All On Contract Flashcards
What is the definition of a contract?
A contract is defined as that which the law will enforce as affecting the legal rights and duties of the parties.
What distinguishes contractual obligations from other legal obligations?
Contractual obligations are based on the agreement of the contractual parties.
What are the key points in defining a contract?
- It is an agreement/promise
- Agreement between two or more parties
- Creates rights and obligations
What is the Subjective Theory of Contract?
It suggests that a contract is an agreement in which the parties have a subjective meeting of minds.
What does the Objective Theory of Contract state?
An agreement is legally binding if, in the opinion of someone not party to the contract, an offer has been made and accepted.
What is a Formal Contract?
A Formal Contract is made by deed and must be in writing or typed, deriving its validity from its form.
What characterizes a Simple Contract?
A Simple Contract refers to all other contracts apart from formal contracts and derives its validity from consideration.
What defines an Express Contract?
An Express Contract has terms that are clearly stated.
What is an Implied Contract?
An Implied Contract has terms that are not expressly stated and are inferred from the conduct of the parties.
What is the nature of an Escrow Contract?
An Escrow Contract describes the terms and conditions applicable to the parties involved, effective when certain conditions are fulfilled.
What is the difference between Bilateral and Unilateral Contracts?
- Bilateral: Exchange of promises
- Unilateral: One party makes promises, the other acts
What is an Executed Contract?
An Executed Contract is a legally binding agreement where all parties have performed their obligations.
What is an Executory Contract?
An Executory Contract is one where one or both parties still have outstanding obligations to fulfill.
What is a Void Contract?
A Void Contract does not exist before the law and is fundamentally unenforceable.
What is a Voidable Contract?
A Voidable Contract is recognized by law but contains a defect allowing one party to choose to enforce or void it.
What is an Electronic Contract?
An Electronic Contract is a legally binding agreement created, signed, and stored electronically.
What are some reasons for creating contracts?
- Serve as a record of commitment
- Prevent conflicts and mitigate risks
- Provide remedies for breaches
- Ensure enforceability of private promises
What are the ingredients necessary for a valid contract?
- Offer
- Acceptance
- Consideration
- Intention to create legal relations
What is an Offer in contract law?
An Offer is an expression of willingness to contract on specified terms, made with the intention to become binding upon acceptance.
What are the key components of an Offer?
- Involves two parties (offeror and offeree)
- Must be definite and precise
- Must be communicated to be effective
- May be express or implied
True or False: An advertisement is always considered an offer.
False
What is the difference between an Offer and an Invitation to Treat?
An Offer is a definite promise to be bound, while an Invitation to Treat is an indication of willingness to negotiate.
What is the legal standing of bids in an auction?
A bid is considered an offer and the auctioneer’s agreement is acceptance.
What is the nature of shop displays in relation to offers?
Shop displays are not offers but invitations to customers to make an offer to buy.
What is the legal status of shop displays of price-marked goods?
An invitation to treat, not an offer
This means customers make an offer to buy when they present goods at the cash register.
In the context of retail, what constitutes an offer?
The act of a customer presenting selected items at the cash register for payment
This was established in the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd.
What was the ruling in Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd?
The display of goods was ruled as an invitation to treat, not an offer
This allowed sales to proceed without pharmacist supervision.
Does a company’s public offer to purchase shares legally constitute an offer?
No, it is not considered a legal offer
Refer to the Harris case (1872) L.R 7 Ch. App.587.
What is a rights issue in the context of shares?
An offer made to existing shareholders to buy new shares
This was illustrated in Berliet Nig. Ltd v Francis.
How do rail-carriers make offers according to legal cases?
By issuing advertisements stating the times and conditions of service
This principle was seen in Denton v GN Railway.
What must occur for a passenger to accept an offer from a road carrier?
Purchasing a ticket or getting on the bus
This was established in Wilkie v London Passenger Transport Board.
What is the legal status of a statement inviting tenders?
It is not an offer; the offer arises from the acceptance of the tender
This was clarified in Spencer v Harding.
What are the ways in which offers can be terminated?
Rejection, death, counter-offer, conditional offer, lapse of time, revocation
Each method has specific legal implications as outlined in various cases.
What happens to an offer once it has been rejected?
It automatically comes to an end
This principle is illustrated by St Machiavelli College v Ogunsan.
What occurs if the offeree knows of the offerror’s death?
The offer lapses and cannot be accepted
As seen in Bradbury v Morgan.
What constitutes a counter-offer?
Introducing new terms that destroy the original offer
This was established in Hyde v Wrench.
When is a conditional offer valid?
Only when the specified conditions are fulfilled
This was determined in Atiba Iyalamu Savings Ltd v Subaru.
What is the postal rule regarding acceptance?
Acceptance is effective when posted, not when received
This rule can lead to complications in contract formation.
What is required for a valid acceptance?
Unconditional assent to the terms of an offer
Acceptance can be written, oral, or inferred by conduct.
What is the mirror image rule?
Acceptance must exactly match the terms of the offer
This ensures clarity in contract formation.
In what situation can acceptance be inferred from conduct?
When an offer to supply goods is accepted by using them
This was established in Weatherby v Banham.
What is considered an invalid type of acceptance?
Counter-offer, conditional acceptance, cross offers, acceptance in ignorance of offer, unauthorized acceptance
Each type fails to meet the legal criteria for effective acceptance.
What is the status of consideration in contract law?
Something of value must be exchanged between parties
Consideration can be a detriment to the promisee or a benefit to the promisor.
