Formation of Contract

Question 1

What is the essential element of a contract under Scots law?

Answer 1

• An agreement between parties with legal capacity,
  • In legally required form,

Creating enforceable obligations

Question 2

Can courts enforce contracts under Scots law?

Answer 2

Yes

Question 3

What are the key characteristics of a contract?

Answer 3

Voluntariness, two or more parties, consensus in idem (agreement on the same thing), and mutuality of obligations.

Question 4

What is the principle of freedom of contract?

Answer 4

The ability of parties to choose with whom they contract and on what terms, with minimal state interference.

Question 5

What does the doctrine of sanctity of contract mean?

Answer 5

Contracts voluntarily entered into must be upheld and enforced.

“Contracts … shall be held to be sacred…” – Printing and Numerical Registering Co v Sampson (1875).

Question 6

Is good faith a formal requirement in Scots contract law?

Answer 6

No, but it influences decisions through case law. (Smith v RBS)

Question 7

At what age does legal capacity begin in Scotland?

Answer 7

Full capacity begins at age 16 (Age of Legal Capacity (Scotland) Act 1991).

Question 8

Can contracts made by 16–17-year-olds be set aside?

Answer 8

Yes, before age 21 if they cause prejudice and would not have been made by a reasonably prudent adult.

Question 9

What case shows total drunkenness voiding a contract?

Answer 9

Taylor v Provan (1864).

Question 10

What orders can be granted under the Incapacity (s) 2000 Act?

Answer 10

Intervention Orders and Guardianship Orders.

Question 11

What is the general presumption in social/domestic contexts when creating legal relations?

Answer 11

There is no intention to create legal relations. (Robertson v Anderson 2003)

Question 12

Are informal emails legally binding?

Answer 12

No, Baillie Estates Ltd v Du Pont (UK) Ltd [2010]

Question 13

what is the difference between gratuitous and onerous obligations?

Answer 13

• Gratuitous: One-sided obligation (e.g. a promise).
• Onerous: Two-sided, mutual obligations (e.g. contracts).
• Presumption against gratuitous obligations in Scots law.

Question 14

what are the differences between promise v contract?

Answer 14

Feature Promise Contract

Parties One (unilateral) Two or more (bilateral)

Agreement required? No Yes (consensus in idem)

Type of obligation Gratuitous Usually onerous

Legal status Binding if intention shown Binding if agreement formed

Question 15

when does an obligation arise in the formation of promise or contract?

Answer 15

• Regus (Maxim) Ltd v Bank of Scotland [2011] CSOH 129

○ “A promise acquires its obligatory nature at the moment it is made.”

• Promisor must intend to be legally bound
• Overlaps with intention to be legally
  bound principle.
• Has to be an intention that it is a legally enforceable obligation.

Question 16

can a promise be revoked by the will of the promiser?

Answer 16

No, * Bathgate v Rosie 1976 SLT (Sh Ct) 16

Once you make that promise it is binding.

Question 17

does the promisee need to accept the promise?

Answer 17

No, Cawdor v Cawdor 2007, the moment the promise is made, the promiser is bound by the terms of the promise.

Knowledge on the Part of the person who is benefiting is not necessary.

Unlike contract which can be revoked until point of acceptance.

Question 18

Can a conditional promise be revoked before the conditions have been met.

Answer 18

No.

• Petrie v Earl of Airlie (1834)
  
  • Reward offered for naming somebody for naming somebody who had defamed the Early of Airlie.
  • The person who did the defaming, the brother informed in order to claim the reward.
  • The Earl of Airlie then changed his mind about paying the reward.
  • The condition was enforceable once it was fulfilled, and because of that, the Earl had to pay.

Question 19

What is the objective test from Muirhead and Turnbull regarding consensus in idem?

Answer 19

Courts cannot make a judgement based on what people think, it is according to what people say and do.

What appears to a reasonable person, that they meant/intended
.
Piano case.

Question 20

What does an agreement primarily need to be as such?

Answer 20

Offer + acceptance.

Question 21

What does Matthieson Gee v Quigly emphasise?

Answer 21

• There was an offer to supply machinery
  
  • There was an acceptance for carrying out the work
    ○ Because the offer and agreement were at cross-purposes, there was no agreement, because they were agreeing to different things.
    § No Consensus in Idem
  • Example of when the parties are in Error.
  • The terms have to be agreed.

Question 22

What is an invitation to treat?

Answer 22

When people, sometimes, by their words and actions, indicate that their willing to enter into a contract, but it is a pre-contractual stage
* A pre-offer stage; an invitation to make an offer, and has to be distinguished from the offer itself.

Question 23

Invitation to treat with ads and catalogues principle and authority?

Answer 23

Grainger & Son v Gough [1896]

* HOL said the catalogue did not amount to an offer, it was an invitation to treat.
* Customers who placed orders were making offers, which Roederer were free to accept/deny.

Look at the function of the advertisement; is it to attract customers to get them to make offers, and if so, it is probably an invitation to treat.

