Contract Law SQE notes.

A shop owner displays a vintage amplifier in her shop window with a price tag of £2,500. A customer walks in, places £2,500 in cash on the counter and says that he will take the amplifier. The shop owner refuses to hand it over, telling the customer that she promised the amplifier to a friend last week.

Is the shop owner obliged to sell the amplifier to the customer?

1. No, because the display was an invitation to treat and the customer's tender of the price was an offer she may reject. Correct
2. Yes, because the priced window display was an offer to the world which the customer accepted by tendering the full price in cash.
3. Yes, because the customer tendered the exact price before the owner had communicated any withdrawal of the display.
4. No, because her earlier promise to her friend was itself a binding contract which takes priority over the customer's offer.
5. No, because a contract for the sale of goods displayed in a shop window must be evidenced in writing.

A dealer writes to a collector offering to buy a painting for £5,000, adding: "If I hear nothing from you by Friday, I shall treat the painting as mine at that price." The collector reads the letter but does not reply. On Saturday the dealer arrives at the collector's house with £5,000 in cash and asks for the painting. The collector refuses to sell it.

Is the collector bound to sell the painting to the dealer?

1. Yes, because the dealer set a clear deadline and, as offeror, he was entitled to prescribe how his offer was accepted.
2. No, because silence cannot amount to acceptance and an offeror cannot impose a duty to reject. Correct
3. Yes, because the collector had a reasonable opportunity to reject the offer and did not take it.
4. No, but the collector must reimburse the dealer for the wasted cost of travelling to collect the painting.
5. Yes, because the offer identified specific goods at a stated price, so no further acceptance was needed.

A man attends an auction of vintage cars. The catalogue states that every lot is subject to a reserve. The auctioneer invites bids for one of the cars, starting at £10,000. The man bids £15,000, another bidder bids £16,000, and the man then bids £17,000. No one bids against him. Before bringing down the hammer, the auctioneer announces that the reserve has not been reached and withdraws the car from the sale. The man insists that the car is his at £17,000.

Was the auctioneer obliged to sell the car to the man at £17,000?

1. Yes, because inviting bids was an offer to sell to whoever bid the highest.
2. No, because each bid was an offer, and no contract arose until the hammer fell. Correct
3. Yes, because his bid of £17,000 accepted the auctioneer's invitation at the highest price offered.
4. No, because a sale at auction is binding only once the price has been paid.
5. Yes, because withdrawing a lot after bidding has started breaks an implied promise to the bidders.

In January a shareholder writes to an investor offering to sell 10,000 shares in a listed company at £5 per share. The letter sets no deadline for a reply but mentions that the shareholder needs the proceeds for a purchase completing in February. The investor does not respond. By July the shares are quoted at £8 each. The investor then writes: "I accept your offer to sell at £5 per share." The shareholder refuses to sell.

What is the legal effect of the letter the investor writes in July?

1. It concludes a contract, because an offer with no stated deadline stays open until the offeror withdraws it.
2. It concludes a contract, because the shareholder never communicated any withdrawal to the investor.
3. It concludes a contract, because a posted acceptance takes effect at the moment of posting.
4. It concludes no contract, because six months of silence amounted to a rejection of the offer.
5. It concludes no contract, because the offer had already lapsed after a reasonable time had passed. Correct