Formation: Offer, Acceptance, Capacity

Question 1

What is an offer?

Answer 1

Expression of willingness to contract on certain terms, made with intention it will become binding as soon as it is accepted by the person to whom it is addressed

Question 2

Willingness to be bound (offer) - test?

Answer 2

Objective (reasonable person regard as an offer?) and Subjective (must believe intended to make offer)

Question 3

What is an invitation to treat?

Answer 3

Offer is incomplete, uncertain terms or no intention to be bound

e.g. ‘thinking’, potential asking price

Question 4

Are window displays ITTs or offers?

Answer 4

GR: ITT
EXCEPTION: clear intention to be bound

Offer: customer at payment point
Acceptance: shop takes payment

Question 5

Are Advertisements offers or ITTs?

Answer 5

GR: ITT
EXCEPTION: clear intention to be bound
EXAMPLES: unilateral contract or reward

Question 6

What is a bilateral offer?

Answer 6

Promise for a promise

Question 7

Is an auction WITH reserve an ITT or offer?

Answer 7

ITT= Auctioneers request for bids
Offer= bid (can be accepted or rejected)
Acceptance = fall of hammer
Bilateral contract between owner and bidder

Question 8

withoUt

Is an auction WITHOUT reserve an ITT or offer?

Answer 8

Offer= request for bids
Acceptance = highest bidder
Unilateral contract to accept highest bid
Damages against Auctioneer

Question 9

Measure of damages for failure to sell to highest bidder in auction without reserve?

Answer 9

Market Value of Goods - Bid

Amount Auctioneer sells for elsewhere irrelevant
Expectation loss

Question 10

Is a tender an ITT or offer?

Answer 10

GR: ITT
EXCEPTION:
* promise to accept lowest tender; or
* promise to consider all conforming tenders (unilateral contract)

Question 11

Measure of damages for breach of implied unilateral contract to consider conforming tenders

Answer 11

Loss of Opportunity

Question 12

3 ways

How can an offer be terminated?

Answer 12

1. Revocation
2. Rejection
3. Lapse of time

Question 13

Can an offer be revoked once accepted?

Answer 13

No

Question 14

Is a promise to keep an offer open binding?

Answer 14

GR: No
EXCEPTION:
1. offer has been accepted
2. consideration for promise to keep offer open

Question 15

Can revocation be communicated by a 3rd party without authorisation from offeror?

Answer 15

Yes provided they are objectively perceived as reliable

Question 16

When does acceptance of unilateral contract take place (cannot be revoked)?

Answer 16

GR: Acceptance occurs when performance is complete (no obligations until act is complete)

BUT

Partial performance is sufficient to prevent revocation
* 2 offers (express offer + implied promise not to revoke if specified act is started in a reasonable time)
* Acceptance and consideration for implied promise not to revoke is commencement of act

Question 17

What is implied rejection of an offer?

Answer 17

Counter offer which contains a definite proposal of its own (destroys original offer)

Question 18

When does lapse of time terminate an offer?

Answer 18

1. Express condition; or
2. reasonable time

Question 19

What is acceptance?

Answer 19

Complete and unqualified assent to all the terms of the offer

Must be communicated

Question 20

When is acceptance complete if postal rule applies?

Answer 20

On posting (not arrival)

Even if letter is lost

Question 21

3 conditions

When does the postal rule apply

Answer 21

1. reasonable to use post (no strike, no prompt reply)
2. letter is properly posted
3. offeror has not excluded rule (stated must reach them / uses word ‘notice’)

Question 22

Is there a presumption of legal relations in a domestic agreement?

Answer 22

GR: No intention to create legal relations
EXCEPTION: facts show otherwise (separated / high value)

Question 23

Is there a presumption of legal relations in commercial agreements?

Answer 23

GR: strong presumption
EXCEPTION: facts show otherwise (clause states no legal relations)

Question 24

Are minors bound by contracts

Answer 24

GR: Minors are not bound but can sue other party
EXCEPTION: contract for necessaries OR beneficial service contract

Food, clothing and non-essentials (never trading contract)

Question 25

What is a contract for necessaries?

Answer 25

1. food 2. clothing 3. non essentials depending on requirements at time of purchase NEVER: trading contract

Question 26

Is a contract binding if party lacks capacity?

Answer 26

GR: a contract made whilst drunk or impaired is valid EXCEPTION: 1. person was incapable of understanding nature of transaction; and 2. other party knew this to be the case | contract is voidable (binding unless person with incapacity recinds)

Question 27

Outcome if person if person lacks capacity and other party aware?

Answer 27

contract is voidable (binding unless person with incapacity recinds)

Question 28

Rules relating to revoking an offer?

Answer 28

GR: revocation must be communicated EXCEPTIONS: 1. notice sent to last known address; or 2. choose not to read it; or 3. unilateral and revoked through same medium with same prominence; or 4. notice is sent electronically to business (communicated when it should have been read) | Note: Postal rule does not apply

Question 29

# 5 conditions Requirements for acceptance?

Answer 29

1. Offeree must know of offer 2. Not been revoked rejected or lapsed 3. corresponds exactly with terms of offer 4. No uncertainty over agreed terms 5. Communicated by offeree OR **authorised** agent

Question 30

How do the rules regarding communication of acceptance and revocation differ?

Answer 30

1. Revocation can be given by a reliable 3rd party (**a**cceptance must be communicated by **a**uthorised **a**gent) 2. The postal rule does not apply to notices of revocation.

Question 31

Exceptions to the GR acceptance must be communicated by offeree or authorised agent?

Answer 31

1. unilateral contract (performance consistutes acceptance) 2. offeree stipulates silence will amount to acceptance 3. postal rule applies

Question 32

What is a unilateral offer?

Answer 32

A promise for an act | If you do X, I promise to do Y

Question 33

Battle of the forms

Answer 33

* Counter-offer after counter-offer * last shot wins * Delivery may be regarded as acceptance by conduct of last set of T&Cs (if no delivery slip signed and returned)

Question 34

How do the court determine whether the parties have reached complete agreement? | certainty (binding contract)

Answer 34

1. Parties in same trade (*'timber of fair specification' ok*) 2. Trade usage (*dealt with each other before?*) 3. Contract has been partly performed 4. Objective mechanism for resolving uncertainty (*arbitration clause / market price*) 5. Agreement on material terms? (*agreement to buy car on HPA terms too vague*)