Law Of Contract

Question 1

What is the definition of a contract?

Answer 1

An agreement between 2 or more parties that is legally binding between them.

According to S.2(h) CA 1950, an agreement enforceable by law is a contract.

Question 2

List the elements of a contract.

Answer 2

• Proposal and Acceptance
• Consideration
• Intention to Create Legal Relations
• Certainty
• Legal Capacity
• Free Consent
• Legality of the Objects
• Required Formalities

Each element is essential for a legally binding contract.

Question 3

What does ‘Proposal’ mean in contract law?

Answer 3

A proposal, also known as an ‘offer’ or ‘promise’, is made when one person signifies to another his willingness to do or abstain from doing anything.

Defined under S.2(a) CA.

Question 4

What is ‘Acceptance’ in contract law?

Answer 4

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.

According to S.2(b) CA, a proposal becomes a promise upon acceptance.

Question 5

What is the difference between a bilateral offer and a unilateral offer?

Answer 5

• Bilateral offer: An offer made by one party to another requiring a promise in return.
• Unilateral offer: An offer made to one party or multiple parties, requiring performance of an act.

Bilateral offers involve mutual promises, while unilateral offers involve a promise in exchange for an act.

Question 6

True or False: An invitation to treat is a proposal.

Answer 6

False.

An invitation to treat is a preliminary communication in negotiations, not an offer.

Question 7

What is an example of an invitation to treat?

Answer 7

• Display of goods
• Advertisement
• Price list
• Auction
• Tender

These examples indicate that no binding contract is formed at the initial stages.

Question 8

What was the significance of the case Payne v. Cave (1789)?

Answer 8

The court held that the auctioneer’s request for bids was an invitation to treat, and bids could be withdrawn until accepted.

The fall of the auctioneer’s hammer constituted acceptance of the highest bid.

Question 9

In the case Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd (1953), when was the contract of sale concluded?

Answer 9

The contract was completed on payment under the supervision of a pharmacist.

The display of goods was deemed an invitation to treat, and the customer made an offer upon payment.

Question 10

What does S.2(b) of the Contracts Act state about acceptance?

Answer 10

Acceptance must be absolute and unqualified, made on the same terms as proposed without modifications.

Any modification constitutes a counter-proposal.

Question 11

Fill in the blank: A counter-proposal is treated as a ________ of the original proposal.

Answer 11

rejection.

A counter-proposal destroys the original proposal.

Question 12

What must be true for acceptance to be valid?

Answer 12

Acceptance must be communicated to the proposer.

Communication is complete when it reaches the proposer’s knowledge.

Question 13

What is the postal rule regarding acceptance?

Answer 13

Acceptance is complete when it is put in a course of transmission to the proposer.

As per S.4(2) CA, it is effective against the proposer when sent.

Question 14

What is the significance of the case R v. Clarke (1927)?

Answer 14

The court held that Clarke’s information was not acceptance of the reward offer because he acted to clear his own charges, not in reliance on the offer.

Ignorance of the offer negates acceptance.

Question 15

True or False: Silence can amount to acceptance of a proposal.

Answer 15

False.

A proposer cannot impose acceptance by silence without the promisee’s consent.

Question 16

What is the legal implication of a proposal made to the general public?

Answer 16

Anyone who meets all the terms of the proposal may accept it.

This differs from a proposal made to a specific individual.

Question 17

What does S.4(1) of the Contracts Act state about communication of proposals?

Answer 17

The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

This emphasizes the importance of awareness for acceptance.

Question 18

What is the distinction between a counter-proposal and a request for further information?

Answer 18

A counter-proposal rejects the original offer, while a request for further information does not.

This distinction is crucial in determining the status of negotiations.

Question 19

What is the Postal Rule in contract law?

Answer 19

The communication of an acceptance is complete when it is put in a course of transmission to the proposer and out of the power of the acceptor.

Question 20

According to Section 4(2) CA 1950, when is acceptance complete against the proposer?

Answer 20

When the acceptance is posted.

Question 21

According to Section 4(2) CA 1950, when is acceptance complete against the acceptor?

Answer 21

When the acceptance comes to the knowledge of the proposer.

Question 22

In the case of B accepting A’s proposal, when is the communication of acceptance complete?

Answer 22

As against A, when the letter is posted; as against B, when the letter is received by A.

Question 23

What does the Postal Rule imply for the proposer?

Answer 23

The proposer is bound when the acceptor posts the letter, regardless of whether the proposer knows of it.

Question 24

What is a suggested solution for proposers to protect themselves under the Postal Rule?

Answer 24

Proposers should stipulate in the proposal that acceptance is complete only upon receipt.

Question 25

What governs instantaneous communications such as telephone or fax?

Answer 25

The general rule, not the Postal Rule.

Question 26

What does Section 5(1) state about the revocation of a proposal?

Answer 26

A proposal may be revoked at any time before the communication of its acceptance is complete against the proposer.

Question 27

What is required for the revocation of a proposal according to Section 6(a)?

Answer 27

The communication of notice of revocation must be made by the proposer to the other party before acceptance.

Question 28

What was held in the case of Byrne v. Tienhoven (1880)?

Answer 28

There was a contract because the revocation of the offer was not effective until it was received by the offeree.

Question 29

What happens when the time prescribed for acceptance lapses according to Section 6(b)?

Answer 29

The proposal is revoked.

Question 30

What defines a 'reasonable time' for acceptance?

Answer 30

It depends on the facts and circumstances of each case.

Question 31

What was the outcome in the case of Fraser v. Everett?

Answer 31

The acceptance was not made within a reasonable time due to the fluctuating nature of shares.

Question 32

What can cause a proposal to be revoked according to Section 6(c)?

Answer 32

The failure of the acceptor to fulfill a condition precedent to acceptance.

Question 33

What does Section 6(d) state regarding the death or mental disorder of the proposer?

Answer 33

If the acceptor knows of the proposer's death or mental disorder before acceptance, the proposal is revoked.

Question 34

Can acceptance still be valid if the acceptor was unaware of the proposer's death?

Answer 34

Yes, acceptance is valid without prior knowledge of the death or mental disorder.

Question 35

What does Section 5(2) say about the revocation of acceptance?

Answer 35

An acceptance may be revoked anytime before the communication of acceptance is complete against the acceptor.