FE-1 Contract Law 1 — Questions and Answers
Question 1: What are the essential elements for the formation of a binding contract under Irish law?
- Offer, acceptance, consideration, intention to create legal relations, and certainty of terms (Correct answer)
- Offer, acceptance, and a written document
- Consideration, capacity, and registration
- An agreement witnessed by a solicitor
Correct answer: Offer, acceptance, consideration, intention to create legal relations, and certainty of terms
A valid contract requires: a definite offer, an unequivocal acceptance, consideration (something of value exchanged), intention of the parties to be legally bound, and terms sufficiently certain to be enforced.
Question 2: In Irish contract law, what is the postal rule as established in Adams v Lindsell (1818)?
- Acceptance of an offer sent by post takes effect when the letter is posted, not when it is received by the offeror (Correct answer)
- An offer posted to an offeree takes effect upon posting
- A contract can only be formed by post if both parties agree in advance
- The postal rule was abolished by the Electronic Commerce Act 2000
Correct answer: Acceptance of an offer sent by post takes effect when the letter is posted, not when it is received by the offeror
The postal rule provides that acceptance is complete the moment a correctly addressed, properly stamped letter is posted. This means the contract is formed before the offeror knows of the acceptance. The rule can be excluded by the terms of the offer.
Question 3: What is the legal effect of a counter-offer in contract law?
- A counter-offer terminates the original offer — it cannot be revived unless the original offeror makes a new offer (Correct answer)
- A counter-offer is a form of conditional acceptance that keeps the original offer alive
- Counter-offers automatically create a binding contract on the original terms
- A counter-offer must be in writing to be effective
Correct answer: A counter-offer terminates the original offer — it cannot be revived unless the original offeror makes a new offer
As established in Hyde v Wrench [1840], a counter-offer constitutes a rejection of the original offer and replaces it with a new offer. The original offer is destroyed and cannot be accepted unless the original offeror repeats it.
Question 4: Under Irish law, what is the doctrine of promissory estoppel and its leading Irish authority?
- Where a party makes a clear and unequivocal promise that the other party relies on to their detriment, equity may prevent the promisor from strictly enforcing their legal rights — Central London Property Trust v High Trees [1947] adopted in Ireland (Correct answer)
- Promissory estoppel creates new contract rights and is a replacement for consideration
- The doctrine applies only where the promise was made in writing
- Promissory estoppel cannot operate as a defence, only as a cause of action in Ireland
Correct answer: Where a party makes a clear and unequivocal promise that the other party relies on to their detriment, equity may prevent the promisor from strictly enforcing their legal rights — Central London Property Trust v High Trees [1947] adopted in Ireland
Promissory estoppel, developed by Denning J in High Trees and applied in Ireland, prevents a party who has made a clear promise from going back on it where the other party has relied on it. In Ireland, following Combe v Combe, it operates as a shield, not a sword.
Question 5: What is misrepresentation in Irish contract law and what are its main categories?
- A false statement of fact (not law or opinion) made by one party to another that induces the other to enter the contract — categories are fraudulent, negligent, and innocent (Correct answer)
- Any incorrect statement made during negotiations
- A misrepresentation is only actionable if made in writing
- Misrepresentation applies only to contracts for the sale of land
Correct answer: A false statement of fact (not law or opinion) made by one party to another that induces the other to enter the contract — categories are fraudulent, negligent, and innocent
Misrepresentation requires: a false statement of existing fact, made to the contracting party, which induces entry into the contract. The categories are fraudulent (Derry v Peek), negligent (Hedley Byrne/section 45 Sale of Goods Act), and innocent — each with different remedies.
Question 6: What is the parol evidence rule in contract law and its main exceptions in Ireland?
- Extrinsic evidence cannot be used to add to, vary, or contradict the terms of a complete written contract — exceptions include collateral contracts, custom and trade usage, and partly written/partly oral contracts (Correct answer)
- All oral agreements made before a written contract can be enforced
- The rule prevents any oral evidence being given in contract disputes
- The parol evidence rule was abolished by the Consumer Rights Act 2022
Correct answer: Extrinsic evidence cannot be used to add to, vary, or contradict the terms of a complete written contract — exceptions include collateral contracts, custom and trade usage, and partly written/partly oral contracts
The parol evidence rule prevents parties from adducing extrinsic evidence to vary a complete written contract. Key exceptions include: collateral contracts, evidence that the written document was not yet intended to be binding, trade custom, and rectification claims.
FE-1 Contract Law 1
What are the essential elements for the formation of a binding contract under Irish law?