Chapter 3

Question 1

Contract

Answer 1

An agreement that is legally enforceable

Question 2

Essential elements of a contract

Answer 2

Capacity - the parties involved must be legally competent to make a contract
Offer - proposal on clear terms to start negotiations
Acceptance - a clear indication to accept offer
Consideration - a ‘price’ for the agreement
Intention - intend to be legally bound by the agreement

Question 3

Must a company be properly incorporated before it can make a contact ?

Answer 3

Yes

Question 4

When is a contract made ?

Answer 4

When a person who has received an offer unequivocally and validly accepts it

Question 5

Invitee

Answer 5

A person invited to make an offer

Question 6

Offeror

Answer 6

A person who makes an offer

Question 7

Offeree

Answer 7

A person to whom an offer is made

Question 8

Acceptor

Answer 8

An offeree who accepts an offer

Question 9

Difference between an offer and an invitation

Answer 9

Invitation opens up discussions towards a possible agreement but only an offer can lead to an agreement

Question 10

When can an offer cease to be in force ?

Answer 10

If it is rejected by the other party, if it lapses or is withdrawn by the one who made the offer

Question 11

An offer is rejected if the offeree turns it down

Answer 11

Explicitly or by making a counter offer

Question 12

Is a counter offer acceptance ?

Answer 12

No

Question 13

What is a counter offer

Answer 13

Where the offeree accepts the offer but with qualifications or in terms different from those on which it is made

Question 14

Can an offer lapse ?

Answer 14

Yes if it is not accepted within any time limit specified on it. If not time limit is specified then it lapses if not accepted within a reasonable time.

Also if the offeror becomes incapable of honouring it eg death

Question 15

What are the rules of acceptance ?

Answer 15

An offer can be accepted anytime while it is in force
Acceptance must be motivated
Acceptance must be communicated. It cannot be imposed through the silence of one of the parties
Acceptance must be a true response to the offer and an unequivocal agreement to its terms

Question 16

Why must the offeror be put on notice of the acceptance ?

Answer 16

Because acceptance has to be communicated

Question 17

Waiver

Answer 17

The offeror’s voluntary surrender of the right to receive communication. It specifies that the offeree has to perform an identifiable act in response to the offer

Question 18

Example of a waiver

Answer 18

If a lost dog is missing and a reward is put up for it

Question 19

Unilateral contract

Answer 19

When an offeree accept an offer by carrying out the required act without having to tell the offeror first

Question 20

What are the four rules of acceptance

Answer 20

It must be motivated
It must be communicated
It must be unequivocal and a true response to the offer
An offer can be accepted any time while it is in force

Question 21

Explain the postal rule

Question 22

When does the postal rule apply

Answer 22

In the acceptance of an offer

Question 23

Rules for consideration

Answer 23

It can be executed or executory
Past consideration is no consideration
It must be lawful
It must move between the parties
It must be sufficient

Question 24

In commercial dealings,

Answer 24

It is presumed the parties do intend to be legally bound unless they other wise agree

Question 25

What is consideration

Answer 25

An element of value that both parties must bring to the table.. Give and take

Question 26

Explain what it means for consideration to not be adequate but sufficient

Answer 26

Adequate means of equal worth. Common law does not require the parties consideration to be of equal worth but it is sufficient if it can be expressed in economic terms

Question 27

What is executed consideration

Answer 27

Consideration is completed simultaneously with the party making an offer or acceptance

Question 28

Green paper

Answer 28

Proposal for new law

Question 29

White paper

Answer 29

After comments received; A draft for the new law

Question 30

How laws are made

Answer 30

Green paper - proposal for new law White paper - after comments received, draft for a new law First reading - introduction to the house Second reading - debate about proposed legislation Committee stage - party committee discusses and amends draft Report stage - amended draft presented to the house for approval Third reading - final approved by the house Royal assent

Question 31

If your actions are in accordance with an existing duty they’re not sufficient to support the title. They have to be above their legal, contractual and natural duty

Answer 31

True

Question 32

Privity of contract

Answer 32

Only those who were involved in the contract have a right to enforce it/sue but there are exceptions (agents, insurers)