Chapter 10

Question 1

What are the elements of a CONTRACT?

Answer 1

1. Offer
2. Acceptance
3. Consideration
4. Intent
5. Genuine consent
6. Legal object
7. Capacity

Question 2

What is CONSIDERATION?

Answer 2

Legal term for something of value that is bargained for, and received by, each party of the contract.

Question 3

CAVEAT EMPTOR

Answer 3

“Let the buyer beware”

The obligation of the buyer of real property to conduct appropriate due diligence on a property before purchasing.

Question 4

PATENT DEFECT

Answer 4

A defect that is visible to the eye or that can be discovered by conducting reasonable inspection and making reasonable inquiries.

Question 5

LATENT DEFECT

Answer 5

A defect that cannot be discovered by conducting a reasonable inspection and making reasonable inquiries about the property.

Question 6

RECISSION

Answer 6

The court to cancel the contract

Question 7

VOID contracts

Answer 7

COMMON, MUTUAL OR UNILATERAL mistakes can make a contract VOID.

Question 8

COMMON MISTAKE

Answer 8

Both parties have made the SAME mistake about a fundamental term of the contract.

Question 9

MUTUAL MISTAKE

Answer 9

Both parties make a fundamental mistake about the contract but each make a DIFFERENT mistake

Question 10

UNILATERAL MISTAKE

Answer 10

One party is mistaken about a fundamental term of the contract and the other party is aware of this mistake but does nothing to correct it

Question 11

VOIDABLE contracts

Answer 11

Done under duress, undue influence or unconscionable transactions

Question 12

DURESS

Answer 12

Where a person is forced to enter into a contract against his/her will as a result of a threat of actual physical force or by a threat of imprisonment of the person or his/her family or very close associates. The person has been robbed of the free will to contract.

Question 13

UNDUE INFLUENCE

Answer 13

One person has superior position over another and uses this position to induce the other to enter a contract which they would not have otherwise made.

Question 14

UNCONSCIONABLE TRANSACTIONS

Answer 14

Arise through ignorance, need or distress of the weaker.

Question 15

Ways a contract can be terminated

Answer 15

1. Performance
2. Agreement (to waive performance or substitute another agreement)
3. Nonfulillment of condition precedent
4. Frustration
5. Breach of a condition

Question 16

CONDITION PRECEDENT

Answer 16

A condition in a contract which must be satisfied before that contract is to be performed.

“Subject to” clauses.

Only the party who was intended to benefit from the clause can waive it:
AND the contract can be performed without the condition precedent being fulfilled
AND made before any time stipulated for fulfillment of the condition precedent, or within a reasonable time

Question 16

FRUSTRATION

Answer 16

The existence of a specific thing is necessary for the performance of the contract, the duty to perform is discharged if the thing, for reasons beyond anyone’s control, is no longer in existence at time for performance.

Example: house burned down after a contract of purchase and sale.

Question 16

VICARIOUS PERFORMANCE

Answer 16

Cannot assign away liabilities, but can have obligations performed by someone else. E.g. a builder can require a subcontractor to perform its obligations.

Not permitted with personal contracts (i.e. artists)

Question 16

DOCTRINE OF PRIVITY OF CONTRACT

Answer 16

A person can assign the benefits under contract to a third party, and they can also sue to enforce those benefits. Cannot assign the liabilities under contract.

Question 16

REMEDIES for breach of contract

Answer 16

Common law: damages awarded are intended to put the parties in the position they would have been in if the contract had been performed

Equitable:
- Specific performance
- Injunction
- Quantum Meirut

Question 17

INJUNCTION vs MANDATORY INJUNCTION

Answer 17

INJUCTION - must NOT do something

MANDATORY INJUECTION - must DO something