Agreement

Question 1

What three elements must be present for there to be a binding contract?

Answer 1

• offer and acceptance
• intention to create legal relations
• consideration

Question 2

What is required for valid offer and acceptance?

Answer 2

There must be a clear and certain offer by one party displaying intention to be bound and the other party needs to communicate an unequivocal acceptance

Question 3

Does the court take an objective or subjective approach in determining whether a contract has been formed or not?

Answer 3

Objective

Question 4

What question does the court ask when determining whether an agreement exists between the parties?

Answer 4

‘What a reasonable person would say the intention of the parties was, having regard to all the circumstances?”

Question 5

What is required for certainty of offer?

Answer 5

There must be a clear and certain offer

Question 6

What are the two kinds of contract?

Answer 6

Unilateral and bilateral

Question 7

What is a bilateral contract?

Answer 7

Each party assumes an obligation to the other party by making a promise to do something, such as to sell an item to the other party in exchange for payment

Question 8

What is a unilateral contract?

Answer 8

One party makes an offer or proposal in terms which call for an act to be performed by one or more other parties. It does not involve mutual promises - only the party making the offer assumes an obligation. Only actual performance of the required act will constitute acceptance.

Question 9

Can an invitation to treat be accepted to form a binding contract?

Answer 9

No - an invitation to treat is not a form of valid acceptance

Question 10

Is an advertisement to be treated as a valid offer or an invitation to treat?

Answer 10

General rule is that advertisements are statements inviting further or invitations to treat.

Exception - can be treated as valid offer if they amount to a unilateral offer

Question 11

What are the requirements for a unilateral offer?

Answer 11

• prescribed act and
• clear intention to be bound

Question 12

Is a display of goods for sale to be treated as a valid offer or an invitation to treat?

Answer 12

General rules is that they are not an offer for sale but invitation to treat

Question 13

Is an invitations to tender to be treated as a valid offer or an invitation to treat?

Answer 13

General rule - invitation to treat

Exceptions:

• where invitation to tender expressly contains an undertaking to accept the highest or the lowest bid

Question 14

Is an auction sale to be treated as a valid offer or an invitation to treat?

Answer 14

General rule - invitation to treat

Bidder may revoke offer anytime before the hammer falls

Question 15

What is the exception to the rule that an auction sale is to be as an invitation to treat?

Answer 15

An auction without reserve price is to be taken as a unilateral contract so valid offer.

• promise to sell to the highest bidder

Question 16

What happens to an offer when it is rejected?

Answer 16

It is terminated and cannot be accepted

Question 17

When does a rejection take effect?

Answer 17

On actual communication to the offeror

Question 18

What is the effect of a counter-offer?

Answer 18

Original offer is deemed to be rejected and cannot be subsequently accepted.

Question 19

What happens if a counter-offer is accepted?

Answer 19

Its terms and not the terms of the original offer are accepted.

Question 20

What is the difference between a counter-offer and a request for information?

Answer 20

A counter-offer rejects the original offer which cannot be subsequently accepted

With a request for information, the original offer still stands

Question 21

How may an offer lapse?

Answer 21

• by passage of time
• by the death of one of the parties

Question 22

What passage of time is required for an offer to lapse?

Answer 22

Either passage specified in contract

If not specified in contract, then if acceptance is not made within a reasonable time (which will depend on circumstances of case)

Question 23

What effect does death of the offeror have on an offer?

Answer 23

If offeree knows of death - offer will lapse

If offeree does not know - offer will probably not lapse

Question 24

What effect does the death of the offeree have on an offer?

Answer 24

Offer will lapse - cannot be accepted by their personal representatives

Question 25

When can an offeror revoke their offer?

Answer 25

Any time before acceptance but not after acceptance

Question 26

When is revocation effective?

Answer 26

On actual notice (communication) reaching the offeror. Must be clear intention to revoke offer

Question 27

Is there a prescribed means of communication for revoking an offer?

Answer 27

No Can be done by third party with authority

Question 28

What is the exception to the rule that an offer can be revoked any time before acceptance (involves unilateral offers)?

Answer 28

Offeror may unable to revoke offeror where offeree has partly completed performance

Question 29

How do you revoke a unilateral offer made to the whole world?

Answer 29

Revocation would likely be effective if offeror brings revocation to attention of all those who have read the offer

Question 30

What is meant by acceptance must be in response to the offer?

Answer 30

Only the person to whom the offer is made can accept the offer If offer is made to the whole world then everyone with notice of the offer can make a valid acceptance

Question 31

What is meant by acceptance must be unqualified?

Answer 31

Acceptance must respond exactly with the terms of the offer. If there is qualification, than likely counter-offer and not an acceptance

Question 32

Is there a prescribed mode of acceptance?

Answer 32

Not as a general rule. Parties can make a prescribed mode - must make it clear that they will not be bound otherwise. If prescribed mode is not made mandatory, then any other reasonable form of acceptance is okay.

Question 33

What is meant by acceptance must be communicated?

Answer 33

Acceptance must be communicated to the offeror and is only effective from that moment. Silence is not enough

Question 34

What if a third party communicates acceptance?

Answer 34

Yes possible for valid acceptance if third party has authority

Question 35

What is the postal rule in relation to acceptance?

Answer 35

Acceptance takes effect from moment letter is properly posted, even if it is never received by offeror

Question 36

When does the postal rule not apply?

Answer 36

Where it has been disapplied by the offeror - offeror can require actual communication The acceptance has been incorrectly addressed

Question 37

What is the situation when communication is made my instantaneous means eg a phone call or email?

Answer 37

General rule - acceptance takes place at moment it is received by the offeror If message received outside of office hours, then will be received at start of next business day

Question 38

What is the situation with communication and unilateral contracts?

Answer 38

Communication is waived Performance is sufficient to accept the offer

Question 39

Why must all material terms be certain and complete for there to be a binding contract?

Answer 39

Because they must be capable of being enforced by the court. Court cannot enforce an agreement that is too vague or ambiguous.

Question 40

How do you know the parties have reached agreement on all material terms?

Answer 40

Ask 'whether in all circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations'