Contract Law - Offer

Question 1

What are the essentials of a binding contract?

Answer 1

An offer
An Acceptance
Consideration
Intention to create legal relations

Question 2

What does the law state if a contract is valid?

Answer 2

The parties are bound to do as they promised

Question 3

Why is it useful to have a written contract?

Answer 3

It can help in the event of a dispute to know exactly what was decided.

Question 4

What are some types of contracts that must be in writing to be valid?

Answer 4

Contracts to sell land under the Law of Property
Contracts to obtain credit under the Consumer Credit Act 1974
Contracts of marine insurance

Question 5

What are deeds ?

Answer 5

A deed is a written document which is executed with the necessary formality and by which an interest, right or property passes are confirmed or an obligation binding on some person is created or confirmed

Question 6

What is an offer?

Answer 6

A clear statement of the terms on which one parties prepared to make an agreement with another party.

Question 7

What is a bilateral offer?

Answer 7

It’s an offer that consists of a promise made in return for a promise

Question 8

What is a unilateral offer?

Answer 8

A promise made in return for the completion of a specific act

Question 9

What must an offer have to be capable of being legally binding?

Answer 9

The terms of the offer must be clearly stated.
The offeror must intend to be legally bound.
The intention to be legally bound must be clearly communicated to the offeree.

Question 10

What is the case of Guthing v Lynn (1831) and what is it an example of?

Answer 10

It’s an example of a vague term.
The buyer of a horse made a promise to give the seller an extra £5 for the horse ‘if the horse was lucky for me’. It was held that the phrase ‘was lucky for me’ was too vague to be enforceable as it was hard to know what the buyer meant by the word ‘lucky’ - it could have several meanings depending on the context.

Question 11

What will happen to the offer if the statement is too vague?

Answer 11

If the statement is too vague it will not be held to the offer

Question 12

What is a Best Endeavours’ clauses?

Answer 12

A clause which requires a party to use their best endeavours to ensure that a contract results from its negotiations

Question 13

What happened in the Dany Lions Led v Bristol Cars Ltd (2014) case?

Answer 13

It was held that a best endeavours’ agreement could only be binding if there were objective criteria by which the quality of the endeavours could be asserted. Dany Lions had undertaken to use his best endeavours to find a specialist classic car restorer for Bristol Cars but had not been able to do so. However, there was no way of judging his performance, such as a limit to the price that could be agreed with the restorer

Question 14

What happened in Jet2.com v Blackpool Airports (2002)? and what case does it contrast with/?

Answer 14

Contrast with Dany Lions Ltd v Bristol Cars Ltd
An airport operator was bound by its promise to use its best endeavours to promote low-cost services by a budget airline. This meant it had to allow that airline to operate the normal opening hours of the airport, even if that meant the airport made a loss on those services, if that was the only way to promote the business as it had promised.

Question 15

What 3 resources may parties turn to to help create certainty when solving uncertanities?

Answer 15

1) previous dealings and the nature of the relevant trade
2) Statutory implied term
3) Arbitration clauses

Question 16

What is a statutory implied term?

Answer 16

A term contained in a Statute/ Act of Parliament

Question 17

What is an Arbitration clause?

Answer 17

Refers any disputes to be determined by an arbitrator

Question 18

What will happen if the offeror does not intend to be legally bound?

Answer 18

The offeree cannot accept the offer

Question 19

What are the two types of pre-contractual statements which may be confused with a legally binding offer?

Answer 19

1) Invitations to treat - declaration of willingness to enter into negotiations
2) Negotiations - Negotiation statements are not an offer

Question 20

What happened in the Partridge v Crittenden (1968) case and what is it a case of?

Answer 20

Invitations to treat
The defendant put an advert in a magazine offering for the sale of some birds. It was an offence to sell these birds under the Wild Birds Act 1954. The defendant was not found guilty as the advert was not an offer, it was encouraging others to make an offer to him.

Question 21

What happened in Fisher v Bell and what is it an example of?

Answer 21

Invitations to treat
The defendant, having placed a flick knife for sale in his shop window was accused of ‘offering for sale an offensive weapon’. It was held he was not guilty as he had not made an offer. The placing of the flick knife in a window was an invitation to treat.

Question 22

What happened in Pharmaceutical Society (GB) Boots Cash Chemists (1953) and what is it an example of?

Answer 22

Invitations to treat
Boots were prosecuted for selling drugs without supervision of a registered pharmacist. It was held that they were not guilty, as the medicines on display were just invitations to treat.

Question 23

What happened in Harvey v Face (1893) and what is it an example of?

