Practice Questions Contracts

Question 1

Distinguish between an offer and an invitation to treat.

Answer 1

An invitation to treat is an action inviting other parties to make an offer to form a contract. The distinction is important because accepting an offer creates a binding contract while “accepting” an invitation to treat is actually making an offer.

Accepting an offer creates a legally binding contract however, accepting a invitation to treat is actually making an offer. It is an invitation to negotiate or an invitation to make an offer.

Question 2

Identify and explain the roles of the parties to a contract.

Answer 2

Offeror the person who is offering to do a deal

Offeree someone who can either accept or counter offer

Question 3

What are the four types of contracts?

Answer 3

Period contract
Verbal contract
Written contract
Standard form contract.

Question 4

What is a period contract?

Answer 4

A contract template that sets out the terms for a business relationship where the contractor is engaged to perform work from time to time. Gives a lot of flexibility

Question 5

What is a verbal contract?

Answer 5

Many independent contracting arrangements use verbal contracts, which only work well if there are no disputes

Question 6

What is a written contract?

Answer 6

A written contract helps to minimise risks as it is much safer to have something in writing than to rely on someone’s word.

Question 7

What is a standard form contract?

Answer 7

Standard form contracts are pre-prepared contracts that are regularly used in business.

Question 8

What does CRS stand for?

Answer 8

Contract Resolution Sevices

Question 9

What do CRSs aim to achieve?

Answer 9

They aim to achieve a resolution through non-court routes such as Mediation, conciliation, and arbitration.