Topic 1 - Formation of a contract Flashcards
(98 cards)
1
Q
What must an offer be in order to be valid?
A
Clear and certain
This principle was illustrated in the case of Gibson v Manchester City Council.
2
Q
What is required to demonstrate an intention to be legally bound?
A
Clear wording indicating commitment
This was contrasted with Storer v Manchester City Council where the language indicated an intention to be bound.
3
Q
What are the two kinds of contracts?
A
Unilateral contracts and bilateral contracts
4
Q
What characterizes a bilateral contract?
A
Both parties assume obligations by making promises
Example: One party sells an item in exchange for payment.
5
Q
What characterizes a unilateral contract?
A
One party makes an offer requiring an act from others
Example: A reward for the return of lost property.
6
Q
Fill in the blank: An invitation to treat is a _______.
A
first step in negotiations
7
Q
What distinguishes an offer from an invitation to treat?
A
An offer is an undertaking to be bound by terms upon acceptance.
8
Q
In what contexts are invitations to treat commonly seen?
A
- Advertisements
- Display of goods for sale
- Invitations to tender
- Auction sales
9
Q
What is the general rule regarding advertisements?
A
Advertisements are invitations to treat
This was established in Partridge v Crittenden.
10
Q
What is the exception to the rule regarding advertisements?
A
An advertisement can be a unilateral offer if it specifies a clear act and intention to be bound.
11
Q
What is the general rule regarding displayed goods for sale?
A
They are invitations to treat
This principle was established in Fisher v Bell.
12
Q
What is the outcome when a request for tenders is made?
A
It is generally an invitation to treat
This was confirmed in Spencer v Harding.
13
Q
What is the exception to invitations to tender being an invitation to treat?
A
If it contains an undertaking to accept the highest or lowest bid.
14
Q
What is the general rule regarding auction sales?
A
The auctioneer’s request for bids is an invitation to treat.
15
Q
What happens in an auction without reserve?
A
The seller must sell to the highest bidder regardless of the bid amount.
16
Q
What are the three ways an offer can terminate?
A
- Rejection
- Lapse
- Revocation
17
Q
What happens when an offer is rejected?
A
It cannot be accepted unless the offeror makes the same offer again.
18
Q
What is a counter-offer?
A
An attempt to accept an offer on new terms, which rejects the original offer.
19
Q
What distinguishes a counter-offer from a request for information?
A
A request for clarification does not reject the original offer.
20
Q
How can an offer lapse?
A
- By passage of time
- By the death of one of the parties
21
Q
What was the court’s ruling regarding the claimant’s telegram accepting the offer?
A
The court held that the claimant’s response was not a counter-offer but rather an enquiry, leading to a binding contract upon sending the telegram.
22
Q
What are two ways an offer may lapse?
A
- By passage of time
- By the death of one of the parties
23
Q
Under what circumstances does an offer lapse due to passage of time?
A
- Acceptance not made within the period prescribed by the offeror
- No period prescribed and acceptance not made within a reasonable time
24
Q
What happens to an offer if the offeror dies?
A
If the offeree knows of the offeror’s death, the offer lapses; if unaware, it probably does not lapse.
25
What occurs when the offeree dies?
The offer lapses and cannot be accepted by the offeree's representatives.
26
Can the offeror revoke their offer after acceptance?
No, an offer cannot be revoked after valid acceptance.
27
When is revocation of an offer effective?
Revocation is effective only upon actual notice reaching the offeree.
28
How does indirect communication of revocation work?
Revocation is effective if the offeror shows a clear intention to revoke and notice reaches the offeree, regardless of the means.
29
In a unilateral contract, when can the offer be revoked?
The offer can be revoked at any time prior to completion of the required act.
30
What is an exception to the revocation rule in unilateral contracts?
If the offeree has partly performed the obligation and is willing to complete, the offeror may be under an implied obligation not to revoke.
31
What is required for acceptance to be valid?
