Offer and acceptance

Question 1

What happens when an offeree makes a counter-offer?

Answer 1

When an offeree makes a counter-offer, the original offer is deemed to have been rejected and cannot be subsequently accepted.

Question 2

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

Answer 2

A bilateral contract is characterized by both parties assuming an obligation to each other, usually by making a promise to do something. In contrast, a unilateral contract involves one party making an offer or proposal that calls for an act to be performed by one or more parties. Only the person making the offer assumes an obligation in a unilateral contract.

Question 3

What are the different contexts in which invitations to treat can occur?

Answer 3

Invitations to treat can occur in the following contexts: a) Advertisements, b) Display of goods for sale, c) Invitations to tender, and d) Auction sales.

Question 4

What is the significance of accepting an offer by email?

Answer 4

Accepting an offer by email is significant because it binds the offeror.

Question 5

What are the consequences when a counter-offer is accepted?

Answer 5

When a counter-offer is accepted, its terms become the terms of the contract instead of the terms of the original offer.

Question 6

How are advertisements generally regarded in relation to invitations to treat?

Answer 6

Advertisements are generally regarded as statements inviting further negotiations or invitations to treat. This is because they are seen as inviting interested parties to make offers rather than constituting an offer themselves.

Question 7

Can you provide an example of a unilateral contract?

Answer 7

A common example of a unilateral contract is when a person puts up a notice offering a reward for the safe return of their lost pet. The person putting up the notice has assumed an obligation to pay a reward to the person who returns their pet. Anyone can accept the offer by performing the required act of returning the pet to the person who put up the notice.

Question 8

What are the requirements for a valid acceptance of an offer?

Answer 8

To form a contract, acceptance must be communicated to the offeror. Acceptance is effective from the moment it is communicated. Silence does not constitute acceptance, and the offeror cannot stipulate that silence will be acceptance.

Question 9

What difficulties can arise when an offer is made on the standard terms of the offeror and the purported acceptance is made on the standard terms of the offeree?

Answer 9

If the terms of the offer and the purported acceptance are different in any way, the offeree has actually made a counter-offer. This can lead to complications in forming a contract.

Question 10

What are the requirements for a valid offer?

Answer 10

In relation to offers, the requirements for a valid offer include: a) The offer must be clear and certain, and b) Invitations to treat are not considered offers.

Question 11

What is the exception to the general rule regarding advertisements as invitations to treat?

Answer 11

The exception to the general rule is when the advertisement amounts to a unilateral offer. An example of this is the case of Carlill v Carbolic Smoke Ball Co (1893) 1 QB 256, where the advertisement was held to be a unilateral offer because it prescribed a clear act (using the smoke balls in a specified manner for a specified period but nevertheless contracting influenza) that constituted acceptance.

Question 12

What is the postal rule and when does it apply?

Answer 12

The postal rule states that acceptance takes effect from the moment the letter of acceptance is properly posted, not from the moment it is received by the offeror. The rule applies when it is contemplated that the post would be used as a means of communication.

Question 13

What are the steps involved in determining whether an acceptance is valid?

Answer 13

The steps involved in determining whether an acceptance is valid include: identifying whether the communication is an offer or an invitation to treat, considering whether there is further communication between the parties that constitutes a counter-offer or a request for further information, assessing whether the acceptance is in response to the offer and unqualified, checking if the acceptance was made using a valid mode of communication, and verifying if the offer was still open at the time of acceptance.

Question 14

What are the requirements for a valid acceptance?

Answer 14

In relation to acceptance, the requirements for a valid acceptance include: a) Acceptance must be in response to the offer, unqualified, and compliant with any required mode, and b) Acceptance must be communicated.

Question 15

What is the general rule regarding price-marked goods displayed in a shop window?

Answer 15

The general rule is that price-marked goods displayed in a shop window are not an offer for sale but an invitation to treat. This means that they are an invitation for interested parties to make offers rather than constituting an offer themselves.

Question 16

How can a counter-offer be distinguished from a request for information?

Answer 16

If an offeree makes a counter-offer, it amounts to a rejection of the original offer. However, if the offeree responds seeking clarification or to ascertain if the offeror would consent to changing certain aspects of the offer, it may be construed as a request for further information. In this case, the original offer remains open for acceptance.

Question 17

Are there exceptions to the postal rule?

Answer 17

Yes, there are exceptions to the postal rule. It does not apply if it is not contemplated that the post would be used, if the letter is incorrectly addressed, or if the offeror has disallowed the postal rule. Additionally, the rule does not apply to letters revoking offers.

Question 18

What is the postal rule and when does it apply?

Answer 18

The postal rule states that when an acceptance is made by post, it takes effect from the moment the letter of acceptance is properly posted. This rule applies even if the letter is delayed or lost in the post. However, there are exceptions to the postal rule, such as when the letter was not properly posted, when it is not contemplated that the post would be used, when the letter is incorrectly addressed, or when the offeror has specifically excluded the postal rule.

