of the consideration?

Answer 16

Thomas v Thomas (1842)

Question 17

Principle of Chappell & Co. v Nestle.

Answer 17

For consideration to be valid, it must be of some value, even if this is nominal. Does not need to be of monetary value.

Question 18

General rule about past consideration and case.

Answer 18

Generally, not valid and cannot be enforced in court.
Re McArdle (1951)

Question 19

Case for exception to general rule about past consideration.

Answer 19

Lampleigh v Braithwaite (1615)

Question 20

Two test from Lampleigh v Braithwaite (1615).

Answer 20

1. Requested service in first place.
2. Promise of future payment was implied

Question 21

General rule about part payment and case.

Answer 21

If a creditor agrees to reduce a debtor’s debt, they are free to later go back on this and say they want the full payment.
Pinnel’s case (1602)

Question 22

Principle of Central London Property Trust Ltd v High Trees House Ltd.

Answer 22

Promissory estoppel = where the debtor relied on the promise they do not have to pay the full payment.

Question 23

Significance of Re Selectmove (1995).

Answer 23

The Court of Appeal affirmed the principle that a promise to pay an existing debt cannot be used as consideration.

Question 24

General rule about existing duty and case.

Answer 24

When someone is already obliged to perform a duty as a part of a first contract, that duty cannot be consideration for a second contract,
Stilk v Myrick (1809)

Question 25

Cases for exceptions of an existing duty.

Answer 25

Hartley v Ponsonby (1857)
Williams v Roffet Bros & Nichols (Contractors) Ltd (1990)

Question 26

Exceptions for an existing duty?

Answer 26

1. Where what is given is more than originally expected (Hartley)
2. Where performing the existing duty gives the other party a ‘benefit’ (Williams)

Question 27

Rule of privity.

Answer 27

Only those who are parties to a contract are bound by it.

Question 28

Cases for rule of privity.

Answer 28

Dunlop Pneumatic Tyre Co. Ltd v Selfridge (1915)
Tweddle v Atkinson (1816)

Question 29

Facts of Shanklin Pier Ltd.

Answer 29

SP LTD hired a contractor to paint the pier.
Spoke to Detel about whether a particular paint was suitable to be used.
Detel said it was.
SP LTD instructed the contractors to use this paint.
Paint started peeling after 3 months, and SP LTD sued Detel for compensation.
Although the main contract was with the contractor, Detel were liable as the court said there was a collateral contract.

Question 30

Principle of Shanklin Pier Ltd (1951).

Answer 30

Collateral contracts = where the court avoids the rule by saying there was a second (collateral) contract alongside the main contract.

Question 31

Facts of Tulk v Moxhay (1848).

Answer 31

Tulk had sold land to Elms on the provision that he did not build on it. Elms sold it on to Moxhay, who intended to build on it.
The court said he could not.

Question 32

Principle of Tulk v Moxhay (1848).

Answer 32

Restrictive covenants = Where contracts concern land, a contract can bind the purchaser of the land AND anyone he sells the land onto, even though they were not party to the original contract.

Question 33

Facts of Jackson v Horizon Holidays (1975).

Answer 33

Jackson booked a 28 day holiday in Ceylon (now Sri Lanka) for himself and his family through Horizon Holidays.
Hotel turned out to be unsatisfactory for various reasons relating to cleanliness and provision of services.
On appeal, the court allowed him and his family compensation despite the fact family members had not been party to the original contract

Question 34

Principle of Jackson v Horizon Holidays (1975).

Answer 34

Where it would seem unfair to adhere to the rule of privity e.g., for family members

Question 35

How was the rule of privity altered by the Contracts (Rights of Third Parties) Act 1999?

Answer 35

This established a set of circumstances in which a third party may enforce a contract. They are if:

1. The third party is identified in the contract by name, or as a member of a class, or as answering a particular description.
2. The contract purports (intends) to benefit the third party

Question 36

In social situations, what is the courts starting assumption and name the case?

Answer 36

No intent to create legal relations.
Wilson v Burnett

Question 37

In social situations, the courts might overturn the starting assumption based on the facts. Name the case where this happened.

Answer 37

Simpkins v Pays

Question 38

In domestic situations, what is the courts starting assumption and name the case?

Answer 38

No intent to create legal relations.
Balfour v Balfour

Question 39

Case where the court overturned the starting assumption, in a domestic situation on the basis of the facts?

Answer 39

Merritt v Merritt

Question 40

In commercial situations, what is the courts starting assumption and name the case?

Answer 40

Is intent to create legal relations.
Esso v Custom & Excise

Question 41

Case where court overturned the starting assumption in a commercial situation on the basis of the facts?

Answer 41

Jones v Vernons Pools

Question 42

Facts of Re Selectmove (1995)

Answer 42

Inland revenue agreed a company could pay its tax debt in instalments but then demanded payment in full. The court said they had this right.
Did not allow promissory estoppel