Formation of contract: offer and acceptance (including invitations to treat, the postal rule and revocation), consideration (sufficiency, adequacy and past consideration), and the intention to create legal relations.

What this dot point is asking

Eduqas contract begins with formation: the rules of offer and acceptance (including invitations to treat, the postal rule and revocation), consideration (sufficiency, adequacy and past consideration), and the intention to create legal relations. The skill is to apply these rules to a scenario to decide whether a contract exists (AO2) and to evaluate a doctrine such as consideration (AO3).

The answer

Offer and invitation to treat

Acceptance, the postal rule and revocation

Consideration

Consideration is the element of exchange: each party must give something of value, some benefit to one party or detriment to the other (Currie v Misa). It must be sufficient (real and recognised by law) but need not be adequate (a chocolate wrapper suffices, Chappell v Nestle); past consideration is generally not valid (Re McArdle, subject to Lampleigh v Braithwait); performing a pre-existing duty is usually not fresh consideration (Stilk v Myrick) unless it confers a practical benefit (Williams v Roffey Bros) or goes beyond the duty (Hartley v Ponsonby); and part payment of a debt does not discharge the whole (Pinnel's Case; Foakes v Beer), unless promissory estoppel applies (Central London Property Trust v High Trees House).

Intention to create legal relations

The parties must intend their agreement to be legally binding. Two rebuttable presumptions apply: in commercial agreements intention is presumed present (Esso v Commissioners), and in social, domestic and family agreements it is presumed absent (Balfour v Balfour). The presumptions can be rebutted: a separated couple's financial agreement was intended to bind (Merritt v Merritt), and a "binding in honour only" clause can negate intention (Rose and Frank v Crompton).

Examples in context

A strong answer takes the ingredients in order and applies the offer/invitation-to-treat and postal-rule cases precisely.

Try this

Q1. Explain the postal rule and its limits. [10 marks]

• What the marker wants. Precise AO1: acceptance by post is complete when posted (Adams v Lindsell), even if delayed or lost, where post is a reasonable means; the rule does not apply to instantaneous methods (Entores) or where the offer requires actual notice of acceptance.

Q2. A builder agrees to finish a job for the original price after the customer promises an extra 500 pounds to ensure completion on time, which benefits the customer. Advise on whether the promise to pay extra is supported by consideration. [20 marks]

• Cue. An AO2 application: performing an existing contractual duty is usually not consideration (Stilk v Myrick), but where the promisor gains a practical benefit (timely completion, avoiding a penalty) and there is no duress, the extra promise may be enforceable (Williams v Roffey Bros), so consideration may be present.