Offer and Acceptance

Question 1

What are displays of goods in a shop window?

Answer 1

They are invitations to treat
- The shop is inviting the customer to make an offer at the till, which the shopkeeper can accept or decline

Question 2

What is the postal rule?

Answer 2

The general rule is that a posted acceptance is effective upon posting

Question 3

What is the general rule for acceptance communicated by instantaneous means?

Answer 3

The contract is created when notice of acceptance is received by the offeror

• Acceptance takes place when it is received by the offeror
• e.g., for an email - acceptance takes place when it is received (landed in the server)
• if outside office hours - acceptance is deemed received first thing the next working day

Question 4

What is the rule for revocation of an offer?

Answer 4

Revocation of an offer must be received for it to be effective

Question 5

What is the rule for revocation in relation to acceptance?

Answer 5

The offeror may revoke their offer at any time before acceptance.
However, once a valid acceptance has been made, the offeror is bound by the terms of their offer

Question 6

When does acceptance take place for phone acceptance?

Answer 6

When the acceptance is actually heard
- acceptance is effective when it is communicated properly to the offeror

Question 7

What is the general rule on signing a document?

Answer 7

Signature binds
- a person is bound by a document that they sign, whether they read it or not

Question 8

What are the rules of revocation of a unilateral offer?

Answer 8

• Acceptance is perceived as complete performance of the act required by the terms of the unilateral offer
• It is possible to revoke the offer at any time prior to completion of the required act
• An exception may apply where the offeree has partly performed the obligation and is willing and able to complete it
• Implied obligation not to revoke once partial performance has commenced

Question 9

When must revocation of a unilateral offer take place?

Answer 9

If the offeree has embarked upon the course of performance before revocation, then the offeror is bound if they then go on to complete the action

To revoke a unilateral offer, this should be done before the offeree has embarked upon the course of performance

Question 10

What is the rule on acceptance by silence?

Answer 10

The general rule is that silence cannot amount to an acceptance. But if the parties agree that this is not the case, this overrides the general rule

Question 11

Is a contract to perform a pre-existing duty to a third party enforceable?

Answer 11

Yes, this is fresh consideration and enforceable

Question 12

What is executory consideration?

Answer 12

An exchange of promises between two parties - a promise to do something in return for something else

The exchange of promises forms a valid contract
Example: a garage promising to fix the car, in return for the customer’s payment

Question 13

What is a bilateral contract?

Answer 13

An exchange of promises between two or more parties, which is binding on both if there is a valid offer and acceptance

Question 14

Is a promise to pay more for an existing obligation enforceable?

Answer 14

The general rule is that agreeing to do the same thing under the contract is generally not good consideration for the variation to the contract

• no consideration provided - promise of extra payment is unenforceable

Question 15

If B has done something new or extra - something of value to enforce extra payment

Answer 15

This will be good consideration
- fresh legal consideration - if parties go beyond existing contractual obligations

Question 16

If there is factual consideration - additional practical benefit

Answer 16

Factual consideration - paying party gets a practical benefit of the new deal

To get extra payment for performing an existing contractual duty, a party needs to go beyond what was originally agreed
- such as incurring extra expenses after a change in circumstances was not accounted for and was the fault of neither part
- or provide a practical benefit

Question 17

Part payment of a debt - promise to accept less

Answer 17

The general rule is that a promise to accept less than your legal right is unenforceable (it is not good consideration)
- part payment of a debt without new consideration does not discharge the full debt

Exceptions:
- payment at a different place/time/thing
- payment of a lesser sum by a third party - partial payment by third party in full and final settlement will discharge the debt
- practical benefit

Question 18

What is an invitation to treat?

Answer 18

The first step in negotiations which may or may not lead to an offer
- an invitation to treat cannot be accepted to form a binding contract

Question 19

How can a contract with a minor later become binding?

Answer 19

A contract with a minor can become binding if it is ratified (by the individual) upon majority - when they turn 18 and they ratify the contract

Question 20

What is the approach in Patel v Mirza when assessing the enforceability of an illegal contract?

Answer 20

Whether allowing recovery would preserve the consistency and integrity of the legal system

There is not an automatic voiding of contracts which are illegal in nature
- Instead, the approach in Patel v Mirza is on preserving legal system integrity

Question 21

A debtor owes a creditor £10,000. The debtor is struggling financially and offers to pay £7,000 immediately if the creditor agrees to forgive the remaining £3,000. The creditor agrees orally to this arrangement. Later, the creditor sues for the remaining £3,000.

Is the creditor entitled to claim the remaining £3000?

Answer 21

Yes, because part payment of a debt is not sufficient consideration to discharge the whole debt

• unless there is some new element introduced at the creditor’s request
• the creditor’s agreement to accept part payment is not binding without additional consideraion

Question 22

Is a contract formed where there is executory consideration?

Answer 22

Executory consideration is consideration that has been promised but not yet provided

E.g., a seller agrees to sell their bike for £25 to a woman but no payment has yet been made

There is a contract because sufficient consideration has been promised
- executory consideration - there is a valid contract