elitesolutions
GENERAL ADVICE
IDENTIFY AREA OF LAW
SUMMARISE THE FACTS
STATE LAW – start with general principles then move onto exceptions
APPLY FACTS TO LAW
CONCLUDE if there are 2 possible answers, say which is more likely but don’t definitively conclude, say
‘may’, ‘if’ etc
DEFINE KEY TERMS
Have a balanced approach, argue options for both sides, don’t be biased and argue on behalf of one party
Highlight facts re each contract/party in different colours so you don’t get muddled
Links between topics (where exam questions could include multiple topics):
Agency and formation
Consideration and duress
Exemption clauses and negligence
Misrepresentation (misrep) and breach
Frustration and breach
Duress and undue influence
Remedies could come up anywhere as a small question at the end
Terms could also come up anywhere
ASPECTS OF CONTRACT FORMATION
STEP 1: state the issue
Eg this is an issue re whether or not there is a binding contract
STEP 2: is there a contract?
Do the easy bits first ie the elements which are met
Make a timeline for each contract
1. Identify who is seeking to show a contract exists
Where there is more than 1 character, deal with each separately and consider events chronologically
2. State: for a binding contract we need:
1) Agreement (offer by one party which Is accepted by the other)
2) Intention to create legal relations; and
3) Consideration ie something in return
where there are multiple issues to consider, state this once as an intro and cross refer
3. State: there is agreement if there is a valid offer from 1 party and acceptance by the other There must be
CERTAINTY in offer and acceptance, or court may not uphold contract: Scammell
Eg ‘timber of fair specification’ was too vague: Hillas v Arcos
,elitesolutions
Intention to create legal relations
1. Assessment of parties’ intention in making an offer is objective would a reasonable person regard it as an
offer: Smith v Hughes
2. Commercial agreements
i) Presumption that there was intention to create legal relations: Edwards v Skyways ii) This is
rebuttable, if there is specific wording to that effect, but rebutting is tricky: Rose and Frank Co
3. Domestic and Social ie family agreements
i) Presumption that there was no intention to create legal relations between spouses as they are based
on love and affection: Balfour v Balfour
ii) This is rebuttable: Merritt evidence that may rebut:
• Exercising professional skill
• Distances of relation eg cousins not a close relationship
• There is substantial consideration
• Limited timescale of negotiations
• Product/service being agreed for business purposes
• It is a substantial task which will take several days
• Is the task one which would usually suggest a commercial, formal arrangement? BUT
informal communication may suggest no intention
start with presumption, then look for evidence against if none, state: there is no evidence to rebut this Offer
or invitation to treat?
Define offer, state the difference between offer and invitation to treat, and identity offer on the facts
,elitesolutions
OFFER:
An expression of willingness to contract on certain terms, made with the intention that it shall become
binding as soon as it is accepted by the person to whom it is addressed: Trietel
Offers should be sufficiently clear and certain for a mirroring acceptance (yes) to come back from the
offeree
INVITATION TO TREAT: made without intention to be bound by specific terms ie first step of negotiations
which may/may not prelude to an offer eg ‘do you have a van? I need to buy one’ or ‘would you be
interested?’
acceptance of an invitation to treat will not result in a contract
Self-service display in a shop Offer only when he presents goods at payment point: Boots Cash
Chemists
Goods on display Fisher v Bell
EXCEPT in limited circumstances where there is clear intention to be
bound eg display of goods in a special sale
Tenders Spencer v Harding/Blackpool & Flyde Aero Club, unless it is a unilateral
contract, in which case it will be an offer: Harvela Investments
Advertisements Merely a notification that goods are to be sold: Partridge v Crittenden,
unless:
• Offering reward: Williams; or
• Clear intention to be bound by an acceptance/unilateral contract, in
which case acceptance need not be communicated: Carlill v
Carbolic Smoke: held to have made an offer to the whole world, to
which anyone could accept how detailed is the advert? Apply
NB unilateral = promise in return for an act – offer to the world – one-sided ‘if you do A, I promise to…’
Bilateral = promise in return for a promise
RULES FOR AUCTIONS
With reserve price s57 Sale of Goods Act 1979 – contract between seller and bidder once the
auctioneer (as agent) completes the sale, ie with the fall of the hammer
Auctioneer’s request for bids = invitation to treat
Bids = offer which:
o The auctioneer may accept or reject
o Can be withdrawn at any time before acceptance
Once the bid is accepted, a contract of sale is formed
Bids are accepted when the hammer hits the table: s57(2) SGA
Without reserve price Barry v Davies – a statement saying ‘without reserve’ amounts to an offer.
