Offer and Acceptance Flashcards
What are the elements of a binding legal contract?
- Offer
- Acceptance
- All material terms certain and complete
- Intention to Create Legal Relations
- Consideration
- Capacity
What is an offer?
Clear, certain and displaying intention to be legally bound.
i.e “may be prepared to sell” is not clear, certain or displaying intention.
What are invitations to treat?
Step before offer
* advertisements = advertiser may have limited supplies BUT may be unilateral contract if it requests action.
* Display of goods for sale
* Request for tender = unless includes an undertaking to accept highest offer (unilateral contract). Might be offer where specified parties, absolute deadline and non-negotiable conditions.
* Auction sales = bidder can revoke any time before hammer falls.
What is the effect of a counter offer?
Attempt to accept offer on new terms; however, if only seeking clarification of extent of offer or its terms, might just be request for further info.
What is the effect of rejecting an offer?
Offer dead in the water and can only be accepted if offer made again.
What is the effect of a lapse?
Time prescribed in offer has lapsed. If offeror dies, offer lapses if offeree knows of death. If offeree dies, automatic lapse.
What is the effect of revocation?
- Offeror can withdraw offer at any time before acceptance
- Effective when notice reaches offeree (by any means)
- For unilateral contracts, must be before completion of act + if act started, may be obliged to allow completion.
- Must take reasonable steps to bring revocation to attention of all offerees.
What are the conditions for acceptance?
- In response to the terms of the offer (ie I accept your offer to walk your dog in return for £5 per week).
- Unqualified
- In the prescribed mode
- Communicated to the offeror
What is the effect of the postal rule?
If acceptance is sent by post or dx, it is deemed accepted when posted, even if delayed or lost.
If it is instant / by email then it is effective on receipt and, if outside of office hours, on recommencement.
If acceptance never received and offeror at fault, will be contract. But if no-one or offeree at fault, will not be contract.
Where does the postal rule not apply?
- where notice in writing required to accept
- expressly or impliedly excluded
- Incorrectly addressed / some other error
- Not to unilateral contracts.
What is intention to create legal relations? When is it presumed?
Would reasonable people in the situation regard the agreement as intended to be binding? (objective test)
* May be deposit of money in bank
* “Subject to contract” creates strong inference that parties do not intend to be bound until the formal execution of the contract.
Presumed in commercial agreements, not presumed in a domestic context but can be rebutted where spouses separating or acting together in business.
Who has full capacity?
Adult (18+) of sound mind and not suffering from intoxication.
Can under 18 y/o be bound by contract?
No, even if the other party does not know that the minor lied about their age. Contract cannot be enforced against minor except in following circumstances:
* Contract to supply necessaries - pay reasonable price
* Contract of employment / apprenticeship or education for their benefit
Can enforce / ratify when they reach 18
How is capacity determined when someone has a mental impairment?
- Decision-specific
- Lacking if person unable to make decision for himself in relation to understanding, retaining, using or communicating info at date of contract.
- Pay reasonable price for necessaries.
Can an intoxicated person be bound by a contract?
Yes unless they didn’t know what they were doing and other party knew that to be the case = voidable.
Must pay reasonable price for necessaries.
