Contracts Overview and Types

Podcast Beta

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What was the primary reason D won the case in Payne v Cave?

D withdrew the bid before it was accepted. (correct)

C did not have the goods available for sale.

D had a legal obligation to fulfill the bid.

The bid was accepted by the auctioneer.

Which of the following best explains the rule regarding the withdrawal of an offer?

An offer can be retracted after acceptance.

Withdrawal must be communicated directly to the offeree. (correct)

An offer can be withdrawn anytime without notifying.

Withdrawal is effective upon posting the notice.

In Bryne v Leon Van Tienhoven, what crucial timing issue affected D's ability to withdraw the offer?

The offer was made too far in advance.

The acceptance was made in a different format.

The offer was ambiguous and unclear.

The withdrawal letter arrived after acceptance. (correct)

What is a key factor in allowing withdrawal through a third party?

The third party must be reliable or reasonable. Signup and view all the answers

In the context of an unilateral contract, which statement is true regarding withdrawal?

An offer for a unilateral contract cannot be withdrawn once performance begins. Signup and view all the answers

What are the essential requirements for a contract as outlined by Lord Wilberforce?

A valid offer, acceptance, intention to create a legal relationship, and consideration Signup and view all the answers

Which type of contract is formed when one party makes a promise in exchange for a performance by another party?

Bilateral contract Signup and view all the answers

In the context of contracts, who is referred to as the offeror?

The party making the offer Signup and view all the answers

Which of the following statements about unilateral contracts is true?

They are binding upon an obligation assumed by one party Signup and view all the answers

What best describes the term 'consideration' in contract law?

Something of value exchanged between parties Signup and view all the answers

What is the purpose of objective tests in relation to contracts?

To infer the intention of the parties based on evidence. Signup and view all the answers

Which characteristic does NOT define a bilateral contract?

Only one party assumes an obligation Signup and view all the answers

In the case of Carlill & Carbolic Smoke Ball, what was the main purpose of the advertisement placed by D?

To prevent flu by encouraging product use Signup and view all the answers

What was the determination made by the court in Hyde v Wrench regarding C's offer of 950 pounds?

It constituted a counter-offer that nullified the prior offer. Signup and view all the answers

Which of the following best describes a counter-offer based on the case of Hyde v Wrench?

A new offer that rejects the original offer. Signup and view all the answers

What was the key issue in the Stevenson Jacques & Co v Mclean case?

Whether C's inquiry constituted a counter-offer. Signup and view all the answers

What does the general rule of withdrawal state?

An offer can be revoked anytime before acceptance. Signup and view all the answers

Which of the following would NOT be a consequence of making a counter-offer?

The original offer remains valid. Signup and view all the answers

In the case of Stevenson Jacques & Co v Mclean, what was the nature of C's telegram?

An inquiry about the terms of the offer. Signup and view all the answers

What happens to an original offer once a counter-offer is made?

It is rejected and cannot be accepted later. Signup and view all the answers

What did the court rule regarding D's failure to respond to C's inquiry in Stevenson Jacques & Co v Mclean?

The original offer remained valid until formally revoked. Signup and view all the answers

What was the main reason D won the case in Dickinson v Dodds?

C did not accept the offer by Friday. Signup and view all the answers

In which case could the offer not be revoked once the offeree had commenced performance?

Errington v Errington & Woods Signup and view all the answers

What is a key principle regarding offers in unilateral contracts?

Offers can be revoked anytime before acceptance, as shown in Dickinson v Dodds. Signup and view all the answers

What circumstance allows for withdrawal of an offer in the context of unilateral contracts?

The performance of the act has not yet begun. Signup and view all the answers

What was the court's ruling regarding D's communication of offer withdrawal in Dickinson v Dodds?

Communication through a third party is valid. Signup and view all the answers

What was the outcome of Errington v Errington & Woods with respect to the unilateral contract?

