Contract Formation in Scots Law Week 1
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Questions and Answers

What is typically necessary for the conclusion of a contract?

  • Agreement on the time of delivery
  • Agreement on the nature, subject, and price (correct)
  • Agreement on the payment method
  • Agreement on the location of the contract

In the context of contractual obligations, who is referred to as the pursuer?

  • The party raising an action (correct)
  • The party providing consideration
  • The party that agrees to the terms
  • The party receiving payment

What is the primary basis for negotiating with the other party in a contractual dispute?

  • The emotional response of the parties
  • The mutual understanding of terms
  • The infallibility of the contract
  • The possibility of legal action (correct)

What was Frederic's response to Adham's initial offer for the bike?

<p>He countered with a higher price (B)</p> Signup and view all the answers

Which scenario demonstrated a lack of consensus or agreement in a contract?

<p>Adham posting money for the bike without confirmation (D)</p> Signup and view all the answers

How is consensus viewed in the context of contracts?

<p>Objectively, based on observable agreements (A)</p> Signup and view all the answers

In the case of Muirhead and Turnbull v Dickson, what was under dispute?

<p>Whether it was a sale or hire purchase agreement (D)</p> Signup and view all the answers

What is the role of the defender in a contractual dispute?

<p>The party being accused in a lawsuit (D)</p> Signup and view all the answers

What occurs after an invitation to treat is accepted?

<p>An offer is made following the invitation to treat. (A)</p> Signup and view all the answers

In the context of Carlill v Carbolic Smokeball Co, what was the nature of the advertisement?

<p>A binding offer available for acceptance. (C)</p> Signup and view all the answers

What is the effect of a counter-offer?

<p>It kills the original offer. (C)</p> Signup and view all the answers

When does an offer typically lapse?

<p>Upon the passage of a reasonable period of time. (B)</p> Signup and view all the answers

Which of the following accurately describes acceptance?

<p>Acceptance may be express or implied. (D)</p> Signup and view all the answers

What stipulation can an offeror make regarding acceptance?

<p>The mode of acceptance may be stipulated. (D)</p> Signup and view all the answers

What determines whether a statement can be considered an offer?

<p>The clarity of the terms indicating intent to be bound (D)</p> Signup and view all the answers

In the case of Boots’ self-service system, when was the contract formed?

<p>At the checkout when the pharmacist supervises the sale. (D)</p> Signup and view all the answers

What can be said about the nature of advertisements in general?

<p>They are generally regarded as invitations to treat. (D)</p> Signup and view all the answers

In the case of Mathieson Gee (Ayrshire) LTD v Quigley, what was the result regarding the existence of a contract?

<p>There was no contract because acceptance was not clear (C)</p> Signup and view all the answers

Which of the following statements is classified as an invitation to treat?

<p>Goods displayed with a price attached (B)</p> Signup and view all the answers

According to the legal definitions provided, who is referred to as the offeror?

<p>The party that makes the offer (D)</p> Signup and view all the answers

Which case emphasizes the principle that an accepted offer creates a contract?

<p>Viscount Stair, Institutions (A)</p> Signup and view all the answers

What is the primary distinction between an offer and an invitation to treat?

<p>An offer aims to create a binding contract, while an invitation to treat does not (D)</p> Signup and view all the answers

What essential element was lacking in the agreement between MG and Q that resulted in no contract?

<p>Clear acceptance of the offer (C)</p> Signup and view all the answers

Which statement correctly identifies what constitutes a legal offer?

<p>It must have terms indicating the intent to be bound (B)</p> Signup and view all the answers

What is required for a promise to be considered a unilateral obligation?

<p>It must be made in writing and signed, unless in business. (D)</p> Signup and view all the answers

Which case demonstrates that an oral promise made in a commercial setting can be relied upon?

<p>Carlyle v RBS (D)</p> Signup and view all the answers

According to Stair, what happens to a promise if the recipient does not accept it?

<p>It becomes void only by a contrary rejection. (A)</p> Signup and view all the answers

What must a promise demonstrate to be enforceable according to the principles of promise?

<p>There must be serious intention to be bound. (B)</p> Signup and view all the answers

What condition can a promise be subject to?

