Offer and Acceptance

Question 1

What is a unilateral contract?

Answer 1

A unilateral contract is formed when one party promises to perform an act in return for the performance of a specific act by another party. The offer is accepted when the act is completed (e.g., Carlill v Carbolic Smoke Ball Company)

Question 2

What is an invitation to treat?

Answer 2

Invitations to treat are an invitation to to a party or parties to make an offer. There is no intention for the invitation to treat to be legally binding

Question 3

What is the rule on auctions under the Sale of Goods Act 1979?

Answer 3

A sale by auction is completed when the auctioneer’s hammer falls, meaning the bid is an offer that can be withdrawn any time before acceptance (fall of the hammer)

Question 4

Can auctioneers be sued for breach of contract if a lot is without reserve price?

Answer 4

Yes, if the auctioneer refuses to accept bids for lots without a reserve price, they can be sued for breach of a unilateral contract

Question 5

What is the rule regarding promises to keep an offer open?

Answer 5

A promise to keep an offer open is generally not binding unless the offeree pays for an option (e.g., Routledge v Grant)

Question 6

What is the rule on revocation of offers in contract law?

Answer 6

Revocation must be communicated to the offeree and is only effective upon receipt (Byrne & Co v Van Tienhoven & Co)

Question 7

When is a notice of revocation sent to a business effective?

Answer 7

It is effective when it is reasonable to expect staff to be available to read it during normal office hours, even if not read immediately (The Brimnes)

Question 8

Can revocation be communicated by a third party?

Answer 8

Yes, revocation can be communicated by a reliable third party, even if not authorised by the offeror (Dickinson v Dodds)

Question 9

What is the rule for revocation of unilateral contracts?

Answer 9

Revocation is only valid before the completion of the performance of the act (Errington v Errington and Woods)

Question 10

What is the legal effect of a counteroffer?

Answer 10

A counteroffer acts as an implied rejection of the original offer (Hyde v Wrench)

Question 11

Can silence or inaction constitute acceptance of an offer?

Answer 11

No, silence or inaction cannot constitute acceptance (Felthouse v Bindley)

Question 12

What is the postal rule in contract law?

Answer 12

Acceptance is effective when the letter is posted, not when it is received (Adams v Lindsell)

Question 13

What are the limitations of the postal rule?

Answer 13

The postal rule only applies to acceptances, when it is reasonable to use the post, and the letter must be properly stamped, addressed, and posted

Question 14

When is electronic communication of acceptance considered effective?

Answer 14

It is effective when it is reasonable to expect the recipient to have read it, even if not read immediately

Question 15

What is the general rule regarding minors and contracts?

Answer 15

Minors are generally not bound by contracts, but there are exceptions for contracts for ‘necessaries’

Question 16

What are ‘necessaries’ for minors in contract law?

Answer 16

Necessaries are goods and services suitable to the minor’s condition in life and actual requirements at the time of sale (Sale of Goods Act 1979)

Question 17

How are contracts involving people with mental incapacity treated?

Answer 17

Contracts with mentally impaired or intoxicated persons are voidable if the person lacked understanding of the transaction and the other party was aware of this

Question 18

What are the three key elements for the formation of a contract?

Answer 18

Agreement (offer and acceptance), intention to create legal relations, and consideration

Question 19

What is the presumption for commercial agreements regarding legal relations?

Answer 19

Commercial agreements are presumed to have an intention to create legal relations (Edwards v Skyways [1964])

Question 20

How does English law treat advertisements in terms of offers and invitations to treat?

Answer 20

Advertisements are generally invitations to treat, but reward advertisements may be considered offers (Carlill v Carbolic Smoke Ball Co [1893])

Question 21

How must acceptance be communicated in contract law?

Answer 21

Acceptance must be communicated by the offeree to the offeror. The exception is the postal rule, which states that acceptance takes effect upon posting

Question 22

What is revocation in contract law?

Answer 22

Revocation is when the offeror withdraws the offer. It must be communicated to the offeree, and until the offeree is informed, the offer remains valid