SQE1 Flashcards
A client advises that they attended a car auction to purchase a car. The auctioneer stated that the car did not have a reserve price. The client made the highest bid for the car which was £2,000. The auctioneer refused to accept the bid as he said it was worth far more than that.
What advice would you give the client as to whether the auctioneer’s refusal to accept their bid gives rise to any remedy?
A
The client may sue the person whose car was being sold for breach of contract.
B
The client has no cause of action as it is up to the auctioneer as to whether or not they want to accept the bid.
C
The client has no cause of action as they did not make a bid which reflected the true value of the car.
D
The client may sue the auctioneer for not selling the car to them.
E
The client could only sue the auctioneer if the auctioneer had accepted the bid via the fall of the hammer.
Option D is correct.
An auctioneer’s request for bids is ordinarily an invitation to treat. The bid is an offer which the auctioneer may accept or reject (Sales of Goods Act 1979, S57(2)). If the auctioneer is acting as agent for the owner, a bilateral contract is formed between the owner and the bidder once the hammer falls. If the auctioneer refuses to accept a bid then there cannot be a contract between the owner and bidder.
However, if the auction is without reserve, the highest bidder may be able to bring an action against the auctioneer. If an auction is advertised ‘without reserve’, and the auctioneer refuses to accept the bid, the highest bidder will have a claim in damages against the auctioneers (Barry v Davies 2000) but will not have a claim against the owner.
Option A is wrong. The auctioneer’s hammer did not fall, and therefore there is no contract with (and no right of recourse against) the owner.
Options B and C are wrong. There is a right of redress against the auctioneer on these facts.
Option E is wrong. If the auctioneer’s hammer had fallen, a bilateral contract would have been entered into with the owner, and the auctioneer (as agent) would have dropped out of the picture such that no action could be brought against him.
On 1 January, a supplier sent a letter to their wholesale customers offering to supply them with goods for the sum of £10,000. The supplier advised that this offer would be kept open until 31 January. A week after making the offer the supplier realised that they had under-priced the goods and sent a letter to withdraw the offer. They were informed by their customers that they had accepted the offer by post two days after it was made on 1 January. The supplier has not received the letter.
A
As the supplier has not received the letter of acceptance they are not obliged to sell the goods for £10,000.
B
As the customers sent their acceptance by post the supplier is obliged to sell the goods for £10,000.
C
As the supplier has effectively communicated that they have revoked the offer they are not obliged to sell the goods for £10,000.
D
As the customers have not communicated their acceptance the supplier is not obliged to sell the goods for £10,000.
E
As the supplier promised to keep the offer open until 31 January they are obliged to sell the goods for £10,000.
Option B is correct. The customers purported to accept the offer by post. As there is nothing to suggest the postal rule does not apply, acceptance would be effective upon posting even if the letter never reaches the supplier. The contract was therefore formed before the supplier attempted to withdraw the offer.
Option A is wrong. If the postal rule works to form the contract at the point the letter of acceptance is posted, it does not matter that the letter is subsequently lost in the post.
Option C is wrong. As the acceptance happened before the supplier changed their mind, the attempt to revoke the prior offer is not effective.
Option D is wrong. As the postal rule can be applied, acceptance is effective upon the letter of acceptance being posted (Adams v Lindsell (1818)).
Option E is wrong. An offer can generally be revoked at any time before acceptance, even if the offeror has said they will leave it open for a specified period of time (Routledge v Grant (1954).
A government department sends out an invitation for the submission of tenders to run a clinical trial. The invitation states that all tenders must be submitted online in the correct format as set out on the department’s website. The deadline for submission is 1 June. A company submits its tender in the correct format on 30 May. The company believes it is very competitive and are confident of being awarded the contract. They then discover that another tenderer has been successful and contact the department to enquire why. They are told that due to an administrative error their tender was not even considered.
A
They have no claim against the department because their tender was an offer which has not been accepted.
B
They can insist that the tendering process be reopened.
C
They can claim for all of the anticipated profits they would have made if the tender had been awarded in their favour.
D
They can claim damages for loss of opportunity as the department are in breach of an implied unilateral contract to consider any conforming tenders.
E
They have no claim because there is no intention to create legal relations in a tendering process.
Option D is correct which reflects the decision in Blackpool & Fylde Aero Club v Blackpool Borough Council. Due to the prescriptive nature of the tendering process, it is likely that the government department has made a unilateral offer (“if you submit a tender that conforms to this tendering process, we will consider it”). The government department’s failure to consider the tender which was properly submitted is therefore a breach of unilateral contract for which the company can claim damages for lost opportunity.
Option A is wrong. The company’s tender constituted acceptance of the unilateral offer made by the government department.
Option B is wrong. The breach of the unilateral contract might entitle the company to damages, but does not entitle them to reopen the tendering process.
