You are forty questions into a practice paper. A builder quotes £18,000 for an extension." The builder says nothing." Is there a contract? Four options stare back at you and three of them look defensible. This is the moment most FLK1 candidates realise that contract law on the SQE is not really about reciting rules — it is about applying them in the right order, quickly, under time pressure.
Contract is one of the seven FLK1 subjects, and it is everywhere. It sits underneath Business Law and Practice, it feeds into Dispute Resolution, and the same reasoning muscles show up again in Property Law and Practice on the FLK2 side. Get contract right and a surprising slice of the 180 questions in FLK1 becomes easier. Here is how to build that reliability.
Formation: where SQE1 FLK1 questions are actually won
" They give you a messy sequence of communications and ask when — or whether — agreement crystallised. So train yourself to draw a timeline before you read the options.Start with the distinction between an offer and an invitation to treat. Goods displayed on a shelf are an invitation to treat, with the offer made at the till (Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]). A shop window display is the same (Fisher v Bell [1961]), and so is an advertisement in most cases (Partridge v Crittenden [1968]). The famous exception is the unilateral offer to the world in Carlill v Carbolic Smoke Ball Co [1893], where the wording and the deposited £1,000 showed a genuine intention to be bound.
Then work through the responses. A counter-offer destroys the original offer (Hyde v Wrench (1840)) — which answers the scenario at the top of this article. Once the client said £16,500, the £18,000 offer was gone; the later "acceptance" was itself a fresh offer that the builder was free to refuse."
Exam habit worth building: for every communication in the fact pattern, label it O (offer), ITT (invitation to treat), CO (counter-offer), RFI (request for information), A (acceptance) or R (revocation). Ten seconds of labelling usually kills two distractors outright.
Timing rules follow. The postal rule makes a posted acceptance effective on posting (Adams v Lindsell (1818)), provided post was a reasonable means and the offer did not require actual receipt. It does not apply to revocation — a withdrawal must reach the offeree to bite (Byrne & Co v Van Tienhoven (1880)) — although notice from a reliable third party will do (Dickinson v Dodds (1876)). For instantaneous or near-instantaneous communication, receipt governs (Entores v Miles Far East Corporation [1955]). Watch for questions where an email lands outside office hours; the reasonable-recipient analysis is what the examiner is testing.
Finally, intention to create legal relations. Domestic and social arrangements are presumed not to be binding (Balfour v Balfour [1919]), but the presumption gives way where parties have separated and the arrangement looks commercial (Merritt v Merritt [1970]). In business dealings the presumption runs the other way and is hard to rebut.
Consideration and estoppel: the FLK1 topic candidates underestimate
Consideration must be sufficient but need not be adequate — chocolate wrappers counted in Chappell & Co v Nestlé [1960]. Past consideration is generally no consideration. The really examinable area is variation.
Performing an existing contractual duty is traditionally not good consideration (Stilk v Myrick (1809)), but where the promisor obtains a practical benefit — avoiding a late-completion penalty, say — and there is no duress, a promise to pay more may be enforceable (Williams v Roffey Bros [1991]). Part payment of a debt, however, does not discharge the whole debt at common law (Foakes v Beer (1884)), and Rock Advertising v MWB Business Exchange [2018] confirmed that Roffey-style reasoning does not simply override that rule.
That is where promissory estoppel enters. A clear promise not to enforce strict rights, relied upon, may be suspensory (Central London Property Trust v High Trees House [1947]). It is a shield, not a sword (Combe v Combe [1951]), and it must be inequitable for the promisor to resile. In MCQs, the tell-tale is a creditor who accepts less during a downturn and then sues for the balance once trade recovers. Ask yourself: suspended or extinguished? For a continuing obligation such as rent, the usual answer is suspension for the relevant period, with future instalments payable in full on reasonable notice.
Discharge: breach, termination and frustration
Classify the term before you classify the remedy. A condition goes to the root of the contract, and breach gives the innocent party a right to terminate as well as claim damages. Breach of a warranty sounds in damages only. An innominate term is judged by the consequences of the breach: does it deprive the innocent party of substantially the whole benefit of the contract (Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962])?
Where the right to terminate arises, the innocent party must elect. Affirm and the contract continues, with damages still available. Terminate and future obligations fall away. Delay in electing, or continued acceptance of performance, can amount to affirmation — a favourite trap. Anticipatory breach lets the innocent party sue immediately or wait and see, though waiting carries risk if the contract is later frustrated.