Question 19

What is the purpose of invitations to tender?

Answer 19

Invitations to tender are used when a party wishes to purchase a major item or service. The requestor invites interested parties to make offers (tenders) to be considered.

Question 20

What are the requirements for a valid offer?

Answer 20

A valid offer must be clear and certain and display an intention to be bound. It must be distinguished from an invitation to treat, which is a first step in negotiations and cannot be accepted to form a binding contract. An offer may come to an end through rejection, lapse, or revocation.

Question 21

How does acceptance by instantaneous communication differ from acceptance by post?

Answer 21

Acceptance by instantaneous communication, such as by telephone or email, is effective when the communication is received by the offeror. However, the offeror may be estopped from denying receipt of a communication if they are at fault for the non-receipt. Acceptance by post, on the other hand, is effective from the moment the letter of acceptance is properly posted.

Question 22

What is the general rule regarding invitations to tender?

Answer 22

As a general rule, invitations to tender are deemed invitations to treat. This means that they are an invitation for interested parties to make offers to be considered by the requestor, who can accept or reject any tender, even if it is the most competitive.

Question 23

What are the circumstances under which an offer may lapse?

Answer 23

An offer may lapse and become incapable of acceptance in two main circumstances: 1) when acceptance is not made within the period prescribed by the offeror, or 2) when no period is prescribed and acceptance is not made within a reasonable time. The reasonableness of the time period depends on the circumstances of the case.

Question 24

What is the significance of a clear and certain offer displaying an intention to be bound?

Answer 24

A clear and certain offer displaying an intention to be bound is essential for the formation of a valid contract. An offer must be clear and certain in its terms, and the offeror must show an intention to be legally bound. The case of Gibson v Manchester City Council illustrates the importance of clarity and certainty in an offer.

Question 25

What is the exception to the general rule regarding invitations to tender?

Answer 25

The exception to the general rule is when the invitation to tender expressly contains an undertaking to accept the highest or lowest bid. In such cases, the party requesting tenders has made an offer to enter into a contract with the party submitting the highest/lowest bid.

Question 26

What are the four rules for a valid acceptance?

Answer 26

The four rules for a valid acceptance are: only the person to whom the offer is made can accept it, the acceptance must be unqualified and correspond exactly with the terms of the offer, the acceptance must be communicated to the offeror using a valid mode of communication, and the offer must still be open at the time of acceptance.

Question 27

What are the four aspects to identifying an unequivocal acceptance needed to form a contract?

Answer 27

The four aspects to identifying an unequivocal acceptance needed to form a contract are: 1) Acceptance must be communicated to the offeror, 2) Acceptance applies from the moment it is communicated, 3) Silence does not constitute acceptance, and 4) A third party with authority can effectively communicate acceptance on behalf of the offeree.

Question 28

What was the outcome of the case Gibson v Manchester City Council?

Answer 28

In the case of Gibson v Manchester City Council, the House of Lords held that there was no binding contract because there was never an offer made by the Council. The Council’s letter stating that it ‘may be prepared to sell’ lacked the requisite clarity and certainty to be considered an offer. It was deemed to be the first step in negotiations, lacking the intention to be legally bound.

Question 29

How does the death of a party affect the lapse of an offer?

Answer 29

In relation to the death of the offeror, if the offeree knows about the offeror’s death, the offer will lapse. However, if the offeree is unaware of the offeror’s death, the offer may not lapse. In the case of the death of the offeree, the offer will lapse and cannot be accepted by the offeree’s representatives.

Question 30

What is the general rule regarding auction sales?

Answer 30

The general rule is that the auctioneer’s request for bids is an invitation to treat. The bidder makes an offer, and the auctioneer is free to accept or reject it. Acceptance is indicated by the fall of the auctioneer’s hammer.

Question 31

What is the significance of an auction without reserve?

Answer 31

In an auction without reserve, the seller promises to sell to the highest bidder, regardless of the bid amount. If an auction without reserve is expressed, the auctioneer may be sued for breach of contract if they refuse to sell to the highest bona fide bidder.

Question 32

What is the importance of an intention to be legally bound in contract formation?

Answer 32

An offeror must show an intention to be legally bound for a contract to be formed. The case of Gibson v Manchester City Council demonstrates the significance of an intention to be legally bound. The wording ‘may be prepared to sell’ used by the City Treasurer in Gibson lacked the requisite intention to be legally bound, while the similar case of Storer v Manchester City Council demonstrated an intention to be bound

Question 33

What is revocation in contract law?

Answer 33

Revocation refers to the act of the offeror withdrawing or revoking their offer at any time before acceptance. Once a valid acceptance has been made, the offeror is bound by the terms of their offer and cannot revoke it.

