CILEx L3 Contract Law — Questions and Answers
Question 1: Which of the following is NOT an essential element required to form a valid contract?
- Offer and acceptance
- Consideration
- A written document (Correct answer)
- Intention to create legal relations
Correct answer: A written document
A valid contract requires offer and acceptance, consideration, intention to create legal relations, and capacity to contract. Writing is not generally required — most contracts can be made orally or by conduct. Exceptions include contracts for the sale of land (which must be in writing under s.2 Law of Property (Miscellaneous Provisions) Act 1989) and guarantees (Statute of Frauds 1677).
Question 2: In Carlill v Carbolic Smoke Ball Company [1893], the court held that the advertisement was:
- An invitation to treat
- A bilateral offer
- A unilateral offer to the whole world (Correct answer)
- A mere puff with no legal effect
Correct answer: A unilateral offer to the whole world
The Court of Appeal held that the advertisement constituted a unilateral offer to the whole world, which could be accepted by anyone who performed the conditions stated (using the smoke ball as directed). The deposit of £1,000 in the bank showed the company's sincerity and intention to be bound.
Question 3: What is the postal rule as established in Adams v Lindsell (1818)?
- An offer sent by post takes effect when received
- Acceptance takes effect when the letter is posted, not when it is received (Correct answer)
- A contract by post must be in writing to be valid
- Revocation of an offer is effective when posted
Correct answer: Acceptance takes effect when the letter is posted, not when it is received
The postal rule provides that acceptance of an offer is effective from the moment the letter of acceptance is properly posted, even if it is delayed or lost in the post. This is an exception to the general rule that communication must be received. The postal rule does not apply to revocation of offers, instantaneous communications, or where its application would produce manifest inconvenience.
Question 4: Which case established that past consideration is not valid consideration?
- Currie v Misa (1875)
- Re McArdle (1951) (Correct answer)
- Stilk v Myrick (1809)
- Pinnel's Case (1602)
Correct answer: Re McArdle (1951)
In Re McArdle (1951), decorating work had already been completed before a promise of payment was made. The Court of Appeal held that the promise was unenforceable because the consideration (the work) was past — it had been performed before the promise was made and was not given in exchange for the promise.
Question 5: What is the effect of a misrepresentation that induces a party to enter into a contract?
- The contract is automatically void
- The contract is voidable at the option of the innocent party (Correct answer)
- The contract remains valid but damages are payable
- The contract is illegal and unenforceable
Correct answer: The contract is voidable at the option of the innocent party
A misrepresentation renders a contract voidable, not void. The innocent party can choose to rescind (set aside) the contract and/or claim damages, depending on the type of misrepresentation (fraudulent, negligent, or innocent). The contract remains valid until the innocent party elects to avoid it.
Question 6: Under the Consumer Rights Act 2015, which of the following terms is implied into every contract for the supply of goods to a consumer?
- Goods must be delivered within 24 hours
- Goods must be of satisfactory quality (Correct answer)
- Goods must be the cheapest available
- Goods must come with a manufacturer's warranty
Correct answer: Goods must be of satisfactory quality
Section 9 of the Consumer Rights Act 2015 implies a term that goods supplied under a contract are of satisfactory quality. This replaced the equivalent provision in the Sale of Goods Act 1979 for consumer contracts. Satisfactory quality takes into account the description, price, and all other relevant circumstances.
CILEx L3 Contract Law
Which of the following is NOT an essential element required to form a valid contract?