<p>It may be subject to a condition, but needs no acceptance. (B)</p> Signup and view all the answers

What is the general rule regarding the communication of acceptance?

<p>Acceptance is effective on receipt. (D)</p> Signup and view all the answers

Which of the following cases illustrates the Postal Acceptance Rule?

<p>Thomson v James (C)</p> Signup and view all the answers

Under what condition can an acceptance be effectively withdrawn according to the given content?

<p>If the withdrawal letter reaches the offeror before the acceptance letter. (A)</p> Signup and view all the answers

What is necessary for a contract to exist as per the details provided?

<p>There must be actual communication of acceptance. (C)</p> Signup and view all the answers

In the context of an offer, which statement is true?

<p>A withdrawal of an offer must be actually communicated to be effective. (C)</p> Signup and view all the answers

What distinguishes a contract from a promise?

<p>A contract becomes binding only after communication. (C)</p> Signup and view all the answers

Which situation exemplifies a unilateral contract?

<p>A person promises a reward for finding a missing dog. (C)</p> Signup and view all the answers

What should parties ideally specify to avoid confusion regarding acceptance?

<p>There should be a clear indication of how acceptance can be communicated. (C)</p> Signup and view all the answers

Which of the following statements correctly reflects an enforceable contract?

<p>A clearly defined contract with all necessary elements settled. (D)</p> Signup and view all the answers

What is an essential element that must be present for a contract to be enforceable?

<p>Intention to create legal relations. (C)</p> Signup and view all the answers

In the context of contract law, what is meant by 'incomplete agreements'?

<p>Contracts that leave essential terms open for interpretation. (D)</p> Signup and view all the answers

What illustrates a characteristic of conditional agreements in contract law?

<p>An agreement contingent upon a specific future event. (C)</p> Signup and view all the answers

According to the legal principles laid out, which type of agreements are generally not enforceable?

<p>Agreements to agree that lack definitive terms. (D)</p> Signup and view all the answers

Which of the following cases involved a term determined by arbitration?

<p>Foley v Classique Coaches (D)</p> Signup and view all the answers

What is a significant factor in determining whether an agreement between parties is legally binding?

<p>The intention of both parties to create legal obligations (B)</p> Signup and view all the answers

In which situation did the courts imply a term regarding reasonable payment due to dissensus on price?

<p>Avintair v Ryder Airline Services Ltd (B)</p> Signup and view all the answers

What legal principle suggests that commercial agreements are enforceable as contracts?

<p>Presumptions based on the context of the agreement (B)</p> Signup and view all the answers

Which case demonstrates that an agreement on price is not always an essential term for contract validity?

<p>R&amp;J Dempster v Motherwell Bridge and Engineering Co Ltd (C)</p> Signup and view all the answers

Which statement best describes the case Balfour v Balfour?

<p>It failed to establish a legal obligation. (D)</p> Signup and view all the answers

What distinguishes a suspensive obligation from a resolutive obligation?

<p>A suspensive obligation is due on occurrence of an uncertain event. (A), A resolutive obligation ends when an uncertain event occurs. (D)</p> Signup and view all the answers

Under the Requirements of Writing (Scotland) Act 1995, which situation requires a written document?

<p>The creation of a real right in land. (C)</p> Signup and view all the answers

Which of the following obligations can be classified as contingent?

<p>Obligations based on a certain event. (D)</p> Signup and view all the answers

Which of the following describes the nature of commercial agreements based on Rose and Frank Co v JR Crompton & Bros Ltd?

<p>They can be informal and non-binding. (A)</p> Signup and view all the answers

Flashcards

Contract Formation

The process of creating a legally binding agreement between two or more parties.

Contractual Obligations

The duties and responsibilities owed by each party to the other in a contract.

Contractual Disputes

Disagreements or conflicts that arise between parties to a contract regarding its terms or performance.

Pursuer

The party initiating legal action in a court case.

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Defender

The party against whom legal action is taken in a court case.

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Consensus ad idem

Agreement on the same thing; a meeting of the minds between parties in a contract.

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Objective Approach (Contracts)

Courts determine the existence of a contract based on the observable conduct and communications of the parties, not their intentions.

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Consideration

Something of value exchanged between parties in a contract.

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Offer

A proposal or declaration by one party with the intention of making it a contract.

