BPP Manual Chapter 2: Agreement I

Question 1

What needs to happen at the most basic level to form a contract?

Answer 1

the offeror makes a clear and certain offer and the offeree communicates a clear and unequivocal acceptance

Question 2

What is a bilateral contract?

Answer 2

one where both parties assume an obligation to each other by making a promise to do something

Question 3

What is a unilateral contract? How does the other side accept?

Answer 3

one where only one party makes an offer and therefore has an obligation. The offer could be answered by one or more parties. The other party accepts by performing the act in accordance with the requirements of the offer.

Question 4

What case governs unilateral offers?

Answer 4

Carlill v Carbolic Smoke Ball Co [1893]

Question 5

What constitutes an offer? What happens to the terms of the offer upon acceptance?

Answer 5

• a promise or undertaking by the offeror to be contractually bound in the event of an unconditional acceptance being made
• the terms of the offer become the terms of the contract

Question 6

What two contrasting cases demonstrate the need for certainty and clarity in making an offer?

Answer 6

Storey v Manchester City Council [1974] and Gibson v Manchester City Council [1979]

Question 7

What two cases demonstrate the difference, when displaying goods for sale, between an offer and an invitation to treat?

Answer 7

Fisher v Bell [1961] and Pharmaceutical Society of GB v Boots Cash Chemists [1953]

Question 8

What is the general rule concering offers in advertisements? What two cases demonstrate this?

Answer 8

• generally, they are seen as statements inviting either further negotiations or invitations to treat.
• Partridge v Crittenden [1968] (advertising wild birds for sale) and Harris v Nickerson [1873] (advertising an auction which then didn’t take place)

Question 9

How are price lists advertising specific goods at specified prices viewed? as offers or invitations to treat (ITT)? When might they be viewed differently & under what authority is all this governed?

Answer 9

• ITT because the advertiser might have limited supplies of the goods and if it were an offer he could therefore be in breach of contract.
• might be viewed differently if the advertiser is also the manufacturer and can therefore be seen to have near limitless supplies.
• governed by Grainger & Son v Gough [1896]

Question 10

When does the general rule about adverts not apply? Give a case.

Answer 10

When the advert is seen to be making a unilateral offer: Carlill v Carbolic Smoke Ball Co [1893]

Question 11

How can an advert be seen as a unilateral offer: what elements must it contain?

Answer 11

if it prescribes an act which, once performed, will constitute acceptance

Question 12

What is a request to tender? In what situation is it offered? How is it seen? What case demonstrates this?

Answer 12

where a party wishes to purchase a major item or service and invites tenders from those interested in supplying the required item or service.

• It is generally seen as an ITT.
• Spencer v Harding [1870]

Question 13

What is the exception to the general rule about invitations or requests to tender? What is the authority?

Answer 13

where the invitation to tender expressly contains an undertaking to accept the highest or lowest bid it will be seen as an offer.
Harvela Investments Ltd v Royal Trust Co of Canada Ltd [1985]

Question 14

What binding contractual obligation can arise from an invitation to tender (other than an offer)? What gives authority for this?

Answer 14

• if the invitation makes it clear that all tenders that are properly submitted will be considered, the party that invites has an obligation to consider all the tenders.
• Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990]

Question 15

What is the general proposition relating to auction sales? When is an offer accepted?

Answer 15

that the auctioneer’s request for bids is an invitation to treat. Offers by the bidders are accepted when the auctioneer’s hammer falls.

Question 16

How may an offer be communicated? When does it become valid? Under what authority

Answer 16

orally, in writing, or it may be implied through conduct.
Becomes valid when it has been communicated to the offeree such that they have the opportunity to accept or reject it - Taylor v Laird [1856]

Question 17

How do offers come to an end?

Answer 17

1) rejection
2) revocation
3) lapse

Question 18

When does a rejection take effect?

Answer 18

When it has been communicated to the offeror

Question 19

How can an offer be rejected other than by an answer in the negative? What case governs this?

Answer 19

when an offer is met by a counter offer. In this case the offeree is deemed to have rejected the original offer.
- Hyde v Wrench [1840]

Question 20

Where a counter offer is accepted, whose terms is it governed under? What is this called? What case governs it?

Answer 20

• “battle of the forms”
• the terms are those of the party making the counter-offer. If an offeree accepts but only on their own terms and these are different in any way, they have changed the nature of the contract and in fact become the offeror themselves.
• Butler Machine Tool Co v Ex-cell-o Corporation [1979]

Question 21

What is a request for information? What happens in this case? What case governs this?

Answer 21

where, upon receipt of an offer, the offeree attempts to clarify the extent and terms of the offer, or to see if the offeror would agree to change certain aspects of the offer.
Stevenson, Jacques & Co v McLean [1880]

Question 22

When can an offeror withdraw an offer? Give an example.

Answer 22

at any time before acceptance. eg Payne v Cave [1789] withdrawal of an offer at auction before the hammer fell accepted as fair revocation before the offer was accepted

Question 23

When does revocation of an offer become effective? Give an example.

Answer 23

when actual notice of revocation reaches the offeree. Eg Byrne v Van Tienhoven [1880] - Van Tienhoven’s revocation was inoperative because it did not reach Byrne until after Byrne had already communicated his acceptance

Question 24

Can a revocation be communicated by a third party?

Answer 24

Yes - provided the offeror has shown, by words or conduct, a clear intention to revoke his offer and notice has reached the offeree, the revocation is effective regardless of how it was communicated.

Question 25

What is the general rule in relation to revoking unilateral offers? What case supports it?

Answer 25

• acceptance is perceived as the complete performance of the act required by the terms of the unilateral offer. You can therefore revoke at any time before the offer is completed.
• Great Northern Railway Company v Witham [1873]

Question 26

What is the exception to the general rule about revoking unilateral offers? What authority supports it?

Answer 26

• the offeror is bound from the time when offeree embarked on his performance of what was required of him by the offer.
• eg Errington v Errington & Woods [1952] - daughter in law had started making mortgage repayments so deserved to be allowed continued use of the house

Question 27

How can unilateral offers made to the general public (like in Carlill v Carbolic Smoke Ball Co) be revoked?

Answer 27

by publicising a revokation to the same extent that the announcement was made. Theoretically this means that anyone who saw the original offer should see the revocation.

Question 28

How can an offer lapse?

Answer 28

1) passage of time
2) death of one of the parties
3) by the non-fulfilment of a condition

Question 29

How can an offer lapse by passage of time?

Answer 29

1) where acceptance is not made within the stated timeframe
2) where no timeframe is stated and acceptance is not made within a reasonable time depending on the circumstances of the case

Question 30

How can offers lapse by the death of one of the parties?

Answer 30

• if the offeror dies the offer usually lapse ONLY if the offeree knows about their death. Bradbury v Morgan [1862]
• the death of the offeree will always cause the offer to lapse

Question 31

Does the non-fulfilment of a condition have to be specific to cause a contract to lapse?

Answer 31

No - it can be implied from the circumstances of the case
(eg Financings Ltd v Stimson [1962] there was an implied term that the car being purchased would remain in the same condition up to the time of the acceptance of the offer)

Question 32

What is the test for whether a party making an invitation to tender needs to consider all the offers? From what authority?

Answer 32

if the party inviting tenders:

1) solicited the tenders from specified parties
2) set out a deadline for submission
3) laid down absolute and non-negotiable conditions for submission
- then they have a contractual obligation to consider the tenders.
- Blackpool & Fylde Aero Club v Blackpool Borough Council [1990]