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Contract: Formation

Evaluating the rules of agreement and consideration

  • 3 things to know
  • A2 Units 3 and 4

Overview

Main criticism of the postal rule, case in favour of retaining the postal rule and case for retaining the requirement of consideration.

What you need to know

Answer each one before you reveal it.

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Evaluation

Explain the criticism of the distinction between an offer and an invitation to treat drawn in Fisher v Bell (1961).

Key term

State the case in favour of retaining the postal rule.

Evaluation

Explain the criticism that the doctrine of consideration defeats the parties' intentions.

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Explain the criticism of the distinction between an offer and an invitation to treat drawn in Fisher v Bell (1961).

    Model answer

    The decision defeated the evident purpose of the statute, since a shopkeeper displaying a weapon for sale escaped liability on a technical point of contract law, and Parliament had to amend the legislation to cover exposing goods for sale.

  2. 2

    State the case in favour of keeping the distinction between an offer and an invitation to treat.

    Model answer

    A trader would otherwise be bound to sell to everyone who responded, even after stock ran out or where a price had been misprinted, and would lose the ability to refuse a customer they have good reason to refuse.

  3. 3

    State the main criticism of the postal rule.

    Model answer

    It can bind an offeror to a contract they never learn about, because a properly posted acceptance takes effect even if it is delayed or lost, which allocates the risk of the postal service to the party with no means of controlling it.

  4. 4

    State the case in favour of retaining the postal rule.

    Model answer

    Some point must be fixed at which the parties can treat the bargain as closed, the offeror chose or accepted a method of communication out of both parties' control, and the rule can always be excluded by the terms of the offer.

  5. 5

    How should an acceptance sent by email be treated, and why is the position uncertain?

    Model answer

    The better view is that an emailed acceptance takes effect on receipt in the same way as other near instantaneous communication, but there is no clear binding authority, so it is uncertain whether receipt means arrival on the server or the moment the recipient could reasonably read it.

  6. 6

    Explain the criticism that the doctrine of consideration defeats the parties' intentions.

    Model answer

    A promise that is seriously meant, deliberately made and relied on will not be enforced unless something of value was given for it, so the law refuses to uphold agreements the parties plainly intended to be binding.

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