Acceptance must be communicated, unqualified, and in response to the offer.
32
What is the 'mirror image rule'?
Acceptance must correspond exactly with the terms of the offer.
33
What happens if the offeree's response to the offer is qualified?
It may constitute a counter-offer or a request for information.
34
What is the significance of a prescribed mode of acceptance?
If the offeror prescribes a mode, only acceptance in that mode will suffice unless otherwise stated.
35
What is the postal rule?
Acceptance takes effect from the moment the letter of acceptance is properly posted, not when received.
36
When does the postal rule not apply?
* If post was not contemplated
* To letters revoking offers
* If incorrectly addressed
* If disapplied by the offeror
37
What is the effect of a letter being incorrectly addressed under the postal rule?
The rule may be displaced if the offeree's carelessness causes the address error.
38
How does acceptance via instantaneous communication differ from postal communication?
Acceptance via instantaneous communication takes effect when received by the offeror.
39
What happens if the acceptance message is not received due to the offeror's fault?
The offeror may be prevented from claiming that acceptance was not received.
40
What must be established for a third party to communicate acceptance?
The third party must have the authority of the offeree to communicate acceptance.
41
What is the court's ruling in Adams v Lindsell regarding the postal rule?
The case established that acceptance takes effect when the letter is properly posted.
42
What is the rationale behind the postal rule?
It aims to balance the interests of the offeror and offeree, acknowledging the burden on the offeror.
43
What happens if an offeror does not receive acceptance due to poor mobile reception?
The offeror may be prevented from saying that they did not receive the acceptance
## Footnote
This highlights the importance of communication in contract acceptance.
44
What was the conclusion of the High Court in Thomas v BPE Solicitors regarding email communications?
The postal rule is inapplicable to email communications; acceptance by email is effective only when received
## Footnote
This means that an email acceptance must arrive on the offeror’s email server to be valid.
45
In The Brimnes case, when was a message considered effective?
When received, even if it was sent during ordinary office hours but not seen until after
## Footnote
This case illustrates the responsibilities of office staff regarding message handling.
46
What is the significance of the case Mondial Shipping and Chartering BV v Astarte Shipping Ltd regarding telex communications?
A message sent outside ordinary office hours is received at the start of business the next working day
## Footnote
This addresses timing issues in international communications.
47
What principle does Carlill v Carbolic Smoke Ball Co. establish regarding unilateral contracts?
Communication of acceptance is waived; performance of acts constitutes acceptance
## Footnote
This means no separate notification is needed for acceptance in unilateral contracts.
48
What is required for a binding contract to be enforceable?
All material terms must be certain and complete
## Footnote
The court applies an objective test to determine if an agreement exists.
49
What did the court rule in Scammell v Ouston regarding hire-purchase terms?
The agreement was too uncertain to be enforced
## Footnote
This case illustrates the necessity for clarity in contractual terms.
50
In Hillas v Arcos, why was the agreement to buy timber of fair specification enforceable?
The words could be given a reasonable meaning based on previous dealings
## Footnote
This shows that some ambiguity can be resolved through the context of prior relationships.
51
What is executory consideration?
Promises made by contracting parties to perform something in the future
## Footnote
This is common in bilateral contracts.
52
What is executed consideration?
Consideration that has already been performed at the time of contract formation
## Footnote
This is typical in unilateral contracts like rewards.
53
What are the four important rules governing consideration?
* Consideration must not be past
* Consideration must move from the promise
* Consideration need not be adequate
* Consideration must be sufficient
## Footnote
These rules help define valid consideration in contracts.
54
What does the rule 'consideration must not be past' imply?
Acts or forbearance prior to the promise cannot be used as consideration
## Footnote
This was illustrated in Eastwood v Kenyon.
55
What is an exception to the past consideration rule?
An act done at the promisor's request with an understanding of reward
## Footnote
This is supported by Pao On v Lau Yiu Long.
56
What does it mean that consideration must move from the promisee?
