Chapter 2: Formation of contract (Offer & Acceptance)

Question 1

What are the elements of a contract?

Answer 1

Intention to be bound, Offer, Acceptance and Consideration.

Question 2

What is an offer?

Answer 2

An expression made by offeror to offeree indicating an intention to be bound by the acceptance of offeree.

Question 3

Offer vs Invitation to treat

Answer 3

Difference: By using the objective test, whereby we see if there’s an intention to be bound. If yes, it’s an offer. If not, its an ITT

Question 4

What is an “intention to create legal relations”?

Answer 4

To see whether the promisor intended his promise to have legal consequences.

Question 5

2 general presumptions of “Intention to create legal relations?

Answer 5

1. Social & Domestic agreement

2. Commercial agreement

Question 6

Social & Domestic agreement presumption:

Answer 6

No intention to create legal relations.
Case: Balfour v Balfour.
Held: There is no intention to create legal relations between family members.

Rebuttal to this:
Case: Merritt v Merritt
Held: Since they are divorced and it has commercial intentions. They intend to create legal relations

Question 7

Commercial agreement presumption

Answer 7

Presumed to have the intention to create legal relations.
Case: Foo Jong Long Dennis V Ang Yee Lim Lawrence and another.
Held: The parties have the commercial intention.

Rebuttal:
Case: Rose & Frank co V J R Cromptons and Bros Ltd
Held: Since their clause clearly stated they have no intention to create legal relations.

Question 8

Forms of contract

Answer 8

Unilateral contract, Bilateral contract, Simple Contract, Special Contract

Question 9

What is a Unilateral Contract?

Answer 9

A promise exchange for an ACT.
It is open to everyone.
Case: Carlill V carbolic smoke ball co ltd

Question 10

What is an invitation to Treat (ITT)

Answer 10

An expression of willingness to enter into NEGOTIATION with the other party.

Question 11

What are the different examples of ITT?

Answer 11

Advertisement, Display of goods, internet Advertisement, Auctions & tenders.

Question 12

The general position of an advertisement

Answer 12

General rule based on partridge V Crittenden, states that advertisement is not an offer but just an ITT.

Question 13

Exceptions to the general rule of advertisement:

Answer 13

1. Unilateral Contract, whereby it’s a promise in exchange for an ACT.
   An Act in response for a conditional response.
   E.g. Carlill V Carbolic Smoke ball co ltd case, Ads for reward case.

Held: there is an intention to be bounded.

Question 14

Internet Advertisement (ITT or Offer)

Answer 14

Based on section 14 of the Electronic Transactions Act (ETA),
generally, an internet ad is considered to be an ITT unless it clearly states the intention to be bound in case of acceptance.

Question 15

Auctions & Tenders (ITT or an Offer)

Answer 15

If it’s a request for bids –> ITT
If it’s Bid itself –> An offer
Fall of Hammer –> Acceptance

Question 16

What about Cross Offer or Provision of information? (ITT or an Offer)

Answer 16

Based on Tin v Hoffman, Cross offer does make up to a contract.

For Provision of information, based on Harvey V Facey, it states that by responding to a request for information does not constitute an offer.

Question 17

Display of Goods (ITT or Offer)

Answer 17

Based on the Pharmaceutical society of great Britain V Boots cash Chemist, the Display of goods and prices in the shop are considered as ITT.

Question 18

What makes an Offer effective? (3 points)

Answer 18

1. Based on R v Clarke, Offer must be communicated to be effective.
2. Based on William V Carwandine, offeree must know the existence and terms of offer.
3. Motive of acceptance does not matters.

Question 19

Ways an offer can be terminated/come to an end? (5 point)

Answer 19

Withdrawal/revocation. 
Rejection or counter offer.
Lapse of time.
Failure to fulfil offer's condition. 
Death of Offeror or Offeree.

Question 20

Explain how an offer can be terminated by withdrawal/revocation?
(Done by Offeror)

Answer 20

Offer can be withdrawn or revoked at any point of time prior to acceptance.
It must be communicated to the offeree. (Can be done by Offeror himself or 3rd party.)

Based on Routledge v Grant, Offeror not bound to keep the offer open, can revoke it even before the said end period.

However, this is not possible for Unilateral contract if the offeree has started to perform conditions for accept of offer.

Question 21

Explain how offer can be terminated by rejection/counter offer?
(Act by Offeree)

Answer 21

When offeree rejects the offer, they must communicate it to offeror orally/in writing/by conduct.

Based on Hyde v Wench, it held that when there’s a counter offer, it rejects the original offer and hence cancel the original offer.

Question 22

Explain how offer can be terminated by Laspe of time?

Answer 22

Based on Ramsgate Victoria hotel V Montefiore, the court held that if there’s no stated period of the end of offer, the court presumed that the offer will lapse after a reasonable period of time.

Unless Offeror has acted in ways that suggest that lapse offer is still valid.

Question 23

Explain how the offer can be terminated by Failure to fulfil the offer’s condition?

Answer 23

When an offer is subject to a condition and it’s not fulfilled.
Offer is gone.

Question 24

Explain how offer can be terminated by death of offeror/offeree?

Answer 24

1. if offeree know of offeror death, No more offer.
2. If Offeree don’t know offeror death, Still may have offer if not for personal service.
3. If offeree is dead, No more offer.

Question 25

Elements of contract: What is an Acceptance.

Answer 25

It is a final unconditional assent to the terms of the offer. Once communicated, it cannot be withdrawn. Acceptance cannot be subject to conditions.

Question 26

What are the rules of communication of acceptance?

Answer 26

Based on entores ltd v miles far east corporation, states that Acceptance must be communicated to the offeror. Based on the receipt rule, it must be received by the offeror. Based on felthouse v Bindley, the court held that Silence does not amount to acceptance.

Question 27

What is the 3 exception to receipt rules?

Answer 27

1. Offeror waives the requirement of communication 2. BOTH parties agreed that silence would be the prescribed mode of acceptance. 3. The Postal rule.

Question 28

What is postal rule?

Answer 28

Based on Adams v Lindsell, it states that when it comes to posting, the postal rule applies, whereby Acceptance is effective upon posting/sending and not when received. This rule only apply to acceptance and not offers. For this rule to be effective, It must be properly stamped and addressed. Both parties have thought carefully and intend for this rule to be applied.

Question 29

Acceptance when it comes to instantaneous communications (F2F, Phone, Telex, Fax)?

Answer 29

The receipt rule applies.

Question 30

Acceptance when it comes to E-Mails

Answer 30

Based on section 13 of the electronic transaction act. S13(2) of ETA: Acceptance is at the time of receipt when capable of being retrieved by the addresses at the electronic address designated by the addressee. When it comes to an E-mail being sent to an email address not designated by the addressee. Look at S13(3) of ETA, Time of receipt is when it is capable of being retrieved by the addressee and addressee must be aware that the email is sent to that email account.