08 - 12 Contracts Flashcards
Definition of contract
A legally binding arrangement between two or more legal persons where they acquire rights and duties and obligations in respect of subject matter.
2 elements:
Agreement
Legally binding
Contracts can be verbal or in writing
- Based on common law
- New Zealand has codified significant aspects of contract law – eg in consumer protection
- Attempts have been made to resolve some of the confusion with common law – eg mistake, misrepresentation, remedies
Features of contract law
- The intention of the parties is paramount – and note the role of the courts
- Objective approach – reasonable person test
- No general requirements regarding form but some rules in relation to particular types of contract
The enforceability of contracts
Contracts can be:
- Valid and enforceable
- Valid but unenforceable (eg minors)
- Voidable (eg misrepresentation)
- Void and of no effect (eg illegal)
Agreement
- Intention to create legal relations
- Offer and acceptance
- Genuine consent
Legally binding
- Consideration
- Capacity
- Legality
The Offer
A proposal or promise by one party (the offeror) to enter into a contract, on a particular set of terms, with the intention of being bound as soon as the party to whom the promise is made (the offeree) signifies his/her acceptance.
The Acceptance
The final expression of assent, by words or conduct, to the offer or proposal.
- Acceptance by conduct
- Communication of acceptance
Termination of offers
- Revocation (or withdrawal)
- Rejection
- Lapse of time
- Where the offer is conditional
- Death
Genuine consent
What happens if one of the parties enters the agreement on the basis of:
- Mistake
- Misrepresentation
- Duress or undue influence (dealt with later)
Genuine consent - misrepresentation is concerned with pre-contractual statements which turn out to be incorrect:
- A false statement of fact
- Made by one party to the other party
- Before or at the time the contract is made
- Which is not a term of the contract but which
- Induces that party to enter into the contract
Contractual Remedies Act 1979
Damages is the general remedy for misrepresentation BUT
- If the truth was essential OR
- Made the contract substantially different to what it would have been
THEN the innocent person may cancel the contract and seek relief and damages
Contracts remedies in an Act - example
Fair Trading Act 1986 s. 9:
“No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”
When is a contract binding?
When all elements are there
Must a contract be in writing?
A contract does not need to be in writing it can be verbal
