2 Contract Law Flashcards
What are the following elements needed a valid contract?
Agreement, consideration, intention to create legal relations, capacity and legality
What is meant by capacity in a valid contract?
Each party must have the legal power to bind itself contractually
What is a contract known as if it does not need to be in writing?
A simple contract
What type of contracts which requires to be in writing to be valid and enforceable?
Bills of exchange, regulated consumer credit arrangements, transfers of land and guarantees
What is the limitation period for contacts by deed?
12 years
What is the limitation period for all other contacts?
6 years
What do the terms subject to contract mean?
Means the parties to an agreement are not legally bound until a contract has been executed
What is an offer?
An offer is a definitive promise to be bound on specific terms made by the offeror to the offeree
How can an offer be made?
Any form but must be communicated to the offeree
What is an invitation to treat?
An invitation to treat is an invitation to someone else to make an offer to you
How can an offer be terminated?
Rejection and counter offer, revocation, lapse of time and failure of a pre condition
When does rejection occur?
When an offeree turns down the original offer or makes a counter offer
When does revocation occur?
any time before acceptance, can be made even if the offerer has agreed to keep the offer open and must be communicated (personably or reliable third party)
What are the exceptions to the rules for revocation?
If a deposit is paid or in a unilateral contract
What is a unilateral contract?
One which is made to the whole world and as such it would be virtually impossible to notify everyone who saw the offer of the revocation
If someone dies during an offer how is this treated?
Lapse of death unless the offeree accepts in ignorance of the death
What is a conditional offer?
One which is dependant on a specified event or change in circumstances
What is acceptance?
Unqualified and unconditional assent to all the terms of the offer
How can acceptance be express?
Implied by the conduct of the offeree
What is the postal rule?
States that acceptance is complete as soon as the letter is posted
When does the postal rule apply?
If it is probably stamped and addressed and if it would not be unreasonable to use the post
When does the postal rule apply?
Even if the letter is never received, but not if the offeror states he must receive acceptance
What must simple contacts be supported by?
Consideration
What do contacts made by deed do not require?
Consideration unless the terms of the agreement require it
What is consideration?
Consideration is an act or forbearance (promise of it) on the part of one party to a contract as the price of the promise made by the offer
What is valid consideration?
Both executed and executory consideration is can able of being valid consideration
What is executed consideration?
Executed consideration is consideration provided at the time of the agreement. It is a pro-formed act in exchange for a promise
What is executory consideration?
Executory consideration is provided when the party agrees to do something in the future at the time of the agreement. It is a promise given in exchange for a promise.
What must consideration be?
Must be sufficient but does not need to be adequate
What is invalid consideration?
Past if it involves something which has already been done at the time the promise is made
What’s the issue with part payment?
Payment of a lesser sum in satisfaction of a great sum cannot be satisfaction for the whole sum
What are the exceptions to the part payment rule?
Alternative consideration, payment by third party, doctrine of promissory estoppel and Barton between creditors
What is promissory estoppel?
The doctrine of promissory was stopped is based on the principles of fairness and justice (prevents a person going back on promise for lower amount)
What does provity of contract mean?
Only a person who is a party to a contract has enforceable rights or obligations
What does the contracts act 1999 allow a person to do?
Someone is not a party to a contract to enforce it as long as the contract was for his benefit and he was expressed by name
What does trust law allow?
A beneficiary to enforce a trust
What is a representation?
Something said by the offerer to induce the offeree to enter into the contract. Turns into a term when written into contract
What are express terms?
Elements of a contract which have been specifically agreed. Can be written, oral or both
What are implied terms?
Terms which are not expressly included but are still part of the contract
What are terms implied due to the term of the contract?
Courts will imply certain types of contract because they are felt to be an implicit requirement of that type of contract
What are terms implied by the courts in order to give business efficacy?
Failure to cover a matter which when addressed would make the agreement unworkable, the courts imply w term to carry out the parties presumed intentions
What is terms to comply with custom and usage?
The courts will imply terms into contracts if they are felt to be usual in that type of agreement, but only if it will not create an inconsistency with the express terms
What are terms implied by acts of parliament?
Legislation can imply terms into particular contracts if parliament has felt it is important to give statutory protection
What are the three types of terms?
Conditions, warranties, innominate terms
What is a condition?
Important term going to the root of the contract
What happens if you breach a condition?
Can result in damages or discharge or both.
What does discharge entitle?
The innocent parties to repudiate the contract and claim damages
What is a warranty?
Less important term than a contract, which is incidental to the main purpose of the contract
What happens if you breach a warranty?
Results in damages only
What is an innominate term?
Neither a condition or a warranty
If a breach of a innominate term is trivial, what is the effect?
Damages only, treat as if a warranty
If a breach of a innominate term is serious, what is the effect?
Damages, discharge or both. Term is treated as a condition
