Contract — SQE1 practice questions
Formation, consideration and intention, terms and exclusion clauses, misrepresentation, mistake, duress and undue influence, frustration, breach and remedies, and third-party rights.
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3 free questions with answers
On 1 March Harlow Ltd emailed Pinewood Supplies Ltd offering to sell 500 oak panels for £20,000 and stating that the offer would remain open until 10 March. On 3 March Pinewood replied: 'We accept, but at £18,000 delivered.' Harlow did not respond. On 5 March Pinewood emailed again: 'Please ignore our last email. We accept your offer at £20,000.' On 6 March Harlow told Pinewood it would not supply the panels because it had found another buyer at a higher price.
Which of the following best describes whether a contract was formed between Harlow and Pinewood?
- AA contract was formed on 5 March, because Harlow had stated that its offer would remain open until 10 March.
- BNo contract was formed, because Pinewood's email of 3 March was a counter-offer which rejected Harlow's offer, leaving nothing capable of acceptance on 5 March.
- CA contract was formed on 3 March for £18,000, because Harlow did not object to Pinewood's revised terms.
- DA contract was formed on 5 March, because the email of 3 March was only a request for information about the price.
- ENo contract was formed, because Harlow's sale to another buyer automatically revoked its offer even before Pinewood was told.
Show answer and reasoning
Rule: A counter-offer rejects and destroys the original offer, so the offeree cannot later accept that original offer.
- A A promise to keep an offer open is not binding without consideration, and in any event the offer was destroyed by the counter-offer. (wrong rule)
- C Silence by the offeree of a counter-offer cannot amount to acceptance (Felthouse v Bindley). (wrong rule)
- D The 3 March email proposed a new price and so was a counter-offer, not a mere enquiry of the Stevenson v McLean type. (right rule, wrong facts)
- E Revocation must be communicated to the offeree; the reason there is no contract is the earlier counter-offer. (wrong rule)
Source: Hyde v Wrench (1840) 3 Beav 334; Stevenson, Jacques & Co v McLean (1880) 5 QBD 346
On 2 June Teresa, a motorcycle dealer, posted a letter to Callum offering to sell him a vintage motorcycle for £12,000. The letter said nothing about how Callum should accept. Callum received the letter on 4 June and at 10 am on 5 June posted a properly stamped and addressed letter of acceptance. At 2 pm on 5 June Teresa emailed Callum withdrawing her offer, and Callum read the email immediately. Callum's letter reached Teresa on 7 June.
Which of the following best describes the legal position?
- AThere is no contract, because an email withdrawal takes effect instantly and overrides an acceptance still in the post.
- BThere is no contract, because an acceptance is effective only when it reaches the offeror, which was after the withdrawal.
- CA contract was concluded, but only on 7 June when Teresa received the letter of acceptance.
- DA contract was concluded at 10 am on 5 June when Callum posted his acceptance, so Teresa's later withdrawal was ineffective.
- EA contract was concluded only if Teresa had expressly authorised acceptance by post.
Show answer and reasoning
Rule: A properly posted acceptance takes effect on posting where use of the post is reasonable, whereas revocation of an offer takes effect only on receipt.
- A Revocation takes effect only on receipt, but a posted acceptance is effective on posting, which happened first. (wrong rule)
- B The postal rule displaces the receipt rule where use of the post is reasonable, as it is when the offer was made by post. (wrong rule)
- C Under the postal rule acceptance is complete on posting, not on delivery. (wrong rule)
- E The postal rule applies where it is reasonable to use the post, which it is when the offer itself was sent by post (Henthorn v Fraser); express authorisation is not required. (wrong rule)
Source: Adams v Lindsell (1818) 1 B & Ald 681; Byrne & Co v Van Tienhoven (1880) 5 CPD 344; Henthorn v Fraser [1892] 2 Ch 27
Asha and Ben are married but separated six months ago, and Ben now lives with his sister. At a meeting to sort out their finances, Ben wrote and signed a note stating: 'In return for Asha paying off the £4,000 balance on my personal credit card, I will pay her £500 per month until our divorce is finalised.' Asha paid off the credit card in full the following week. Ben made two monthly payments and then stopped, saying that arrangements between husband and wife are not legally binding.
Which of the following best describes whether Asha can enforce Ben's promise?
- AAsha cannot enforce the promise, because agreements between spouses are presumed not to be intended to create legal relations and nothing here rebuts that presumption.
- BAsha can enforce the promise only if it was made by deed, because promises between spouses are gratuitous.
- CAsha can enforce the promise, because any written agreement is conclusively presumed to be intended to create legal relations.
- DAsha can enforce only the payments already made, because a party to a domestic arrangement may end it on reasonable notice.
- EAsha can enforce the promise, because the presumption that domestic agreements are not intended to be binding is rebutted where the spouses have separated and record their arrangement in writing.
Show answer and reasoning
Rule: The presumption against intention to create legal relations in domestic agreements is rebutted where spouses have separated and record their arrangement, especially in writing.
- A The presumption is readily rebutted where spouses have separated and set out their terms in writing (Merritt v Merritt); Balfour v Balfour concerned spouses living together. (right rule, wrong facts)
- B Asha provided consideration by paying Ben's personal debt, so no deed is required. (wrong rule)
- C Writing is evidence of intention but there is no conclusive presumption arising from writing alone. (wrong rule)
- D There is no such general rule; if the agreement is binding Ben is bound by its terms until the divorce. (wrong rule)
Source: Merritt v Merritt [1970] 1 WLR 1211; Balfour v Balfour [1919] 2 KB 571
Next 20 questions on Contract →
Subtopics
| Consideration and promissory estoppel | 3 questions |
| Contents of the contract: terms | 3 questions |
| Discharge: performance, breach and frustration | 3 questions |
| Exclusion and limitation clauses | 3 questions |
| Formation of contract | 3 questions |
| Privity and third party rights | 2 questions |
| Remedies for breach of contract | 3 questions |
| Vitiating factors: misrepresentation, mistake, duress, undue influence | 5 questions |