Answer 23

Negotiations
The case concerned the sale of land. The land was not advertised for sale, but the claimant sent a message asking for the lowest price that would be accepted. The defendant replied saying the lowest was £900. The claimant then sought to accept this ‘offer’ and sued when the defendant refused to sell. It was held that this was a negotiation and no contract had been formed.

Question 24

What happened in Gibson v Manchester City Council (1979) and what is it an example of?

Answer 24

Negotiations
An existing council tenant contacted the council regarding the purchase of his council house. The council replied stating that they were prepared to sell and invited formal application. The tenant applied but was turned down it was held that the council’s letter was not an offer and instead was just a negotiation.

Question 25

What happened in Big v Boyd Gibbons (1971) and what is it an example of?

Answer 25

Negotiations with a legally binding offer being made The parties were negotiating over the sale of a piece of land. The claimant wrote to the defendant that for a quick sale he would except £20,000. The defendant wrote back agreeing to pay £20,000 and the claimant wrote thanking the defendant for accepting the offer.

Question 26

What happened in Carlill v Carbolic Smoke Ball Co (1893) and what did it establish?

Answer 26

Offers can be made to the whole world and that adverts can be offers. A smoke ball company advertised their smoke ball for sale stating it could prevent influenza. They promised to pay £100 to any person, who correctly used the smoke ball, caught influenza. They also placed this money into a local bank. Mrs Carlill bought the smoke ball, used it, then caught influenza. The company said the advert was merely a puff, but it was held that the advert was an offer through the placing of the £100 into the bank.

Question 27

What happened in Bloom v American Swiss Watch co. (1915) and what did it prove?

Answer 27

Proves that the offeree must know of the offer in order to legally be able to accept it. The claimant gave evidence to the authorities which led to the arrest of some jewel thieves. He then discovered that the defendant had previously advertised a reward for such information. The defendant refused to pay. The defendant was not legally obliged to pay as no contract to do so existed between the parties.

Question 28

What is a Tender?

Answer 28

A tender is a competitive offer to provide goods or services

Question 29

What happened in the Blackpool & Fylde Aero Club v Blackpool Council (1990, CA) case?

Answer 29

The Aero Club was invited by the council to tender for a concession to provide pleasure flights for the summer tourist trade. Although, the club delivered its tender before the deadline, the council, failed to clear its letter box and so the tender did not reach the appropriate committee in time to be considered. The council's request for tenders implicitly contained a unilateral offer to consider any tender submitted by the deadline. The council was in breach of this contract with the Aero Club which had been deprived of its chance to be the successful bidder.

Question 30

What are the different situations that can occur for an offer to come to an end and what do they mean?

Answer 30

Death - if the offeror dies than the offer normally dies too. Rejection and counter-offers - If an offer is rejected it will cease to exist. If the offeree, then changes their mind and tries to accept, they will fundamentally be making a new contract. Lapse of time - An offer will cease to exist if not accepted within any specified time limit. Revocation - Offerers are entitles to change their minds and withdraw offers at any time right up until the moment it is accepted.

Question 31

What happened in the Bradbury v Morgan (1862) case?

Answer 31

During his life the deceased made a standing offer to guarantee another man' debt. The debtor failed to pay the creditor, who, not knowing off the death of the guarantor, wrote to claim his money. The guarantors' obligations could be satisfied out of his estate.

Question 32

What happened in the Hyde v Wrench (1840) case?

Answer 32

The defendant offered to sell his farm for £1,000. The claimant at first said that he would only pay £950, but after a few days he would pay the full price. He heard nothing from the defendant. There was no contract between the parties; the defendant had not accepted the offer from the claimant, who had destroyed the defendant's original offer by his counteroffer of a reduced price. The claimant's subsequent statement that he would pay the asking price could not revive the original offer. It was a new offer which the defendant never accepted.

Question 33

What happened in the Stevenson v McLean (1880) case?

Answer 33

An offer to sell iron at a certain price was not destroyed when the offeree enquired whether delivery and payment might be made in instalments. This was not a counteroffer of different terms but an enquiry as to whether the terms might be varied which did not destroy the original offer.

Question 34

What happened in the Ramsgate Hotel Co.Ltd v Montefiore (1866) case?

Answer 34

The defendant applied to buy some shares in June but heard nothing more until November when the company informed him that the shares were his. No contract had been formed since the company's unreasonable delay in notification of the allotment of the shares had made the defendant's offer relapse and the acceptance came too late. He was not obliged to take the shares.

Question 35

What is an Option Contract?

Answer 35

If an offeree gives some payment to the offeror in return of the promise to keep an offer open for a certain time or to give someone 'first refusal'.

Question 36

What is an option agreement?

Answer 36

An option agreement gives the offeree time to choose whether to buy

Question 37

What is an endeavour?

Answer 37

An obligation to take all steps necessary to achieve a desired result or outcome