Week 1: Formation of a Contract

Question 1

What is necessary for the formation of a contract?

Answer 1

Consensus in idem.

Question 2

“Commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are arranged by what people say.”

Answer 2

Muirhead and turnbull v Dickson (1905) 7F 686

Question 3

Describe and Explain the importance of Mathieson Gee LTD v Quigley

Answer 3

• Q wished to have a pond on his estate clearer of solt and mould

MG - offered to ‘supply the necessary mechanical plant for the excavation and removal of mould at present deposited in your pond’

Q - I have the pleasure in accpetoing your offer to remove the silt and deposit from my pond

MG provided the mechanical plant to Q, who refused to pay the agreed fee

This highlights that consensus in idem is necessary for the formation of a contract.

Question 4

An invitation to treat is an offer (T or F).

Answer 4

False.
It is not possible to purport to accept an invitation to treat and conclude a contract. Instead, if you respond to an invitation to treat then you are making an offer, which may then be accepted or rejected.

Question 5

Provide two examples of invitations to treat.

Answer 5

1. Shop displays
2. Adverts

Question 6

Which cases highlighted the distinction between an offer and an invitation to treat?

Answer 6

1. Carlill Carbolic Smokeball Co. [1893] 1 QB 256

Background
- Company advertised their ‘smokeballs’ which they claimed would prevent colds and flu.
- They stated that if anyone bought product and used as directed but still caught the cold or flu, then the company would pay them £100.
- Ms Carlill caught the flu and brought action against Carbolic Smokeball Co.

Judgement
- The court held that because the company had deposited £1,000 into a bank account, which therefore showed an intention to be legally bound, and was thereby an offer.

2. Pharmaceutical Society of Great Britain v Boots

Background
- Boots operated a ‘self-service’ system. Products were being sold that contained drugs which by statute should only be sold by a registered pharacist.
- A pharmacist was near the check out and would supervise the sale of any relevant drug.

Judgement
- The display of goods on the shelf cannot be considered as an offer therefore the transaction commenced once the customer had brought the drug in question to the counter. This is supported by the fact that the customer is free to return a product before they reach the counter.

Question 7

What are the three circumstances in which an offer lapses?

Answer 7

1. When rejected or met with qualified acceptance
2. When the offer is revoked.
3. When not accepted in time*

Question 8

What case highlights that an offer is ‘killed’ when met by a counter offer.

Answer 8

Hyde v Wrench.

Question 9

What case highlights that an offer can lapse due to the passage of time?

Answer 9

Wylie & Lochead v McELroy & Sons
- Price of Iron was fluctuating - 5 week delay.
- Offeror not bound by acceptance due to delayed acceptance.

Question 10

What converts an offer into a contract?

Answer 10

Acceptance.

Question 11

What case highlighted that an offer may bot be accepted through silence?

Answer 11

Felthouse v Bindley.

Question 12

What case highlights the conditions for a postal acceptance.

Answer 12

Thomson v James (1855) 18 D 1

Question 13

What is the distinction between the postal acceptance rule and the general acceptance rule.

Answer 13

Postal: Contract concluded upon postage of acceptance.

General: Contract concluded upon reading of fax, email etc.

Question 14

What are the three key features of a promise.

Answer 14

1. In writing
2. Irrevokable
3. Communicated

Question 15

Under what circumstances does a promise not need to be in writing?

Answer 15

When made in the course of business.