Only a party who has provided consideration can enforce a contract
## Footnote
This is distinct from the doctrine of privity of contract.
57
What was the outcome of Tweddle v Atkinson regarding consideration?
The groom could not enforce his father-in-law's promise as he provided no consideration
## Footnote
Consideration was provided by the fathers, not the groom.
58
What does the doctrine of freedom of contract state?
The courts will not assess the relative value of each party's contribution
## Footnote
This means a party can agree to any terms they choose, regardless of adequacy.
59
What is an example of consideration being sufficient but not adequate?
In Chappell & Co v Nestle Co Ltd, chocolate wrappers were considered part of the consideration
## Footnote
The wrappers had no value after being received but were still valid consideration.
60
What constitutes good consideration in terms of existing obligations?
An obligation already owed is not good consideration for a new promise
## Footnote
This principle is illustrated in Stilk v Myrick.
61
What is necessary for a variation of contract to be binding?
Agreement, consideration, and intention to create legal relations must be present
## Footnote
Variations must follow the same principles as forming a new contract.
62
What is meant by 'factual consideration' as discussed in Williams v Roffey?
Consideration that acknowledges no new promise is made, but the promisee still receives a benefit from the agreement
## Footnote
This differs from legal consideration.
63
List the conditions necessary to establish factual consideration according to Lord Justice Glidewell in Williams v Roffey.
* A has a contract with B for work or services in return for payment
* B doubts A's ability to complete the contract
* B promises A additional payment for timely performance
* B obtains a practical benefit or avoids a disbenefit
* B's promise is not due to economic duress or fraud
* The benefit to B is capable of being consideration
## Footnote
These conditions clarify the legal framework for enforcing promises in contract law.
64
True or False: In Stilk v Myrick, the sailors provided additional consideration for the promise of extra payment.
False
## Footnote
The sailors were only fulfilling their existing contractual obligations.
65
What type of consideration was provided by the sailors in Hartley v Ponsonby?
Fresh legal consideration
## Footnote
The sailors exceeded their contractual obligations by making the return journey in dangerous conditions.
66
What principle states that merely carrying out a public duty does not amount to sufficient consideration?
The principle that public duty does not constitute good consideration
## Footnote
This principle was discussed in relation to police officers providing information.
67
What does the rule in Foakes v Beer state regarding part payment of a debt?
Part payment of a debt is not good consideration to discharge the whole debt
## Footnote
This rule highlights the inadequacy of consideration in debt settlement.
68
What was the outcome of Foakes v Beer regarding accrued interest on a judgment debt?
The agreement was held to be unsupported by consideration, allowing the creditor to claim interest
## Footnote
This case illustrates the legal principle that part payment does not nullify the full debt.
69
What introduces the possibility of good consideration in a part payment arrangement?
The introduction of a new element into the payment
## Footnote
Examples include payment at a different time or place.
70
True or False: The Court of Appeal in Re Selectmove Ltd held that the principles from Williams v Roffey applied to cases of part payment of debt.
False
## Footnote
The court concluded that Williams v Roffey did not apply to promises to accept less than legal rights.
71
What doctrine allows a contract to be enforced despite not being supported by consideration?
Promissory estoppel
## Footnote
This doctrine protects a party's reliance on a non-bargain promise.
72
What was the outcome of the House of Lords' judgment regarding the landlord's conduct?
The landlord's conduct was held to be an implied promise to the tenant that he would not enforce the forfeiture at the end of the notice period
## Footnote
This ruling established the reliance of the tenant on the landlord's promise regarding repairs.
73
What was the significance of the tenant's reliance on the landlord's promise in Central London Property Trust v High Trees House?
The tenant could rely on the defence of promissory estoppel to prevent the landlord from going back on their promise to accept reduced rent.
74
What does promissory estoppel act as, according to the legal principles established?
Promissory estoppel acts as a shield and not a sword
75
What must be shown for promissory estoppel to apply?
