L2: Formation of a Contract 1

Question 1

What is a contract?

Answer 1

An agreement between two or more parties that is legally enforceable.

Question 2

State the 3 important requirements for a contract to be legally binding:

Answer 2

1. Offer and Acceptance
2. Intention to create legal relations
3. Consideration

Question 3

What is an offer?

Answer 3

A statement by one party of his willingness to enter into a contract on certain stated terms.

It may be made orally or in writing or both.

Question 4

Is invitation to treat an offer and give some examples?

Answer 4

No, it merely invites others to negotiate or make offers which may or may not be accepted.

Examples:
1. Display of goods in a shop window

2. Ads
3. Circulars and Catalogs
4. Tenders
5. Supply of Information

Question 5

State the 3 ways an offer can be terminated

Answer 5

1. Revocation (withdrawal) by the offeror
2. Rejection by offeree
3. Rejection by counter-offer
4. Lapse of Offer

Question 6

How does one accept an offer?

Answer 6

1. Offeree must unconditionally agree the offer without changing the terms.
2. Acceptance must be communicated to the offeror

Question 7

Can an offer be accepted by silence?

Answer 7

No, an offer can only be accepted if the offeree do or say something to indicate his acceptance.