1. Contract Formation Flashcards
Define contract
A legally binding agreement- enforceable in law
Simple contracts require no formality such as the need to be _____ or _______ ______
Written, formally completed
What are the four essential features of a contract?
- Offer
- Acceptance
- Consideration
- Intention
What four vitiating factors can affect the validity of a contract?
- Lack of capacity
- Absence of free will
- Illegality
- Misrepresentation
What is the difference between a void and voidable contract?
Void: contract is not a contract at all (illegal)
Voidable: a contract which one party may set aside
Define offer
A definite promise to be bound on specific terms, and it must be capable of acceptance
Define Invitation to Treat (ITT)
Give an example
An invitation by one party to the other to enter negotiations that might lead to an offer
Examples: goods displayed in shop window, advertisements, share prospectus
An offer must be more than a supply of _____ on request
Information
What five ways can lead to a termination of an offer?
- Rejection
- Counter-offer
- Lapse of time
- Revocation
- Failure of a precondition
Define acceptance
The unqualified agreement to all of the terms of the offer
Acceptance will only be effective where the _____ is aware of the offer
Offeree
What two rules must acceptance follow?
- Acceptance must be either expressly worded or inferred from conduct
- Acceptance may not be via silence
In which two circumstances may the need to communicate acceptance be waived?
- Where unilateral acceptance is possible
2. Where postal rules apply
Define consideration
The element of value in an agreement
What three types of consideration are there?
- Executory (valid) (promise for a promise)
- Executed (valid) (act already performed for a promise)
- Past (generally invalid) (consideration given before agreement)
Consideration need not be ____ but must be _____
Adequate, sufficient
In the absence of written or verbal consent, which two presumptions will the courts make?
- Domestic family and social arrangements (e.g. are the spouses living together?)
- Commercial agreements
Define the doctrine of privity
Only a party who is a party to a contract may enforce or sue on that contract
What three exceptions are there to the doctrine of privity?
- Where an agency relationship exists
- Common law and statutory exceptions
- The Contracts Act 1999 whereby the third party has rights provided that a) they are expressly identified in the contract by name, class or description and b) the contract confers a benefit on them
Define express term
One that has been explicitly agreed by the parties, either orally or in writing, during the formation of a contract
What three factors must be taken into account when considering express terms?
- Terms must be substantially complete
- Statements of fact made before the contract which induces the other party to enter into the contract may become a term
- Oral evidence will not usually be admitted to add to, Cary or contradict written terms
In what three ways may implied terms be incorporated into contract?
- By reference to custom, unless inconsistent with express terms
- By statute
- If it is implicit in the nature of the contract
