Unit 1

Question 1

What are the two requirements of an offer?

Answer 1

A willingness to be bound if it is agreed.
Sufficient certainty in terms of the proposals (price, model, etc)

Question 2

What are the two requirements of an acceptance?

Answer 2

Assent: the offeree must be doing something of their own volition
Unqualified: clear acceptance without new terms

Question 3

Does intention matter in terms of contracts?

Answer 3

The actual intention deemed too difficult to ascertain. The intention of the offeror is assessed objectively from the perspective of a reasonable person, considering what was said and done between the parties (Smith v Hughes (1871)). This is called the ‘Objective test of agreement’ -> would a reasonable person have thought that an offer has been made? While the test is primarily objective, the offeree must believe that the offeror genuinely intended to make an offer. This introduces a subjective element.

Question 4

What are the two types of offers?

Answer 4

Bilateral (a promise in return for a promise)
Unilateral (only one party is making a promise like to pay a reward)

Question 5

What is the postal rule?

Answer 5

Subject to limitations, a letter of acceptance which is posted is complete on posting and the contract is formed at that point. However it only applies to acceptance, it must be reasonable to send by post and must be clearly addressed and stamped.

Question 6

What is the contract formed at a supermarket?

Answer 6

Goods on display in supermarkets are generally regarded as invitations to treat and not offers. The customer offers to buy when presenting at payment point and acceptance involves the shop taking payment.

Question 7

What is a revocation?

Answer 7

When the offerer withdraws it. They may have changed their mind about selling. A successful revocation requires communication to offeree in a way equal to the offer. Unless they are informed the offer is still open for acceptance.

Question 8

What is rejection?

Answer 8

The offer is brought to an end and you cannot change your mind. A counter offer impliedly rejects an offer and cannot be accepted later on.

Question 9

What is an example of an exploratory enquiry?

Answer 9

Would you be prepared to come down a bit on that?

Not a counter offer as just wanting to gain information

Question 10

What is a lapse?

Answer 10

The specific time of an offer might exceed or if an offer doesn’t specify how long it is open for the law regards this as a reasonable time and will depend on circumstances.

Question 11

What are commercial agreements?

Answer 11

The law presumes these are LEGALLY BINDING. agreements between businesses and individuals. Also between sellers and buyers in eBay.

Question 12

What are domestic agreements?

Answer 12

Agreements between family members or close friends. There is a presumption of no intention to create legal relations. If the facts show otherwise then this presumption is rebutted.

Question 13

What is consideration?

Answer 13

It is essentially something in return, which solidifies that their is an exchange or deal occurring

Question 14

What is adequacy of consideration?

Answer 14

The amount or value of something in return. It doesn’t have to be adequate because contracts are voluntary.

Question 15

What is sufficiency of consideration?

Answer 15

Contracts are usually to do with money, goods or services. Not abstract concepts like love.

Question 16

Can a supplier exclude negligence which causes death or injury in their contracts?

Answer 16

No

Question 17

The intention of the offeror is assessed …

Answer 17

Objectively from the perspective of a reasonable person.

Question 18

What is an invitation to treat?

Answer 18

If is a preliminary statement inviting negotiation, but lacks the definite promise to be bound. For example shop displays are an invitation to treat (Pharmaceutical Society of Great Britain v Boots)

Also advertisements, but in exceptional cases may be an offer of a unilateral contract if there is a clear intention to be bound (carbolic smoke ball).

Question 19

Auctions

Answer 19

The auctioneers call for bids is an invitation to treat. Each bid is an offer that can be withdrawn before acceptance.

Acceptance occurs with the fall of auctioneers hammer (sale of goods act 1979) forming a bilateral contract between bidder and owner.

In auctions without reserve, the auctioneer makes a unilateral offer to sell to highest bidder. If the auctioneer then refuses to sell, they are in breach of unilateral contract (Barry v Davies). The bidder can sue the auctioneer for damages but there is no contract of sale with owner.

Question 20

Termination of Offer

Answer 20

Three main ways an offer can be terminated: Revocation, Rejection, Lapse of Time.

Question 21

Revocation - General Rule

Answer 21

An offer can generally be revoked any time before acceptance. Once accepted, it’s irrevocable.

Question 22

Revocation: Gratuitous Promise to Keep Open

Answer 22

A gratuitous promise (no consideration given) to keep an offer open for a specific period is generally not binding.
Case: Routledge v Grant (1828)

Question 23

Revocation - Promise to Keep Open (Consideration)

Answer 23

If the offeree provides consideration (even nominal) to keep the offer open, it creates an option contract, and the offer is irrevocable during that period.
Case: Mountford v Scott [1975]

Question 24

Revocation: Communication to Offeree

Answer 24

Revocation must be communicated to the offeree to be effective.
Withdrawal by telegram is effective upon receipt.
Case: Byrne & Co v Van Tienhoven & Co (1880)

Question 25

Revocation: Exceptions to Communication

Answer 25

Potential exceptions exist: Notice sent to the offeree's last known address (if they moved without informing). If the offeree chooses not to read a received revocation.

