Chapter 5 Self Test Questions Essential Features of A Valid Contract 1 Offer and Acceptance PDF

Chapter 5 Self-test questions
Essential features of a valid contract 1: offer and acceptance

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To whom may an offer be made.
An offer is an agreement to a set of terms under which the offeror is
willing to be bound. Only the offeree can accept on the contract and
he/she must accept in the method expressed (if stipulated) by the
offeror. Carlill v Carbolic Smoke Ball Co [1893] established that the offeror
can make an offer to the entire world (through advertising for example)
and it is not restricted to one person or group.
Section reference: 5.4.1
Only a specified individual. incorrect
Only a single group of people specifically identified in the offer. incorrect
The entire world. correct
Only to persons over the age of 21. incorrect
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A void contract has no legal effect and does not place obligations on the
parties to the agreement.
True correct
False incorrect
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________ contracts are those where one of the parties offers to do something
in return for an action by the other party–they exchange promises. Each of
the parties in this type of contract has an obligation to perform some action.
For example, one person agrees to wash the other's car in return for having
his/her lawn mowed.
| Correct response: bilateral
Bilateral. Bilateral contracts are those where one of the parties offers to do
something in return for an action by the other party-they exchange promises.
Each of the parties in this type of contract has an obligation to perform some
action. For example, one person agrees to wash the other's car in return for
having his/her lawn mowed. A unilateral contract is one where the first party
promises to perform some action in return for a specific act, although the
second party is not promising to take any action. Carlill v Carbolic Smoke Ball
Co. is an example of a unilateral contract.
Section reference: 5.2
Your response
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A display in a shop window will generally be held to constitute what?
Fisher v Bell [1960] and Pharmaceutical Society of Great Britain v Boots
Cash Chemists [1953] identified that the courts will generally consider
goods advertised in shop windows or those with a price tag attached to
constitute an invitation to treat. Whilst this is true in the widest sense,
there have been instances where an item in a shop window with
information regarding the price has constituted an offer, not an invitation
to treat. This case was not heard in the United Kingdom (and because it is
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not in this jurisdiction it has limited authority as a precedent) but due to
the similarities of the legal systems it could provide evidence of how an
English court may deal with similar facts (see Leftkowitz v Great
Minneapolis Surplus Stores [1957]).
Section reference: 5.4.1.1
Always an offer. incorrect
It cannot be identified in advance as it depends upon the perceived
intention of the seller. incorrect
An invitation to treat. correct
It has no legal significance. incorrect
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Asking a tenant if they are interested in purchasing a house is simply
requesting further information as part of a negotiation and does not amount
to an offer to sell.
True correct
False incorrect
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A _________ contract is one where the injured party has the option to affirm
the contract (he/she can continue with the agreement and bring about an
enforceable contract) or he/she can avoid the contract (and the contract is
terminated).
| Correct response: voidable
voidable. A voidable contract is one where the injured party has the option
to affirm the contract (he/she can continue with the agreement and bring
about an enforceable contract) or he/she can avoid the contract (and the
contract is terminated). The key element here is that it is for the injured party
to decide if he/she wishes to proceed with the agreement or have it set aside.
Your response
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Acceptance is NOT effective if through:
The offeror establishes the terms by which they are willing to be bound,
and as such, acceptance of those terms must be unconditional. Outward
evidence of the offeree's intention to accept an offer has to be
demonstrated and communicated in order for effective acceptance. Where
the offeror identifies silence as a means of acceptance, this will not be
effective. The presumption is that if the offeree wishes to be bound by the
contract, they will at least go to the trouble of making some outward sign /
gesture to indicate the acceptance (see Felthouse v Bindley [1862]).
Conduct only. incorrect
Express words (whether oral or written) only. incorrect
The offeree's non-communicated intention. correct
Conduct and/or express words. incorrect
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Where A offers a house for sale to B for £1000 and B accepts and informs A
that he will pay £950, A may refuse. If B then provides A with the £1000, a
valid acceptance has taken place which establishes an enforceable contract.
True incorrect
False correct
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The _______ is the party that establishes the terms of a contract by which
he/she is willing to be bound.
| Correct response: offeror
offeror. The offeror is the party that establishes the terms by which he/she is
willing to be bound and therefore he/she has the choice of what terms are
contained and to whom the offer is made.
Your response
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Revocation of an offer is effective when:
i) It is posted.
ii) It is communicated to the offeree by the offeror.
iii) It is the intention of the offeror to revoke.
iv) It is communicated to the offeree by a reliable third party.
The offeror has the right to revoke his/her offer at any time until
acceptance has taken place. An intention to revoke is insufficient - it must
be communicated. Unlike the postal rule on acceptance where acceptance
may take effect on posting, whether this is received or not, the revocation
must be communicated to be effective. Revocation of an offer is also
effective where this has been communicated to the offeree by a reliable
third party, rather than the offeror (see Dickinson v Dodds [1875-76]).
i only. incorrect
i and iii. incorrect
i, ii, and iii. incorrect
ii and iv. correct
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The case Butler v Ex-Cell-O identified the 'first/last shot approach' adopted by
the courts in determining the operative contract where both parties have
used their own standard form contracts in the negotiations.