What is past consideration?
Consideration given before the promise was made
It is generally not valid unless specific conditions are met.
What are the requirements for past consideration to be valid?
Requested by the promisor, understood as a promise, legally recoverable
These criteria ensure past acts can support new promises.
Can performance of an existing duty constitute valid consideration?
Generally no, unless it exceeds the existing duty
This principle was established in cases like Stilk v Myrick.
What is the legal principle regarding the enforceability of a promise made to a witness already under a legal duty?
The promise cannot be enforced as the individual is already under a legal duty to attend court due to a subpoena.
In Stilk v Myrick, why did the action to enforce the captain’s promise fail?
The performance of the act was part of an existing contractual duty.
What is the legal stance on contractual duties owed to a third party in relation to consideration?
Performance of that duty is sufficient consideration for a new promise.
What principle was affirmed in Pinnel’s case regarding part payment of a debt?
Payment of a lesser sum does not discharge the whole debt.
What is promissory estoppel?
A doctrine that prevents a party from going back on a promise once the other party has relied on it.
In which case was the principle of promissory estoppel established?
Hughes v Metropolitan Railway.
What are the two types of agreements regarding the intention to enter legal relations?
- Domestic and social agreements
- Commercial agreements
What is the presumption regarding contractual intention in domestic and social agreements?
There is a presumption that contractual intention is absent.
In which case was it held that there was no contractual intention in a promise between spouses?
Balfour v Balfour.
What is the significance of performance in domestic or social engagements?
Performance involving great sacrifices may rebut the presumption against contractual intention.
What is the presumption regarding contractual intention in commercial agreements?
The law presumes the presence of contractual intention.
What are the exceptions to the presumption of contractual intention in commercial agreements?
- A mere puff
- An express clause excluding intention
What is the difference between a term and a mere representation in a contract?
A breach of a term can warrant damages or repudiation, while a mere representation does not.
What is a collateral contract?
A contract that provides a remedy when a representee enters into a contract based on a statement or promise made by the representor.
What are the conditions for a collateral contract as per Shanklin Pier Ltd v Deter Products Ltd?
- A promise or assertion by A
- Acquisition of goods by B on reliance on that promise
What are the three types of conditions in contracts as identified by James LJ?
- Condition precedent
- Condition subsequent
- Condition inherent
What is the distinction between condition and warranty?
Conditions are essential to the contract, while warranties are secondary.
What are innominate or intermediate terms?
Terms that can lead to damages or repudiation depending on the effects of the breach.
What is meant by fundamental terms in a contract?
Terms that underlie the contract, where failure to comply equates to non-performance.
What are implied terms in contracts?
Terms assumed to exist to give the contract business efficacy.
What are the types of implied terms?
- Terms implied by customs or trade
- Terms implied by statute
- Terms implied by courts
What does S12(1) of the Sales of Goods Act imply regarding the seller’s title?
The seller must have the right to sell the goods.
What is the implied condition under S13 of the Sales of Goods Act for goods sold by description?
The goods must correspond with the description.
What is the implication of S14 regarding the fitness of purpose for goods?
Goods must be reasonably fit for a particular purpose if the buyer relies on the seller’s skill or judgment.
What does ‘merchantable quality’ mean under S14(2)?
Goods must be fit for the purpose for which they are commonly bought.
What are the implied conditions in a sale by sample as per S15?
- Bulk must correspond with the sample
- Buyer must have a reasonable opportunity to compare
- Goods must be free from defects that are not apparent
What happens in cases of breach of implied terms under the Sales of Goods Act?
Breaches of conditions are generally treated as breaches of warranties.
What occurs when a buyer accepts goods under a non-severable contract?
The breach of any condition by the seller is treated as a breach of warranty, not grounds for rejecting the goods.
This applies to most contracts for sale of goods.
What are the three situations that constitute acceptance of goods by the buyer?
- The buyer communicates acceptance to the seller
- The buyer acts inconsistently with the seller’s ownership
- The buyer retains the goods for a reasonable time after delivery
Acceptance may occur before the seller discovers defects.
When does property in specific goods usually pass to the buyer?
When the contract is made.
This is significant in determining the rights and obligations of the parties.
What is the purpose of implying terms in contracts according to courts?
To give the contract business efficacy.
Courts can only imply terms within certain guidelines.
What are the types of terms that may be implied by courts?
- Terms that parties had in mind but did not express
- Terms that parties would have probably expressed if the issue was raised
- Terms implied by the court for fairness or policy reasons
This was established in Shir law v Southern Foundaries Ltd.
How does the National Child Welfare Policy of 1989 define a child?
As anyone who is 12 years or younger.
What age is considered a child in Criminal Law?
Anyone below 14 years.
What is the age of majority in Britain as of now?
18 years.
What types of contracts involving infants are expressly declared void?
- Contract of loan
- Contracts for goods other than necessaries
- Account stated
These contracts are void under the Infants Relief Act of 1874.
What are necessaries in the context of contracts with infants?
Goods suitable to the condition in life of an infant and to their actual requirements at the time of sale and delivery.
The onus of proof lies on the party seeking to enforce the contract.
What is a beneficial contract of service?
Contracts such as apprenticeship or employment that are substantially for the benefit of the infant.
Courts will weigh the terms to determine overall benefit.
What special rules apply to contracts involving illiterates?
The writer of any document must comply with specific requirements to protect the illiterate.
These include reading and explaining the document in an understood language.