Question 34

What happens if the offeree posts their acceptance?

Answer 34

If the offeree posts their acceptance, it is unlikely to be deemed an equally advantageous mode of acceptance to the offeror, as post is slower than email. However, a response by an alternative instantaneous communication would likely suffice.

Question 35

What happens if the offeree communicates acceptance in a different mode than prescribed by the offeror?

Answer 35

If the offeror prescribes a mode of acceptance and the offeree communicates acceptance in a different mode, the question arises whether the communication of acceptance in the other manner will suffice. If the offeror makes it clear that only acceptance by the prescribed mode will suffice, then acceptance by that mode is required. However, if the prescribed mode is not made mandatory and the alternative mode does not disadvantage the offeror, the acceptance using the alternative mode will bind the offeror.

Question 36

Can a third party communicate acceptance on behalf of the offeree?

Answer 36

Yes, a third party with authority can effectively communicate acceptance on behalf of the offeree.

Question 37

When does revocation of an offer become effective?

Answer 37

Revocation of an offer is effective only upon actual notice of it reaching the offeree. If revocation is communicated by post, it takes effect from the moment it is received by the offeree and not from the time of posting. Indirect communication of revocation is also effective if the offeror has shown a clear intention to revoke and notice has reached the offeree.

Question 38

What are the twin requirements of a unilateral offer in the Carlill case?

Answer 38

The twin requirements of a unilateral offer in the Carlill case were a prescribed act (using the smoke balls in a specified manner for a specified period but nevertheless contracting influenza) and a clear intention to be bound. The defendants’ deposit of £1,000 and the certainty of the language used in the advertisement demonstrated their intention to be bound.

Question 39

What is the effect of termination on an offer?

Answer 39

An offer may come to an end through rejection, lapse, or revocation. Once terminated, the offer loses its legal effect and becomes incapable of acceptance. It is important to check whether the offer had been terminated before accepting it.

Question 40

Can an offer be revoked after acceptance?

Answer 40

No, once a valid acceptance has been made, the offeror is bound by the terms of their offer and cannot revoke it. An offer cannot be revoked after acceptance.

Question 41

Under what circumstances does the postal rule not apply?

Answer 41

The postal rule does not apply if it is not contemplated that the post would be used, to letters revoking offers, if the letter is incorrectly addressed, or if the offeror has disallowed the postal rule.

Question 42

What is the objective approach to agreement?

Answer 42

The objective approach to agreement focuses on determining the intention of the parties based on what a reasonable person would say was their intention, considering all the circumstances. It is not concerned with the inward mental intent of the parties but rather with the outward manifestations of their intent.

Question 43

What is the objective approach taken by the court in determining intention to be bound?

Answer 43

The court takes an objective approach in determining intention to be bound. It focuses on what a reasonable person would say the parties intended based on their letters or communications. The actual intent of the parties is not relevant; what matters is the objective interpretation of their words and actions.

Question 44

What are the elements needed for a valid contract?

Answer 44

In order for there to be a binding contract, three elements must be present: offer and acceptance, intention to create legal relations, and consideration. Offer and acceptance involve one party making a clear and certain offer displaying an intention to be bound, and the other party communicating an unequivocal acceptance.

Question 45

What happens if the acceptance is incorrectly addressed?

Answer 45

If the acceptance is incorrectly addressed, the postal rule may be displaced. The offeree’s own carelessness in addressing the acceptance may result in the loss of the benefit of the postal rule.

Question 46

What are the exceptions to the postal rule?

Answer 46

Exceptions to the postal rule include situations where the letter of acceptance was not properly posted, where it is not contemplated that the post would be used, where the letter is incorrectly addressed, or where the offeror has specifically excluded the postal rule. Note that the postal rule does not apply to letters revoking offers.

Question 47

Can the offeror stipulate that silence will be acceptance?

Answer 47

No, the offeror cannot stipulate that they will take silence to be acceptance and thus bind the offeree. The rule that silence cannot amount to acceptance is a sensible one as it clarifies when the parties are bound.

Question 48

What was the decision in the case of Brimnes [1975] QB 929?

Answer 48

The Court of Appeal concluded that a message sent during ordinary office hours but not seen by office staff until the following Monday was effective when received. The decision recognized the possible negligence of the office staff in failing to note the message, allowing the offeree to reasonably assume effective communication.

Question 49

What is the significance of complete performance in relation to unilateral contracts?

Answer 49

In relation to unilateral contracts, acceptance is perceived as the complete performance of the act(s) required by the terms of the unilateral offer. However, if the offeree has partly performed the obligation and is willing and able to complete it, the offeror may be under an implied obligation not to revoke the offer.

Question 50

In what situations is communication waived for unilateral contracts?

