Acing the SQE/Contract Law

Core principles of contract law

Formation

In English contract law, formation refers to the creation of a legally binding agreement between two or more parties. For a contract to be valid and enforceable, it must satisfy several key elements. These elements are:

offer and acceptance

An offer is a clear, unequivocal proposal made by one party (the offeror) to another (the offeree) with the intention of being bound by it once the offeree accepts. • The offer must be specific and capable of acceptance. • Offers can be terminated through rejection, revocation, lapse of time, or counteroffer. Acceptance

• Acceptance is an unqualified agreement to the terms of the offer. • It must be communicated clearly, either explicitly (e.g., verbally or in writing) or implicitly (e.g., through conduct). • Acceptance must mirror the terms of the offer (the “mirror image rule”). Any variation might constitute a counteroffer rather than acceptance.

Some leading cases are: • Carlill v Carbolic Smoke Ball Co (1893): Demonstrates offer and acceptance in a unilateral contract. Hyde v Wrench (1840): Establishes the mirror image rule and the effect of a counteroffer. • Currie v Misa (1875): Defines consideration as a detriment to the promisee or a benefit to the promisor.

consideration

Consideration refers to the “price” paid for the promise made in the contract. It involves an exchange of value, such as money, services, goods, or promises. • It must be sufficient but need not be adequate. For example, a small or nominal consideration can suffice, but it must have some value in law. • Past consideration (an act performed before the promise is made) is generally not valid, except in specific exceptions.

intention to create legal relations

• The parties must intend for their agreement to have legal consequences. • In commercial agreements, there is a presumption of intent to create legal relations, unless expressly stated otherwise. • In social or domestic arrangements, there is usually no such presumption unless evidence shows otherwise.

certainty

• The terms of the agreement must be clear and complete enough for the court to enforce. • Ambiguities or omissions in key terms may render the contract void.

capacity

The parties entering the contract must have the legal capacity to do so (e.g., they must be of sound mind and not minors, with some exceptions for necessities).

Contract terms

exemption clauses

Section 3 of the Unfair Contract Terms Act (UCTA) will apply and the exemption clause will be valid if reasonable (reasonableness test).