• Answer Question 1(One) AND any other 2(Two)
• Marks will be lost for illegibility
• Time: 2 Hours

1. (a) Adam is a second hand car dealer. He places an advertisement in the Saturday
edition of his local paper stating:-

“Once in a lifetime opportunity: a one year old, low mileage, Mota special:
Pounds 5,000 cash. This is a serious offer – the car will go to the first person who
accepts it – valid for one day only”.

When Ben sees the advertisement he immediately posts a letter of acceptance of
Adam’s offer.

Carol also sees the advert and after inspecting the car, offers Adam a cheque for
Pounds 5,000, but he refuses to accept the cheque and tells her she cannot have
the car.

Later in the day Dave asks Adam if he will keep the offer open until he can get to
his bank to arrange a loan. Adam agrees but later in the day when Eric says he
will pay Pounds 6,000 in cash for the car he agrees to sell the car to Eric.

On Monday morning Ben’s letter arrives, and Dave returns to complete his
purchase of the car. In the afternoon Eric phones Adam to say that he has had
second thoughts and no longer wishes to buy the car.

Consider the above situation with respect to the rules governing the creation of
contracts and support your answer with decided case,

i) The precise nature of Adam’s advertisement. (4 Marks)
ii) Whether Ben has entered into a binding contract with Adam. (4 Marks)
iii) Whether Carol has any right of action against Adam (4 Marks)
iv) Whether Dave has any right of action against Adam (4 Marks)
v) Whether Adam has any right of action against Eric. (4 Marks)

(b) Oyaro is sitting with a group of friends outside a public house in a harbour. He
says that he will give Pound 100 to anyone who can swim across all harbour.
Oyaro puts that amount of money on the table to show the seriousness of his
challenge. Ben is not with Oyaro’s group but is sitting at the table next to Oyaro.

He hears the promise but does not say anything. Suddenly a child falls into the
water from the other side of the harbour. Ben dives into the water and begins to
swim to her rescue. As Ben is approaching the child, Oyaro shouts out “Don’t
think you are going to get Pounds 100, because I am withdrawing my offer”.

Ben nonetheless rescues the child and climbs out to the other side of the harbour.

Explain, with reasons, whether Ben can claim the Pounds 100 from Oyaro under
the Law of Contract. (10 Marks)
(TOTAL MARKS 30)

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