True when they even say ‘special offer’ - could just be invitation to treat to attract people to buy it

Question 24

Invitation to Treat shopping display case?

Answer 24

Fisher v Bell [1961]

○ The product on display are simply an invitation to treat, and when you take your items to the till, and give them to the cashier, you are making an offer, which is accepted when they take your money.

Question 25

Vending machines for Invitation to treat authority?

Answer 25

* Thornton v Shoe Lane Parking [1971] There was an automatic machine at the car park at the entrance to the car park, which issued a ticket. The machine was making a standing offer to anyone who came along. Taking the ticket/paying for the ticket/pressing the button. This is accepting the standing offer made by the machine.

Question 26

When is an offer not effective?

Answer 26

Promises cannot be revoked - offers are generally revokable. * Cannot be accepted if * 1. Withdrawn/revoked * 2. Rejected * 3. Lapsed * 4. Death of parties

Question 27

what are the conditions for an offer to be revoked?

Answer 27

* Revocation must be communicated - offers of acceptance * Revocation is only effective from the point of communication. Offers cannot be withdrawn if the offer is one that is promised to be kept open. Cannot be withdrawn during that period of time

Question 28

What is a reasonable time for an offer to 'lapse?'

Answer 28

* Wylie & Lochhead v McElroy & Sons (1873) - offer of price for a cosntruction contract - said it was only open for a day. Wylie & Lochhead accepted after a month Court, in obiter, said the offer was not in reasonable time, accepted.

Question 29

What are the different modes of acceptance?

Answer 29

* Acceptance may be oral or in writing cf Requirements of Writing (Scot) Act 1995

Question 30

Can you accept an offer through conduct?

Answer 30

Yes, University Of Edinburgh v Onifade 2005 - about Parking on university Property. Notice on Uni Car Parks - Those parking without a permit will be fined. The court said that 'the defender by parking his vehicle on University property without a permit, made it plain that he accepted that position (the notice) by his conduct. However, silence does not equal acceptance, even if offer says so * The person accepting has done something to indicate their consent - silence does not equal acceptance, even if offer says so.

Question 31

What must be sufficiently defined for one to accept a contract?

Answer 31

The essential terms. * May & Butcher Ltd v The King [1934] (HL) * “As a matter of general law of contract all the essentials have to be settled. What are the essentials may vary according to the particular contract under consideration” There needs to be some certainty in the essentials (Grant v Peter Gauld & Son 1985)

Question 32

What is a qualified acceptance?

Answer 32

Looks like an acceptance, but it's changing some of the terms. Two effects of qualified acceptance: * Rejects the original offer * In itself becomes a counter-offer (Wolf and Wolf v Forfar Potato Co.) Key point of Wolf and Wolf, was that a qualified acceptance amounted to a new offer, with the consequence that the original offer fell and could no longer be acceptance.

Question 33

Sometimes parties may have standard T&Cs, who gets to impose their T&Cs in the contract?

Answer 33

Butler Machine Tool Co Ltd v Ex-cell-o Corporation (Eng) Ltd [1979] The last shot wins, the party who impose their terms as the last communication in negotiations, if it is accepted, then it is those T&C's that govern the contract.

Question 34

When has an acceptance been effectively communicated through instantaneous communications?

Answer 34

* Entores v Miles Far East Corporation [1955] * The Onus falls upon the acceptor to take reasonable steps to check that the other party has heard and understood the acceptance, if there is doubt.

Question 35

When has acceptance been effectively communicated through non-instantaneous communications?

Answer 35

POSTAL RULE BABY!!! Thomson v James 1885 * If acceptance is posted contract is formed at moment of posting - only the acceptance has the postal rule of doubt. * an exception to the rule that the offeror must be receive intimation of the acceptance * until withdrawal is intimated (received), the offer is open for acceptance. * A contract is concluded at the moment of posting and not at the moment the acceptance is received.

Question 36

What happens if acceptance never arrives for the postal rule?

Answer 36

Mason v Benhar Coal Co (1882) English case prior were the court applied the postal rule strictly. A matter of proof that the letter had been posted. The acceptance must eventually turn up before the contract can be concluded.

Question 37

A Quick Summary of Formation of Contract!

Answer 37

Categorise communications Offer vs Invitation to Treat? Offer v Promise? Offer and Acceptance Check for essential terms Do any of these exceptions apply? Check type of communication Instantaneous or not? Does postal rule apply? * Supaseal Glass Ltd v Inverclyde Windows Mfg Ltd [2022] CSOH 49 ○ Writing is not required ○ The question of whether agreement had been reached should be judged objectively ○ There must be agreement on the essential terms ○ Not void from uncertainty

Question 38

What is the general exception under the age of capacity s act for <16 y.o?

Answer 38

A person under the age of 16 years shall have legal capacity to enter into a transaction— (a)of a kind commonly entered into by persons of his age and circumstances, and (b)on terms which are not unreasonable.