Option C is wrong. Even had the government department considered the company’s tender, that does not mean that the company would have been awarded the contract. The company cannot therefore recover all of the profits that they would have made had they been awarded the contract, but rather damages to reflect the lost chance of being successfully awarded the contract.
Option E is wrong. Given that this tendering process is taking place in a commercial setting, there is a strong presumption of intent to create legal relations.
A client attended an auction. When it came to the lot comprising a Persian carpet, the auctioneer said it had been valued at £300 and would be sold that day whatever price it fetched. He invited bids of £100, then £80. When nobody responded, the auctioneer asked how much anyone would be prepared to pay for the carpet and the client bid £20. No further bids were made but the auctioneer withdrew the carpet from the sale. He later sold it privately for £150.
Which of the following statements best sums up the legal position of the client?
A
The client could sue the owner of the carpet for breach of a contract.
B
The client could sue the auctioneer for breach of contract and the measure of damages would be £130.
C
The client could sue the auctioneer for breach of a bilateral contract and the measure of damages would be £280.
D
The client would not have an action for breach of contract as the bid was far too low.
E
The client could sue the auctioneer for breach of a unilateral contract.
The correct statement is E.
Normally at an auction the bids are the offers and the fall of the auctioneer’s hammer is the acceptance (SGA 1979, s 57). Therefore, the client had no contract to buy the carpet from the seller as the auctioneer did not accept the bid. Hence A is wrong.
Here the auctioneer made an offer of a unilateral contract when he said the carpet would ‘be sold that day whatever price it fetched’. This is why C is wrong. He was promising to sell to whoever made the highest bid (Barry v Davies) but he did not then sell to the highest bidder so he was in breach of contract. The amount of the bid is irrelevant and that is why D is wrong.
The auctioneer will be liable in damages to the client for £280, ie the difference between the value of the carpet (£300) and the amount of the client’s bid (£20), so B is wrong.
A client wanted a skip to take away rubbish and so contacted a skip hire company. The company posted a quotation for £90 and said that if the client wanted to accept the company needed to know by Friday 19 April.
On Tuesday 16 April the client posted a letter accepting the quotation and asking when would be the earliest the company could supply a skip. By 22 April the client had not heard back from the company. The client rang the company. It said it had not received the letter and had no skips available for hire now or in the near future.
If the client sued the company for breach of contract, which of the following best describes the most likely outcome?
A
The company would be liable for breach because a contract was formed when the client posted the letter on 16 April.
B
The company would not be liable for breach of contract because the client’s letter on 16 April amounted to a counter-offer.
C
The company would not be liable for breach of contract as it had no more skips available.
D
The company would be liable for breach of contract as the client accepted its offer when the client rang on 22 April.
E
The company would not be liable for breach of contract as the postal rule would not apply.
The correct answer is E.
An offer was made by the company to hire out the skip for £90. The client purported to accept on Tuesday 16 April. The letter was not a counter-offer as the client was only asking a question and not imposing a condition, so B is wrong. Acceptance must be communicated. On that basis the client has no contract with the company, because by the time the client actually contacted the company (ie on 22 April) its offer had lapsed (19 April), so D is wrong.
There will only be a contract if the postal rule applied. Under the postal rule a letter of acceptance is binding as soon as it is posted. For the rule to apply the post must have been a reasonable means of communication. On the facts it may have been reasonable to reply by post on 16 April as the offer did not lapse until 19 April and also the quote had been sent by post. Query though whether the letter was sent first or second class and at what time (eg was it posted after the last postal collection on 16 April?).
In any event the postal rule will only apply where a letter was properly addressed and posted etc. Query here why the client’s letter was lost in the post, eg had it been properly addressed? Also the postal rule may have been impliedly excluded as the company said it needed to ‘know’ by 19 April. Only in the unlikely event of the postal rule applying would there be a contract. This is why A is wrong.
C is wrong because even if the company had no more skips it could be in breach and liable to pay damages.
A client attended an auction. When it came to the lot comprising Victorian garden ornaments, the auctioneer said they had been valued at £300 and would be sold that day whatever price they fetched. He invited bids of £100, then £80. When nobody responded, the auctioneer asked how much anyone would be prepared to pay for the ornaments and the client bid £20. No further bids were made but the auctioneer withdrew the ornaments from the sale. He later sold them privately for £150.
Which of the following statements best sums up the legal position of the client?
A
The client could sue the owner of the ornaments for breach of a contract.
B
The client could sue the auctioneer for breach of contract and the measure of damages would be £130.
C
The client could sue the auctioneer for breach of a unilateral contract.
D
The client would not have an action for breach of contract as the bid was far too low.
E
The client could sue the auctioneer for breach of a bilateral contract and the measure of damages would be £280.
The correct statement is C.
