8 - Contract Formation 1 Flashcards
what is law
system of rules that a country/community recognise as regulating actions of members and may lead to penalties
what is a contract
legally binds parties, law will recognise and enforce
what does it mean to be subject to contract
- parties in agreement but not legally bound
- parties negotiating, either party may leave without penalty
what are standard form contracts
- used when no negotiation between parties
- party presenting contract has more power
- eg, mobile phone, utility companies
what is an agreement
made by offer and acceptance
what is consideration
both parties bring something of value to the contract
what is intention
parties have intention to create legal relations between themselves
what are vitiating factors
those that can render a contract void:
- form = particular form sometimes needed
- terms = properly incorporated into contract
- consent = affects validity of contract
- legality = won’t be enforced if seen as illegal
- capacity = contracts only within boundaries of authority
how may a contract be formed - types of contracts
- written
- oral
- inferred
how may a contract be invalid
VOID = there is no contract
VOIDABLE = innocent party withdraws from contract
UNENFORCEABLE = valid contract but one party can’t be enforced
types of contracts that need to be in writing to be legally enforceable
- transfer of shares
- sale of land
- bills of exchange/cheques
- consumer credit contracts
- assignment of debts
what are speciality contracts
- leases of 3+ years
- transfer of a legal estate in land, including a mortgage
- promise not supported by consideration
- must be by DEED
- covenants are also speciality contracts
what is an offer
an offer to be bound on specific terms, it must be certain
who are the people engaged with an offer
offerer = person making the offer
offeree = person in receipt of offer
what is an Invitation to Treat
something acting as an inducement to encourage someone else to make an offer; not capable of acceptance itself
which actions terminate an offer
- express rejection
- counter offer
- lapse of time; express = time stated in offer, implied = reasonable time if unstated
- revocation = cancellation that is communicated, received, reliable
- failure of a condition
- death of offeree
what is acceptance
unconditional assent to all terms of the offer
an offer is accepted when all parties ‘in agreement’
what is the rule around communication
- acceptance must be communicated
- a person can only accept an offer if they know about it
what are exceptions to the communication rule
- where unilateral acceptance is possible (one side only)
- when postal rules apply, acceptance completed as soon as letter is posted subject to restrictions
- telegrams subject to comms rule
what does it mean for a contract to be exercised in deed
- in writing and signed
- delivery must take place; consists of conduct that deed will be executed and bound by
examples of invitations to treat
- goods displayed in a shop window
- goods on shop shelf
- public advertisements
- a share prospectus (shows details of stocks of a company)
- invitation to submit a tender
what terms is revocation subject to
- communicated before acceptance
- actually received by offeree
- may be via third party
- promise to keep offer open only effective when promise has been bought by offeree