Answer 50

In a unilateral contract, the communication of acceptance is waived. This means that acceptance can be made through performance of the acts required in the offer. The case of Carlill v Carbolic Smoke Ball Co (1893) is authority for this principle.

Question 51

What are the three aspects of acceptance needed to form a contract?

Answer 51

The three aspects of acceptance needed to form a contract are: 1) acceptance must be in response to the offer, 2) acceptance must be unqualified and correspond exactly with the terms of the offer, and 3) if a mode of acceptance is prescribed, the offeree can use any alternative mode that is no less advantageous to the offeror.

Question 52

How does the context and past dealings influence the meaning of office hours in legal cases?

Answer 52

The courts have shown a willingness to look at the context and the parties’ past dealings to determine the meaning of office hours. This was established in the case of Thomas v BPE Solicitors.

Question 53

What is the significance of the auctioneer’s hammer falling in the context of a contract for sale at an auction?

Answer 53

The auctioneer’s hammer falling constitutes acceptance of the antique collector’s offer, resulting in the conclusion of a contract for sale. If the hammer does not fall, no contract is concluded.

Question 54

When does an offer cease to be open

Answer 54

An offer ceases to be open if it is rejected, if a counter-offer is made, or if it is not accepted within the prescribed period or within a reasonable time. It can also lapse on the death of a party if the offeror or offeree dies.

Question 55

What are the presumptions applied by the court regarding Intention to Create Legal Relations (ICLR)?

Answer 55

In a business context, ICLR is presumed. In a domestic or social agreement, it is assumed that the parties do not intend to enter into a legally binding contract. These presumptions are rarely rebutted.

Question 56

What is the legal significance of a request for bids at an auction?

Answer 56

A request for bids at an auction is usually no more than an invitation to treat, and does not constitute a unilateral offer

Question 57

When will the courts enforce an agreement that is uncertain or incomplete?

Answer 57

The courts will look to enforce an agreement, reflecting the intentions of the parties, where possible. However, if an agreement is too vague or ambiguous, the courts may not be able to enforce it. The case of Hillas v Arcos (1932) 147 LT 503 demonstrates the court’s willingness to enforce an agreement if the words can be given a reasonable meaning.

Question 58

What are the instances when a minor can be bound by a contract?

Answer 58

Minors lack capacity to contract, but there are limited instances when they can be bound by a contract. These include contracts for necessaries and contracts of employment, apprenticeship, or education.

Question 59

What is the principle of consideration in contract law?

Answer 59

Consideration is the act or forbearance of one party, or the promise thereof, which is the price for which the promise of the other party is bought. Each party must give consideration for a contract to be binding.

Question 60

What is the difference between a unilateral offer and an invitation to treat in the context of an auction?

Answer 60

A unilateral offer is a statement that an item will be auctioned without reserve, which can be accepted by the act of a bona fide bidder making the highest bid. An invitation to treat, on the other hand, is a request for bids at an auction, which is usually not considered a unilateral offer.

Question 61

What is the significance of mutual exchange of something of value in a contract?

Answer 61

The mutual exchange of something of value, known as consideration, is vital for a contract to be binding. Without this exchange, a contract becomes unenforceable and is considered a gratuitous promise.

Question 62

What are the key principles regarding consideration in contract law?

Answer 62

First, consideration must not be past. Second, consideration must move from the promisee. Third, consideration need not be adequate but must be sufficient. If valid consideration, along with agreement, ICLR, and capacity, is present, a binding contract is formed.

Question 63

What is the requirement for acceptance to be binding?

Answer 63

Acceptance must be a mirror image of the offer, unqualified, and made in response to the offer. If acceptance asks for something different or is a counter-offer, it is not binding. Acceptance must also be communicated to the offeror.

Question 64

What is the legal concept of acceptance in the context of a contract for sale at an auction?

Answer 64

In the context of a contract for sale at an auction, acceptance occurs when the auctioneer’s hammer falls, signifying the conclusion of the contract.

Question 65

When is acceptance by instantaneous means binding?

Answer 65

Acceptance by instantaneous means, such as fax or email, is binding upon receipt. It is the offeree’s responsibility to ensure that acceptance has been properly communicated. If there is an error at the offeree’s end, there will be no contract. However, if the fault lies with the offeror, they will be estopped from denying acceptance.

Question 66

What happens if an offer specifies a particular method of acceptance?

Answer 66

If the offeror specifies a particular method of acceptance, the mode becomes relevant. If the offeror uses mandatory language and explicitly excludes other modes, only acceptance in the prescribed mode will be binding. Failure to use mandatory language and exclude other modes will leave the offeror bound by any mode that is no less advantageous.

Question 67

What is the legal position when an auction is stated to be without reserve?

Answer 67

When an auction is stated to be without reserve, it means that there is no minimum price set for the item being auctioned. The highest bidder, even if it is the only bid, is entitled to purchase the item.

