Contract Law Essentials

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Questions and Answers

What is the significance of Barry v Davies (2001) in contract law?

Withdrawing an item after the highest bid breaches a contract. (correct)

A 'no reserve' auction creates no binding contracts.

An auctioneer can withdraw an item at any time.

Highest bid in an auction is not binding.

What does the case of Hyde v Wrench (1840) illustrate about offers?

Once a counter-offer is made, the original offer is voided. (correct)

Counter-offers can be accepted at any time.

All offers can be accepted unless explicitly stated otherwise.

A counter-offer does not affect the original offer.

Under what circumstance does silence constitute acceptance?

When the offeree agrees to this condition. (correct)

When the offeror insists on a swift acceptance.

When silence is customary in the industry.

When there is an established relationship between the parties.

In Henthorn v Fraser (1892), what principle regarding acceptance is established?

Acceptance is binding once the letter is posted, regardless of delivery issues. Signup and view all the answers

What does The Brimnes (1975) say about electronic communications?

Acceptance is effective upon receipt by the offeror. Signup and view all the answers

How is acceptance communicated over instantaneous methods like phone or email?

It is valid upon receipt by the offeror. Signup and view all the answers

When does the postal rule apply to acceptance of an offer?

When acceptance is valid upon dispatch of the letter. Signup and view all the answers

According to Routledge v Grant (1828), when can an offer be revoked?

An offer can be revoked anytime before acceptance, even if a time limit is stated. Signup and view all the answers

What happens if an offer explicitly requires direct communication of acceptance?

The postal rule does not apply. Signup and view all the answers

What does Dickinson v Dodds (1876) demonstrate about the revocation of offers?

A reliable third party can effectively communicate an offer's revocation. Signup and view all the answers

In the context of competing contractual terms, which doctrine applies?

Last shot doctrine. Signup and view all the answers

What does Schweppe v Harper (2008) state about the communication of revocation?

Clear communication of revocation is essential for its validity. Signup and view all the answers

What is the definition of consideration in Currie v Misa (1875)?

A right, interest, or detriment exchanged between parties. Signup and view all the answers

What is required for a contract to be valid when the offeror specifies a method of acceptance?

The offeree must adhere to the specified method. Signup and view all the answers

Can an offer in a unilateral contract be revoked once the offeree starts performance?

No, the offeror cannot revoke the offer. Signup and view all the answers

In auction sales, what obligation does an auctioneer have after the highest bid is placed?

They must sell the item without reserve. Signup and view all the answers

What principle is established in Harvey v Facey regarding price listings?

Price listings constitute an invitation to treat. Signup and view all the answers

According to Fisher v Bell, what does displaying an item with a price in a store window represent?

An invitation to treat. Signup and view all the answers

What does the case of Carlill v Carbolic Smoke Ball Co demonstrate about advertisements?

Advertisements can form unilateral contracts. Signup and view all the answers

What principle was highlighted in Gibson v Manchester City Council regarding contract language?

Future intentions cannot be interpreted as offers. Signup and view all the answers

What does the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists clarify about self-service stores?

Selecting an item is an invitation to treat. Signup and view all the answers

In the principle of acceptance by conduct as established in Metropolitan Railway v Brogdon, what is a key element?

Acceptance can be inferred from actions. Signup and view all the answers

What principle regarding general advertisements is illustrated in Partridge v Crittenden?

General advertisements are invitations to treat. Signup and view all the answers

What key understanding about acceptance in contracts is derived from the principle established in Metropolitan Railway v Brogdon?

Actions may indicate acceptance. Signup and view all the answers

What are the conditions for past consideration to be valid?

The act must be done at the promisor's request with an expectation of a future reward. Signup and view all the answers

In Collins v Godefroy, what was established regarding consideration and public duties?

Consideration cannot arise from duties already owed to the public. Signup and view all the answers

What principle was established in Balfour v Balfour regarding family agreements?

Agreements in a family context are presumed to lack legal intent. Signup and view all the answers

In which case was it determined that exceeding public duty may constitute valid consideration?

