CILEx L3 Contract Law Fundamentals 2 — Questions and Answers
Question 1: What is a 'counter-offer' and what effect does it have?
- A response that varies the terms of the original offer, which destroys the original offer (Correct answer)
- An acceptance with minor amendments that does not affect the original offer
- A request for more information about the offer
- A delay in accepting the original offer
Correct answer: A response that varies the terms of the original offer, which destroys the original offer
A counter-offer introduces different or additional terms to the original offer. Under Hyde v Wrench [1840], a counter-offer destroys the original offer, which can no longer be accepted.
Question 2: What is the 'postal rule' in contract law?
- Acceptance by post takes effect when the letter is posted, not when received (Correct answer)
- Offers must be sent by post to be valid
- Contracts must be posted to the other party within 7 days
- Acceptance is only effective when the offeror reads it
Correct answer: Acceptance by post takes effect when the letter is posted, not when received
The postal rule (Adams v Lindsell [1818]) states that where it is reasonable to accept by post, acceptance is complete and binding at the moment the letter is posted, even if lost or delayed.
Question 3: Which case is the leading authority on unilateral contracts and acceptance by performance?
- Carlill v Carbolic Smoke Ball Co [1893] (Correct answer)
- Balfour v Balfour [1919]
- Dunlop v Selfridge [1915]
- Currie v Misa [1875]
Correct answer: Carlill v Carbolic Smoke Ball Co [1893]
In Carlill v Carbolic Smoke Ball Co, the Court of Appeal held that a newspaper advertisement offering £100 to anyone who used the smokeball and still caught flu was a valid offer to the world, accepted by performance.
Question 4: When can an offer be revoked?
- At any time before acceptance, provided the revocation is communicated to the offeree (Correct answer)
- Only after a reasonable time has elapsed
- Never, once the offer has been made
- Only if the offeree has not yet read it
Correct answer: At any time before acceptance, provided the revocation is communicated to the offeree
An offer can be revoked at any time before acceptance (Payne v Cave [1789]), but the revocation must be communicated to the offeree to be effective (Byrne v Van Tienhoven [1880]).
Question 5: What is the 'battle of the forms'?
- Where each party tries to contract on their own standard terms, creating uncertainty about which terms govern (Correct answer)
- A dispute about the physical content of a written contract
- The process of negotiating contractual terms face to face
- A competition between solicitors to draft the best contract
Correct answer: Where each party tries to contract on their own standard terms, creating uncertainty about which terms govern
The battle of the forms occurs in commercial dealings where each party sends their own standard terms with orders/acceptances, and courts must determine which party's terms prevailed (Butler Machine Tool v Ex-Cell-O [1979]).
Question 6: What is the effect of silence on acceptance?
- Silence generally cannot constitute acceptance of an offer (Correct answer)
- Silence always amounts to acceptance if the offeror states it will
- Silence is a valid method of acceptance in all commercial contracts
- Silence constitutes acceptance after 14 days
Correct answer: Silence generally cannot constitute acceptance of an offer
As established in Felthouse v Bindley [1862], silence cannot generally constitute acceptance of an offer — a party cannot impose a contract on another by stating that silence will be treated as acceptance.
CILEx L3 Contract Law Fundamentals 2
What is a 'counter-offer' and what effect does it have?