Contract Law Essentials for SQE1: Offer, Consideration and Remedies

Contract is the subject candidates think they already know. You did it in first year, you can recite Carlill in your sleep, and the doctrine feels tidy compared with the sprawl of Business Law and Practice. Then you sit a timed FLK1 mock and lose nine minutes on four questions because every fact pattern is a fiddly little puzzle about whether a counter-offer killed the original offer, or whether the claimant's loss is recoverable at all.

That's the trap. Contract on SQE1 isn't hard because the law is obscure. It's hard because the questions are precise, the answer options are close together, and the examiner is testing whether you can apply a rule to facts in about fifty seconds. Recognition isn't enough. You need the rules loaded and ready.

What follows is a working revision map for the contract element of FLK1 — the bits that repeatedly generate questions, the traps that catch competent candidates, and how to practise it so it actually sticks.

Where contract sits in the SQE1 architecture

SQE1 is two assessments: FLK1 and FLK2. Each is 180 single-best-answer multiple-choice questions, delivered in two sessions of 2 hours 33 minutes. Contract lives in FLK1, alongside Business Law and Practice, Dispute Resolution, Tort, the Legal System of England and Wales, Constitutional and Administrative Law and EU law, and Legal Services. FLK2 handles Property Practice, Wills and the Administration of Estates, Solicitors Accounts, Land Law, Trusts, and Criminal Law and Practice. Thirteen functioning legal knowledge subjects across the two papers.

Contract earns disproportionate attention for a simple reason: it bleeds. Business Law questions about directors' authority sit on agency and contract principles. Dispute Resolution questions about limitation and settlement assume you understand breach. Even Tort questions on pure economic loss make more sense once you've internalised why contract law polices the boundary of recoverable loss. Solid contract knowledge quietly lifts your score in three other subjects.

One planning note before we get into doctrine. Passing SQE1 is one component of qualification. You also need a qualifying degree or equivalent, two years of qualifying work experience (QWE), SQE2, and to satisfy the SRA on character and suitability. Fees, sitting windows and booking deadlines shift — check the current position at sqe.sra.org.uk rather than relying on what a friend told you last cycle.

Formation: offer, acceptance and the parts candidates skim

Formation questions are the bread and butter of contract on FLK1, and they reward mechanical precision. The examiner isn't asking whether a contract "feels" formed. They're asking: at what precise moment, on these precise facts, did agreement crystallise — or fail to?

Offer versus invitation to treat

You know the categories. Goods on a shop shelf, advertisements, and auction lots without reserve are ordinarily invitations to treat; the customer makes the offer at the till. Unilateral offers to the world can be genuine offers where the language is sufficiently definite and there's evident intention to be bound — the smoke-ball reasoning.

Where candidates go wrong is with tenders and online listings. A request for tenders is normally an invitation to treat, but a clear undertaking to accept the highest conforming bid can convert it into a binding unilateral obligation to consider bids properly. Read the wording in the stem. The examiner puts the operative phrase there deliberately — usually one clause, easy to skim past.

Termination of the offer

This is the single richest seam for MCQ writers, because there are five ways an offer dies and each has a wrinkle:

• Rejection — including a counter-offer, which destroys the original. But a mere request for information does not. "Would you consider £8,000?" is very different from "I'll give you £8,000."
• Revocation — effective only when it actually reaches the offeree. It can be communicated by a reliable third party. Crucially, the postal rule does not apply to revocation.
• Lapse of time — express deadline, or a reasonable period, which depends on the subject matter. Perishable goods lapse faster than land.
• Failure of a condition precedent — sometimes implied, as where goods deteriorate between offer and acceptance.
• Death — of the offeror, generally terminating the offer once the offeree knows; of the offeree, generally terminating it outright.

Acceptance and the postal rule

Acceptance must be unqualified, communicated, and made in response to the offer. Silence is not acceptance. The postal rule makes acceptance effective on posting, provided post was a reasonable means and the letter was properly addressed and stamped — but it is disapplied where the offer requires actual receipt ("notice in writing to reach me by Friday"). For instantaneous communications, acceptance takes effect on receipt.

Battle of the forms questions turn on the "last shot" analysis: the final set of terms sent before performance usually governs. Track the sequence of documents in the stem chronologically. I sketch a quick timeline on the scrap paper for these — three seconds, saves thirty.