Glasbrook Ltd v Glamorgan CC Signup and view all the answers

What does the principle from Tweddle v Atkinson state regarding consideration?

Only a party who provided consideration can enforce a contract. Signup and view all the answers

What do Rose & Frank v Crompton Bros signify about commercial agreements?

Parties can waive legal enforceability if stated clearly. Signup and view all the answers

What is the definition of consideration as established in Currie v Misa?

A right, interest, profit, or benefit accruing to one party. Signup and view all the answers

In Chappell & Co Ltd v Nestle Co Ltd, what was determined about the adequacy of consideration?

Consideration need not be economically adequate but must be legally sufficient. Signup and view all the answers

What is considered valid consideration in the context of exceeding legal duties?

Performance of a duty that exceeds legal requirements Signup and view all the answers

Which case established that performing an existing contractual duty does not amount to valid consideration?

Stilk v Myrick Signup and view all the answers

What did the case of Foakes v Beer confirm regarding part payment of debt?

It does not discharge the full debt unless accompanied by additional consideration Signup and view all the answers

According to Williams v Roffey Bros & Nicholls, when can additional promises in a contract become binding?

When the promisor receives a practical benefit Signup and view all the answers

What principle was introduced in the case of Central London Property v High Trees?

Promissory estoppel prevents parties from going back on promises relied upon Signup and view all the answers

Which early case laid the foundation for the principle of promissory estoppel?

Hughes v Metropolitan Railway Signup and view all the answers

What limitation of promissory estoppel was clarified in Combe v Combe?

It can only be used as a defense Signup and view all the answers

In Collier v P&MJ Wright (Holdings) Ltd, how did promissory estoppel relate to part payment of debt?

It affirmed that part payment might prevent full debt enforcement under certain circumstances Signup and view all the answers

Study Notes

Auction Sales and Reserve

An auctioneer cannot withdraw an item without reserve after the highest bid has been placed.
Once the highest bid is made in a no reserve auction, a binding contract is formed between the auctioneer and the highest bidder.

Counter-Offers

A counter-offer voids the original offer.
Once a counter-offer is made, the original offer can no longer be accepted.

Postal Rule for Acceptance

Acceptance through postal communication is binding upon posting, provided mail is a reasonable means of communication.
This rule applies even if the offeror does not receive the acceptance immediately.

Electronic Communication

Acceptance through instantaneous communication, such as fax or email, is valid upon receipt by the offeror.

Revocation Before Acceptance

An offeror can withdraw their offer before it has been accepted, even if a time limit was stated for acceptance.
Revocation must be communicated to the offeree for it to be effective.

Revocation by Third Party

An offer can be effectively revoked if a reliable third party communicates the revocation to the offeree.
The third party must be a reliable source of information.

Limits of Revocation

Revocation must be communicated in a clear manner to the offeree.
The offeree must have been made aware of the revocation in order for it to be valid.

Definition of Consideration

Consideration is defined as some right, interest, or benefit to one party or some forbearance, detriment, loss, or responsibility undertaken by the other.
Consideration is the price paid for a promise. It must be something of value in the eyes of the law, and it must be moving from the promisee.

Past Consideration Exception

Past consideration can be valid if it was requested by the promisor and if both parties understood that payment was expected.
This exception applies only in limited circumstances.

Advertisements as Invitations to Treat

General advertisements, even with pricing, are invitations to treat rather than binding offers.
This means that the advertiser is not bound to sell at the advertised price, even if someone has expressed interest.

Unilateral Contracts

Advertisements promising rewards upon specific actions, as in the case of Carlill v Carbolic Smoke Ball Co, form unilateral contracts.
These contracts are formed when one party (the offeror) promises to do something if another party (the offeree) performs a specific act.

Clarity in Language for Binding Contracts

Ambiguous language does not create binding offers.
Language suggesting future intentions or possibilities does not constitute a legally binding offer.

Self-Service Stores

Selecting an item in a self-service shop is an invitation to treat.
The offer to buy is only made at checkout.

Acceptance by Conduct

Acceptance can be inferred from actions demonstrating intent, even if no verbal or written confirmation is provided.
This occurs when the offeree’s conduct demonstrates that they have accepted the offer.

