Offer and Acceptance

Question 1

What are the four elements of a contract?

Answer 1

Offer, acceptance, consideration and intention

Question 2

What are the two requirements for a valid offer?

Answer 2

. Clear intention to be bound on stated terms.
- Terms must be specific, clear and certain

Question 3

What are four examples of invitation to treat?

Answer 3

Advertisements, display of goods, invitations to tender and auctions

Question 4

What are the three requirements for a valid acceptance?

Answer 4

1. Acceptance must be in response to to the offer.

2) Acceptance must be unqualified

3) It may be necessary to follow a prescribed mode of acceptance

Question 5

What is the receipt rules in terms of acceptance?

Answer 5

Legal document takes effect when it is received for instantaneous methods.

Question 6

What is the postal rule?

Answer 6

Acceptance made in the form of a letter takes effect as soon as the letter is posted.

Question 7

What is a unilateral contract?

Answer 7

Where a promise is exchanged for performance.

Question 7

What constitutes a valid acceptance?

Answer 7

Valid acceptance must fulfil all conditions required in the offer.

Question 8

What is legal certainty?

Answer 8

A binding contract requires all material terms to be certain and complete.
Objective test is whether the parties have agreed all the terms they considered to be a pre-condition to creating legal relations.

Question 9

What is consideration?

Answer 9

Legal means to identify exchange of values

Question 10

What are the 4 rules governing consideration?

Answer 10

1. Must not be past.
2. Must move from the promisee.
3. Need not be adequate
4. Must be sufficient.

Question 11

Is performing your existing legal duty consideration?

Answer 11

Depends on the circumstances but answer tends to be no unless the person has gone above and beyond their existing duty.

Question 12

Mere performance of a pre-existing duty can amount to good consideration if…

Answer 12

Williams v Roffey- D had obtained a practical benefit = sufficient consideration provided

Question 13

What is promissory estoppel?

Answer 13

1. Promisor need to make a clear and unequivocal promise not to insist on his strict legal rights.
2. A change of position in reliance by promise.
3. Promisee must have acted equitably- inequitable to go back on the promise.

Question 14

What are the two effects of PE?

Answer 14

1. Extinctive to the past but suspensory as to future obligations.
2. It is a shield not a sword- does not create a new cause of action where one did not already exist.

Question 15

Requirements to have full contractual capacity?

Answer 15

Over the age of 18, sound mind, not suffering from a factor ruling out capacity e.g drunk

Question 16

Minors and necessaries

Answer 16

• Minor is bound by a contract to supply necessaries to them if the contract is for their benefit.
• Minor must be a reasonable price for these rather than the actual cost of the necessaries supplied.
• Goods suitable to the condition in life of the minor
• Minor is also bound by a contract of employment, apprenticeship or education, but only if it is for their benefit.

Question 17

Mental incapacity and intoxication?

Answer 17

A person lacks capacity under s 2 of The Mental Capacity Act 2005 if ‘he is unable to make a decision for himself in relation to the matter’ at the time the contract is made, whether the impairment is permanent or temporary.

Question 18

What is the definition of duress?

Answer 18

Involves one party coercing the other into a contract.

Question 19

What is duress to the person?

Answer 19

When it involves actual or threatened violence. Threats had to be one of the reasons for contracting.

Question 20

What is duress to goods?

Answer 20

Threat to seize the owner’s property or damage it.
Must be shown that the agreement would not have been entered into if not for the duress.

Question 21

Economic duress?

Answer 21

DSND Subsea v Petroleum Geo Services
must be pressure
(a) whose practical effect is that there is compulsion on, or a lack of practical choice, for the victim, (b) which is illegitimate, and (c) which is a significant cause inducing the claimant to enter into the contract’
(would have entered had it not been for the duress’

Question 22

Legal effect of duress?

Answer 22

Contract is made voidable. Remains in force unless some action is taken to avoid it.

Question 23

Lack of practical choice- Economic duress?

Answer 23

Victim must have no practical alternative but to acquiesce to the demand.

Question 24

What constitutes as illegitimate pressure?

Answer 24

Whether there has been actual or threatened breach of contract, person exerting the pressure has acted in bad faith, whether the victim protested at the time, whether he affirmed and sought to rely on the contract.

Question 25

Does a threatened breach of contract lead to illegitimate pressure?

Answer 25

Yes, it is an unlawful threat.

Question 26

Affirmation and economic duress

Answer 26

Unless the victim takes immediate action once the pressure has ceased to operate, they make be taken to have affirmed the contract.

Question 27

What is undue influence?

Answer 27

Consent to a transaction was produced in a way such that the consent ought not fairly be treated as the expression of a person's free will, then the transaction will not be allowed to stand.

Question 28

What are the two types of undue influence?

Answer 28

1. Overt acts of improper pressure or coercion. 2. Relationship of influence of which unfair advantage is taken.

Question 29

Which are the cases where there are an irrebuttable presumption that one party has influence over another?

Answer 29

e/g parent and child (under 18) , trustee and beneficiary, solicitor and client, doctor and patient.

Question 30

How can you prove taking advantage or influence in a relationship>

Answer 30

Must be a relationship of trust and confidence and a transaction which requires explanation (does not fit with what would usually be expected in the relationship).

Question 31

What is the relief from proving undue influence>

Answer 31

Contract may be sat aside

Question 32

intention and a 'subject to contract' clause

Answer 32

'subject to contract' creates a strong inference that the parties do not intend to be bound until the formal execution of the contract.

Question 33

Undue influence and third parties (banks or lenders) and constructive notice?

Answer 33

Depends on whether the bank had constructive notice of the undue influence. Held to have constructive notice in every case where the relationship between party giving guarantee and the borrower is non-commercial, unless the bank takes reasonable steps to warn the weaker party of the risks of the transaction or to ensure it gets independent advice.

Question 34

Can the victim sue the bank for undue influence?

Answer 34

No, she can sue her solicitor for not property advising them if the banks inform them of the undue influence and they do not advise her.

Question 35

what is the rule in Foakes v Beer>

Answer 35

part payment of a debt is not sufficient to discharge a whole debt unless there is fresh consideration

Question 36

if a contract was made with a minor but then they turned 18 and carried on the contract, is this binding?

Answer 36

yes as making payments after reaching the age of majority can be considered ratification of the contract, making it binding.

Question 37

what is the effect of the Mental Capacity act?

Answer 37

a contract can be voidable if it can be shown that the person was unable to understand the nature of the contract due to their mental state and the other party was aware or should have been aware of their condition.

Question 38

can a bank be fixed with constructive notice of undue influence?

Answer 38

yes the bank is on inquiry whenever the relationship between the guarantor and the debtor is non-commerical and it failed to take reasonable steps to ensure the weaker person was independently advised.