Offer and Acceptance

Question 1

A valid offer must be

Answer 1

clear, certain and show an intention to be bound

Question 2

If the offeror does not specify an expiry date for the offer, the offer will

Answer 2

lapse after a reasonable time

Question 3

What are the requirements of a binding contract?

Answer 3

Offer, acceptance, consideration and ICLR

Question 4

Can you revoke an offer before acceptance?

Answer 4

An offer may be revoked at any time before acceptance, provided it is communicated by the offeror to the offeree.

Question 5

Offeree

Answer 5

The person to whom an offer is made

Question 6

What approach does the court take when determining whether an agreement exists between the offeror and offeree?

Answer 6

An objective approach, by considering what the reasonable person would say was the intention of the parties having regard to all the circumstances

Question 7

an invitation to treat

Answer 7

a first step in negotiations which may or may not lead to a firm offer by one of the parties

Question 8

General rule for advertisements (Partridge v Crittenden)

Answer 8

they are regarded as statements inviting further negotiations or invitations to treat

Question 9

General rule - display of goods for sale (Fisher v Bell)

Answer 9

They are an invitation to treat

Question 10

General rule - invitation to tender (Spencer v Harding)

Answer 10

inviting parties to tender = an invitation to treat

Question 11

Does the requestor have to accept one of the offers submitted in tender?

Answer 11

No, the requestor can accept or reject any tender, even if it is the most competitive

Question 12

When must the party requesting tenders accept a tender?

Answer 12

If the invitation to tender expressly contains an undertaking to accept the highest or the lowest bid, it is a unilateral offer and they must accept

Question 13

Contractual duty when inviting submissions for tender

Answer 13

There is a contractual duty to consider those tenders which have complied with the conditions for submission.

Question 14

In an auction without reserve, the seller promises to sell to the

Answer 14

highest bidder

Question 15

Bilateral contract in an auction

Answer 15

the bidder makes an offer which is capable of acceptance or rejection by the auctioneer. This contract determines who is entitled to the goods.

Question 16

Unilateral contract in an auction

Answer 16

If a reserve is not applied and the goods are withdrawn from sale there is a breach of this unilateral contract and the highest bona fide bidder is entitled to be compensated by the payment of damage

Question 17

The auctioneer’s request for bids is…

Answer 17

an invitation to treat (Payne v Cave (1789))

Question 18

Acceptance of the bidder’s offer will be indicated by

Answer 18

the fall of the auctioneer’s hammer (s 57 SGA)

Question 19

When can the auctioneer be sued for breach of contract?

Answer 19

they can be sued for breach of contract in a sale without reserve if they refuse to sell to the highest bidder

Question 20

What is the consequence in a no reserve sale if a reserve is not applied and the goods are withdrawn from sale?

Answer 20

there is a breach of this unilateral contract and the highest bona fide bidder is entitled to be compensated by the payment of damages (Barry v Davies)

Question 21

‘mirror image rule’ for acceptance

Answer 21

acceptance must correspond with the offer

Question 22

4 rules on acceptance

Answer 22

• Acceptance must be in response to the offer
• Acceptance must correspond with the offer
• Prescribed mode of acceptance
• Acceptance must be communicated

Question 23

Rule on prescribed mode of acceptance

Answer 23

if the offeror prescribes a specific mode of acceptance, you have to use that method to validly accept

Question 24

How can you prescribe a mode of acceptance?

Answer 24

• must be mandatory
• particularly clear words must be used

Question 25

Acceptance where an offer is made generally to the world at large

Answer 25

everyone with notice of the offer is an 'offeree', and a valid acceptance may be made by any person with notice of the offer

Question 26

Acceptance must be unqualified (Hyde v Wrench)

Answer 26

Acceptance must be unqualified and must correspond exactly with the terms of the offer

Question 27

Can you prescribe a specific mode of acceptance of an offer?

