Contract Law - Worksheets PDF

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Worksheets for contract law - Oisin Suttle, Ethan Shattock and David Mangan...

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Contract Law - Worksheets For each topic that we cover in the module, you are expected to complete and associated worksheet. These worksheets allow you to ‘check in’ with your learning as you move through the module, ensuring that you are picking up on the main issues and understand key principles and concepts. They also provide the foundation for tutorials – each tutorial will discuss a number of the worksheets, which you are required to have completed in advance and to bring to the tutorial (whether physically or virtually). You will find below worksheets for the topics to be covered in the first few weeks of class. Further worksheets will be added to this document as we move through the term, so please make sure to check back in a few weeks’ time.

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Worksheet 1 – Introduction (Topic 1) 1. What is a contract?

A legally enforceable agreement – spoken or written

2. List five examples of contracts you have entered into this week. 1) New app – ‘Spendee’ terms and conditions 2) Buying food from the store 3) Using social media apps 4) Bought data for my phone 5) Took money out of my bank account 3. What purposes does contract law serve? Why might people disagree about this? Why do you think it matters?

Provide a legal framework within which parties can freely contract. Regulating the legally enforceable agreements, where transactions under the people voluntarily assume obligations towards each other. By regulating the promises made by parties it places obligations on both parties and if one fails to meet those obligations they can be brought before the courts.  People may disagree as there is a distrust in courts also courts may try to force a contract between parties when in dispute. Are the courts value neutral or are they influenced? Are the courts encouraged to find a contract or not? Do courts favour parties with more commercial and the superior bargaining power. Encouraging economic stimulation v creating and protecting individual rights.

4. What do we mean when we talk about ‘freedom of contract’? Is it always a good thing?

Parties (especially if they have equal bargaining power) should be free to assume whatever obligations they wish. Suggesting that obligation should be the product of the individual free will rather than external imposition. It may not always be a good thing when there is an inferiority complex – inequality of bargaining power between parties - US Supreme Court Case example; Lochner v New York 198 US (1905)

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Offered the employees “...protection against the superior bargaining power of their employers”

Worksheet 2 – Agreement I – Offer (Topic 2) 1. What are the elements of a legally binding contract? 1) 2) 3) 4)

Willingness to be bound Expressed by a valid offer and acceptance Adequate consideration Capacity and legality

2. What is the objective approach to contracts? Why might it not be as straightforward as it seems?

Objective meaning of communication not subjunctive state of mind- what the reasonable person would think the other party meant The problem is there is a need of clarity and protection of reasonable expectations of honest people. If person A jokingly says they’ll sell their house for 2 euro and person B agrees to buy that house for the price, A may bound to sell unless the reasonable person would have known it was a joke and not a reasonable and serious offer.

3. What is required for a legally effective offer? What is the difference between and offer and an ‘invitation to treat’? A legally effective offer is a willingness to contract on certain terms – shall become binding when accepted. An invitation to treat is where a party is willing to receive and consider offers it may be an offer but can be negotiable.

4. Why did the court in Carlill v Carbolic Smokeball Company come to the conclusion that it did? What reasons did the Lindley LJ give for that conclusion? What other reasons might also have been important?

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If advertisement sufficiently clear, then it can be an offer-since the lodgement of the £1000 was called in aid by the advertisers as proof of their sincerity the court ruled it to be a serious manner. Communication of acceptance is not necessary in unilateral contracts when peoples conduct manifests an intention to contact.