True correct
False incorrect
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An _____ __ ______ is the term used when a party invites offers (essentially the
party with the goods/services to trade invites offers which he/she is able to
accept or decline).
| Correct response: invitation to treat
invitation to treat. An 'invitation to treat' is the term used when a party
invites offers (essentially the party with the goods/services to trade invites
offers which he/she is able to accept or decline). In this context, the word
'treat' means to negotiate, hence it is an invitation to negotiate for a good or
service.
Your response
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Michelle contacts Hannah and asks her if she would be interested in
purchasing her car for £2000. Hannah immediately takes £2000 to Michelle
and says she wants to buy the car. Michelle subsequently does not wish to
proceed. What is the consequence of the above scenario?
Requesting additional information with regards to a negotiation will not
provide a valid acceptance of an offer or defeat the offer through a
counter-offer. Negotiations are an important element of forming a contract
and the sharing of information is necessary to identify the scope of the
obligations involved (see Gibson v Manchester CC [1979]).
A contract was made when Hannah accepted Michelle's offer. incorrect
Michelle has the right to refuse before she takes possession of the
cash. incorrect
As the value of the car is only £2000 the courts will not hear the case and
no enforcement can be ordered. incorrect
There is no contract as Michelle only requested information and did not
make an offer to sell. correct
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As a general rule, where the offeror has not provided for any specific form
that acceptance must take, silence may be a valid form of acceptance.
True incorrect
False correct
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The case of _______ identified the 'first/last shot approach' to which contract
will be the operational one where two businesses use standard form
contracts.
| Correct response: butler
Butler / Butler v Ex-Cell-O. Butler v Ex-Cell-O identified the 'first/last shot
approach' adopted by the courts.
Your response
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Which of the following cases demonstrated that (in the absence of any
specific deadline) for acceptance of an offer to be effective, it must be
provided within a reasonable time.
In Ramsgate Victoria Hotel v Montefiore (1865-66) shares in the hotel
were applied for in June but were not issued until November. When
Montefiore refused to accept the shares an action was raised for non-
acceptance. It was held that whilst the offer did not contain any provision
for the time in which acceptance must take place, the court considered
that allotment must take place within a reasonable time, and this had not
been achieved. As such Ramsgate's action failed.
Ramsgate Victoria Hotel v Montefiore (1865-66). correct
Gibson v Manchester CC [1979]. incorrect
Blackpool and Fylde Aero Ltd v Blackpool BC [1990]. incorrect
Harris v Nickerson (1872-73). incorrect
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Acceptance by means of the post will always be valid on posting, not when it
is received by the offeror.
True incorrect
False correct
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In face to face contractual negotiations, an effective acceptance of an offer
must be ___________ to the other party.
| Correct response: communicated
communicated. Generally, outward evidence of the offeree's intention to
accept an offer has to be demonstrated and communicated in order for
effective acceptance. Exceptions do exist but these do not apply in the
situation outlined in the question.
Your response
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Where the post is a valid means of acceptance, at what point will the offeree
have been held to have accepted the offer?
Where offer and acceptance takes place through written communication
rather than face-to-face negotiations, there exists the possibility that such
communication may be lost, undelivered, or delayed through postal
strikes or public holidays. The general rule established with the post
(where it is a valid means of acceptance) is that acceptance is valid on
posting (see Adams v Lindsell [1818]).
When the letter of acceptance has been written. incorrect
When the letter of acceptance has been correctly addressed, its postage
paid, and posted. correct
When the letter of acceptance is received by the offeror. incorrect
When the letter of acceptance is opened and its contents read by the
offeree. incorrect
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When using instantaneous forms of communication, acceptance is effective
when received, not when sent.
True correct
False incorrect
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Felthouse v Bindley established the need for the offeree to positively
communicate, and hence make an outward sign of, his/her __________ .
| Correct response: acceptance
acceptance. This case is relevant to the necessity for an outward sign of
acceptance and for the offeree to positively communicate his/her acceptance.
This is because the offeree should not be placed under the burden of a
rejection every time an offer is forwarded to him/her and if the offeree does
intend to accept an offer, he/she can make the effort to fulfil this requirement
without undue inconvenience.
Your response
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In relation to acceptance through instantaneous forms of communication, in
which of the following locations have the courts held the contract as being
formed?
The rule was established in Entores v Miles Far East Corporation [1955]
with telegram communications and can be extended to other forms of
instantaneous forms of communication such as a telephone or telex.
