Topic 3: Contract Law: Establishing an agreement

Question 1

What is a contract?

Answer 1

Legally binding agreement between two or more parties;

Vast majority are entered into without formalities;
Can be in oral or written form.

Question 2

Essential features of a valid contract?

Answer 2

• Offer
• Acceptance
• Intention to create legal relations
• Consideration (not just a promise)
• Certainty of terms (must be clear and certain for court to enforce)

= LEGALLY BINDING

Question 3

What are the two types of contract?

Answer 3

• Speciality contracts
• Simple contracts

Also, classed into bilateral and unilateral contracts.

Question 4

Difference between an Offer and an Invitation to treat?

Answer 4

Offer = Offeror proposes a set of terms to offeree, with a promise to be bound by stated terms if offeree accepts them.

Invitation to treat = merely invitation to negotiate

Question 5

Whats difference between bilateral and unilateral contracts?

Answer 5

Bilateral contracts are those where one of the parties offers to do something in return for an ACTION by the other party. E.g. wash car in return for having lawn mowed.

Unilateral contracts are where the first party promises to perform some action in return for a specific act, although the second person is under no obligation to take any action. But where they do they can claim what was offered.

Question 6

What case demonstrates that adverts are not always invitations to treat?

Answer 6

Carlill v Carbolic Smoke Ball Co. 1893

Question 7

What are the four ways to terminate a contract?

Answer 7

1) By acceptance
2) By rejection
3) By revocation
4) By lapse of time

Question 8

What are the 6 different types of invitations to treat examples?

Answer 8

Advertisements
Goods displayed in a shop
Display of goods on a shelf
Auctions
Tenders
Statements of price in negotiations

Question 9

Three types of speciality contract?

Answer 9

I) Agreements which must be created in the form of a deed

ii) Agreements which must be made in writing;
iii) Agreements which need only to be evidenced in writing.

Question 10

Whats a voidable contract?

Answer 10

A voidable contract is one where the injured party has the option to affirm the contract (he/she can continue with the agreement and bring about an enforceable contract) or he/she can avoid the contract (and the contract is terminated).

Question 11

What is a void contract?

Answer 11

If a contract has fallen down for not having one of the legal elements it will be a void contract. A void contract has no legal effect and does not place obligations on the parties to the agreement.

Question 12

In order for there to be acceptance what must be done?

Answer 12

Must be absolute, unqualified and COMMUNICATED to the offeror

Question 13

What are the different ways for their to be acceptance?

Answer 13

Acceptance by clear communication to offeror
Acceptance by post
Acceptance by conduct
Acceptance by offeror specifiying manner that’s accepted

Question 14

Whats the case that supports that silence doesn’t communicate acceptance to offeror

Answer 14

Felthouse v Bindley 1862