5. What is a ‘unilateral contract’? How is it different from a bilateral contract? What difficulties do unilateral contracts pose for our standard models of contract law? Unilateral contracts are a promise in exchange for an act- doctrine of consideration. Bilateral contracts are a promise in exchange for a promise- both parties are bound to fulfil their obligations Offeree not bound to do anything and is entitled to receive what is offered if they do the act. There must be a communication of acceptance however implication of unilateral contracts waives this; communication of acceptance not needed when conduct manifests an intention to contract 6. Which of the following are and are not contractual offers? Why? What cases that you have read / read about this week are most relevant to each? i) Sinéad runs a bookshop. She displays a copy of the latest bestseller in her shop window, with a price tag of €12. Sinéad only has 20 copies of the book available to her. Advertisement is an Invitation to treat however it is not contractually sufficient (offer to anyone who received the advertisement could accept it) – limited stock. Grainger and Sons v Gough [1896] AC 325 ii) Adeola places an advertisement in the Maynooth Advertiser stating that she has a bass guitar for sale - “€100 or nearest offer” - and asking anyone who is interested to contact her at a phone number listed in the ad. Advertisement of auction – invitation to treat Harris v Nickerson [1873] LR QB 286 iii) Joe, who runs an off licence (selling alcohol), stocks beer, wine and spirits on the shelves of the off licence, with prices listed. Display of Goods in a shop is an invitation to treat – price listed addresses consumer protection legislation - Consumer Protection Act 2007 Pharmaceutical Society of GB v Boots Cash Chemist [1953] 1 QB 401 iv) Mary tells her neighbour Marty that she will give him €500 if he runs from Straffan to

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Trim in less than 5 hours. (If this is an offer, what kind of contract results from such an offer?) Unilateral contract – If he does the act, she is obligated to reward him the 500. Carlil v Carbolic Smoke Ball Co [1893] 1 QB 256

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Worksheet 3 – Agreement II – Acceptance (Topic 3) 1. What is required for a legally valid acceptance? How would you distinguish an acceptance from other possible responses to an offer? Acceptance must be communicated- no acceptance until the offeror is aware that the offeree has accepted. Acceptance by conduct:  Unilateral contracts: (Carlil)  Bilateral contracts: (Brogden v Metropolitian Railway [1877] 2 App Cas 666) decision to accept insufficient but provided external manifestation but sufficiently unambiguous Acceptance in ignorance:  Unilateral contracts: (R v Clarke [1927] 40 CLR 227) offered to the world, accepted by conduct (other motive than the reward)  Bilateral contract: (Tinn v Hoffman & Co. [1873] LT 271) Acceptance by silence:  Unilateral contract: Act is the acceptance, no communication needed (Carlil)  Bilateral contract: (Felthouse v Bindley [1862] 11 CB (NS) 869) silence does not constitute acceptance, silence is generally ambiguous as to intention (silent party may be unaware of offer) A controversial exception is the postal rule where acceptance is sent through the post and deemed in law at the time and where it was posted.

2. How did the traditional rules of offer and acceptance cause problems in Butler Machine Tool Co v Ex-Cell-O Corporation? What is the ‘better way’ that Lord Denning MR proposes to deal with these kinds of situations? Can you think of any reasons why Denning’s approach might not in fact be better?

The ambiguous acceptances challenge the traditional views of offer and acceptance as a battle of forms do not necessarily have an acceptance more like a back and forth of contract offers. In this case the Seller returned a slip with a covering letter referencing the original quotation in response to the buyers offer and terms stating to place an order on their terms with no price variation. Lord Denning suggested that the offer and acceptance is found through the correspondence in its entirety, not just the intention of parties therefore they see if the parties have come to agreement on essential terms. The seller accepted the Buyers terms when returned the slip however a problem could arise as the seller did not explicitly agree to the buyer’s terms in fact the seller reiterated their own original terms in response to the buyer. Lord Denning’s reasoning forces the seller into agreeance.

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3. Why does the law require that an acceptance should be communicated? Are there any exceptions to this requirement? Why do you think these exceptions are made?

Acceptance is a final and unqualified assent to the terms of an offer. It is important that both parties have communicated that they are willing to be contractually bound to the terms of the offer. (Entores Ltd v Miles Far East Corporation [1955] 2 Q.B 327) Oral usually must be heard speaker can usually assume unless some reason why might not be - noise. No communication = no acceptance. Silent party may not have heard the offer therefore communication must be acknowledged by both parties. Exceptions include – Unilateral contracts, where terms of the offer permit acceptance without communication, offerors own fault (“The Brimnes” [1975] QB 629) Exceptions are made to accommodate the distinct types of interactions between parties.

4. What is the postal rule? In what situations does it apply? What are the best arguments for (i) keeping or scrapping the postal rule; and (ii) extending it to apply to other situations?