Answer 27

Yes, if the offeror makes it clear that they will not be bound unless acceptance is communicated in that precise way and by no other, only acceptance by that mode will suffice. The prescribed mode of acceptance must be mandatory to apply exclusively.

Question 28

What is required from the offeror to prescribe a specific mode of acceptance?

Answer 28

particularly clear words

Question 29

What is the meaning of the rule that acceptance must be unqualified?

Answer 29

The acceptance must correspond with the offer (eg not be a counter-offer)

Question 30

What is the effect of a counter-offer?

Answer 30

The original offer is terminated

Question 31

The postal rule applies even where the acceptance is

Answer 31

delayed or lost in the post (Household Fire and Carriage Accident Insurance Co. v Grant)

Question 32

the postal rule does not apply if

Answer 32

it is not contemplated that post would be used

Question 33

Does the postal rule apply to revocation?

Answer 33

NO, revocation of an offer must be received to be effective [Byrne v Van Tienhoven]

Question 34

When does postal rule NOT apply? (5)

Answer 34

- revocation of an offer - incorrectly addressed post - if post was disapplied as a mode of acceptance - acceptance via email (must arrive in their inbox) - does not apply if the postal rule was specifically disapplied by the offeror

Question 35

When does acceptance of an offer via postal rule take effect?

Answer 35

Acceptance takes effect from the moment the letter of acceptance is properly posted by the offeree / third party on their behalf

Question 36

Where an acceptance is made by an instantaneous mode of communication, the general rule is that

Answer 36

the acceptance takes place at the moment the acceptance is received by the offeror (Entores v Miles Far East)

Question 37

Acceptance by email

Answer 37

Postal rule does NOT apply - an email must be received by the offeror to apply (however, they do not have to read it - just has to be in their inbox)

Question 38

Unilateral contracts are open to acceptance by

Answer 38

performance of the acts required in the offer

Question 39

Where acceptance is communicated by post, when is the contract formed?

Answer 39

the contract is formed as soon as the letter of acceptance is properly posted

Question 40

'properly posted'

Answer 40

A letter is properly posted when it is put into an official letter box or into the hands of an employee of the Post Office who is authorised to receive letters.

Question 41

A binding contract requires all material terms to be

Answer 41

certain and complete

Question 42

To determine whether the parties have reached an agreement on all material terms, the court applies an

Answer 42

objective test, asking whether, in all the circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations

Question 43

the courts will not enforce an agreement if it is too

Answer 43

vague or ambiguous. However, this is seen as a last resort and the courts will look to enforce the agreement, reflecting the intentions of the parties, where possible.

Question 44

Contracts made with someone lacking mental incapacity are binding UNLESS

Answer 44

the person claiming incapacity can establish that: (1) they did not understand what they were doing and (2) the other party knew that to be the case

Question 45

Unequivocal acceptance

Answer 45

Unambiguous/100%

Question 46

Why was the advertisement found to be a unilateral offer in Carlill v Carbolic Smoke Ball Co?

Answer 46

- the defendant’s intention to be bound was clearly demonstrated by their deposit of the £1,000 - the certainty of the language used

Question 47

Why was an agreement to buy 'timber of fair specification' enforceable in Hillas v Arcos?

Answer 47

The court found that the words could be given a reasonable meaning, particularly in light of the parties' previous dealings

Question 48

If acceptance is sent outside of business hours, when is it deemed received?

Answer 48

at the start of next working day

Question 49

How do the courts determine whether there was an agreement between the parties?

Answer 49

Objective test - they assess whether a reasonable person would have thought there was an agreement

Question 50

If a party sends out an invitation to tender for a contract, but subsequently does not consider all tenders that meet its Ts&Cs, what can the aggrieved party do?

Answer 50

Bring a claim for breach of an implied unilateral contract to consider any conforming tenders (Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council)

Question 51

What is consideration?

Answer 51

"something in return" eg value in exchange for the promise