Core principles of contract law
SQE Spec Key points
Formation: offer and Clear and certain offer displaying an intention to be bound – advert/notice/letter/statement –
acceptance invitation to treat/offer (usually invitation but there are exceptions)
Advertisement – invitation to treat
Bid – invitation to treat unless bidder says it will accept the highest offer regardless of how
much it is – unilateral offer
Bilateral offer = offer or promise in exchange for an offer or promise
Unilateral offer = offer in exchange for a specified act. The person need to be aware of the offer
when they do the specified act.
If an offer – what's the response? Has that offer been accepted or was there a counter
offer/request for more information.
Acceptance needs to be a mirror image (unequivocal)
Acceptance needs to be made in response to the offer. Cannot be accepted in ignorance of the
offer. Has to be accepted by the person to whom it was made. Offeree is responsible for making
sure the offeror gets the acceptance.
Must be made using a valid mode – relevant when the offeror has specified the mode of
acceptance. If mode is compulsory – you have to be very explicit about that and reject all other
methods and only that will bind. If not expressly and you don't reject – an acceptance that is 'no
less advantageous' will bind the offeror
Acceptance by post – effective upon posting – N/A:
- If not contemplated post would be used
- If manifestly inconvenient/absurd
- To letters revoking offers
- If incorrectly addressed
- If disapplied by offeror
Acceptance by instantaneous means – contract created when notice is received by offeror
- Offeree at fault/nobody at fault = no contract
- Offerror at fault = contract
Courts look at the context and past dealings when trying to define the meaning of office hours
but normally acceptance deemed received first thing the next working day
Is the offer still open at the point of acceptance?
- Rejection (incl. counter offer)
- Lapse (within prescribed period or within reasonable time)
- Revocation – postal rule N/A!
consideration Must not be past (prior to the promised pay – if consideration is past, that exchange is missing)
Must move from the promisee
Need not be adequate
Must be sufficient
, If agreement contained in a deed – agreement enforceable without consideration
(there are exceptions)
Case law (Williams) – court found consideration in the form of 'practical benefit' Roffey received
(the avoidance of late completion payment in the main contract)
Case law – husband cannot enforce payment as he has not provided any consideration
Legal consideration – fresh by making the trip in more dangerous conditions
Performance of an existing obligation owed to 3rd party = good consideration
Practical benefit (part payment) – sufficient bcos LL obtained P.B. by keeping the tenant in
property
Usually not good consideration:
- part-payment of debt (unless 3rd party)
- performance of existing obligation
intention to Commercial/business agreement – presumption
create legal
relations Social/domestic agreement – no presumption
- detrimental reliance and seriousness of the contract can make intention to create legal
relations
Has the presumption been rebutted?
- Presumption + certainty?
Agreements and communications whose names not conclusive as to whether they have legal
effect:
- comfort letters (letter describing a current policy will not be legally binding and letter
provided by an accountancy firm to confirm that the figures in an annual report are
accurate will be)
- advertisements – where there is an intention to perform the promise such as providing
holiday insurance
Agreements to agree are not enforceable
certainty If agreement lacks sufficient certainty – no intention
Lack of certainty = void
Vague, not complete, one or both of the parties to the agreement is mistaken
Courts will not refuse to enforce every agreement that is vague or uncertain – high degree of
contractual freedom
Is certain enough – it will not be void for lack of certainty
Is there any evidence to make the agreement certain enough to be enforceable?
SQE Spec Key points
Formation: offer and Clear and certain offer displaying an intention to be bound – advert/notice/letter/statement –
acceptance invitation to treat/offer (usually invitation but there are exceptions)
Advertisement – invitation to treat
Bid – invitation to treat unless bidder says it will accept the highest offer regardless of how
much it is – unilateral offer
Bilateral offer = offer or promise in exchange for an offer or promise
Unilateral offer = offer in exchange for a specified act. The person need to be aware of the offer
when they do the specified act.
If an offer – what's the response? Has that offer been accepted or was there a counter
offer/request for more information.
Acceptance needs to be a mirror image (unequivocal)
Acceptance needs to be made in response to the offer. Cannot be accepted in ignorance of the
offer. Has to be accepted by the person to whom it was made. Offeree is responsible for making
sure the offeror gets the acceptance.
Must be made using a valid mode – relevant when the offeror has specified the mode of
acceptance. If mode is compulsory – you have to be very explicit about that and reject all other
methods and only that will bind. If not expressly and you don't reject – an acceptance that is 'no
less advantageous' will bind the offeror
Acceptance by post – effective upon posting – N/A:
- If not contemplated post would be used
- If manifestly inconvenient/absurd
- To letters revoking offers
- If incorrectly addressed
- If disapplied by offeror
Acceptance by instantaneous means – contract created when notice is received by offeror
- Offeree at fault/nobody at fault = no contract
- Offerror at fault = contract
Courts look at the context and past dealings when trying to define the meaning of office hours
but normally acceptance deemed received first thing the next working day
Is the offer still open at the point of acceptance?
- Rejection (incl. counter offer)
- Lapse (within prescribed period or within reasonable time)
- Revocation – postal rule N/A!
consideration Must not be past (prior to the promised pay – if consideration is past, that exchange is missing)
Must move from the promisee
Need not be adequate
Must be sufficient
, If agreement contained in a deed – agreement enforceable without consideration
(there are exceptions)
Case law (Williams) – court found consideration in the form of 'practical benefit' Roffey received
(the avoidance of late completion payment in the main contract)
Case law – husband cannot enforce payment as he has not provided any consideration
Legal consideration – fresh by making the trip in more dangerous conditions
Performance of an existing obligation owed to 3rd party = good consideration
Practical benefit (part payment) – sufficient bcos LL obtained P.B. by keeping the tenant in
property
Usually not good consideration:
- part-payment of debt (unless 3rd party)
- performance of existing obligation
intention to Commercial/business agreement – presumption
create legal
relations Social/domestic agreement – no presumption
- detrimental reliance and seriousness of the contract can make intention to create legal
relations
Has the presumption been rebutted?
- Presumption + certainty?
Agreements and communications whose names not conclusive as to whether they have legal
effect:
- comfort letters (letter describing a current policy will not be legally binding and letter
provided by an accountancy firm to confirm that the figures in an annual report are
accurate will be)
- advertisements – where there is an intention to perform the promise such as providing
holiday insurance
Agreements to agree are not enforceable
certainty If agreement lacks sufficient certainty – no intention
Lack of certainty = void
Vague, not complete, one or both of the parties to the agreement is mistaken
Courts will not refuse to enforce every agreement that is vague or uncertain – high degree of
contractual freedom
Is certain enough – it will not be void for lack of certainty
Is there any evidence to make the agreement certain enough to be enforceable?
