Certainty + Capacity

Question 1

What does it mean to have ‘Certainty?’

Answer 1

No doubt as to exactly what each party is obliged to do in terms of agreement

Question 2

What are the 3 aspects of Certainty?

Answer 2

1. Completeness
2. Certainty
3. Terms cannot be illusory

Question 3

What are the 3 factors for ‘Completeness?’

Answer 3

1. Agreement on all ESSENTIAL terms (Milne v AG) + (ANZ v Frost)
2. If not agreed, had the parties turned their mind to issue
3. Had the agreement been partly executed? –> If party has already partly performend some work –> courts less likely to find an ‘incomplete agreement’ in other words

Question 4

What are settled categories of essential terms?

Answer 4

1. All contracts –> subject matter and parties are always essential
2. Lease of land –> settlement date, term, rental, parties IS essential
3. Sale of land –> settlement date NOT essential
4. Sale of goods –> Price is NOT essential (reasonable price be inferred)

Question 5

What are the factors of ‘Deferred Agreement?’

Answer 5

• Treated the same way as if agreement was silent on that essential term
• Agreement to agree on non-essential term is unenforceable, but contract still remains valid

Question 6

What if a performance has been partly executed?

Answer 6

• Court more likely to find contract valid
  e.g. Foley v Classique

Question 7

What is an illusory promise?

Answer 7

A promise is illusory if the promisor has an unfetered discretion in relation to performance

Question 8

What if an agreement is incomplete or terms are uncertain and illusory?

Answer 8

• Whole agreement becomes void
• Ineffective term can be severed
• Ineffective term can be waived by party for whose benefit that term was stipulated

Question 9

Who lacks capacity?

Answer 9

• Minors, mentally incapable persons, intoxicated persons

Question 10

3 Types of Contract w minors?

Answer 10

Binding - necessary items
Binding unless repudiated - contracts to acquire subject matter of permanent nature w continuous obligations
Not binding - ratified (confirmed) after 18

Question 11

What is considered as a ‘necessary’ item?

Answer 11

2 test:
1. ‘suitable to the condition in life of such minor’ e.g. food, drink, services of lawyer, medical services, education
2. ‘and to his actual requirements:’ if minor already has adequate supply, it is NOT necessary

Question 12

How does being Intoxicated or inability affect a Contract?

Answer 12

Person seeking to set aside contract must show that:
a) Was incapable of understanding contract at time it was made
–> Other party knew or ought to have known incapacity