Is there a valid contract?

Question 1

What is an offer?

Answer 1

An expression of willingness to contract on certain terms, made with the intention that it will become binding as soon as the other person accepts it

VS invitation to treat = invitation to negotiate

Question 2

Reserve auctions

Answer 2

Auction = invitation to treat, bids = offers, bang of gavel = acceptance of last offer (creates bilateral contract between seller + bidder)

If reserve price not met, item can be withdrawn

Question 3

Auctions without reserve

Answer 3

Must sell to highest bidder- unilateral contract arises between auctioneer and bidder

If auctioneer refuses to sell, highest bidder has claim against auctioneer in damages (but, no breach of contract!)

Question 4

Tenders for work

Answer 4

Generally invitations to treat

BUT: if promise to accept eg. lowest offer/ implied promise to consider all conforming tenders: breach of unilateral contract if doesn’t (claim damages for loss of opportunity)

Question 5

For there to be acceptance, there must be…

Answer 5

1. expression of assent,
2. which is unqualified

Question 6

Postal rule conditions:

Answer 6

Acceptance effective as soon as posted if:
1. it was reasonable to use post,
2. letter properly addressed, stamped, and posted,
3. postal rule not excluded by offeror

Question 7

Options for termination of offers

Answer 7

1. rejection by offeree (eg. counter-offer),
2. revocation by offeror,
3. lapse of specified time (or reasonable time)

Question 8

Communication of termination by offeror

Answer 8

• electronic communication between businesses: revocation effective when should’ve been read
• offer made to general public: must publish notice in same place as offer, with same prominence

Question 9

Factors for whether agreement is complete

Answer 9

• whether parties are in same trade,
• trade usage,
  whether arrangement has been acted on yet,
• whether there’s objective mechanism for resolving uncertainty

Question 10

Intention to create legal relations in commercial agreements

Answer 10

Presumption of intention - rebuttable - to rebut, clear statement of lack of intention required (hard to do)

Question 11

Intention to create legal relations in domestic agreements

Answer 11

Presumption of no intention - rebuttable - to rebut, consider factors:
- dealing at arm’s length?
- how much money involved?
- express agreement to create legal relations?
- is the agreement formalised?

Question 12

Consideration: adequacy vs sufficiency

Answer 12

Adequacy (amount) = irrelevant
Sufficiency (what consideration is) = relevant (eg. love and affection insufficient)

Question 13

Is past consideration good consideration? If so, what are the conditions for it?

Answer 13

NOT good consideration, unless:
- past act done on promisor’s request,
- mutual understanding it’d be compensated,
- had promise to compensate been made in the past, it would’ve been enforceable

Question 14

Variation: when are promises to pay more good consideration, and when not?

Answer 14

No consideration if: performing existing duty
Consideration if: existing duty exceeded, or practical benefit conferred

Question 15

Variation: what is the general rule on promises to accept less, and which case is it from?

Answer 15

D not bound if agrees to part-payment (can change mind): Pinnel’s case

UNLESS C gives some consideration for this (eg. early payment)

Question 15

Variation: rule on promissory estoppel

Answer 15

Creditor may be estopped from retracting offer to accept less if it would be unfair to the debtor

Question 16

Under the Contracts (Rights of 3rd Parties) Act 1999, 3rd party can acquire rights under contract if:

Answer 16

1. contract expressly provides they may acquire benefit, or
2. term purports to confer benefit on them, UNLESS contract didn’t intend to term to be enforceable by 3rd party

Question 17

Agency arises if:

Answer 17

1. actual authority (express or implied)
2. apparent authority

Question 18

Minors only bound by contract if:

Answer 18

1. contract for necessary goods/services
2. contracts of service for minor’s benefit

Question 19

When is a contract voidable for mental incapacity?

Answer 19

If:
- the person is incapable of understanding nature of transaction, and
- other party knew this

Question 20

What are the limitations of promissory estoppel? (variation)

Answer 20

• it can only be used as a defence when the other party tries to enforce the rights at common law
• there must’ve been a promise to waive strict legal rights
• debtor must’ve acted on the promise
• creditor can request full payment of future instalments/rent if gives REASONABLE NOTICE
• debtor must have clean hands

Question 21

For a 3rd party to enforce a term of the contract, they must…

Answer 21

Be identified in the contract by name or class

Question 22

When does apparent authority arise?

Answer 22

Arises if:
- principal must’ve represented the agent had authority,
- 3rd party relied on this,
- 3rd party altered their position by entering into contract

Question 23

What is the consequence of a party’s mental incapacity?

Answer 23

The contract is voidable

Question 24

What is the consequence of a statutory corporation entering a contract outside its powers?

Answer 24

The contract is void (as it was made ultra vires)