Question 26

Revocation: Public Offers

Answer 26

Revoking a public offer requires taking reasonable steps to notify those who might have seen it, using similar channels and prominence as the original offer. Case (Persuasive): Shuey v United States (1875)

Question 27

Revocation: Business Communications (e.g., Email)

Answer 27

Likely effective upon receipt during normal business hours, if it's reasonable to expect staff to be available to read it. Case (Analogy): The Brimnes [1975]

Question 28

Revocation: Reliable Third Party

Answer 28

Revocation can be communicated by a reliable third party whom the offeree believes to be trustworthy and who provides clear information about the withdrawal. The third party doesn't need the offeror's authorization. Case: Dickinson v Dodds (1876)

Question 29

Revocation: Unilateral Contracts (Partial Performance)

Answer 29

Unfair to revoke after substantial partial performance. Authorities suggest partial performance may prevent revocation. Case: Errington v Errington and Woods [1952]

Question 30

Rejection by Offeree

Answer 30

An offer can be terminated if the offeree rejects it either expressly or impliedly (e.g., by making a counter-offer). Case (Counter-Offer): Hyde v Wrench (1840)

Question 31

Rejection: Request for Information

Answer 31

A mere request for information or clarification about the offer's terms does not constitute a rejection. The original offer remains open. Case: Stevenson Jacques and Co v McLean (1880)

Question 32

Lapse of Time: Specified Time

Answer 32

An offer terminates if it is not accepted within a specified time limit set by the offeror.

Question 33

Lapse of Time: Reasonable Time

Answer 33

If no specific time limit is stated, the offer will lapse after a reasonable time, depending on the circumstances (e.g., nature of goods, means of communication).

Question 34

Acceptance: Complete and Unqualified

Answer 34

Acceptance must mirror the offer exactly. Any variation is a counter-offer, implicitly rejecting the original offer. Case: Hyde v Wrench

Question 35

Acceptance: Knowledge of the Offer

Answer 35

The offeree must be aware of the offer at the time of acceptance. Case: R v Clarke Note: Motive for acceptance is generally irrelevant (Williams v Carwardine).

Question 36

Acceptance: Communication - General Rule

Answer 36

Generally, acceptance must be communicated to the offeror. Communication must be by the offeree or their authorized agent. Case: Entores Ltd v Miles Far East Corp Case: Powell v Lee Contrast: Withdrawal of offer can be by a reliable third party (Dickinson v Dodds).

Question 37

Acceptance: Exceptions to Communication

Answer 37

The offeror can waive the need for communication, particularly in unilateral contracts where acceptance is shown by performing the stipulated act. Case: Carlill v Carbolic Smoke Ball Co

Question 38

Acceptance: Silence is Not Acceptance - General Rule

Answer 38

An offeror cannot impose a contract by stating that the offeree's silence will be deemed acceptance. Case: Felthouse v Bindley Rationale: Protects unwilling offerees.

Question 39

Acceptance: Silence as Acceptance - Potential Exception

Answer 39

The Court of Appeal in Re Selectmove Ltd suggested that offerees could bind themselves by silence if they explicitly state this intention. (Note: This is a narrow, debated exception).

Question 40

Battle of the Forms

Answer 40

Arises when businesses try to contract using their own standard terms and conditions (Ts & Cs), with each exchange potentially being a counter-offer.

Question 41

Battle of the Forms: Traditional Approach

Answer 41

"The last shot wins" - the terms submitted and accepted without further objection usually govern the contract. Case: Butler Machine Tool v Ex-Cell-O Corp

Question 42

Battle of the Forms: TRW Ltd v Panasonic

Answer 42

"Last shot" doesn't always win. Prior conduct and explicit agreements on governing terms can override later terms. Panasonic's terms applied due to TRW's prior agreement acknowledging them.

Question 43

Certainty and Completeness

Answer 43

Even with apparent agreement, a contract may be unenforceable if terms are too uncertain or essential matters are undetermined.

Question 44

Certainty and Completeness: Assessment

Answer 44

Courts assess certainty objectively, considering: Trade usage Prior dealings (Hillas v Arcos) Mechanisms for resolving uncertainty

Question 45

Certainty and Completeness: Mechanisms

Answer 45

Agreements with mechanisms to determine uncertain terms (e.g., market price at delivery) can be binding.

Question 46

Certainty and Completeness: Provisional Agreements

Answer 46

"Provisional agreements" intended to operate until a formal document are generally binding if parties clearly agree on essential terms.