Question 68

What are the requirements of a binding contract?

Answer 68

Offer, acceptance, consideration and intention to create legal relations

Question 69

What approach does the court take when determining whether an agreement exists between the offeror and offeree?

Answer 69

An objective approach, by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances

Question 70

Which of the following best describes an ‘offeree’?

The person who breaches a contract

The person who makes an offer

The person to whom an offer is made

The reasonable person

Answer 70

The person to whom an offer is made

Question 71

What are the requirements of a valid offer?

Answer 71

The offer must be clear, certain and show an intention to be bound.

Question 72

A man is showing off his rare first edition book to his neighbour when he says, ‘I might consider selling this book for a five-figure sum’. The next day, the neighbour tells the man that he accepts his offer and gives him a cheque for £10,000. Which of the following options best describes whether the man made a valid offer to his neighbour?

No, because he did not mention the title of the book in his statement.

Yes, because his statement was clear and certain about the book and price.

No, because the statement was not clear about the price, nor did it show an intention to be bound.

No, because his statement was not clear and certain about the book and price.

Answer 72

No, because the statement was not clear about the price, nor did it show an intention to be bound.

Question 73

Which of the following is not an example of how an offer can come to an end?

Following the death of the offeree

By making a counter-offer

Following revocation by the offeror

A request for further information

Answer 73

A request for further information

Question 74

A woman offers by email to sell her snooker table to a man for £3,500. The man replies that he is happy to pay £3,500 for the snooker table but wants the cues, balls and framed O’Sullivan picture included for that price. The woman is happy to go ahead with that suggestion. What is the effect of the man’s reply?

Answer 74

It amounts to a counter offer.

Question 75

What is the meaning of the rule that acceptance must be unqualified?

Answer 75

The acceptance must correspond with the offer.

Question 76

A farmer telephones his neighbour on Monday and offers to sell him three ducks for £50. The neighbour responds that he will pay £40 for the ducks. Later that evening, the neighbour informs his brother of the farmer’s offer. The brother immediately telephones the farmer and informs him that he accepts the farmer’s offer. On Tuesday morning, the neighbour telephones the farmer and says he has changed his mind and he accepts the offer of £50. Is there a contract formed?

Answer 76

No, there is no contract between the farmer and the brother because the farmer did not accept the brother’s offer.

Question 77

What is the postal rule?

Answer 77

Where acceptance is communicated by post, the contract is formed as soon as the letter of acceptance is properly posted.

Question 78

The courts will readily strike down an agreement if it lacks certainty.

Answer 78

False

Question 79

On 1 February, a Council places a notice on public display which reads: “For sale, (used) printers, £85 each, contact Council Estates Division”. On 5 February, a woman writes to the Council Estates Division ‘I am happy to pay £85 for one of your printers identified in your notice dated 1 February’. On 11 February, the Council writes back ‘thank you for your letter dated 5 February. We are happy to go ahead. Please contact us by telephone to arrange delivery’. Which one of the following best explains the legal position?

The notice constitutes an invitation to treat which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is an acceptance.

The notice constitutes an offer which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is an acceptance.

The notice constitutes an invitation to treat. The woman’s letter dated 5 February is an offer. The Council’s letter of 11 February is an acceptance.

The notice constitutes an offer which was accepted by the woman’s letter dated 5 February. The council’s letter of 11 February is a request for further information.

The notice constitutes an offer which was rejected by the woman’s counter-offer in her letter dated 5 February. The Council’s letter of 11 February is a request for further information.

Answer 79

The notice constitutes an invitation to treat. The woman’s letter dated 5 February is an offer. The Council’s letter of 11 February is an acceptance.

Question 80

To promote a new sports club, the venue owner puts an advert in a newspaper advertising an open day for potential members. The advert includes the following statement, ‘Shoot ten netball goals in a row at our open day and you will receive a £50 club token to spend on fitness classes’. A woman sees the advert and immediately phones the club to state that she accepts the challenge and will be attending the fun day. The woman is the first person to shoot ten goals. A man sees the advert and is the second person to shoot ten goals.

Which one of the following statements best explains the legal position?

The advert is a unilateral offer. Consequently, it will be construed to entitle the first person to shoot ten goals to be entitled a token. Only the woman is entitled to a token.

The advert is an invitation to treat. By contacting the club, the woman has formed a bilateral contract with the sports club and is entitled to a token.

The woman is the only participant who is entitled to a token as she was the only participant who communicated her intention to accept prior to completion of the prescribed act.

The advert is an invitation to treat. Consequently, none of the participants are entitled to a token.

The advert is a unilateral offer. The woman and the man are both entitled to a token as they have completed the act prescribed by the advert.