The couple was allowed to complete their payment. Signup and view all the answers

Which case allowed for the withdrawal of an offer in a unilateral contract?

Shuey v United States Signup and view all the answers

What must occur for a unilateral contract to remain binding on the offeree?

The offeree must complete the promised act. Signup and view all the answers

When is a withdrawal considered effective under normal business hours?

When it reaches the offeree, regardless of reading Signup and view all the answers

What was the main factor that led to the court's decision in The Brimnes case?

The message was sent during ordinary business hours Signup and view all the answers

Which of the following describes the outcome of the Pickfords v Celestica case regarding the first offer?

The first offer was revoked upon submission of the second Signup and view all the answers

In what circumstance would a withdrawal sent to the last known address of the offeree still be considered effective?

If the offeree moves without notifying the offeror Signup and view all the answers

What is a key distinction between an offer and a counter-offer as illustrated in the discussed cases?

Acceptance of a counter-offer voids the original offer Signup and view all the answers

What is the implication of a notification being sent during ordinary business hours?

It is deemed to have been read by the receiver Signup and view all the answers

What condition leads to the revocation of an earlier offer when a modified offer is presented?

The acceptance of the second offer implies rejection of the first Signup and view all the answers

What principle regarding offers was established in Carlil v Carbolic Smoke Ball Co.?

Advertising can serve as an offer when specific conditions are met Signup and view all the answers

Study Notes

Contracts

Agreements between 2 or more parties that creates obligations for those parties to fulfill their promises.
The case of Eurymedon is an example of a contract.

Requirements of a Contract

A valid offer.
An equivocal acceptance.
An intention to create a legal relationship.
Consideration.

Types of Contract

Bilateral contract
- Contract between 2 or more parties.
- Each party makes a promise to the other in exchange for something.
Unilateral contract
- Contract between 1 party and the world at large.
- One party makes a promise in exchange for an act by another.
- Typically involves a reward for performing a specific act.

Offer

An expression of willingness to contract on certain terms.
The offeror intends it to become binding upon acceptance by the offeree.

Offeror and Offeree

Offeror: The person or entity making the offer.
Offeree: The person or entity to whom the offer is made.

Offer Made To

A specific person.
A group of people.
The world at large / the public.

Objective Tests

Used by courts to determine the intention of parties to reach an agreement.
Based on the facts of the case.

Case Study - Unilateral Contract: Carlil v Carbolic Smoke Ball

Defendant (Carbolic Smoke Ball Company) placed an advertisement for their product, claiming it could prevent flu.
The advertisement promised a reward of £100 to anyone who used the product for a specific period and still caught flu.
The company deposited £1000 in a bank account to demonstrate their sincerity.
This case established that a unilateral contract can be formed through an advertisement.

Offer Termination

Specified Time: The offer expires after a specific time.
Reasonable Length of Time: If no time is specified, the offer expires after a reasonable period.
Rejection: The offeree declines the offer.
Failure of Precondition: A condition for acceptance of the offer fails.
Death of an Offeror/Offeree: The offer lapses if the offeror or offeree dies before acceptance.
Counter-Offer: The offeree proposes different terms, which effectively cancels the original offer.
Request for Information: An inquiry for clarification on the terms does not constitute a counter-offer.
Withdrawal & Revocation: The offeror can withdraw the offer before acceptance.

Case Study - Counter-Offer: Hyde v Wrench

Defendant offered to sell a farm to the plaintiff for £1200, but the plaintiff declined.
Defendant then offered to sell the farm for £1000, stating it was a final offer.
The plaintiff offered £950, which was refused.
Plaintiff then attempted to accept the original £1000 offer, but the defendant refused to sell.
The court held that the plaintiff's offer of £950 was a counter-offer, effectively destroying the original £1000 offer.