Denning LJ concluded in his judgment that 'the rule about instantaneous
communications between the parties is different from the rule about the
post. The contract is only complete when the acceptance is received by
the offeror: and the contract is made at the place where the acceptance is
received.' In such methods of negotiation, acceptance must be notified to
the offeror to establish a binding contract, and that as telex offers a
virtually instantaneous means of communication, a contract is concluded
when and where the acceptance is received (see Brinkibon v Stahag Stahl
und Stahlwarenhandels GmbH [1982]).
The place where the offeree is based when deciding to accept the
offer. incorrect
The place where the acceptance is sent. incorrect
The place where the acceptance is received. correct
The place where the parties choose to select. incorrect
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Where the offeror has identified to the offeree that an offer will remain open
for seven days, the offeror may not revoke the offer before this time has
passed.
True incorrect
False correct
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When the postal rule of acceptance is valid, acceptance is considered
effective when ______.
| Correct response: posted
posted. A contract may be created through an exchange of documents via
the post. Where offer and acceptance takes place through written
communication rather than face-to-face negotiations, there exists the
possibility that such communication may be lost, undelivered, or delayed
through postal strikes or public holidays. The general rule established with
the post (where it is a valid means of acceptance) is that acceptance is valid
on posting.
Your response
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Which of the following is NOT a recognised possible solution to problems
posed by the so-called 'battle of the forms', when two contracting business
organisations each claim that their terms apply?
The courts will generally hold that a contract has been formed between
commercial parties in this scenario, but the details of the terms applicable
need identification.
The contract is made on the terms of the party whose form was put
forward first (the 'first shot' approach'). incorrect
The contract is made on the terms of the party whose form was put
forward last (the 'last shot' approach).. incorrect
There is no contract at all, because the parties are not in agreement, and
there is no matching offer and acceptance. correct
The contract is as yet incomplete, since the parties must re-negotiate the
agreed terms of the contract in order for their dispute to be resolved
fairly. incorrect
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Cases involving traders displaying goods, advertisements, auctions, and
negotiations are general examples of offers to sell.
True incorrect
False correct
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When using __________ forms of communication, the 'postal rule' of
acceptance is departed from and the traditional rules of communication of
acceptance is used.
| Correct response: instantaneous
instantaneous. Compared with the postal rule and its 'business efficacy'
decision, the courts have traditionally reverted to the common rule of
acceptance being effective when communicated and received (in cases
involving instantaneous forms of communication).
Your response
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Which of the following would NOT constitute a valid acceptance by Peter of
an offer made by Jane?
Valid acceptance must be an unconditional acceptance of an offer. In B,
Peter is merely stating how much he wishes for the purchase of the rug -
this is an offer which Jane may accept or may decline as no price had
been indicated in Jane's initial communication.
On Monday morning, Jane sends a letter to Peter offering to sell her
Vauxhall Astra car to him for £1500. Peter receives the letter on Tuesday
morning, and immediately writes back, telling Jane that he will buy the car for
that price. incorrect
Jane telephones Peter, offering to buy Peter's valuable Persian rug. Peter
says he will think about it. Later that day Peter telephones Jane, and tells her
that he will be happy to sell the rug to her, and that the price is £500. correct
Jane sends a fax message to Peter, offering to sell him her antique dining
table and six chairs for £2,000, and asking him to reply by fax by 5 pm the
same day. Later that day, Peter sends Jane a fax message at 4.50 pm, saying
that he is prepared to buy the furniture at that price. incorrect
Jane telephones Peter asking if he would like to purchase her car for
£1000. Peter agrees to the purchase for a sum of £900. incorrect
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A voidable contract is one where the injured party has the option to affirm the
contract or they can avoid the contract.
True correct
False incorrect
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The case Alexander Brogden v Metropolitan Railway demonstrated that
acceptance of a contract need not be in writing or made orally, rather it could
be evidenced through the ______ of the parties.
| Correct response: conduct
conduct. The House of Lords had to decide whether a completed contract
had been established in Alexander Brogden v Metropolitan Railway. There
was an assertion that the document was merely an intention to create a
contract that would have meant no contract was in existence. However, it
was held that a valid contract had been established between the parties due
to their actual conduct. A contractual document had been drafted by the
principals of the relevant companies and was used in negotiations between
the parties, and whilst it had not been signed, the intentions from the parties'
actions enabled an agreement to be deduced. Therefore the breach of
contract claim was successful.
Your response
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An advert is placed in a shop window offering a reward for anyone who will
find and return a lost cat. This is an example of:
A unilateral contract is one where a party promises to perform some
action in return for a specific act, although the other party is not promising
to take any action. Carlill v Carbolic Smoke Ball Co. is an example of a
unilateral contract. There is no obligation on the person to buy the
advertised smoke ball, but where he/she does and, as with Mrs. Carlill,
contracts influenza, he/she can claim the £100 reward advertised, as the
contractual obligations have been completed.
A bilateral contract. incorrect
A void contract. incorrect
A unilateral contract. correct
Not evidence of any type of agreement. incorrect
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Essential features of a valid contract 1: offer and acceptance

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