Answer 80

The advert is a unilateral offer. The woman and the man are both entitled to a token as they have completed the act prescribed by the advert.

Question 81

A man has lost his dog. He puts up signs around the local neighbourhood with his address and a picture of his dog, reading “£50 reward for anyone who returns this dog to me”. Has the man made an offer capable of acceptance?

The man has made an offer which is accepted by someone finding the dog.

The man has not made an offer to contract because a very large number of people might read the notice and search for the dog.

The man has made an offer which is accepted by someone looking for the dog.

The man has made an offer which is accepted by someone returning the dog to the man.

The man has not made an offer to contract because it is possible that the dog will never be found.

Answer 81

The man has made an offer which is accepted by someone returning the dog to the man.

Question 82

The owner of a campervan sends an email to an interested buyer. Her email states, ‘I will sell my campervan to you for £15,000.’ The interested buyer responds, ‘I want to go ahead if your campervan has a full-service history.’

Which one of the following statements best describes the legal position?

The interested buyer’s response is a counter offer. The campervan owner’s offer is extinguished.

The interested buyer’s response is a request for further information. The campervan owner’s offer is extinguished.

The campervan owner’s email is an invitation to treat. The interested buyer’s response is an offer.

The interested buyer’s response is a request for further information. The campervan owner’s offer remains open for acceptance.

The interested buyer’s response is a conditional acceptance. The parties will have a contract for the sale of the campervan provided it has a full-service history.

Answer 82

The interested buyer’s response is a request for further information. The campervan owner’s offer remains open for acceptance.

Correct. The statement is a request for further information as the interested buyer is making an enquiry about an ancillary matter. The answer correctly states the legal effect of a request for further information (see Stevenson Jacques v McLean [1880] 5 QBD 346). The other answers seem plausible, but they are not correct. A request for further information does not terminate the offer (see Stevenson Jacques v McLean [1880] 5 QBD 346) A valid acceptance must be unconditional (see Hyde v Wrench 49 ER 132) A counter offer must propose alternative terms for acceptance (see Hyde v Wrench 49 ER 132).

Question 83

An antique collector visits a local auction house. The auction includes a rare antique table like the one the antique collector is looking for and the auction is stated to be ‘without reserve’. The auctioneer invites bids. The antique collector bids £500. Although the antique collector is the only person in the room to bid, the auctioneer refuses to accept his bid, stating that it is too low.

What advice would you give the antique collector?

The auctioneer is in breach of a bilateral contract and the antique collector is entitled to buy the table for £500.

The auctioneer is in breach of a unilateral contract and the antique collector is entitled to nominal damages.

The auctioneer is in breach of a bilateral contract and the antique collector is entitled to damages.

The auctioneer is in breach of a unilateral contract and the antique collector is entitled to damages.

There is no contract between the parties and the antique collector is entitled to nothing.

Answer 83

The auctioneer is in breach of a unilateral contract and the antique collector is entitled to damages.

Although a request for bids at an auction is usually no more than an invitation to treat, a statement that an item will be auctioned ‘without reserve’ constitutes a unilateral offer which is accepted by the act of a bona fide bidder making the highest bid (Warlow v Harrison, confirmed in Barry v Davies). No contract for sale of the table has been concluded between the parties, as the auctioneer’s hammer has not fallen (which would otherwise constitute acceptance of the antique collector’s offer – Payne v Cave). As a result, the antique collector is not entitled to the table. However, the antique collector has accepted the auctioneer’s unilateral offer by making the highest (albeit the only) bid at the auction and is therefore entitled to damages for breach of that separate collateral contract (Barry v Davies).

Question 84

Exception to revocation of offer at anytime before acceptance?

Answer 84

he only exception to
that is if the offeree gave something in return for the promise to keep the offer open (eg if the
offeree paid the offeror £1 for the privilege of having a specific period of time within which to
accept) then the offer would have to be kept open for the agreed time.

Question 85

Question 1
A client wanted a skip to take away rubbish and so contacted a skip hire company. The
company posted a quotation for £90 and said that if the client wanted to accept the
company needed to know by Friday 19 April.
On Tuesday 16 April the client posted a letter accepting the quotation and asking when
would be the earliest the company could supply a skip. By 22 April the client had not heard
back from the company. The client rang the company. It said it had not received the letter
and had no skips available for hire now or in the near future.
If the client sued the company for breach of contract, which of the following best
describes the most likely outcome?
A The company would be liable for breach because a contract was formed when the
client posted the letter on 16 April.
B The company would not be liable for breach of contract because the client’s letter on
16 April amounted to a counter- offer.
C The company would not be liable for breach of contract as it had no more skips
available.
D The company would be liable for breach of contract as the client accepted its offer
when the client rang on 22 April.
E The company would not be liable for breach of contract as the postal rule would
not apply.