Frustration discharges the contract automatically where a supervening event makes performance impossible, illegal, or radically different from what was undertaken (Taylor v Caldwell (1863); Davis Contractors v Fareham UDC [1956]). Loss of the whole purpose can qualify (Krell v Henry [1903]), but mere expense or inconvenience will not, and self-induced frustration is no frustration at all. Financial consequences are then governed by the Law Reform (Frustrated Contracts) Act 1943: sums paid before discharge are recoverable, sums payable cease to be payable, and the court may allow a party to retain or recover expenses incurred, with a further claim where a valuable benefit has been conferred.
Remedies: putting a number on the loss
The default is the expectation measure — put the claimant in the position they would have been in had the contract been performed (Robinson v Harman (1848)). Where that is speculative, reliance loss (wasted expenditure) may be claimed instead, but not both for the same loss.
Three filters then apply, and SQE1 questions almost always turn on one of them:
- Causation — the breach must have caused the loss.
- Remoteness — loss must arise naturally from the breach, or have been within the reasonable contemplation of both parties at the time of contracting because of special knowledge (Hadley v Baxendale (1854); Victoria Laundry v Newman Industries [1949]). If the defendant was told about the unusually lucrative dyeing contract, the second limb is live.
- Mitigation — the claimant cannot recover for losses that reasonable steps would have avoided (British Westinghouse v Underground Electric Railways [1912]).
Quantification has its own traps. Where the cost of cure is wholly disproportionate to the benefit, the court may award loss of amenity instead — the shallow swimming pool in Ruxley Electronics v Forsyth [1996]. Damages for distress are exceptional, available where a major object of the contract was pleasure, relaxation or peace of mind (Jarvis v Swans Tours [1973]; Farley v Skinner [2001]).
Agreed damages clauses are enforceable as liquidated damages unless they fall foul of the penalty rule. The modern test asks whether the clause imposes a detriment out of all proportion to the innocent party's legitimate interest in enforcement (Cavendish Square Holding v Makdessi; ParkingEye v Beavis [2015]) — a broader question than the older "genuine pre-estimate of loss" formula from Dunlop Pneumatic Tyre v New Garage [1915], which still helps in simple cases.
Equitable remedies are discretionary. Specific performance is rare, and generally unavailable for contracts of personal service or where damages are adequate. Injunctions, rescission and rectification each carry their own bars. And do not forget the Contracts (Rights of Third Parties) Act 1999, which lets a third party enforce a term that purports to confer a benefit on them, or where the contract expressly so provides — subject to any contrary intention.
Statutory overlays you cannot ignore in FLK1
Two regimes sit over the common law. Between businesses, the Unfair Contract Terms Act 1977 controls exclusion and limitation clauses, most obviously through the reasonableness test and the rule that liability for death or personal injury caused by negligence cannot be excluded. In consumer contracts, the Consumer Rights Act 2015 implies terms as to satisfactory quality, fitness for purpose and description in goods contracts, and reasonable care and skill in services, with a tiered remedy structure — short-term right to reject, repair or replacement, then price reduction or final right to reject. Fairness of terms and the transparency requirement also live in the 2015 Act. An MCQ that names a consumer buyer is signalling which statute it wants.
How to drill contract law for SQE1 single best answer questions
Knowledge alone will not carry you across 180 questions in five hours and twenty minutes. Practice these three habits instead. Read the final sentence of the stem first, so you know whether you are being asked about formation, enforceability or quantum before you wade through the facts. Predict your answer before looking at the options — it stops well-drafted distractors from steering you. And when you get one wrong, write down the single rule that would have saved you, not a paragraph of notes.
One more thing. Contract questions often hide inside other subjects: a partnership dispute in Business Law, a settlement offer in Dispute Resolution, a sale contract in Property Law and Practice. Every time you meet one, treat it as free contract revision.
How CELE SQE can help
If you would like structured coverage of contract law alongside the other twelve subjects, our SQE1 courses run as Long-term (£3,720), Mid-term (£2,750) and Short-term (£1,750), with a single-FLK option at half those prices and £150 off for early bird or within-three-months-of-exam bookings. Candidates who mainly need volume practice often take the SQE1 Question Bank subscription at £575 per month, and full textbook sets are £950 (£570 for a single FLK). For those already looking ahead, the SQE2 course is £1,450 and includes 61 full mock questions built to the official SRA format.com — no pressure either way.