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Acceptance

Agreement to the offered terms by the other party.

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Consensus

Agreement between parties on the terms of a contract.

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Offer

A clear statement of terms, intending to be bound by acceptance.

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Acceptance

Unconditional agreement to the terms of an offer.

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Invitation to Treat

A statement which invites others to make offers.

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Offeror

The person making the offer.

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Offeree

The person to whom the offer is made.

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Commercial contracts

Contracts based on the words used, not the hidden intentions.

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Mathieson Gee v Quigley

Case highlighting that a contract requires mutual understanding (consensus) for true agreement.

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Sufficiently clear terms

Criteria to determine whether a statement amounts to an offer.

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Advert

Generally considered an invitation to treat, not an offer.

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Communication of Acceptance

Acceptance of an offer is effective only when communicated to the offeror.

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Postal Acceptance Rule

Acceptance is effective when posted, not when received, only for postal communication.

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Revocation of Offer

Withdrawal of an offer must be communicated to be effective.

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Offer and Acceptance Crossing in Post

A contract is formed when acceptance is posted, even if a revocation arrives later.

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Effective Acceptance

Acceptance is effective on receipt, unless the Postal Acceptance Rule applies.

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Contract vs. Promise

A contract is a legally binding agreement, while a promise may not be.

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Binding in Law

A contract has binding legal force.

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Need for Agreement

A contract requires a mutual agreement between parties.

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Need for Acceptance

A contract requires acceptance of the terms of an offer.

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Communication of Acceptance?

Acceptance needs to be communicated to be valid.

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Revocation?

An offer can be revoked before acceptance.

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Promise

A simple, unconditioned commitment. It becomes void if not accepted, not because of non-acceptance, but because of rejection.

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Unilateral Obligation

A promise made by one party, where the other party's action isn't required for the promise to be binding.

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Writing Requirement (Promises)

Most promises need to be in writing and signed unless made in business dealings.

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Serious Intention (Promises)

A promise requires a serious intention to be legally bound by that commitment.

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Communication of Promises

The promise must be communicated to the other party to be considered valid.

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Irrevocable Promise

A promise that, once made, cannot be taken back unless under certain legal circumstances.

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Promise's Acceptance

While not always required, a promise can be made subject to a condition.

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Commercial Promise

Promises made in a business setting can sometimes be legally enforceable even without written documentation, sometimes even based on an oral promise.

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Offer Keeping

A promise to maintain an offer open for a certain time, binding the proposer.

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Invitation to Treat

An invitation to make an offer, not an offer itself. A display in a shop window or a price list are examples.

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Offer

A definite proposal to enter into a contract, which, if accepted, creates a binding agreement.

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Acceptance

Unconditional agreement to the terms of an offer, creating a binding contract.

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Counter-offer

A response to an offer that changes the terms of the initial offer, effectively rejecting the original offer.

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Lapse of Offer

When an offer expires due to a reasonable time passing, rejection, or revocation.

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Revocation

Withdrawing an offer before it is accepted.

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Pharmaceutical Society of Great Britain v Boots

A case illustrating that displaying goods in a shop is an invitation to treat, not an offer.

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Carlill v Carbolic Smoke Ball Co

A case where an advertisement was deemed to be an offer, due to its clear and definite terms.

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Hyde v Wrench

A case showing that a counter-offer terminates the original offer.

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Reasonable Time (Offer)

The time period considered fair for acceptance of an offer, dependent on the circumstances.

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Acceptance: Express/Implied

Acceptance can be explicitly stated or inferred from actions aligning with the offer's terms.

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Stipulated Mode of Acceptance

The offeror can specify the way in which acceptance must be communicated.

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Silence as Acceptance

Failure to respond to an offer cannot be considered acceptance.

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Incomplete Agreements

Agreements lacking essential terms, like price or key details, are not enforceable.

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Intention to Create Legal Relations

Parties must intend to be legally bound by their agreement for it to be enforceable.

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Conditional Agreements

Agreements dependent on a future event or condition are enforceable only when the event occurs.

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Formalities

Certain agreements might require specific forms (like written contracts) to be valid and enforceable.

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Agreements to Agree

These agreements, where parties intend to 'agree' on terms later, lack sufficient detail and aren't enforceable.