Normally at an auction the bids are the offers and the fall of the auctioneer’s hammer is the acceptance (SGA 1979, s 57). Therefore, the client had no contract to buy the ornaments from the seller as the auctioneer did not accept the bid. Hence A is wrong.
Here the auctioneer made an offer of a unilateral contract when he said that the ornaments would ‘be sold that day whatever price they fetched’. This is why E is wrong. He was promising to sell to whoever made the highest bid (Barry v Davies) but he did not then sell to the highest bidder so he was in breach of contract. The amount of the bid is irrelevant and that is why D is wrong.
The auctioneer will be liable in damages to the client for £280, ie the difference between the value of the ornaments (£300) and the amount of the client’s bid (£20), so B is wrong.
At 9am a car dealer emailed a client offering to sell her a vintage car for £60,000. The client received the email shortly afterwards and emailed an acceptance of the offer at 12.55pm. The client knew that the car dealership closes for lunch each day between 1pm and 2pm. After lunch the car dealer did not check his email account. At 2.30pm the car dealer received an offer for £62,000 for the vintage car, which he accepted. At 4pm the client phoned the car dealer to enquire about the car and was told the car was no longer for sale. The client has been reliably informed it will cost £65,000 to buy a similar car elsewhere.
Which of the following statements best sums up the legal position of the client?
A
The client has a contract with the dealer to buy the car and can sue the dealer for £2,000 representing the profit the dealer made on selling the car elsewhere.
B
The dealer revoked his offer before acceptance was communicated and so there would be no contract of sale with the client.
C
The client’s acceptance would be deemed communicated before 2.30pm and so the dealer would be liable to pay the client damages of £5,000.
D
By virtue of the postal rule acceptance was communicated at 12.55pm and so the dealer would be liable to the client for breach.
E
When the dealer sold the car elsewhere he effectively revoked the offer to the client and so would not be liable for breach.
An offer is made by one business to another. The offeror purports to revoke its offer by email. Around the same time the offeree purports to accept the offer by text message. A dispute arises about whether revocation occurred before acceptance. Both the revocation email and the acceptance text message were sent on a Saturday.
Which of the following statements best describes the position with electronic communication and instant messaging like email and text messages?
A
The postal rule means that messages are communicated when they are sent.
B
The rule is that messages are communicated when they are opened and read.
C
The messages would be deemed communicated at 9am on the next business day.
D
The messages would be deemed communicated at 5pm on the next business day.
E
There is no universal rule so a court would look at the circumstances and the intentions of the parties.
Option E is correct. There is no universal rule that applies to all forms of electronic communication and instant messaging. A court is likely to say that this will depend on the circumstances in question and the intentions of the parties. In a dispute such as this a court may also look at the decision in The Brimnes and say that a message sent to a business will be communicated when it would have come to the attention of the recipient acting in a business-like manner.
Option A is wrong. The postal rule only applies to acceptances and only applies to letters sent in the post. Certain conditions would need to be satisfied.
Options B, C and D are all wrong for the reasons set out above.
A client decided to sell their car and placed an advert on their village’s Facebook page. The advertised sale price was £6,000 and underneath photographs of the car it said ‘Need to know if you’re interested within the next 7 days; otherwise it’s off to an auction’. Three days later someone responded to the client’s post ‘I’ll buy it for £6,000. Tell me where you live and I’ll come and collect it. How do you want to be paid? ’In the meantime, the client had sold the car to a neighbour for £6,500 and posted this on the village’s Facebook page.
Which of the following best explains the legal position?
A
The response to the client’s offer to sell the car for £6,000 was an acceptance followed by a query regarding method of payment.
B
The client will not be in breach of contract as they had not accepted the other person’s offer to buy the car for £6,000.
C
The advert was an offer to sell the car for £6,000 but had been validly revoked by the client.
D
In the advert the client had promised to keep the offer open for 7 days and so should not have sold the car elsewhere in the meantime.
E
Adverts cannot amount to offers to the public: they are simply invitations to treat and as such do not give rise to liability.
Option B is correct. The advert would simply be an invitation to treat. The person offered to buy the car for £6,000 and the client did not accept that offer.
As the advert would be deemed an invitation to treat all the other options are wrong.
A client needed to hire a van to transport some goods and so contacted a van hire company. The company posted a quotation for £90 and said that if the client wanted to accept the company needed to know by Friday 19 April.
On Tuesday 16 April the client posted a letter accepting the quotation and asking when would be the earliest the company could supply a van. By 22 April the client had not heard back from the company. The client rang the company. It said it had not received the letter and had no vans available for hire now or in the near future.
If the client sued the company for breach of contract, which of the following best describes the most likely outcome?
A
The company would be liable for breach of contract because a contract was formed when the client posted the letter on 16 April.
