Core principles of Contract Law Flashcards
Discuss the formation of a contract - there are 4 elements.
Offer and acceptance: Offeror must make an offer which is accepted by the offeree to form a binding contract. Acceptance can be made by words/by conduct - so if someone does not communicate their response to an offer but starts to perform their obligations in accordance with the terms of the offer, the performance will amount to acceptance.
Provided the offeree knows about an offer, their motive in performing the act that constitutes acceptance is irrelevant.
Discuss acceptance for bilateral offers. Include reference to PAR rule.
Must be communicated to the offeror to create a legally binding contract.
Receipt rule = an offeror must actually receive an acceptance for the acceptance to be valid. Silence cannot amount to an acceptance - so even if the offeror tells the offeree that he will assume his offer has been accepted if he does not hear from him - this would have no legal effect.
Postal acceptance rule (PAR) = exception to rule that acceptance of a bilateral contract must be communicated. PAR can be used where post is made clear to be a valid way to communicate acceptance. So as soon as the acceptance is posted, it is effective and forms a legally binding contract. Even if the offeror never receives the acceptance, he is still bound by the contract (as it was formed when it was posted).
Another exception might be if its sent outside office hours.
Rules for PAR to apply
- Letter of acceptance must be properly addressed AND posted through a post office or a Royal Mail postbox
- Rule does NOT apply to letters that are handed to the post person OR sent through a courier company.
- Parties can exclude the PAR - e.g. offeror stating that an acceptance must not be sent by post and by specifying an alternative means of communication.
Without PAR, how do you communicate acceptance?
Receipt rule applies - offeror must receive an acceptance for it to be communicated
Offeree is responsible for ensuring that the offeror has received acceptance.
Telephone acceptances - treated as if they were interacting face to face so if the offeror does not hear/understand the acceptance, it will not have been communicated.
Summarise the means of communication and when acceptance is communicated
If through instant media (EG fax) sent during office hours, acceptance is held to be communicated at the time when acceptance is actually received. If it was sent outside office hours, its deemed to be received at start of the following working day.
If by email, receipt rule applies.
How is acceptance of a unilateral offer different to that of a bilateral offer?
For a unilateral offer, the offeree can accept the offer by conduct. There does not need to be any communication to the offeror in order to form a legally binding contract.
Does PAR apply to the revocation of offers?
No.
Does revocation need to be communicated to the offeree to be effective?
If it’s a bilateral offer - then yes.
With unilateral offers, the offeror cannot revoke once the offeree has started to perform the act specified in the offer. So the offeror must let the offeree finish performing the specified act. But otherwise, communication to offeree is not actually required to revoke a unilateral offer. All that is required is that the offeror must use the same means to revoke the offer as he used to make the offer in the first place.
What are other types of termination of an offer?
- Termination through lapse of time
- Termination by offeror making another offer