Silence as Acceptance

Silence does not amount to acceptance unless specifically agreed otherwise by the offeree.
The offeree must actively communicate their acceptance for it to be valid.

Acceptance via Instant Communication

Acceptance over instantaneous methods like phone or email is valid upon receipt, unlike traditional mail.
This principle reflects the immediacy of communication in these cases.

Postal Rule

Acceptance is valid upon dispatch when using postal communication, forming a contract even before the offeror receives notice.
This rule acknowledges the delay inherent in postal communication and protects the offeree's reliance on the postal service.

Exception to Postal Rule

The Postal Rule is void if the offer explicitly requires direct communication of acceptance to the offeror.
This exception protects the offeror's right to control the method of acceptance.

Battle of Forms

In competing contractual terms, the ‘last shot’ doctrine applies, where the last set of terms presented before acceptance becomes binding.
This rule ensures that parties are aware of the terms of the contract, even if there are competing forms.

Specified Method of Acceptance

The offeror may dictate a specific method of acceptance which must be adhered to for the contract to be valid.
If a specific method of acceptance is not followed. the offer may not be deemed accepted.

Revocation in Unilateral Contracts

Once an offeree begins performing an act in response to a unilateral offer, the offeror cannot revoke the offer.
The offeror is bound by the offer once the offeree begins performing the act.

Invitation to Treat

Advertisements inviting bids or tenders are generally considered invitations to treat, not offers.
They are invitations for others to make offers.

Further Conditions for Past Consideration

Past consideration can be valid if it was understood by both parties that payment was expected.

Existing Public Duty

Consideration is insufficient if it is a duty already owed to the public, such as appearing as a witness under subpoena.
The performance of an existing public duty does not constitute valid consideration.

Exceeding Public Duty

Where a party goes beyond its public duty, this may constitute valid consideration for a contract.
This is because the party is providing something extra beyond what they are legally obligated to do.

Family Agreements

Agreements in family contexts, such as between husband and wife, are generally presumed not to have legal intent.
These agreements are often based on love and affection, and not on legal obligation.

Commercial Agreements

Parties can expressly exclude legal enforceability in commercial contexts if stated clearly within the contract.
This is achieved through clear language and a specific clause in the contract.

Consideration Must Move From the Promisee

Only a party who has provided consideration can enforce a contract.
The party who provided the consideration is the only party who can sue for breach.

Performance or Promise of Performance of Existing Duty

The performance of a duty exceeding what was required by law can serve as valid consideration.
This means that going beyond what is minimally required can constitute valid consideration.

Promised Performance of Existing Duty

An individual's performance of a duty they are already contractually obligated to fulfill does not constitute valid consideration.
The performance must be something beyond the existing duty.

Part Payment of Debt as Insufficient Consideration

Part payment of a debt, without additional consideration, does not discharge the full debt unless agreed otherwise.
This rule helps to protect creditors from being unfairly pressured into accepting less than what they are owed.

Practical Benefit as Consideration

Additional promises in a contract can be binding if the promisor gains a practical benefit, even without new consideration.
This rule recognizes that practical benefits can be as valuable as traditional forms of consideration.

Consideration and Modification

While part payment may not always constitute valid consideration for a modification of contract terms, practical benefits to the promisor can be substantial.

Estoppel in Promissory Estoppel

The principle of promissory estoppel prevents parties from going back on promises that others have relied upon.

Foundation of Promissory Estoppel

Parties are bound to prior promises under certain conditions.

Limitation of Promissory Estoppel

Promissory estoppel can only be used as a defense (a shield), not as a cause of action (a sword).
It cannot be used to initiate legal action on its own.

Estoppel and Part Payment of Debt

Part payment of a debt, under promissory estoppel, may prevent creditors from enforcing full debt collection.
This rule helps protect debtors from being unfairly pressured into paying the full amount when they have relied on a promise of partial payment.

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Test your knowledge on the key principles of contract law, including auction sales, counter-offers, and the postal rule for acceptance. This quiz covers essential topics that every law student should understand, highlighting the importance of communication in contract formation.