The postal rule is where acceptance is deemed in law when and where the acceptance was posted- the point of postage as opposed to the receipt. (i)

The offeror may believe there has been no communication or acceptance if the post is delayed or has been lost- there’s an acceptance even if the letter doesn’t show up (Household Fire & Carriage v Grant [1879] 4 Ex D 216 (CA) The postal rule had eased the transactions of contract via Post Office before the means of instant telecommunications that we have now therefore it was not completely useless

(ii)

Courts are anxious to confine the postal rule and will be reluctant to extend it to the likes of emails as its unreasonable to anticipate by post. The acceptance for instant communication would be the receipt rule (Thomas v BPE Solicitors [2012] EWHC 306 (Ch) supports the instantaneous communication rule over the postal rule.

is whether the Page 7 of 41

general receipt rule or the postal rule applies to an emailed acceptance message. It is easy to draw analogies with the postal system. The sender of the message puts it outside their control by pressing the “send” button. On the other hand, the sender will generally Page 8 of 41

know that the message has not been sent (a delivery failure notice) and so the receipt rule is whether the general receipt rule or the postal rule applies to an emailed acceptance message. It is easy to draw analogies with the postal system. The sender of the message puts it Page 9 of 41

outside their control by pressing the “send” button. On the other hand, the sender will generally know that the message has not been sent (a delivery failure notice) and so the receipt rule 5. What are the different ways that an offer can terminate? Are there situations where an offeror might be unable to terminate an offer? Why?

Bilateral contracts:  Revocation by lapse of time – (Ramsgate Victoria Hotel Ltd v Montefiore [1866] LR 1 Ex 109); open for a specific time – lapses once time ends or if there is no deadline, lapses after reasonable time.  Express revocation – (Bryne v Van Tienhoven [1880] 5 CPD 344) - offeror can revoke at any time before acceptance regardless of whether longer time was specified (option contract), Revocation only effective when received (postal Page 10 of 41

rule)  Revocation by conduct – (Dickinson v Dodds [1876] 2 Ch D 463) – revocation or behaviour that is inconsistent with continuance of offer; it is enough for someone to revoke the offer on behalf of the offeror granted the offeree find out from a reliable source. Exception: Walker v Glass [1979] NI 129 [Lord Lowry] Revocation is effective :  An offer may be withdrawn at any time before it has been accepted. An offer may be withdrawn at any time before it has been accepted, this is so even where the offer was expressed to be kept open for a specified period. (Dickinson v Dodds)  If the Offeror prescribes a mode of acceptance, no contract is created unless the offer is accepted in that mode.  Revocation of an offer is not effective on the posting of a letter of revocation or the dispatch of a telegram, but only when the offeree receives notice of the revocation The problem comes with Unilateral contracts:  Errington v Errington & Woods [1952] 1 All ER 149 – Cannot revoke offer once entered on performance; unfair to someone who has started to do the act. Denning LJ noted that they have acted on the promise and neither the father nor his widow would have been entitled to eject them in disregard of it.  Daulia v Four Millbank Nominees – Goff J stated that the offeror is not usually bound until condition fully performed but implied obligation not to prevent condition being fulfilled arises as soon as offeree starts to perform act.  If offer to whole world; advertisement; revocation must be done through the same medium as original offer.  Schweppe v Harper [2008] EWCA Civ 442 - Waller LJ stated that a court should be “reluctant” to find that the offer contemplates the ability to revoke at any time before acceptance in circumstances where the offeree has gone beyond starting performance and there is par performance with “a real benefit being accepted by that offeror from that part performance.

6. Consider the following hypothetical situation: Nora runs a car sales showroom just outside Maynooth. She acquires a vintage 1950s car for €15,000, and places it in the window display of her showroom, to