There must be a clear and unequivocal promise that existing legal rights will not be fully enforced
76
What is an essential element of the doctrine of promissory estoppel regarding the promisee?
The promisee must have relied upon the promise or representation
77
What does it mean if it is 'inequitable to allow the promisor to go back on their promise'?
The courts will determine whether it would be unfair to allow the promisor to withdraw from their promise
78
What does promissory estoppel allow the promisee to do?
It allows the promisee to prevent the promisor from going back on their promise
79
Does promissory estoppel suspend or extinguish legal rights?
It generally suspends the rights concerned, but does not extinguish them
80
What three elements must be present for a binding contract?
* Offer and acceptance
* Intention to create legal relations
* Consideration
81
What is meant by 'intention to create legal relations'?
An intention to enter into an agreement that has legal ramifications
82
How is the test of intention to create legal relations determined?
The test is objective, based on the actions of the parties rather than their subjective intentions
83
In commercial agreements, what is the usual presumption regarding intention to create legal relations?
There is a presumption that the parties intend the agreement to be legally binding
84
What is the significance of the phrase 'subject to contract'?
It creates a strong inference that the parties do not intend to be bound until a formal contract is executed
85
In social and domestic agreements, what is the usual presumption regarding intention to create legal relations?
There is a presumption that there is no intention to create legal relations
86
What is the general presumption regarding social and domestic agreements?
They do not amount to legally enforceable agreements
## Footnote
This includes agreements related to family arrangements or social commitments.
87
Under what circumstances can the presumption against legal relations be rebutted?
When agreements are made between spouses who are separating or separated
## Footnote
Example: Merritt v Merritt [1970] 1 WLR 1211.
88
What is the age threshold for full contractual capacity?
18 years old
## Footnote
Individuals over this age are presumed to have full capacity unless affected by specific factors.
89
What are the two main exceptions to a minor's inability to be bound by contracts?
* Necessaries
* Contracts of employment, apprenticeship, or education
## Footnote
These exceptions allow minors to enter into enforceable agreements under specific conditions.
90
What are 'necessaries' in the context of contracts with minors?
Goods or services suitable to a person's condition of life and actual requirements
## Footnote
Examples include food, medicines, and clothing.
91
What was the outcome in Nash v Inman regarding the supply of waistcoats to a minor?
The contract was not enforceable because the waistcoats were not deemed necessary
## Footnote
The minor had sufficient clothing, making the supply unnecessary.
92
What was the ruling in Aylesbury Football Club v Watford Association Football Club regarding a minor's contract?
The contract was unenforceable as it was not beneficial to the minor
## Footnote
The terms were onerous and did not provide the minor with extra training or experience.
93
What happens if a minor ratifies a contract upon reaching the age of 18?
The contract becomes binding on them
## Footnote
This allows minors to validate agreements made during their minority.
94
What does s 2 of The Mental Capacity Act 2005 state regarding a person's capacity to contract?
A person lacks capacity if unable to make a decision in relation to the matter at the time the contract is made
## Footnote
This includes both permanent and temporary impairments.
95
According to s 3(1) of The Mental Capacity Act 2005, what are the impairments related to capacity?
* Unable to understand relevant information
* Unable to retain relevant information
* Unable to use relevant information
* Unable to communicate a decision
## Footnote
These criteria help assess an individual's capacity.
96
What is the effect of entering into a contract with a person lacking capacity?
The person remains liable to pay a reasonable price for 'necessaries'
## Footnote
This ensures that those lacking capacity are still accountable for essential goods and services.
97
What must a person claiming incapacity establish for a contract to be voidable?
* They did not understand what they were doing
* The other party knew of their incapacity
## Footnote
This principle is illustrated in the case of Imperial Loan Co v Stone [1892] 1 QB 599.
98
What is the legal position regarding contracts made by intoxicated persons?
They must pay a reasonable price for necessaries but are not bound by other contracts
## Footnote
This principle is supported by Matthews v Baxter (1873) LR 8 Ex 132.
