Week 7 - Contract Law

Question 1

What are the elements of a contract?

Answer 1

1. INTENTION to create legal relations
2. AGREEMENT (an offer and acceptance)
3. CONSIDERATION (the ‘price’)
4. Capacity of the parties
5. CONSENT that is genuine
6. Legality of objects

I Always Consider Chocolate Consumption Legal

Question 2

What is requirement 1 of a contract?

Answer 2

Agreement which is offer + acceptance. Sometimes it’s clear that a finalised agree exists based on the conduct of the parties. Other times, not so much.

Question 3

What are the four responses to an offer?

Answer 3

1. ACCEPTANCE, then an agreement comes into existence
2. REJECTION, or a counter offer can be made which terminates the original offer. This means the offeree cannot later change her mind and accept the offer but she can make a new offer
3. The offeror can REVOKE their offer even if they promised to keep the offer open for a certain amount of time, unless the oferee provided consideration to keep the offer open
4. If none of the above occur, it will LAPSE and the offer will end.

Question 4

Does responding to a request for information create an offer?

Answer 4

No - according to Harvey v Facey.

If T asks E how much he’s willing to sell something, and E responds with a price, it doesn’t mean E’s response is an offer.

Question 5

What is an invitation to treat?

Answer 5

An invitation to another person to make an offer. It’s NOT an offer and cannot be accepted. It is the party who responds to the invitation who will be the party making the offer.
e.g. Ads, catalogues, goods displayed on shop shelves and in shop windows. NOT vending machines, they’re an offer

Question 6

Acceptance must be what three things?

Answer 6

1. Unqualified (the offeree must accept the offer without modifying the offer in some way, otherwise it’s a counter offer)
2. Communicated
3. Accepted by the offeree in reliance of the offer

Question 7

Can an offeree back out of a contract after accepting?

Answer 7

No, unless the offeror releases them from the contract. It matches the rule that offerors can’t revoke the offer once it’s been accepted

Question 8

If the offeror has specified the specific mode of acceptance, how will acceptance be valid?

Answer 8

If acceptance is communicated in the manner specified by the offeror

Question 9

What is the postal rule?

Answer 9

The exception to the rule that it’s required that the offeree communicate their acceptance to the offeror.

Postal rule: acceptance is effective when the offeree posts the letter of acceptance, not when the offeror receives the letter (Adams v Lindsell). This only applies for letters and telegrams, not instantaneous methods like phone or email

Question 10

What is requirement 2 of a contract?

Answer 10

Intention: this is the element that separates legally binding contracts from other agreements

Question 11

How do courts test whether there was intention in the contract?

Answer 11

They make 2 presumptions:

If the agreement took place in a social/domestic setting (like between friends or family members) then it’s not considered legally enforceable - Balfour v Balfour

If the agreement took place in a business or commercial setting, then it is - Edwards v Skyways Ltd

Question 12

What is a mere puff? (Relates to commercial agreements)

Answer 12

A promise that businesses make to customers that shouldn’t be taken seriously like in Carlill v Carbolic Small Ball where CSBC claimed their offer of a reward was mere puff