Principles of Contract: Formation, Parties and Terms

Question 1

In order to form an agreement what is needed?

Answer 1

An unequivocal offer which is accepted in its entirety by the other party

Question 2

What is an invitation to treat?

Answer 2

Where a party is not agreeing to be bound but instead is seeking an offer from another party themselves

Question 3

What are some examples of an invitation to treat?

Answer 3

• goods displayed in a shop
• auctions
• circulation of a price list
• advertisements

Question 4

What is a unilateral contract?

Answer 4

Where only one party will promise to do something and the promise only becomes binding if another party performs some specified act (reward cases)

Question 5

When can an offer be withdrawn?

Answer 5

At any time before it is accepted even if the time limit for accepting the offer has not expired

Question 6

The revocation must be what to be valid?

Answer 6

Communicated - it does not have to be communicated by the person who made the offer but it must be made to the party whom the offer had been made

Question 7

How can a unilateral offer be withdrawn?

Answer 7

The revocation should be communicated in the same way that it was made

Question 8

When can a unilateral offer be withdrawn?

Answer 8

It is generally accepted that an offer cannot be revoked once the act has started, so once a party has started performing the act, even if not complete, the offer cannot be withdrawn

Question 9

Can there be a time limit on offers?

Answer 9

Yes and if the offer is not accepted within the tie frame it will lapse

Question 10

What happens if there is no time limit on an offer?

Answer 10

The offer should be accepted within a reasonable time depending on the circumstances on each offer

Question 11

What happens if the person who made the offer dies?

Answer 11

The offer cannot be accepted if the other party has notice of death however if they are not aware of the death they can still accept the offer unless it is for a service provided personally by the deceased

Question 12

What happens if the offer is subject to a condition?

Answer 12

If the condition is not fulfilled by the other party, then they ill not be able to accept the offer

Question 13

What happens if someone makes a counter offer?

Answer 13

It will terminate the original offer but be careful it is not just a request for further information rather than a counter offer

Question 14

Can silence constitute acceptance?

Answer 14

No, acceptance must be communicated in order for a contract to be formed

Question 15

If communication of acceptance is posted when is the offer deemed accepted?

Answer 15

As soon as the acceptance is posted, not when it is received even if it is never received however the party who posted the letter will need evidence to prove they did

Question 16

Are there any exceptions to the postal rule for acceptance?

Answer 16

Yes:
- the letter must have been properly posted
- it must also be acceptable to use post to accept the offer
- the rule will not operate where the terms of the offer say that the acceptance has to be received (interpreted quite broadly)

Question 17

What must parties have to make an agreement legally binding?

Answer 17

Intention to create legal relations

Question 18

What is an honour clause?

Answer 18

It is a clause parties can insert that indicates their agreement will have no legal consequence

Question 19

When can a minor enter into a contract?

Answer 19

When they need to buy necessities such as food, clothing and housing and also if they need to buy necessities they can also enter a contract of employment providing it is a benefit to them

Question 20

What are contracts entered into by minors considered to be?

Answer 20

Voidable - a minor can terminate the contract before the age of 18 or within a reasonable time after they turn 18

Question 21

What is the final element required for a binding contract?

Answer 21

Consideration

Question 22

If consideration is provided before the contract is made is this sufficient?

Answer 22

No, it cannot be before unless potentially employment

Question 23

What is the doctrine of promissory estoppel?

Answer 23

Where a party cannot go back on its promise not to enforce a contractual right if the other party has relied on the promise and it would be inequitable to allow the promise to be enforced

Question 24

What are the general principles of promissory estoppel?

Answer 24

• there must be a pre-existing contractual relationship
• there should be a clear and unambiguous promise evidence by either words or conduct
• the party who the promise was made must have relied on the promise although this does not have to be to their detriment
  The doctrine can only be used as a shield not a sword - therefore only a defence and not to form the basis of an action

Question 25

What is the doctrine of privity of contract?

Answer 25

A contract can only create rights and obligations that bind those who are parties to the contract

Question 26

What is the exception to the privity rule in the Contract (Rights of Third Parties) Act 1999?

Answer 26

Essentially a person who is not party to a contract may have a right to enforce a term of the contract if a contract expressly provides that they may or the terms purports to confer a benefit on them

Question 27

What are the key common law exceptions to the privity rule?

Answer 27

• agency
• collateral contracts
• assignment
• claiming damages on behalf of another
• constructive trust

Question 28

What are the legal requirements for a contract?

Answer 28

• Offer and acceptance
• consideration
• intention to create legal relations
• certainty
• capacity