Graduate Diploma in Law (GDL) Contract Law Syllabus

Contract Law syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Contract Law in Graduate Diploma in Law (GDL), not a summary of it.

1. 1

   Formation of Contract

   5 topics

   • Offer and Invitation to Treat
     • Distinguishing offers from invitations to treat (Fisher v Bell, PSGB v Boots)
     • Advertisements and unilateral offers (Carlill v Carbolic Smoke Ball)
     • Auctions, tenders and displays of goods
   • Acceptance
     • Mirror image rule and battle of the forms
     • Communication of acceptance and the postal rule (Adams v Lindsell)
     • Acceptance by conduct and instantaneous communications
   • Consideration
     • Adequacy versus sufficiency
     • Past consideration and existing duties (Stilk v Myrick, Williams v Roffey)
     • Promissory estoppel (Central London Property v High Trees)
   • Intention to Create Legal Relations
     • Domestic and social agreements (Balfour v Balfour)
     • Commercial agreements and rebuttable presumptions
   • Certainty and Completeness of Terms
2. 2

   Contents of a Contract

   4 topics

   • Terms versus Representations
   • Express and Implied Terms
     • Terms implied in fact (officious bystander, business efficacy)
     • Terms implied by statute (Sale of Goods Act, Consumer Rights Act)
   • Classification of Terms
     • Conditions, warranties and innominate terms (Hong Kong Fir)
   • Exemption and Limitation Clauses
     • Incorporation, construction and contra proferentem
     • Unfair Contract Terms Act 1977 and Consumer Rights Act 2015
3. 3

   Vitiating Factors

   4 topics

   • Misrepresentation
     • Fraudulent, negligent and innocent misrepresentation
     • Remedies and the Misrepresentation Act 1967
   • Mistake
     • Common, mutual and unilateral mistake
     • Mistake as to identity and non est factum
   • Duress and Undue Influence
     • Economic duress
     • Actual and presumed undue influence (Royal Bank of Scotland v Etridge)
   • Illegality and Public Policy
4. 4

   Discharge and Remedies

   5 topics

   • Discharge by Performance and Breach
   • Frustration
     • Doctrine and limits (Taylor v Caldwell, Davis Contractors)
     • Law Reform (Frustrated Contracts) Act 1943
   • Damages
     • Expectation and reliance interest
     • Remoteness (Hadley v Baxendale) and mitigation
   • Equitable Remedies
     • Specific performance and injunctions
   • Privity of Contract and Third Party Rights

Contract Law flashcards for Graduate Diploma in Law (GDL)

24 of 63 cards from the Contract Law deck — real questions with worked answers.

1. What is the distinction between an offer and an invitation to treat?

   An offer is a clear expression of willingness to be bound on stated terms upon acceptance (e.g. Carlill v Carbolic Smoke Ball Co). An invitation to treat is merely an invitation to negotiate or make offers, with no intention to be bound until acceptance (e.g. shop displays, advertisements, auctions).

2. In Carlill v Carbolic Smoke Ball Co (1893), what made the advertisement a unilateral offer rather than an invitation to treat?

   The advert showed clear intention to be bound (the company had deposited £1,000 in a bank to show sincerity), was sufficiently certain, and was an offer to the world capable of acceptance by anyone performing the stated conditions (using the smoke ball and still catching flu).

3. How are goods displayed on a shop shelf classified in contract formation, per Pharmaceutical Society v Boots (1953)?

   A display of goods is an invitation to treat. The customer makes the offer at the till by presenting goods for purchase, and the shopkeeper accepts (or declines) at that point.

4. List the four core requirements for a valid simple contract.

   (1) Offer; (2) Acceptance; (3) Consideration; and (4) Intention to create legal relations. (Certainty of terms and capacity are also required for enforceability.)

5. What is the postal rule of acceptance and which case established it?

   Acceptance by post is complete and effective when the letter is properly posted, not when received (Adams v Lindsell (1818)), provided post was a reasonable means of acceptance. It does not apply where it would produce manifest inconvenience or absurdity (Holwell Securities v Hughes).

6. When does acceptance by instantaneous communication (e.g. email, telex, fax) take effect?

   When and where it is received by the offeror, not when sent (Entores v Miles Far East Corporation (1955); Brinkibon v Stahag Stahl). The postal rule does not apply to instantaneous communications.

7. What is the 'mirror image' rule and the effect of a counter-offer on the original offer?

   Acceptance must mirror the offer exactly. A counter-offer rejects and destroys the original offer, which can no longer be accepted (Hyde v Wrench (1840)). A mere request for information, however, does not destroy the offer (Stevenson, Jaques v McLean).