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Enforceable Agreements

Contracts with all necessary terms and a valid intention to create legal relations.

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Unenforceable Agreements

Agreements lacking necessary details, the intention to be legally bound, or complying with required formalities.

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Terms left to be determined

In contracts, terms whose specifics are not immediately agreed upon and need further clarification or agreement.

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Term determined by arbitration

A dispute resolution method. When a contract has terms that need settling, the parties agree to have a third party (the arbitrator) decide the specifics.

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Term determined by open market value

When a contract term depends on market price at the time of execution, and the price is decided based on the prevailing market value.

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Executed agreement

An agreement where the parties have already performed the obligations they've agreed to.

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Payment quantum meruit

Payment for services rendered, based on the reasonable value of the services, even if the exact amount wasn't agreed upon in the contract.

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Social agreement

Agreements made in social settings that may not be legally enforceable because of a lack of intention to create legal obligations.

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Commercial agreement

Agreements and contracts made in a business context, usually intended to be legally binding.

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Intention to create legal obligations

A crucial element in contract formation — both parties must intend that their agreement is legally enforceable

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Intention to create legal obligations

The willingness of parties to enter a contract with legally binding consequences. This is a crucial element for a contract to be legally enforceable.

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Social agreement (contract)

Agreements between individuals regarding matters like personal arrangements, often lacking the intent to create legal obligations, making them unenforceable in a court.

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Commercial agreement (contract)

A business-related agreement that is usually intended to create legally binding obligations.

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Conditional agreement

Agreements where the performance of obligations is contingent upon the occurrence of a specific event.

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Pure obligation

A contractual obligation that is due immediately upon agreement.

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Future obligation

A contractual obligation due at a future date or after the occurrence of a specific event.

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Contingent obligation

A contractually imposed requirement that depends on the fulfillment of a specific condition.

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Suspensive condition

Obligations are not due until a specific event occurs.

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Resolutive condition

Obligations are due until a specific event occurs.

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Requirements of Writing (Scotland) Act 1995

A Scottish law specifying certain contracts that require a written document for legal validity.

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Unwritten contract for land interest

Agreements concerning land that are not formally documented but can be legally binding under specific conditions in Scotland.

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Capacity to contract

The legal ability of a person to enter into a valid contract.

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Children's Capacity

Individuals under 16 typically lack full capacity to contract, but exceptions exist.

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Age of Legal Capacity (Scotland)

The age at which individuals are legally allowed to enter into contracts, as defined by the 1991 Act.

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Incapable Adults

Adults lacking mental capacity due to illness or other reasons need safeguards to manage their affairs.

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Intoxicated Adults

Individuals intoxicated to the point of lacking the ability to understand a transaction have limited capacity.

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Prejudicial Transaction

A specific type of transaction that may be detrimental to a person aged 16 or 17 in Scotland.

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Void Contract

A contract that has no legal effect from its beginning. It is as though the contract never existed.

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Force and Fear

Contracts influenced by force, especially threats of immediate violence, are void.

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Facility and Circumvention

Contracts where a person in a weakened state is tricked or pressured, are potentially void (invalid).

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Defective Agreements

Agreements that are flawed, potentially invalidating the contract.

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Grounds of Challenge

Reasons why a contract can be questioned or challenged in court.

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Lack of Capacity

A party's inability to understand or form a contract, due to factors like age or mental state.

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Unlawful Contract

A contract that breaks the law, making it void.

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Defects in Consent

Problems with the agreement's voluntariness, like force, fear, or undue influence.

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Consent Induced by Force and Fear

A contract made due to threats or force that make it invalid.

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Consent through Circumvention

Agreement obtained through deceptive or misleading tactics.

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Consent under Undue Influence

Agreement made due to manipulation or exploitation.

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Mistaken Consent (Error/Misrepresentation)

A contract based on a mistaken understanding or a false statement.

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Contract Void

A contract with no legal effect from the start, as if it never existed.

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Contract Voidable

A contract that is valid until one of the parties chooses to cancel it.

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Restitutio in Integrum

Restoration of all parties to their original position.

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Third Party Rights

Rights created, transferred or impacted by a contract that involve parties not directly involved.