Consideration and intention: the deceptively simple bit

Consideration must be sufficient but need not be adequate. Courts don't police the bargain's value; they police whether something of legal value moved from the promisee. A peppercorn works. A pre-existing duty ordinarily does not.

The rules that generate questions:

1. Past consideration is not good consideration — subject to the narrow exception where the act was done at the promisor's request, both parties understood it would be paid for, and payment would have been legally enforceable if promised in advance.
2. Performance of an existing contractual duty is not consideration for a fresh promise from the same party — unless you can find a practical benefit to the promisor and no economic duress. This is the classic builder-runs-out-of-money scenario.
3. Part payment of a debt does not discharge the whole, on the orthodox rule. Look for something extra: earlier payment, payment in a different form, payment by a third party, or a genuine composition with creditors.
4. Promissory estoppel operates as a shield, not a sword. It requires a clear promise, reliance, and inequity in resisting the promise. It suspends rights rather than extinguishing them, at least for periodic obligations.

Intention to create legal relations follows a presumption structure: domestic and social arrangements are presumed not to be legally binding; commercial ones are presumed to be. Both presumptions are rebuttable by clear evidence. Watch for separated spouses — the presumption against intention weakens sharply once the relationship has broken down.

The examiner rarely asks "was there a contract?" in the abstract. The question is almost always "which of these five statements correctly explains why there was or wasn't one" — and four of the five will be legally accurate propositions applied to the wrong facts.

Misrepresentation: the topic with the most moving parts

If one contract topic deserves extra revision hours, it's this. Misrepresentation questions require you to run a chain: was there an actionable misrepresentation, of what type, and what remedies follow? Get the type wrong and every downstream answer collapses.

Step one — is it actionable?

You need an unambiguous false statement of fact or law, made by one party to the other, which induced the contract. Statements of opinion aren't actionable unless the maker had no reasonable grounds for holding it, or had special knowledge. Statements of future intention aren't actionable unless the maker never held that intention. Silence is generally not a misrepresentation — but half-truths, statements falsified by later events, and contracts of utmost good faith (insurance) are the exceptions you must have ready.

Inducement is the sleeper issue. The representation need not be the only reason, but the claimant must actually have relied on it. If the claimant commissioned their own survey and relied on that instead, reliance fails.

Step two — which type?

The statutory route under the Misrepresentation Act 1967 is the workhorse. It reverses the burden of proof — the representor must establish reasonable grounds — and it delivers deceit-measure damages. That combination makes it more attractive than the common law route in most fact patterns, and the examiner knows it.

Step three — bars to rescission

Rescission unwinds the contract, but it is lost through affirmation, lapse of time, impossibility of substantial restitution, or where a third party has acquired rights in good faith for value. Candidates frequently pick "rescission" as the answer to a question where the goods have already been resold to an innocent purchaser. Read the last sentence of the stem — that's usually where the bar is hiding.

A worked example

Priya buys a small café business from Dev. During negotiations Dev says weekly takings are "consistently around £4,200". He has looked at three good weeks and not at the quarterly figures, which show an average of £2,800. Priya doesn't inspect the accounts. She completes, discovers the true figures after six weeks, keeps trading for a further four months while she tries to build turnover, then seeks to unwind the sale.

Work it through. The statement is one of fact, false, and made by Dev to Priya. Opinion? Arguably framed as one, but Dev had special knowledge of his own accounts, so it's treated as a representation of fact. Inducement — yes, and Priya's failure to inspect doesn't defeat reliance; there's no duty on a representee to verify. Type — Dev honestly believed it, so not fraudulent, but he had no reasonable grounds, which puts him squarely in the statutory negligent category with deceit-measure damages. Rescission — this is where it turns. Four months of continued trading after discovering the truth looks like affirmation. So the realistic answer is damages, not unwinding.

Notice how many decision points that is. Six, in a stem you'd have around ninety seconds for at real exam pace. That's why misrepresentation needs drilling rather than reading.

Breach and remedies: knowing which loss is recoverable

Remedies questions split into two families: what type of term was breached, and what the claimant can actually recover.

Terms and the right to terminate

Breach of a condition gives the innocent party the right to terminate and claim damages. Breach of a warranty gives damages only. An innominate term depends on the seriousness of the consequences — did the breach deprive the innocent party of substantially the whole benefit of the contract? Repudiatory breach and renunciation before performance is due (anticipatory breach) both trigger an election: affirm or terminate. That election, once made and communicated, is generally irrevocable.

