PGDL Contract Law Test Questions and Correct Solution Graded A+

State the three elements required to form a legally binding contract - 1. Consideration 2. Intention to Create Legal Relations 3. Agreement (O+A) What must an offer be? - 1. Valid (Clear, Certain, and Addressed to the Offeree) 2. Communicated to offeree 3. Not rejected, revoked or lapsed 4. Made with intention to treat What must acceptance be? - 1. A mirror image of the offer 2. Made by the offeree in response to the offer 3. Communicated to the offeror Offeror - Person making the offer Offeree - Person to whom the offer is made When is there a valid offer? - Treitel: An expression of willingness to contract on specified terms made with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed Invitation to treat - Preliminary stage of negotiations, not an offer Adverts - The general rule is that an advert is an ITT, not an offer Invitation to tender - The general rule is that an invitation to tender is an ITT, not an offer How can an offer be communicated? - 1. Orally 2. In Writing 3. By Conduct How can an offer be terminated? - 1. Rejection 2. Revocation 3. Lapse Counter-Offer - Rejection of the first offer Request for further information - Original offer remains open Revocation - Can occur any time before acceptance Revocation of a unilateral offer - Can be revoked any time before complete performance Lapse - 1. Passage of time-after a reasonable period 2. fulfilment of a condition 3. Death Requirements for acceptance - 1. Must be mirror image of the offer 2. Must be made by an offeree 3. In response to the offer/ being aware of the offer 4. Motive for acceptance is irrelevant 5. An acceptance must be communicated Exceptions to the above requirement for communication of acceptance - 1. For unilateral offers, only performance of the act is necessary 2. Where the failure to communicate acceptance is the offeror's fault 3. The Postal Rule The Postal Rule - - For acceptance sent in the post, acceptance occurs at the moment of posting - Offeror cannot revoke their offer after acceptance is posted, even if they are unaware of its posting - Must be properly posted - The acceptance is still valid even if the letter is lost or destroyed Exceptions to the Postal Rule - - If it is addressed incorrectly by the offeree then it is only valid from the moment that it arrives - It is not reasonable to use the post or there is an implied condition or actual condition that prompt acceptance is required - If the application of the postal rule would cause manifest inconvenience and absurdity - If the postal rule is ousted by the offeree Instantaneous Communications - Acceptance occurs when the communications is received Unilateral Offer - A legal contract in which one individual, the buyer, pays for a specific action from another party. One-Sided agreement Bilateral offer - Between two parties who agree to perform certain services to provide certain products for a specific price Intention to Create Legal Relations - In order for an agreement to be legally enforceable, at the time of contracting the parties must have had the intention to enter into a legally binding arrangement Subjective - Concerned with the defendants perspective: was the result reasonably foreseeable Objective - Concerned with the perspective of the reasonable man Rebuttable Presumption - Assumption made by a court that is taken to be true unless someone comes forward to contest it and prove otherwise Intention to create legal relations - A principle of contract law requiring the parties to intend to create obligations that are legally binding and enforceable. Parties deemed to not have the necessary capacity to enter into a legally binding agreement - Minors: children under the age of 18 Mentally Impaired people