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attract interest in her business. Molly, who loves vintage cars, hears about the vehicle and rings Nora to ask about it. Over the phone, Molly offers to buy the car from Nora for €10,000. Nora responds stating that she would be willing to sell the car to Molly for €20,000 and offering it to her at that price. Molly responds saying she will definitely pay no more than €15,000, but Nora expressly declines to accept less than €20,000. Later that day, having had a change of mind, Molly leaves a message on Nora’s work phone saying that, unless she hears from Nora within 2 days, Molly will consider the car hers for a price of €20,000. Nora receives the message, but does not respond. The next day, Stephen comes into the showroom. Having overheard Nora tell a potential customer that the vintage car is probably worth around €25,000, Stephen tells Nora he will buy the car there and then for €30,000. Nora, however, is suspicious of Stephen, believing he does not have the money. She refuses to sell him the car. Angry at her response, Stephen asserts that Nora is legally obliged to sell him the car as the display in the showroom window constitutes an offer that he has accepted. Is Nora legally obliged as a matter of contract law to sell the car to either Molly or Stephen? Give reasons for your response and discuss case law relevant to the problem. Some specific points you might need to think about in answering this question:  Does displaying an item usually amount to an offer?  Is an advertisement usually an offer?  What constitutes acceptance of an offer?  What is a counter-offer and what is its effect?  Is silence in response to an offer acceptance of that offer?

Firstly, Nora is not obliged to sell the car to neither Molly nor Stephen. The display of the car in the shop is an invitation to treat – price listed does not necessarily constitute to an offer. (Pharmaceutical Society of GB v Boots Cash Chemist [1953] 1 QB 401). The advertisement of the car is an Invitation to treat however it is not contractually sufficient (offer to anyone who received the advertisement could accept it) – there is only one car (Grainger and Sons v Gough [1896] AC 325). If she had put in the advertisement that if the buyer does x then she will in turn sell the car then that would constitute as an offer as she is legally obligated to do her part of the buyer does the act (Carlil v Carbolic Smoke Ball Co [1893] 1 QB 256). However, all she did was put an advertisement up not an offer. Therefore, Stephen and Nora have no legally binding contract between them she is not obligated to sell him the car as it was an invitation to treat. Molly and Nora’s had a transaction of cross offers which does not bind them as neither can be constructed as acceptance of the other; in addition to that Nora

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rejected Molly’s original offer of 10,000. Her silence can be a rejection as the silent party has acknowledged the offer but has not communicated their acceptance. If Nora had agreed to the terms of the offer, it would most likely need to be communicated as Molly has no indication of whether she has bought the car or not. (Tinn v Hoffman & Co. [1873] LT 271)/ (Felthouse v Bindley)

7. Consider the following hypothetical situation: Adeola receives a letter from Mike, offering to buy Adeola’s car for €2,000. Adeola responds by letter, indicating that she accepts the offer and will sell her car to Mike for €2,000. She posts the acceptance letter in the post box on Maynooth’s Main Street on 5 January. The letter arrives in Mike’s house in Cork on 7 January. With reference to relevant case law, answer the following questions:   



Where and when did acceptance of the offer take place? What would the situation be if the letter were to be lost in the post (not due to any fault on Adeola’s part)? Would your answer to (a) and (b) be any different if Mike had stated in the offer letter that the offer would only be accepted once acceptance was received by him and not otherwise? Would your answer be any different if Mike and Adeola had corresponded by email?  







The acceptance took place at the point of postage – on Maynooth’s Main Street on the 5th January and will be deemed in law on that given day. Under the Postal rule it does not matter if the letter were to get lost as seen in (Household Fire & Carriage v Grant [1879] 4 Ex D 216 (CA)) even if the letter never arrives the acceptance is deemed in law. The rule does not apply if Mike has expressed that the acceptance must be received or else it would cause an inconvenience and absurdity to apply in law. (Holwell Securities Ltd v Hughes [1974] 1 All ER 161) per Lawton J E-mail is not instantaneous as it operates through a service provider: the receipt rule might be more consistent with the Entores ruling. There is no clear appellate authority on when an email acceptance is effective. Under the instantaneous communication rule acceptance is effective when it could be reasonably expected to be read when it arrives in the recipients’ mailbox- during business hours or in some cases outside regular business hours. (Thomas v BPE Solicitors [2012] EWHC 306 (Ch)) So yes, my answer would be different, instead of applying the postal rule I would apply the receipt rule. (Chwee Kin Keong v Digilandmall.com [2004] SLR 594 – Singapore HC that finds in favour of the receipt rule as it pertains to an email.) Websites – internet contracting – instantane...