Damages

The default measure is expectation loss — putting the claimant in the position they'd have been in had the contract been performed. Reliance loss (wasted expenditure) is the alternative where expectation loss is too speculative, but you cannot use reliance loss to escape a bad bargain.

Then apply the filters, in this order:

• Causation — did the breach cause the loss?
• Remoteness — the two limbs: loss arising naturally in the ordinary course, and loss within the reasonable contemplation of both parties at the time of contracting because of special knowledge communicated to the defendant. The famous mill-shaft case is the anchor here.
• Mitigation — the claimant cannot recover for loss they could reasonably have avoided, and must give credit for benefits obtained in mitigating.
• Non-pecuniary loss — generally not recoverable, save where an important object of the contract was pleasure, relaxation or peace of mind, or for physical inconvenience caused by the breach.

Liquidated damages clauses are enforceable unless they impose a detriment out of all proportion to the innocent party's legitimate interest in performance. Note the modern formulation — this is not the old "genuine pre-estimate of loss" test alone, and the answer options will often include the outdated phrasing as a distractor.

Equitable remedies round it out: specific performance (discretionary, not for personal services, not where damages are adequate), injunctions, and restitutionary claims for a total failure of consideration. Add the Consumer Rights Act 2015 tier of remedies for consumer contracts — repair or replacement, then price reduction or the final right to reject, plus the short-term right to reject within thirty days for goods. Consumer questions appear regularly and the tiered structure is very testable.

How to revise contract so it survives exam pressure

Reading contract notes feels productive and is largely useless past the second pass. The subject rewards retrieval under time pressure, because the exam skill is pattern-recognition plus rapid rule application, not recall of essay-length doctrine.

What actually moves the needle:

1. Build decision trees, not summaries. One side of A4 for misrepresentation, structured as a flowchart from "false statement of fact?" through to "bars to rescission". One for remedies. One for formation. If you can't draw it from memory, you don't know it.
2. Practise mixed, not blocked. Twenty consecutive misrepresentation questions inflate your accuracy because you already know the topic. Interleaved sets of contract, tort and business law questions are harder and far more predictive.
3. Time from the start. Roughly 51 seconds per question at real pace. Practising untimed teaches habits that fall apart on the day.
4. Log every wrong answer by reason, not just topic. "Misread the timeline", "didn't spot affirmation", "picked a true statement that didn't answer the question". Reason-tagging reveals patterns that topic-tagging hides.

This is where a decent question bank earns its keep. I used the Ant Law SQE Question Bank largely for its smart practice engine — it pushes unseen questions and your previously wrong ones back at you rather than letting you re-do the questions you're already good at, which is the natural human temptation. The AI tutor is genuinely useful for contract specifically, because when you get a remoteness question wrong you usually need a follow-up conversation, not a two-line explanation.

A note on pass rates and pacing

Published SQE pass rates make uncomfortable reading if you look at them the wrong way. A meaningful proportion of candidates don't pass FLK1 first time, and the SRA publishes the breakdowns — go and read the actual reports on sqe.sra.org.uk rather than absorbing figures second-hand from forums. What the data consistently suggests is that candidates who prepare with substantial timed multiple-choice practice do better than those who prepare by reading. Contract is the clearest illustration of that gap.

Putting it together

Contract on FLK1 is a subject where a fortnight of focused, timed practice can lift you several percentage points across the whole paper, because the reasoning transfers into business law and dispute resolution. Front-load formation and misrepresentation; they carry the most decision points per question. Keep remedies as a structured checklist you can run in ten seconds. And resist the urge to re-read your undergraduate notes — the SQE tests something narrower and sharper than a university contract module ever did.

Start tonight with a single concrete step: draw the misrepresentation flowchart from memory, then do thirty timed contract questions and tag every error by reason. If you'd like a structured bank to run that against, the Ant Law SQE Question Bank at antlaw.ai has FLK1 and FLK2 questions tagged down to sub-topic level with realistic mock sittings — and it's available on iOS, Android and the web, so you can drill contract on the commute. Questions about the platform go to [email protected]. For anything concerning fees, sitting dates, QWE or SRA requirements, always check sqe.sra.org.uk directly.