This creates a unilateral contract between auctioneer and bidder that the
auctioneer will accept the highest bid.
,elitesolutions
A bidder’s high bid constitutes an acceptance of the offer
Bilateral contract of sale only created with the product owner when the hammer
goes down: s57(2)
If the auctioneer doesn’t accept the bid, the highest bidder can sue the
auctioneer (not owner) for damages due to breach of unilateral contract
damages = different in value between highest bid and cost of procuring a
similar product elsewhere – no contract of sale so cannot claim the product itself
TENDERS
• Depending on circumstances, an invitation for tenders may give rise to a unilateral
contract
• Harvela: sent 2 parties identical telexes offering a unilateral contract to sell to the highest bidder. One
firm offered a fixed amount and another said ‘£101k more than any other offer’ cannot accept
referential bids, only fixed offers
Has an offer been accepted?
Define acceptance and apply to the
facts
Acceptance: complete and unconditional expression of assent to all of the terms of an offer without
qualification or addition
Objective test would a reasonable person interpret the offeree’s response as being:
• An agreement to purchase the goods at the specific price followed by a query re payment method; or
Implied rejection
Clarke: offeree must know of the offer in order to accept to be entitled to a reward for an act, you must
know the reward existed first before completing the act that warranted the reward
Williams: motives for accepting an offer is irrelevant
Scammell: in the absence of any other details of a hire purchase agreement (eg duration) it is too vague to
be a contract
The Leonidas: if the offeror so acts that his conduct, objectively considered, constitutes an offer, and the
offeree, believing that the conduct of the offeror represented his actual intention, accepts the offer =
contract
if no reason to suppose offeree’s conduct does not represent his actual intention = contract
Offeree cannot accept if the offer has ended by revocation, rejection or time lapse
Acceptance must be
communicated
• GENERAL RULE: for acceptance, there must be effective communication: Entores v Miles Far East
It should be communicated by: o Offeree; or
o Authorised agent: Powell v Lee
Stark contrast to notice of offer withdrawal – which can be through a reliable 3 rd party:
Dickinson
EXCEPTIONS:
• There is a unilateral contract – offeror deemed to have waived his right to have
acceptance communicated; the offeree’s conduct will amount to acceptance: Carlill
• Silence cannot constitute acceptance: Felthouse v
Bindley
GENERAL ADVICE
IDENTIFY AREA OF LAW
SUMMARISE THE FACTS
STATE LAW – start with general principles then move onto exceptions
APPLY FACTS TO LAW
CONCLUDE if there are 2 possible answers, say which is more likely but don’t definitively conclude, say
‘may’, ‘if’ etc
DEFINE KEY TERMS
Have a balanced approach, argue options for both sides, don’t be biased and argue on behalf of one party
Highlight facts re each contract/party in different colours so you don’t get muddled
Links between topics (where exam questions could include multiple topics):
Agency and formation
Consideration and duress
Exemption clauses and negligence
Misrepresentation (misrep) and breach
Frustration and breach
Duress and undue influence
Remedies could come up anywhere as a small question at the end
Terms could also come up anywhere
ASPECTS OF CONTRACT FORMATION
STEP 1: state the issue
Eg this is an issue re whether or not there is a binding contract
STEP 2: is there a contract?
Do the easy bits first ie the elements which are met
Make a timeline for each contract
1. Identify who is seeking to show a contract exists
Where there is more than 1 character, deal with each separately and consider events chronologically
2. State: for a binding contract we need:
1) Agreement (offer by one party which Is accepted by the other)
2) Intention to create legal relations; and
3) Consideration ie something in return
where there are multiple issues to consider, state this once as an intro and cross refer
3. State: there is agreement if there is a valid offer from 1 party and acceptance by the other There must be
CERTAINTY in offer and acceptance, or court may not uphold contract: Scammell
Eg ‘timber of fair specification’ was too vague: Hillas v Arcos
,elitesolutions
Intention to create legal relations
1. Assessment of parties’ intention in making an offer is objective would a reasonable person regard it as an
offer: Smith v Hughes
2. Commercial agreements
i) Presumption that there was intention to create legal relations: Edwards v Skyways ii) This is
rebuttable, if there is specific wording to that effect, but rebutting is tricky: Rose and Frank Co
3. Domestic and Social ie family agreements
i) Presumption that there was no intention to create legal relations between spouses as they are based
on love and affection: Balfour v Balfour
ii) This is rebuttable: Merritt evidence that may rebut:
• Exercising professional skill
• Distances of relation eg cousins not a close relationship
• There is substantial consideration
• Limited timescale of negotiations
• Product/service being agreed for business purposes
• It is a substantial task which will take several days
• Is the task one which would usually suggest a commercial, formal arrangement? BUT
informal communication may suggest no intention
start with presumption, then look for evidence against if none, state: there is no evidence to rebut this Offer
or invitation to treat?
