LAW P3 CONTRACT (OFFER ACCEPTANCE, CONSIDERATION, ITCLR)

Question 1

What is offer and acceptance?

Answer 1

Contractual agreement can be analysed in terms of offer and acceptance. This is when one party, the offeror, makes an offer which once accepted by another party, the offeree, creates a binding contract.

Question 2

What is the definition of offer?

Answer 2

An offer can be defined as a proposal made by an offeree to enter into a legally binding agreement.

Question 3

What must be shown for there to be an offer?

Answer 3

In order to amount to an offer it must be shown that the offeror had the intention to be bound.

CASE - carlill v carbolic smoke ball, the advert amounted to the offer for a unilateral contract by the defendants.

Question 4

What is the definition of invitation to treat?

Answer 4

Invitation to treat can be defined as when someone is invited to make an offer which can be accepted or declined.

Question 5

What is the difference between an offer and ITT?

Answer 5

An offer will lead to a binding contract on acceptance, an invitation to treat can not be accepted as it is merely an invitation for offers.

Question 6

What are the different situations for ITT?

Answer 6

• Goods on display in shops are generally not offers but an ITT.
• Advertisements are also generally invitations to treat.

Question 7

What are the cases for ITT?

Answer 7

• Goods on display - Fisher v Bell, the display of the item was not an offer of sale but merely an invitation to treat.
• Advertiesements - Partridge v Crittenden, the advertisement was not an offer but an invitation to treat.

Question 8

How can an offer be terminated?

Answer 8

• Death of offeror or offeree
• Lapse of time (an offer will terminate after a reasonable lapse of time) - Ramsgate victoria hotel v montefiore, the offer that the defendant had previously made was no longer valid to form a contract.
• Revocation (the offeror may revoke an offer at any time before acceptance takes place) - Dickinson v Dodds, the offer made can be revoked at any time before there is acceptance.
• Counter offer - Hyde v Wrench, when a counter offer is made, this supersedes and destroys the original offer.

Question 9

What is acceptance?

Answer 9

Once a valid acceptance takes place, a binding contract is formed.

Question 10

What are the 3 main rules relating the acceptance?

Answer 10

1. The acceptance must be communicated to the offeree - Felthouse v Bindley, silence did not amount to acceptance and an obligation cannot be imposed by another.
2. The terms of the acceptance must exactly match the terms of the offer - Hyde v Wrench, when a counter offer is made, this supersedes and destroys the original offer.
3. The agreement must be certain - Scammell & Nephew v Ouston, there was no certainty as to the terms of the agreement.

Question 11

What is the postal rule?

Answer 11

The postal rule from adams v lindsell states that if the post is an accepted method of acceptance, then the acceptance is made upon posting the letter, even if the letter is never recieved.

Question 12

What is consideration?

Answer 12

Each party to a contract must be both a promisor and a promisee. They must each recieve a benefit and each suffer a detriment. This benefit or detriment is referred to as consideration.

Question 13

What is the definition of consideration

Answer 13

Consideration was defined in Dunlop v Selfridge as an act where something is given in return for something promised.

Question 14

What are the rules of consideration?

Answer 14

1. The consideration must not be past - Re Mcardle
2. The consideration must be sufficient but need not be adequate - Chappel v Nestle
3. The consideration must move from the promisee - Tweddle v Atkinson
4. An existing public duty will not amount to valid consideration. - Collins v Godefrey
5. An existing contractual duty will not amount to valid consideration. - Stilk v Myrick
6. Part payment of a debt is not valid consideration - Foakes v Beer

Question 15

What are the cases for the rules of consideration?

Answer 15

Re Mcardle - the promise to make payment came after the consideration had been performed and therefore the promise to make payment was not binding.

Chappel v Nestle - The item did form part of the consideration as the object was to increase sales and therefore provided value.

Tweddle v Atkinson - The groom was not party to the agreement and the consideration did not move from him.

Collins v Godefrey - Where there exists a public duty this can not be used as consideration for a new promise.

Stilk v Myrick - The claimant had not provided any consideration for the promise for extra money, consequently he was entitled to nothing.

Foakes v Beer - The agreement reached amounted to part payment of a debt and under Pinnel’s case this was not good consideration for a promise.

Question 16

What is intention to create legal relations?

Answer 16

The requirement of intention to create legal relations in contract law is aimed at sifting out cases which are not appropriate for court actions. Not every agreement leads to a binding contract which can be enforced through the courts.

Question 17

What are the 2 types of agreements?

Answer 17

Social and domestic agreements - the law raises a presumption that the parties do not intent to create legal relations

Commerical agreements - the law raises a presumption that the parties do intend to create legal relations by the agreement.

Question 18

What are the cases for intention to create legal relations?

Answer 18

Social and domestic agreements - Balfour v Balfour, the agreement was a purely social and domestic agreement, therefore it was presumed that the parties did not intend to be legally bound.

Commercial agreements - Edwards v Skyways, the agreement had been made in a business context which raised a strong presumption that the agreement is legally binding.

Question 19

What evidence may rebute the presumption of social and domestic agreements?

Answer 19

The presumption that parties involved in social and domestic agreements do not intend to create legal relations may be rebutted by evidence to the contrary, the evidence may consist of:

• A written agreement - Errington v Errington woods
• Where the parties have sepeerated - Merrit v Merrit
• Where is a third party to the agreement - Simpkins v Pays

Question 20

What evidence may rebute the presumption of commerical agreements?

Answer 20

• Binding in honour only clauses - Rose and Frank v Crompton Bros
• Comfort letters - Kleinwort Benson LTD v Malaysia mining corporation berhad