Answer 85

Answer
The correct answer is E.
An offer was made by the company to hire out the skip for £90. The client purported to accept
on Tuesday 16 April. The letter was not a counter- offer as the client was only asking a question
and not imposing a condition, so B is wrong. Acceptance must be communicated. On that
basis the client has no contract with the company, because by the time the client actually
contacted the company (ie on 22 April) its offer had lapsed (19 April), so D is wrong.
There will only be a contract if the postal rule applied. Under the postal rule a letter of
acceptance is binding as soon as it is posted. For the rule to apply the post must have been
a reasonable means of communication. On the facts it may have been reasonable to reply by
post on 16 April as the offer did not lapse until 19 April and also the quote had been sent by
post. Query though whether the letter was sent first or second class and at what time (eg was
it posted after the last postal collection on 16 April?).
In any event the postal rule will only apply where a letter was properly addressed and
posted etc. Query here why the client’s letter was lost in the post, eg had it been properly
addressed? Also the postal rule may have been impliedly excluded as the company said it
needed to ‘know’ by 19 April. Only in the unlikely event of the postal rule applying would there
be a contract. This is why A is wrong.
C is wrong because even if the company had no more skips it could be in breach and liable
to pay damages.

Question 86

Question 2
A client attended an auction. When it came to the lot comprising Victorian garden
ornaments, the auctioneer said they had been valued at £300 and would be sold that day
whatever price they fetched. He invited bids of £100, then £80. When nobody responded,
the auctioneer asked how much anyone would be prepared to pay for the ornaments and
the client bid £20. No further bids were made but the auctioneer withdrew the ornaments
from the sale. He later sold them privately for £150.
Which of the following statements best sums up the legal position of the client?
A The client could sue the owner of the ornaments for breach of a contract.
B The client could sue the auctioneer for breach of contract and the measure of damages
would be £130.
C The client could sue the auctioneer for breach of a unilateral contract.
D The client would not have an action for breach of contract as the bid was far too low.
E The client could sue the auctioneer for breach of a bilateral contract and the measure
of damages would be £280.

Answer 86

Answer
The correct statement is C.
Normally at an auction the bids are the offers and the fall of the auctioneer’s hammer is the
acceptance (SGA 1979, s 57). Therefore, the client had no contract to buy the ornaments from
the seller as the auctioneer did not accept the bid. Hence A is wrong.
Here the auctioneer made an offer of a unilateral contract when he said that the ornaments
would ‘be sold that day whatever price they fetched’. This is why E is wrong. He was promising
to sell to whoever made the highest bid (Barry v Davies) but he did not then sell to the highest
bidder so he was in breach of contract. The amount of the bid is irrelevant and that is why D
is wrong.
The auctioneer will be liable in damages to the client for £280, ie the difference between the
value of the ornaments (£300) and the amount of the client’s bid (£20), so B is wrong.

Question 87

Question 3
At 9am a car dealer emailed a client offering to sell her a vintage car for £60,000. The
client received the email shortly afterwards and emailed an acceptance of the offer at
12.55pm. The client knew that the car dealership closes for lunch each day between 1pm
and 2pm. After lunch the car dealer did not check his email account. At 2.30pm the car
dealer received an offer for £62,000 for the vintage car, which he accepted. At 4pm the
client phoned the car dealer to enquire about the car and was told the car was no longer
for sale. The client has been reliably informed it will cost £65,000 to buy a similar car
elsewhere.
Which of the following statements best sums up the legal position of the client?
A The client has a contract with the dealer to buy the car and can sue the dealer for
£2,000 representing the profit the dealer made on selling the car elsewhere.
B The dealer revoked his offer before acceptance was communicated and so there would
be no contract of sale with the client.
C The client’s acceptance would be deemed communicated before 2.30pm and so the
dealer would be liable to pay the client damages of £5,000.
D By virtue of the postal rule, acceptance was communicated at 12.55pm and so the
dealer would be liable to the client for breach.
E When the dealer sold the car elsewhere he effectively revoked the offer to the client
and so would not be liable for breach.

Answer 87

Answer
The correct answer is C. Acceptance would be deemed communicated when it would be
reasonable for the client to expect it to be read. With businesses it is reasonable to expect
communications to be read during normal office hours (so here not between 1pm and 2pm
but certainly before 2.30pm). Also the aim of contractual damages is to compensate the
innocent party for loss of bargain. Here it will cost the client an extra £5,000 to buy a similar
car elsewhere. This is why A is wrong.
B is wrong as it is likely acceptance would be deemed communicated before the offer was
revoked at 4pm.
D is wrong as the postal rule only applies to letters of acceptance.
E is wrong as revocation must be communicated (by the offeror or a reliable third party).

Question 88

Question 1

An architect received a leaflet from website designers advertising their website design packages. On the back of the leaflet was a copy of the website designers’ standard terms, which contained a limitation clause.