B
The company would not be liable for breach of contract as the postal rule would not apply.
C
The company would not be liable for breach of contract as it had no more vans available.
D
The company would be liable for breach of contract as the client accepted its offer when the client rang on 22 April.
E
The company would not be liable for breach of contract because the client’s letter on 16 April amounted to a counter-offer.
Option B is correct.
An offer was made by the company to hire out the van for £90. The client purported to accept on Tuesday 16 April. The letter was not a counter-offer as the client was only asking a question and not imposing a condition, so option E is wrong.
Acceptance must be communicated. On that basis the client has no contract with the company, because by the time the client actually contacted the company (ie on 22 April) its offer had lapsed (19 April), so option D is wrong.
There will only be a contract if the postal rule applied. Under the postal rule a letter of acceptance is binding as soon as it is posted. For the rule to apply the post must have been a reasonable means of communication. On the facts it may have been reasonable to reply by post on 16 April as the offer did not lapse until 19 April and also the quote had been sent by post. Query though whether the letter was sent first or second class and at what time (eg was it posted after the last postal collection on 16 April?).
In any event the postal rule will only apply where a letter was properly addressed and posted etc. Query here why the client’s letter was lost in the post, eg had it been properly addressed? Also the postal rule may have been impliedly excluded as the company said it needed to ‘know’ by 19 April (Holwell Securities v Hughes). Only in the unlikely event of the postal rule applying would there be a contract. Option A therefore is not the best answer.
Option C is wrong because even if the company had no more vans it could be in breach and liable to pay damages.
At 9am a car dealer emailed a client offering to sell her a vintage car for £60,000. The client received the email shortly afterwards and emailed an acceptance of the offer at 12.55pm. The client knew that the car dealership closes for lunch each day between 1pm and 2pm. After lunch the car dealer did not check his email account. At 2.30pm the car dealer received an offer for £62,000 for the vintage car, which he accepted. At 4pm the client phoned the car dealer to enquire about the car and was told the car was no longer for sale. The client has been reliably informed it will cost £65,000 to buy a similar car elsewhere.
Which of the following statements best sums up the legal position of the client?
A
The client has a contract with the dealer to buy the car and can sue the dealer for £2,000 representing the profit the dealer made on selling the car elsewhere.
B
The dealer revoked his offer before acceptance was communicated and so there would be no contract of sale with the client.
C
The client’s acceptance would be deemed communicated before 2.30pm and so the dealer would be liable to pay the client damages of £5,000.
D
By virtue of the postal rule acceptance was communicated at 12.55pm and so the dealer would be liable to the client for breach.
E
When the dealer sold the car elsewhere he effectively revoked the offer to the client and so would not be liable for breach.
The correct answer is C. Acceptance would be deemed communicated when it would be reasonable for the client to expect it to be read. With businesses it is reasonable to expect communications to be read during normal office hours (so here not between 1pm and 2pm but certainly before 2.30pm). Also the aim of contractual damages is to compensate the innocent party for loss of bargain. Here it will cost the client an extra £5,000 to buy a similar car elsewhere. This is why A is wrong.
B is wrong as it is likely acceptance would be deemed communicated before the offer was revoked at 4pm.
D is wrong as the postal rule only applies to letters of acceptance.
E is wrong as revocation must be communicated (by the offeror or a reliable third party).
A builder attends a hardware store in order to buy key materials for the current project she is working on. As the builder is walking around the hardware store, she spots some luxury paint that her partner has tried to source. The builder calls her partner to check if he has managed to find the luxury paint, but he does not answer. The builder proceeds to put two luxury paint pots into her basket and heads towards the checkout. As the builder is queuing to pay, her partner calls to confirm he has already purchased the paint online.
Must the builder pay for the luxury paint?
A
No, because the paint on display is an invitation to treat.
B
Yes, because the paint on display is an offer which the builder has accepted.
C
Yes, because by approaching the checkout the builder is contractually obliged to pay for the paint.
D
Yes, because by putting the items in her basket the builder is contractually obliged to pay for the paint.
E
No, because an invitation to treat is only made when the builder presents the paint at checkout.
Option A is correct. Goods on display are simply an invitation to treat. As a result, a contract for the purchase of the paint has not yet been formed, and the builder is not obliged to pay for them.
Option B is wrong. Please see above.
Option C is wrong. In a supermarket, the customer offers to buy the goods and it is up to the cashier to decide whether or not to accept that offer. The goods on display are simply an invitation to treat ie an invitation to select the goods and put them in the basket. If the builder later changes her mind and decides she does not want the paint, then she can put them back without obligation.
Option D is wrong. For the reasons set out above, the contract is not concluded when the items are placed in the basket.
Option E is wrong. The paint on display is an invitation to treat; when the builder presents the paint at the checkout, she offers to buy them.