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Study Notes

Student Attendance System

  • System for on-campus attendance: Students open the app/calendar, find their beacon, click "Check-In" icon, wait for it to turn solid green
  • System for online attendance & engagement: Students open the app/calendar, click the Watch link, close the confirmation screen, view the lesson on their device
  • Online Introduction to Scientific Enterprise: The course is scheduled for Monday, September 6th at 10:00

Contract Formation in Scots Law

  • Topic: Formation of a Contract/Incurring Contractual Obligations
  • Course: Private Law of Scotland I, LW11011, Week 1
  • Contract Disputes: Courts uphold rights and enforce duties. Possibility of legal action provides a basis for negotiation. Party raising action is the pursuer, other party is the defender.
  • Contract Conclusion: Sometimes the answer is obvious, sometimes arguable. Examples are included in the slides showing scenarios and questions for discussion to determine if a contract was reached.

Elements of a Contract

  • Agreement/Consensus in Idem: Agreement on the nature of the contract, subject(s) of the contract, and the price/consideration
  • Objectivity of Consensus: Courts consider the outward appearance of agreement, not the parties' internal thoughts or intentions

Cases and Examples

  • Muirhead & Turnbull v Dickson (1905): The court determined the contract was NOT for hire purchase, looking at what parties said, not what they thought they said. This case emphasizes objective interpretation of agreement.
  • Mathieson Gee v Quigley (1952): Examines whether a contract existed based on the parties' communications.
  • Hyde v Wrench (1840), Wolf & Wolf v Forfar Potato Co (1984): A counter-offer kills the original offer, making it no longer capable of acceptance. Passage of time and reasonable time for acceptance discussed.
  • Wylie & Lochead v McElroy & Sons (1873): Passage of reasonable time for acceptance discussed in the context of commodity price fluctuations.
  • Holwell Securities v Hughes (1974), Felthouse v Bindley (1862): Acceptance must be communicated. Silence does not constitute acceptance; the offeror can't stipulate acceptance by silence.
  • Shaw (2010): Consideration of circumstances where a party thought their communication constituted acceptance, and a contract was then judged to exist.

Communication of Acceptance

  • General Rule: Acceptance is effective on receipt; it needs to be read, heard, or received.
  • Exception - Postal Acceptance Rule: If offer and acceptance are conducted by post, acceptance is deemed effective on posting The offeror cannot withdraw an offer once the letter of acceptance has been posted, but revocation needs to have been received to be effective. Once the acceptance has been posted, the contract is formed. -Important context: To avoid confusion, an offer may specify that acceptance must be communicated directly to avoid the postal rule.

Revocation

  • A contract's offer can be withdrawn but needs to be effectively communicated before the acceptance. Putting the revocation in the post is not enough, it needs to be received.

Offer vs Invitation to Treat

  • Offer: Statement with clear terms demonstrating intention to be bound upon acceptance.
  • Invitation to Treat: Not an offer; it's an invitation to make an offer. Common examples include shop displays, advertisements, price lists, and quotations.

Cases Illustrating Offer/Invitations to Treat

  • Pharmaceutical Society of Great Britain v Boots (1953): A self-service store selling drugs; a pharmacist supervising transactions. Clarified the difference between an invitation to treat and an offer in retail settings.
  • Carlill v Carbolic Smoke Ball Co (1893): Company made a promise for a particular outcome to customers; viewed as a binding offer, not an invitation to treat.

Contract vs Promise

  • Contract: Binding in law; includes a clear agreement, acceptance, and consideration. Key questions include if it's binding, if it needs writing, if it needs agreement and acceptance, and if its communication is required and how to revoke it.
  • Promise: Something that may not be legally binding. It highlights essential elements in determining if a promise is actionable in law. Examples are given in slide 25

Further Study Points

  • Enforceability and formalities of contracts will be discussed following this material.

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Related Documents

LW11010 PLS I - week 1 Formation of Contract - Tagged.pdf
LW11011 PLS I - Week 2 Enforceable & Unenforceable Agreements PDF
Defective Agreements - Past Paper PDF

Description

Explore the principles of contract formation and the obligations that arise within Scots law in this Week 1 quiz from the Private Law of Scotland course. Understand the roles of pursuer and defender in contractual disputes and engage with various scenarios to determine contract status. Test your knowledge on the legal foundations and practical implications of contract formation.

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