CONTRACT - ESSENTIAL ELEMENTS

Question 1

~~ INVITATION TO TREAT ~~

Answer 1

An indication of willingness to deal, but not an intention to be bound.

Question 2

ITT - DISPLAY OF GOODS

Answer 2

Pharmaceutical Society v Boots 1953 (Items offered for sale on shelves), Fisher v Bell 1961 (Knife displayed in shop window was not offer for sale)

Question 3

ITT - LOTS AT AN AUCTION

Answer 3

British Car Auctions 1972 (An auction is an ITT, bidder makes offer)

Question 4

ITT - NEWSPAPER ADVERTS

Answer 4

Partridge v Crittenden 1968 (Advert for sale of illegal birds is ITT, not offer)

Question 5

ITT - UNILATERAL OFFER

Answer 5

Carlill v Carbolic Smoke Ball Company 1893 (Advert can be offer, e.g. promising £100 to any purchaser who used the smoke ball but still got the flu)

Question 6

ITT - STATEMENT OF PRICE

Answer 6

Harvey v Facey 1893 (Indicating an acceptable price isn’t an offer)

Question 7

~~ OFFER ~~

Answer 7

Expression of willingness by an offeree to enter into a legally binding agreement based on the terms set out in the offer made by the offeror.

Question 8

OFFER RULES - COMMUNICATION

Answer 8

Taylor v Laird 1856 (In order for an offer to be effective, it must be communicated, or it can’t be accepted)

Question 9

OFFER RULES - CERTAIN

Answer 9

Guthling v Lynn (The terms of the offer cannot be too vague e.g. extra £5 ‘If the horse will be lucky for me’)

Question 10

OFFER RULES - WITHDRAWAL 1

Answer 10

Routledge v Grant 1828 (An offer can be withdrawn any time before it is accepted)

Question 11

OFFER RULES - WITHDRAWAL 2

Answer 11

Byrne v Van Tienhoven 1880 (An offer is open until the other party becomes aware of it being withdrawn. If acceptance occurs before they’re aware of withdrawal, the contract is valid.)

Question 12

OFFER RULES - WITHDRAWAL 3

Answer 12

Dickinson v Dodds 1876 (A reliable third party can communicate withdrawal of offer)

Question 13

OFFER RULES - TERMINATION

Answer 13

Acceptance, Rejection, Revocation (withdrawal), Counter-Offer, Lapse of Time, Failure of Conditions, Death

Question 14

OFFER TERMINATION RULES - COUNTER-OFFER

Answer 14

Hyde v Wrench 1840 (A counter offer kills the original offer and it can no longer be accepted), Stevenson v McLean 1880 (A request for more information is not a counter-offer)

Question 15

OFFER TERMINATION RULES - LAPSE OF TIME

Answer 15

Ramsgate Victoria Hotel v Montefiore 1866 (An offer will either expire after the duration specified in the offer, or after ‘reasonable time’ has passed)

Question 16

OFFER TERMINATION RULES - FAILURE OF CONDITIONS

Answer 16

Financings Ltd v Stimson 1962 (If the conditions of the offer are not met, the contract is not valid)

Question 17

OFFER TERMINATION RULES - DEATH

Answer 17

Bradbury v Morgan 1862 (If an offer is accepted in ignorance of the death of the offeror, a contract may be formed), Dickinson v Dodds 1876 (Death of either party terminates the contract). Courts are at odds with precedent.

Question 18

~~ ACCEPTANCE ~~

Answer 18

Acceptance of the given offer, which forms a legally binding contract.

Question 19

ACCEPTANCE RULES - UNCONDITIONAL

Answer 19

‘Mirror image’ rule. Any attempt to change the terms of an offer is a counter-offer (Hyde v Wrench 1840), and a request for more information is not rejection (Stevenson v McLean 1880) - neither are acceptance.