Define offer, state the difference between offer and invitation to treat, and identity offer on the facts
,elitesolutions
OFFER:
An expression of willingness to contract on certain terms, made with the intention that it shall become
binding as soon as it is accepted by the person to whom it is addressed: Trietel
Offers should be sufficiently clear and certain for a mirroring acceptance (yes) to come back from the
offeree
INVITATION TO TREAT: made without intention to be bound by specific terms ie first step of negotiations
which may/may not prelude to an offer eg ‘do you have a van? I need to buy one’ or ‘would you be
interested?’
acceptance of an invitation to treat will not result in a contract
Self-service display in a shop Offer only when he presents goods at payment point: Boots Cash
Chemists
Goods on display Fisher v Bell
EXCEPT in limited circumstances where there is clear intention to be
bound eg display of goods in a special sale
Tenders Spencer v Harding/Blackpool & Flyde Aero Club, unless it is a unilateral
contract, in which case it will be an offer: Harvela Investments
Advertisements Merely a notification that goods are to be sold: Partridge v Crittenden,
unless:
• Offering reward: Williams; or
• Clear intention to be bound by an acceptance/unilateral contract, in
which case acceptance need not be communicated: Carlill v
Carbolic Smoke: held to have made an offer to the whole world, to
which anyone could accept how detailed is the advert? Apply
NB unilateral = promise in return for an act – offer to the world – one-sided ‘if you do A, I promise to…’
Bilateral = promise in return for a promise
RULES FOR AUCTIONS
With reserve price s57 Sale of Goods Act 1979 – contract between seller and bidder once the
auctioneer (as agent) completes the sale, ie with the fall of the hammer
Auctioneer’s request for bids = invitation to treat
Bids = offer which:
o The auctioneer may accept or reject
o Can be withdrawn at any time before acceptance
Once the bid is accepted, a contract of sale is formed
Bids are accepted when the hammer hits the table: s57(2) SGA
Without reserve price Barry v Davies – a statement saying ‘without reserve’ amounts to an offer.
This creates a unilateral contract between auctioneer and bidder that the
auctioneer will accept the highest bid.
,elitesolutions
A bidder’s high bid constitutes an acceptance of the offer
Bilateral contract of sale only created with the product owner when the hammer
goes down: s57(2)
If the auctioneer doesn’t accept the bid, the highest bidder can sue the
auctioneer (not owner) for damages due to breach of unilateral contract
damages = different in value between highest bid and cost of procuring a
similar product elsewhere – no contract of sale so cannot claim the product itself
TENDERS
• Depending on circumstances, an invitation for tenders may give rise to a unilateral
contract
• Harvela: sent 2 parties identical telexes offering a unilateral contract to sell to the highest bidder. One
firm offered a fixed amount and another said ‘£101k more than any other offer’ cannot accept
referential bids, only fixed offers
Has an offer been accepted?
Define acceptance and apply to the
facts
Acceptance: complete and unconditional expression of assent to all of the terms of an offer without
qualification or addition
Objective test would a reasonable person interpret the offeree’s response as being:
• An agreement to purchase the goods at the specific price followed by a query re payment method; or
Implied rejection
Clarke: offeree must know of the offer in order to accept to be entitled to a reward for an act, you must
know the reward existed first before completing the act that warranted the reward
Williams: motives for accepting an offer is irrelevant
Scammell: in the absence of any other details of a hire purchase agreement (eg duration) it is too vague to
be a contract
The Leonidas: if the offeror so acts that his conduct, objectively considered, constitutes an offer, and the
offeree, believing that the conduct of the offeror represented his actual intention, accepts the offer =
contract
if no reason to suppose offeree’s conduct does not represent his actual intention = contract
Offeree cannot accept if the offer has ended by revocation, rejection or time lapse
Acceptance must be
communicated
• GENERAL RULE: for acceptance, there must be effective communication: Entores v Miles Far East
It should be communicated by: o Offeree; or
o Authorised agent: Powell v Lee
Stark contrast to notice of offer withdrawal – which can be through a reliable 3 rd party:
Dickinson
EXCEPTIONS:
• There is a unilateral contract – offeror deemed to have waived his right to have
acceptance communicated; the offeree’s conduct will amount to acceptance: Carlill
• Silence cannot constitute acceptance: Felthouse v
Bindley