Case Study - Request for Information: Stevenson Jacques & Co v Mclean

Defendant offered to sell iron to the plaintiff at a price of 40 shillings, keeping the offer open until Monday.
Plaintiff sent a telegram asking if payment could be extended over two months, or what the defendant's longer limit for payment was.
Defendant did not reply and sold the iron to a third party.
Plaintiff then sent a telegram accepting the original offer on Monday.
The court ruled that the plaintiff's telegram was a request for information, not a counter-offer.
The original offer remained valid, and the second telegram formed a binding contract.

General Rule of Withdrawal

An offer can be withdrawn at any time before acceptance.

Case Study - General Rule of Withdrawal: Payne v Cave

Defendant placed goods for sale at a public auction.
The plaintiff made the highest bid, but changed his mind before the auctioneer's hammer fell.
The court held that withdrawing the bid before acceptance was valid.

Rules of Withdrawal of an Offer

Withdrawal must be communicated to the offeree.
The offeror can notify the offeree directly.
A third party can communicate withdrawal, but only from a reliable source.
An offer for a unilateral contract can't be withdrawn once the offeree has commenced performance.

Case Study - Withdrawal Must be Communicated: Byrne v Leon Van Tien Hoven

Defendant sent a letter offering to sell 1000 boxes of tin plates.
Plaintiff received the offer and accepted by telegram.
Defendant had sent a letter withdrawing the offer before acceptance, but it arrived after the plaintiff's acceptance.
The court held that the withdrawal was ineffective because the contract was formed when the plaintiff accepted the offer.

Case Study - Withdrawal by Third Party: Dickinson v Dodds

Defendant offered to sell a house to Plaintiff, keeping the offer open until Friday.
Defendant subsequently sold the house to a third party.
The plaintiff claimed he was going to accept the offer, but did not communicate this.
Defendant informed the plaintiff through a friend that the offer had been withdrawn.
The court ruled that the offer could be revoked at any time before acceptance, and communication made by a third party was valid.

General Rule of Withdrawal in a Unilateral Contract

Revocation of a unilateral offer is not allowed once the offeree has commenced performance.

Case Study: Errington v Errington & Woods

A father purchased a house with a mortgage for his son and daughter-in-law.
The father promised the house to the son and daughter-in-law if they paid off the mortgage.
The son and daughter-in-law began paying the mortgage, but the father died before the mortgage was paid off.
The father's widow claimed the house.
The court ruled that there was a unilateral contract between the father and the couple.
The father's promise to give the house could not be revoked once they started paying off the mortgage.

Case Study - Withdrawal Allowed in Unilateral Contract: Shuey v United States

This case established that offers made to the public can be withdrawn by the same means used to communicate the original offer.

Exceptions to the Communication Rule

If the offeree moves without informing the offeror, withdrawal sent to the last known address is effective upon delivery.
Withdrawal is effective when it reaches the offeree, even if they fail to read it (applies to telefax or fax during normal business hours).
If the offeror sends a modified offer after an original offer, the original offer is considered revoked.

Case Study - Withdrawal Effective Upon Delivery: The Brimnes

Defendant sold a ship to Plaintiff on the condition that the ship be time chartered back to them.
Plaintiff sent a message via telex withdrawing the ship, during normal office hours.
Defendant did not read it until the next day and had already made payment.
The court ruled that the withdrawal was effective at the time of delivery, not when read.

Case Study - Withdrawal of Modified Offer: Pickfords v Celestica

Plaintiff offered to relocate the defendant's business equipment, using a rate per vehicle load and extras.
Two weeks later, Plaintiff submitted a fixed-price offer.
Defendant purported to accept the first offer.
The court held that Plaintiff's first offer was no longer capable of acceptance because the defendant's acceptance was a counter-offer.
The counter-offer was accepted by Plaintiff's conduct, leading to a contract based on the ‘per vehicle' rate.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the fundamentals of contracts, including key elements required for their validity, types of contracts such as bilateral and unilateral, and the roles of offeror and offeree. Test your understanding of how agreements create obligations among parties and the various facets of contract law.