Question 20

ACCEPTANCE RULES - COMMUNICATED

Answer 20

Felthouse v Bindley 1863 (Acceptance must be a positive act, silence does not amount to acceptance)

Question 21

ACCEPTANCE RULES - AWARENESS

Answer 21

Inland Revenue Commissioners v Fry 2001 (The offeree must have knowledge of the full offer in order to accept it)

Question 22

ACCEPTANCE RULES - COMMUNICATED 2

Answer 22

Powell v Lee 1908 (The acceptance must be communicated by an AUTHORISED third party)

Question 23

ACCEPTANCE RULES - METHOD

Answer 23

Yates Building Co v Pulleyn Ltd 1975 (Acceptance can be in any form, including conduct, UNLESS a method was specified in the offer)

Question 24

ACCEPTANCE RULES - BATTLE OF THE FORMS

Answer 24

Butler Machine Tool v Excell-o-Corp 1979 (If two parties make an offer with clashing standard terms, no acceptance can be made. But if one party enacts their side of the contract regardless, acceptance of the other party’s terms is implied via conduct, and acceptance is valid)

Question 25

ACCEPTANCE RULES - MODERN COMMUNICATION

Answer 25

Brinkibon v Stahag Stahl 1982 (If a message is sent out of office hours, it is only valid when the office reopens), Entores v Miles Far East Corp 1955 (Postal rule does not apply to instantaneous communication. Acceptance is valid upon arrival, not upon being sent)

Question 26

ACCEPTANCE - POSTAL RULE

Answer 26

Adams v Lindsell 1818 (A contract is formed when the party posts their letter of acceptance, not when the letter is received by the other party), Household Fire Insurance v Grant 1879 (Acceptance is valid even if the letter never arrives to the other party)

Question 27

ACCEPTANCE - JUSTIFICATION FOR POSTAL RULE

Answer 27

The courts argue that parties can protect themselves by stating in the offer that it will not be a binding contract until acceptance is received.

Question 28

~~ INTENTION TO CREATE LEGAL RELATIONS ~~

Answer 28

Presumptions as to whether a promise or agreement was intended to be legally binding. Commercial and business agreements = Presumption in favour of creating legal relations Social and domestic agreements = Presumption against creating legal relations

Question 29

INTENTION TO CREATE LEGAL RELATIONS - COMMERCIAL AND BUSINESS AGREEMENTS

Answer 29

Edwards v Skyways Ltd 1969 (Courts will presume an intention to create legal relations exists unless there is evidence to the contrary), Esso Petroleum Company 1976 (Offers to give away free gifts to promote a company fall under the same presumption), Jones v Vernon's Pools Ltd 1938 (If specifically stated that there is no intention for legal relations, it may not be legally binding)

Question 30

INTENTION TO CREATE LEGAL RELATIONS - SOCIAL AND DOMESTIC AGREEMENTS

Answer 30

Balfour v Balfour 1919 (Presumed that family relations, friends and workmates do not have intention unless there is evidence to the contrary), Merritt v Merritt 1970 (If intention is found, a legally binding agreement may have formed), Simpkins v Pays 1955 (When money has been exchanged, the courts are likely to remove the presumption)

Question 31

~~ CONSIDERATION ~~

Answer 31

Dunlop v Selfridge 1915 (Consideration defined as 'An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.')

Question 32

CONSIDERATION RULES - SUFFICIENT NOT ADEQUATE

Answer 32

Thomas v Thomas 1942 (Consideration doesn't need to be equal or 'fair', it just needs to be enforceable, i.e. £1 payment a year), Chappell v Nestlé Company 1960 (Doesn't need to be monetary, can even be chocolate wrappers as sufficient consideration)

Question 33

CONSIDERATION RULES - MOVE FROM PROMISEE

Answer 33

Consideration must move from the promisee. Only the party that has provided consideration can be sued.

Question 34

CONSIDERATION RULES - EXISTING DUTY

Answer 34

Williams 1990 (

Question 35

CONSIDERATION RULES

Answer 35

I DONT LIKE CONSIDERATION. PROMISSORY ESTOPPEL I DISLIKE YOU

Question 36

CONSIDERATION RULES - PAST CONSIDERATION IS NO CONSIDERATION

Answer 36

Re McArdle 1951 (Consideration is only valid if it occurred after the agreement was formed, not prior to it. Protects people from being forced into contracts after being given goods or services they didn't agree to recieve)

Question 37

~~ PRIVITY OF CONTRACT ~~

Answer 37

Only the parties privy to the contract can enforce or impact it. This is typically the parties who formed the contract