Question 47

Postal Rule: General Rule

Answer 47

Acceptance is complete upon posting the letter, not upon receipt. The contract is formed at the moment of posting. Case: Adams v Lindsell

Question 48

Postal Rule: Lost Mail

Answer 48

Even if the letter of acceptance is lost in the post and never reaches the offeror, a valid contract is still formed upon posting. Case: Household Fire and Carriage Accident Insurance Co (Ltd) v Grant

Question 49

Postal Rule: Rationale

Answer 49

Prevents fraud and delays in commercial transactions. Offerors can always stipulate actual communication. Case: Household Fire Insurance (Thesiger LJ's reasoning)

Question 50

Postal Rule - Limitation 1: Only Acceptance

Answer 50

Applies only to acceptances, not to offers, revocations, or other communications.

Question 51

Postal Rule - Limitation 2: Reasonableness Postal Rule - Limitation 3: Proper Posting

Answer 51

Must be reasonable to use the post in the circumstances (e.g., offer by post, no urgency, no postal strike). The letter must be correctly stamped, addressed, and posted.

Question 52

Postal Rule - Limitation 4: Exclusion by Offeror (Express)

Answer 52

The offeror can explicitly exclude the postal rule. Case: Holwell Securities Ltd v Hughes (required "notice in writing to [the defendant]")

Question 53

Postal Rule - Limitation 5: Exclusion by Offeror (Implied)

Answer 53

Phrases like "I need to know by..." or "You must tell me..." might imply that actual communication is required, overriding the postal rule.

Question 54

Postal Rule - Use of Post Permitted (Even if Excluded)

Answer 54

Even if the postal rule is excluded, using the post as a means of communication is not prohibited; it just means acceptance is effective upon receipt, not posting.

Question 55

Postal Acceptance: Retraction

Answer 55

No clear English authority on whether a postal acceptance can be retracted before it reaches the offeror (where the postal rule applies).

Question 56

Postal Acceptance: Retraction (Postal Rule Excluded)

Answer 56

If the postal rule does not apply, retraction is possible until the acceptance is actually communicated.

Question 57

Electronic Communication: Postal Rule

Answer 57

The postal rule does not apply to methods like email and telex. Acceptance by instantaneous communication is effective when and where it is received by the offeror. Parties treated as virtually in each other's presence. Case: Entores Ltd v Miles Far East Corp

Question 58

Electronic Communication: Time of Communication

Answer 58

Acceptance effective when it would be reasonable for the offeror to have read it. (Extending Entores principle).

Question 59

electronic Communication: Analogy to Revocation

Answer 59

Like revocation by telex during office hours (The Brimnes), acceptance likely effective upon receipt, even if not read immediately.

Question 60

Intention to Create Legal Relations

Answer 60

A necessary element for a binding contract; parties must intend their agreement to have legal consequences.

Question 61

Commercial Agreements: Presumption

Answer 61

Law presumes intention to create legal relations in commercial agreements (between businesses, individuals and businesses, or individuals in a business context like eBay). This presumption is rarely rebutted.

Question 62

Domestic Agreements: Presumption

Answer 62

Law presumes no intention to create legal relations in agreements between family members or close friends.

Question 63

Domestic Agreements: Rebutting the Presumption

Answer 63

The presumption of no intention can be rebutted by facts indicating otherwise (e.g., agreements during divorce, family members entering a business contract).

Question 64

Consideration

Answer 64

Sufficient justification for holding someone to a deal; an exchange of promises where each party provides something of value for the other's commitment.

Question 65

Consideration: Adequacy

Answer 65

The amount or value of the 'something in return'. Consideration does not need to be adequate (accurate value). Parties are free to make their own bargains.

Question 66

Consideration: Sufficiency

Answer 66

The type of 'something in return'. Approved: money, goods, services. Usually not sufficient: 'natural love and affection', stopping complaints.

Question 67

Capacity

Answer 67

The legal ability or power of a party to enter into a binding contract.

Question 68

Lack of Capacity: Main Groups

Answer 68

Primarily minors (under 18) and individuals with mental incapacity may lack full contractual capacity.

Question 69

Capacity: Minors - Necessaries

Answer 69

Contracts for 'necessaries' (goods suitable to a minor's condition in life and their actual requirements at the time of sale - includes food and clothing under the Sale of Goods Act 1979) are binding on minors.

Question 70

Capacity: Minors - Beneficial Contracts

Answer 70

Minors are also bound by beneficial contracts, such as contracts of employment, apprenticeship, or education that are for their benefit.

Question 71

Capacity: Corporations

Answer 71

A corporation (registered companies, statutory corporations, limited liability partnerships) is treated as a separate legal identity with the power to enter into contracts.

Question 72

Damages

Answer 72

Aim in contract law is to compensate the innocent party for loss of expectation / loss of bargain (Robinson v Harman). Assess the financial position the claimant is in due to the breach and compare it to the financial position they would have been in had the contract been properly performed. The claimant is entitled to a sum that bridges this financial gap.