SQE1 Contract Law.

A solicitor is advising a client who runs a high-street electronics shop. The client displayed a rare vintage amplifier in the shop window with a price tag of £2,500. A customer entered the shop and placed £2,500 in cash on the counter, demanding to buy the amplifier. The client refused to sell because he had promised it to a friend. The customer threatens to sue, claiming the display was an offer which he accepted by tendering the money. The solicitor needs to advise on whether the shop window display constituted a legally binding offer.

Which of the following best describes the legal effect of displaying goods with a price tag in a shop window?

1. The display is an invitation to treat, not an offer, so the shop owner is not bound to sell to the customer. Correct
2. The display is a unilateral offer to the world at large which the customer accepted by tendering the full price.
3. The display is a binding offer which the customer accepted by entering the shop and expressing willingness to pay.
4. The display is a conditional offer which becomes binding once the customer picks up the goods and takes them to the till.
5. The display is an offer that can only be revoked before the customer enters the shop premises.

An antiques dealer wrote to a collector offering to buy a painting for £5,000, stating: "If I do not hear from you by Friday, I shall consider the painting mine at £5,000." The collector did not reply. On Saturday, the dealer arrived at the collector's house with £5,000 in cash, demanding the painting. The collector refused to sell. The dealer claims a binding contract was formed by the collector's silence. The collector's solicitor is asked to advise.

Which of the following best describes the legal position regarding the dealer's claim that the collector's silence constituted acceptance?

1. A contract was formed because the collector had a reasonable opportunity to reject the offer and failed to do so before the deadline.
2. No contract was formed because silence cannot constitute acceptance — an offeror cannot impose a duty on the offeree to reject an unwanted offer. Correct
3. A contract was formed because the dealer specified a clear deadline and method of acceptance, making him the master of the offer.
4. No contract was formed, but the collector must pay damages for failing to respond within a reasonable time.
5. A contract was formed because the offer was for the purchase of specific goods at a stated price, which is a self-executing offer.

A solicitor is advising a client who attended an auction to buy a vintage car. The auctioneer invited bids starting at £10,000. The client bid £15,000. Another bidder bid £16,000. The client then bid £17,000, which was the highest bid. Just before the hammer fell, the auctioneer announced that the reserve price had not been met and withdrew the car from sale. The client is furious and wants to know whether the auctioneer was bound to sell the car to him as the highest bidder.

Which of the following best describes the legal position regarding the auction?

1. The auctioneer was bound to sell to the highest bidder because calling for bids constitutes an offer to sell to whoever bids the most.
2. The auctioneer was not bound to sell because each bid is an offer from the bidder, and the auctioneer accepts by the fall of the hammer — until that point, there is no contract. Correct
3. The auctioneer was bound to sell because the client's bid of £17,000 constituted acceptance of the auctioneer's invitation to buy at the highest price offered.
4. The auctioneer was not bound because the auction was merely an agreement to negotiate and no legal relations were intended at all.
5. The auctioneer was bound to sell because withdrawing the lot after bids have been made constitutes a breach of the implied contract to sell to the highest bidder.

In January, a shareholder offered to sell his shares in a company to another investor at £5 per share. No time limit for acceptance was stated. The investor did nothing for six months. In July, the share price had risen to £8 per share. The investor then wrote to the shareholder stating: "I accept your offer to sell shares at £5 per share." The shareholder refused to sell. A solicitor is asked to advise the investor on whether the acceptance was effective.

Which of the following best describes the legal position regarding the investor's purported acceptance?

1. The acceptance is effective because no time limit was stated, so the offer remains open indefinitely until expressly revoked by the offeror.
2. The acceptance is effective because the shareholder never communicated a revocation to the investor.
3. The acceptance is effective because the postal rule applies and the letter of acceptance was properly posted.
4. The acceptance is ineffective because the investor's delay of six months amounts to a rejection of the offer by implication.
5. The acceptance is likely ineffective because where no time limit is stated, an offer lapses after a reasonable time, and six months is likely unreasonable for a share sale. Correct