Formation of contract: practice

Formation of contract

Goods on display are an invitation to treat, not an offer: the customer makes the offer and the seller accepts it.

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Question 1 · Section A · Syllabus B12 marks

Formation of contract

Under a contract between Arden Ltd and Belmont Ltd, Belmont Ltd promises to pay Carys £3,000 a month for a year. Carys is named in the contract, which says nothing about varying it. She never contacts Belmont Ltd.

Belmont Ltd learns that, relying on the payments, Carys has signed a lease on a workshop. Arden Ltd and Belmont Ltd then agree to cancel the payment term without asking her.

Does the cancellation take away Carys's right to the payments? (2 marks)

No, because a third party's rights can never be changed once the contract is madeYes, because the parties to a contract may always vary it before a third party has been paidYes: until a third party has communicated her assent to the promisor, the parties remain free to cancel the termNo: Belmont Ltd knew she had relied on the term, so it could not be cancelled without her consent