1 - The rules of Contract

Question 1

Basic elements of a contract

Answer 1

Offer
Acceptance
Consideration
Intention

Question 2

Purpose of a contract

Answer 2

ensure that agreements are formed in a fair way and can be enforced by the courts if necessary

Question 3

Basic rules of contract

Answer 3

Formation of a contract
Terms of a contract
Discharge of a contract

Any available remedies

Question 4

A contract

Answer 4

an agreement between two parties which is legally binding and therefore enforceable in court

Question 5

Breach of contract

Answer 5

when a party fails to carry out any of their obligations under the argreement; or in carrying it out they fail to do what they are supposed to

Question 6

Injured party

Answer 6

eg the claimant will either ask the other party (the defendant) to carry out the contract or ask for compensation for any losses

Question 7

Creating a legally binding contract

Answer 7

Not all contracts are legally binding, there must be an intetnion to create a legally binding contractin the first place
this avoids filling the courts with cases of ‘broken promises’

Question 8

Basic presumptions in contract law

Answer 8

• Social and domestic agreements – presumed not to be legally biding unless it can be proven otherwise (ie the rebuttal presumption)
  Promises or agreements are not legally enforceable – I promise I will pay you £5 if you take the rubbish out
• Commercial or business agreements – presumption that there is an intention to create a legally binding contract – unless it can be proven otherwise (ie the rebuttal presumption)

Question 9

contract terms

Answer 9

Contract terms are the contents/subject matter of the contract
It is the binding part of the contract
If either party fails to carry out the terms then they are in breach of contract
In business - terms form the foundation for negotiations

Question 10

Types of contract terms

Answer 10

**Express **– the parties specifically agree to put them in there
Implied – as a presumption of agreement
**Imputed **– they are automatically part of the contract by law eg. for consumer protection

Question 11

vitiating factors

Answer 11

defects in the contract that neither party is aware of
This will invalidate the contract – even if both parties agreed to it
2 types of vitiating factors:
Void contract – the contract was not valid ie. Not a contract right from the start
Voidable contract – the contract is avoidable ie. Either party can get out of the contract

Question 12

discharge of contract

Answer 12

the end of a contract -
**discharge by performance **-both parties have completed their end of the contract –

**discarge by frustration **- Where the contract cannot be performed due to events outside of the party’s control
**

Question 13

Breach of Contract

Answer 13

either party fails in their side of the contract then this is regarded as a breach of contract
The primary obligation of completing the contract is therefore replaced with secondary obligations. –
an example of a secondary obligation would be to pay the injured party damages

Question 14

Remedies for Breach of Contract

Answer 14

Common Law Remedies
Damages – most often payment as compensation

Where damages would not properly compensate the injured party equitable remedies have been created
Equitable remedies - These are at the courts discretion