Introducing Contract Law notes from The SQE Hub specifically tailored by addressing each of the assessment specifications listed on the SRA website. These high yield notes are an amazing revision aid and address the following:
- Formation;
- Parties;
- Contract terms;
- Vitiating factors;
- T...
SQE 1 Assessment specification: Formation
Offer and acceptance:
An 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.
Expression = i.e. letter, newspaper advertisement, email, text message and even conduct.
An offer is different to an ‘invitation to treat’.
An advertisement = generally regarded as an invitation to treat.
Most contracts are bilateral = a promise in return for a promise.
Unilateral contracts = only one party is making a promise e.g a promise to pay a reward.
Promise to do something in return for another party performing an act, other party accepts
by performing act, once performed, offeror is bound.
Auctions = when the auctioneer’s gavel goes down, that is the acceptance of the last bid,
which was the offer (Sale of Goods Act s.57(2)).
Tenders = a co outsourcing cleaning services and invite tenders. Co does not have to
accept any particular one because it is an invitation to treat and tenders are offers to do the
work. But invitation to tender can make unilateral offers in 2 ways (1. Where tender
undertakes to accept the highest bidder and 2. where tender is made with specific conditions
on how bid should be submitted = unilateral offer to consider the bid, not accept).
Requirements for a valid offer: clear and certain and an intention to be bound.
Invitation to treat: first step in negotiations. Inviting other party to make an offer.
- Adverts are ITT. Adverts will not be ITT if advert is in fact a unilateral offer, a
promise to pay something in return for an act.
- Auctions: auctioneer is inviting people to make offers. Once someone has made an
offer, acceptance is by the auctioneer hotting the gravel. BUT, in auction without
reserve (where item is sold to the highest bidder) there is a unilateral contract to
accept the highest bid. So if highest bid is made, offer has been accepted by
auctioneer and goods can’t be withdrawn from auctions.
- Display of goods for sale: shop displaying goods is ITT. Customer taking item to till
to pay is when offer is made.
Acceptance:
Definition = unqualified expression of assent to the terms of an offer so there must be an:
1. An expression of assent;
2. Which is unqualified (must be on the exact terms of as the offer).
Communication of acceptance = acceptance must be communicated by the offeree or their
authorised agent. This may be by words or conduct.
Silence as acceptance? If couples with conduct that clearly signifies acceptance when
viewed objectively - then the answer is yes. But generally, silence cannot bind the other
party to a contract
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Counter offers = destroys original offer and presents a new offer that the other party is free
to accept or reject.
Acceptance by Email = acceptance takes place when it reaches the offerors server. If in
outbox, no acceptance. If between 9-5, then acceptance happens on same day.
Acceptance by phone = acceptance takes place when offeror hears the acceptance over
the phone.
Acceptance by post = Postal rule - letter of acceptance of an offer will be effective WHEN
properly posted even if the letter is lost in the post. For this to apply, following conditions
must be met:
1. It was reasonable in all the circumstances to use the post
2. The letter was properly addressed, stamped and posted; and
3. The postal rule had not been excluded by the offeror.
Termination of offers:
An offer cannot be accepted once it has been terminated.
Can be terminated by:
1. Rejection by the offeree
- Offer may be rejected by offeree either expressly or impliedly. It will be
rejected by implication if the offeree makes a counter-offer.
2. Revocation (withdrawal) of the offer by the offeror
- Offer can be revoked any time before acceptance even if the offeror promised
to keep the offer open for a certain period of time.
- Exception if offeror gave something to keep the offer open.
- Revocation = must be communicated to the offeree in order to be effective.
Email - rule is revocation effective when read.
- Postal rule does not apply to notices of revocation.
- Unilateral offers can’t be revoked where offeror has partly performed the
prescribed act and is willing and able to complete it.
3. Lapse of time
- Lapse after a specified time or otherwise a reasonable time, or death of a
party or condition of acceptance not satisfied.
Intention to create legal relations:
Commercial agreements = law presumes that agreement is intended to be legally binding
even if the subject matter of the transaction is trivial (Esso v Commissioners).
- In commercial context, always a very strong presumption the parties intended their
agreement to have legal consequences.
- Rare case where this has been rebutted i.e. where there is a clear express statement
that the agreement is not meant to be binding i.e. ‘binding in honour only’.
Domestic agreement = between family members, close friends or the like.
- Law presumes that agreement is not intended to be legally binding unless facts show
otherwise - then presumption is rebutted.
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Adverts = no ICLR. Can be rebutted if advert is in fact a unilateral act.
Consideration:
Variation:
- ‘Something in return’ = consideration. May be a promise or an act.
- Consideration must be sufficient (some value in eyes of law) but need not be
adequate
Past consideration:
- Generally past consideration is not good consideration.
Exception if following conditions are met:
1. The past act/promise was done at the promisor's request
2. There was a mutual understanding between parties that the act/promise
would be compensated for in some way; and
3. Had the promise been made in advance it would have been legally
enforceable → depends on whether there is a necessary intention to create
legal relations.
Alteration promises to pay more:
- General rule is simply performing an existing contractual duty owed to the other party
will not be consideration in exchange for a promise by the other party to pay more
money.
- Exceeding a contractual duty is consideration
- Performance of an existing contractual duty owed to the other party will be
consideration for a promise of extra payment if it confers a practical benefit; however,
if the promise to pay more was made under duress the promise may be set aside.
Alteration promises to accept less:
- Rule in Pinnel’s case = Undisputed debt at common law = an agreement
between a creditor and a debtor that creditor will simply accept part payment
in full and final settlement of the full amount is not binding on the creditor.
Exception is in Pinnel’s case
- Provided debtor gives creditor something in return for creditors promise to
forego the balance of the debt - then that ‘something different’ will be
consideration.
A debtor is at risk of the creditor changing his mind - equitable doctrine of
promissory estoppel is used. I.e. a creditor may be prevented ‘estopped’ from
going back on promise to accept part payment if in all the circumstances it
would be unfair for the creditor to do so.
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