The architect wrote a letter to the website designers asking them to design his website and he attached to his letter a copy of his own standard terms and conditions, which did not contain a limitation clause. The architect received a quotation for £2,500 from the website designers.

The architect signed and returned a tear-off slip to the website designers which stated that he accepted the quotation on the website designers’ standard terms and conditions

Which of the following statements best describes the legal position?

A. The terms on the leaflet constituted an offer which the architect accepted by asking for a quotation.

B. The quotation constituted an offer which the architect accepted on the website designers’ standard terms and conditions.

C. The quotation constituted an offer which the architect accepted on the architect’s standard terms and conditions.

D. The letter from the architect to the web designers constituted an offer which the web designers accepted by sending a quotation.

E. The letter from the architect to the web designers constituted a counter offer which the web designers accepted by sending a quotation.

Answer 88

B. The quotation constituted an offer which the architect accepted on the website designers’ standard terms and conditions.

Question 89

On 1 February, a jeweller offers to sell a diamond ring (identified by an engraved serial number) to a client for £15,000. On 3 February, the client emails the jeweller asking for details of the ring’s setting. The jeweller does not respond. On 5 November, the client emails the jeweller indicating she is accepting the offer made on 1 February.
Has a contract been formed?
Select one alternative:

Yes, because a request for further information does not extinguish an offer.

No, because acceptance was not within a reasonable time.

No, because the offer was rejected by the email on 3 February.

Yes, because an offer remains open to acceptance until it is revoked.

No, because silence does not constitute acceptance.

Answer 89

This is a contract law question on the topic of offer and acceptance. An offer must be unequivocally accepted to form a legally binding agreement. An offer remains open until is revoked or the offer lapses. If the offeror does not specify an expiry date for the offer, the offer will lapse after a reasonable time. As the offer is made in February the purported acceptance in November comes too late as the offer has lapsed. It is necessary to distinguish between a request for further information and a counter offer. A counter offer extinguishes an offer. A request for further information does not nullify the offer, it remains open to acceptance. The question regarding the ring’s setting was a request for further information and consequently did not nullify the offer.

Question 90

A wholesaler emails a building contractor offering to sell 10,000 kg of cement mix for £1,500 if acceptance is received by 5pm that day. At 4pm, the wholesaler receives an email from the building contractor stating, ‘We accept your offer of 10,000 kg for £1,500 but we need to discuss delivery dates.’ The wholesaler does not read the building contractor’s email until 5.10pm. At 4.45pm on the same day the wholesaler emails the building contractor to say that the cement mix has been sold to another customer.
What advice would you give the wholesaler?
Select one alternative:

No contract was created as the building contractor’s email was not an unequivocal acceptance.

No contract was created as the wholesaler revoked its offer prior to the 5pm deadline.

No contract was created as the building contractor’s email was not read by the wholesaler until after the offer had lapsed at 5pm.

An enforceable contract between the wholesaler and building contractor was created when the wholesaler received the building contractor’s email at 4pm.

An enforceable contract was created between the wholesaler and building contractor when the wholesaler read the building contractor’s email at 5.10pm.

Answer 90

An enforceable contract between the wholesaler and building contractor was created when the wholesaler received the building contractor’s email at 4pm.

This is a contract law question on the topic of agreement. A contract is formed when an offer is made by one party (the wholesaler) and accepted by another party (the building contractor). The issue here is whether an enforceable contract was created when the building contractor’s email was received at 4pm. The acceptance by the building contractor was a mirror image to the wholesaler’s offer and is a valid acceptance. The question around delivery was not an attempt to change material terms. It was communicated at 4pm when the email is received (not when it is read at 5.10pm). The attempted revocation at 4.45pm is therefore too late.

Question 91

A retailer emails a company offering to sell 100kg of flour for £150. The company replies, offering £120 for the flour. The retailer declines the company’s offer and sells the flour to a third party.
Which of the following statements, relating to whether there is an offer open for acceptance by either party, is correct?
Select one alternative:

The company cannot accept any offer by the retailer because there is no offer open for acceptance for the flour.

The company cannot accept any offer because a valid contract has been formed for the flour with a third party.

The retailer can accept the company’s offer of £120 in relation to the flour.

The company can accept the retailer’s offer to sell the flour for £150.

The company can accept the retailer’s offer. If the parties cannot agree a price, the court will determine an appropriate price.

Answer 91

The company cannot accept any offer by the retailer because there is no offer open for acceptance for the flour.

This is a contract law question on the topic of offer and acceptance. There is no offer open to accept. The retailer’s offer to sell the flour for £150 was extinguished by the company’s counter offer to buy for £120. The company’s counter offer was terminated by the retailer’s rejection of this offer. Forming a valid contract with a third party does not extinguish any other valid offer.