8. Can silence constitute acceptance of an offer?

   No. An offeror cannot stipulate that silence amounts to acceptance; acceptance generally requires some positive act of communication (Felthouse v Bindley (1862)).

9. List the four ways an offer may be terminated before acceptance.

   (1) Revocation (withdrawal communicated before acceptance — Byrne v Van Tienhoven); (2) Rejection or counter-offer; (3) Lapse of time or a stated condition; (4) Death of either party (in some circumstances).

10. In unilateral contracts, when may an offer not be revoked?

    Once the offeree has commenced or is in the course of performing the requested act, the offeror cannot revoke (an implied obligation not to revoke arises) — Errington v Errington & Woods (1952).

11. Define consideration in the law of contract.

    Consideration is the price paid for the other party's promise. Classically, it is 'some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other' (Currie v Misa (1875)).

12. State the rule that consideration must be sufficient but need not be adequate.

    Consideration must have some recognisable economic value in the eyes of the law (sufficient), but the courts will not assess whether it is a fair or equivalent price (adequate) — Chappell v Nestlé (1960), where chocolate wrappers were good consideration; Thomas v Thomas.

13. What is the rule against past consideration, and its main exception?

    Consideration given before/independent of the promise is past and not valid (Re McArdle; Roscorla v Thomas). Exception (Pao On v Lau Yiu Long): a past act counts where it was done at the promisor's request, with an understood expectation of payment, and would have been legally enforceable if promised in advance.

14. Is performance of an existing public duty good consideration for a new promise?

    Generally no (Collins v Godefroy). But exceeding the existing duty is good consideration (Glasbrook Bros v Glamorgan CC; Ward v Byham, where the mother went beyond her statutory duty).

15. What is the rule in Pinnel's Case / Foakes v Beer on part payment of a debt?

    Part payment of a debt is not good consideration for a promise to forgo the balance; the creditor can still claim the rest (Foakes v Beer (1884)). Exceptions include payment at a different place/time, with a chattel, or early at the creditor's request.

16. How did Williams v Roffey Bros (1991) modify consideration for existing contractual duties owed to the same party?

    Performing an existing duty owed to the same party can be good consideration if it confers a 'practical benefit' (or avoids a disbenefit) on the promisor, provided there is no economic duress and the promise was freely given.

17. State the requirements for promissory estoppel (Central London Property Trust v High Trees House (1947)).

    (1) A clear and unequivocal promise/representation that strict legal rights will not be enforced; (2) reliance by the promisee (alteration of position); (3) it must be inequitable for the promisor to go back on the promise. It is 'a shield not a sword' (Combe v Combe) and generally suspends rather than extinguishes rights.

18. What is the presumption regarding intention to create legal relations in commercial agreements?

    There is a strong rebuttable presumption that parties to a commercial/business agreement intend to be legally bound. It can be rebutted by clear words, e.g. an 'honour clause' (Rose & Frank Co v JR Crompton).

19. What is the presumption regarding intention to create legal relations in social and domestic agreements?

    There is a rebuttable presumption that parties do NOT intend to be legally bound (Balfour v Balfour — husband/wife). The presumption can be rebutted where parties are separating or the arrangement is more clearly contractual (Merritt v Merritt).

20. What level of certainty and completeness must contract terms have to be enforceable?

    Terms must be sufficiently certain and complete. A vague agreement is unenforceable (Scammell v Ouston), and an 'agreement to agree' essential terms is not binding (Walford v Miles). Courts may, however, save a contract using a stated machinery, trade custom, or the reasonableness standard (Hillas v Arcos).

21. How can an apparently incomplete or vague contract still be saved by the courts?

    By reference to: a stated mechanism for resolving the matter; previous course of dealing or trade custom; a 'reasonableness' standard (e.g. reasonable price under s8 Sale of Goods Act 1979); or by severing a meaningless clause (Nicolene v Simmonds).

22. What is the distinction between a term and a representation?

    A term is a promise forming part of the contract; its breach gives a contractual remedy. A representation is a pre-contractual statement inducing the contract but not part of it; its falsity gives a remedy in misrepresentation, not breach of contract.

23. What four factors do courts weigh in deciding whether a statement is a term or a mere representation?

    (1) Importance attached to the statement (Bannerman v White); (2) timing/lapse before contracting (Routledge v McKay); (3) whether reduced to writing; (4) relative skill/knowledge of the parties (Oscar Chess v Williams vs Dick Bentley v Harold Smith).

24. What are the three sources/types of implied terms in a contract?

    (1) Terms implied by statute (e.g. Consumer Rights Act 2015; Sale of Goods Act 1979); (2) terms implied by custom or trade usage; (3) terms implied by the courts — either 'in fact' (to give business efficacy) or 'in law' (as a standard incident of a type of contract).

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