Formation of Contracts. Flashcards

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1
Q

What do the rules on a formation of a contract seek to identify?

A

-What the parties agreed to (not what the parties wanted to agree to).
-The basis upon which they agreed to (terms and conditions)
-Seek to enforce that agreement.

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2
Q

What are the four steps for a formation of a contract?

A

1) Valid offer.
2) An offer must be validly accepted.
3) Intention to create legal relations.
4)Consideration.

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3
Q

What is a valid offer?

A

The person making the offer is the offeror, the offeree is the one receiving the offer.
This identifies the person who made the offer and what the offer is about.

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4
Q

What must happen for the offer to be validly accepted?

A

The issue is identifying the time it was accepted, when acceptance taken place and whether there was something to accept to in the first place.

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5
Q

What is the intention to create legal relations?

A

-Intent to treat whatever is agreed with the other person to be a contract.

-Assessing the mental state of mind and the intent to make a contract which is legally binding,

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6
Q

Why is consideration the important final step?

A

Makes the agreement legally binding.

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7
Q

What is consideration?

A

This is not the promise to do something, rather the exchange of promises which signify what will be done in the contract in consideration for the benefit which will be received.

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8
Q

What is not an offer?

A

An invitation to treat.

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9
Q

What is not acceptance?

A

-Counter offers.
-Questions to do with the offer itself like requests for more information

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10
Q

What test is used to determine whether there has been an offer?

A

The objective test: whether a reasonable person would agree that an offer has been validly made

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11
Q

What is the battle of the forms?

A

Identifies which of the multiple offers proposed, was the one which was accepted.

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12
Q

What are online transactions?

A

○ These are often invitations to treat, when displays flash up.
○ An offer is made not when going to the cart, but when going through checkout process, paid everything and receive an email confirmation.
○ Prior to acceptance of the offer, the offer can be rejected meaning the money is reserved in the bank account, not immediately taken.

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13
Q

What is refusal?

A

This immediately rejects the offer.

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14
Q

What is revocation?

A

Offer made and changed your mind. Yet the offer must be revoked prior to being accepted.

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15
Q

What is lapse of time?

A

Physical deadline or the offer has a clear deadline.

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16
Q

What is the objective test of agreement?

A

This assesses what a reasonable person would have done in that situation/would have concluded from the events.

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17
Q

What does a subjective approach assess?

A

The mind of a party. It aims to discover what that party actually intended and understood.

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18
Q

What does an objective approach assess?

A

The external factors and describes how the reasonable person would have understood what was said and done.

19
Q

What is the promisee or promisor objectivity?

A

The reasonable person stands in the shoes of either the promisee or the promisor and views the events from that perspective.

20
Q

What is detached objectivity?

A

The reasonable person stands in no one’s shoes, but observes the events as though a fly on the wall.

21
Q

Why is the subjective approach not favoured?

A

Due to the ‘impossible to know’ explanation of the individual’s actual intentions. It is impossible for either party to truly be aware of the other’s intentions, let alone for the court to know this.

22
Q

What does an offer require?

A

One person to intend or appear to intend to make an offer which is capable of being accepted.

23
Q

What can B do if a genuine offer is made?

A

B can bind the maker by accepting the offer.

24
Q

What can B do if only an invitation to offer is made?

A

There is nothing for B to accept. B can make an offer in response which A may then choose to accept or reject, but A will have the final say on whether there is an agreement.

25
Q

What is an invitation to treat?

A

An invitation for the other party to make an offer, which the former party is free to accept or reject.

26
Q

How are auctions similar to the display of goods in a shop window?

A

An auctioneer displays goods on behalf of the seller. This is an invitation to treat, where the bidders make offers to buy, the highest which is accepted by the fall of the hammer.

The auctioneer can withdraw the goods anytime before the bid is made.

27
Q

What does it mean when an auction is held ‘with reserve’?

A

There is a minimum price which must be met before the goods can be sold.

28
Q

What does it mean when an auction is held ‘without reserve’?

A

There is no minimum price which must be met, the goods can be sold for anything irrespective of their value.

29
Q

How is the auction being held ‘without reserve’ different in terms of the offer?

A

The auctioneer is making only an invitation to treat on behalf of the seller but they will presume that the auctioneer in a personal capacity is making an offer to sell to the highest bidder.

The highest bid will amount to an offer by the bidder to enter into the contract and acceptance.

30
Q

In ‘without reserve’ offers will the seller still be allowed to withdraw the item from the sale?

A

The seller can do this if the offer from the highest bidder has not yet been accepted by the auctioneer.

Yet the auctioneer would be in breach of their obligation to sell to the highest bidder.

31
Q

What does the auctioneer act as?

A

Agent for the seller.

32
Q

What is the contract between the auctioneer and the highest bidder?

A

A collateral contract.

33
Q

What does the collateral contract signify?

A

That the auctioneer, in his personal capacity, is making a collateral promise to perform his role of agent and create the main contract of sale between the seller and the highest bidder.

34
Q

What can a seller who wishes to attract multiple potential purchases do?

A

They may invite these potential purchasers to submit a tender.

35
Q

What is a tender?

A

Each person is asked to make just one bid. The request for tenders is sometimes an invitation to treat, whilst the tenders will constitute offers to buy the goods at the tendered price.

36
Q

What is the intention of the seller during tenders?

A

The seller who wants to encourage as many offers as possible in order to be able to accept the most attractive one.

37
Q

What does it being an offer or invitation to treat depend on?

A

The intention of the seller.

38
Q

What happens if the seller’s intentions are unclear?

A

The court will generally presume that only an invitation to treat was intended.

39
Q

When are the courts more likely to find that an offer existed?

A

-If it is limited to a certain amount of acceptances.
-It is possible to meet a large number of orders (Lefkowitz).
-It is of a limited nature e,g to consider reply (Blackpool).
-There are other practical reasons for finding an offer.

40
Q

What are inquiries?

A

These are one way in which a party can introduce potential new terms to the other party without making a counter-offer that is also likely to count as a rejection of the original offer.

41
Q

What is lapse of an offer?

A

The offeror can place a time limit on the offer.

42
Q

What happens when there is not a specific expiry date?

A

The court will have to reasonably decide whether too much time has elapsed.

43
Q

What is a unilateral contract?

A

Only on party assumes an obligation, it is one-sided.