Chapter 2 - Contract

Question 1

What elements are required to create a contract?

Answer 1

Offer, acceptance, consideration and intention to create a legal relationship.

Question 2

Define offer.

Answer 2

An expression of willingness to contract on certain terms. This can be made orally, in writing or by conduct.

Question 3

What is an invitation to treat?

Answer 3

Inviting someone to offer. For example an advert in a paper.

Question 4

How can an offer be terminated?

Answer 4

Revocation by the offeror, rejection by the offeree, lapse of time or acceptance.

Question 5

When will revocation take place?

Answer 5

When it is actually received by the offeree.

Question 6

What is a counter offer?

Answer 6

Where the offeree responds to an offer with different terms. The effect of this is that the original offer is rejected and the counter offer becomes the new offer.

Question 7

What is acceptance?

Answer 7

The agreement to all terms, given originally in writing or by conduct. It must be communicated to the offeror.

Question 8

What are the rules on consideration?

Answer 8

1. Must move from the promisee
2. Must not be past
3. Does not need to be adequate but must be sufficient. I.e. doesn’t matter how much money is changing hands it just matters there is some.

Question 9

What is the presumption for legal relations with family and business agreements?

Answer 9

Family - no intention to create legal relations
Business - there is intention

This can be rebutted.

Question 10

What is a term?

Answer 10

Determines what each party are contractually obliged to do.

Question 11

How can terms be incorporated into a contract?

Answer 11

Implied by statute, custom or courts
Or
Express i.e. in writing.

Question 12

What is the different types of terms?

Answer 12

Condition - go to the root of the contract. If breached can end the contract.
Warranties - less important. If breached the innocent party can claim damages.

Question 13

What is an innominate/ intermediate term?

Answer 13

A term that does not fit into the definition of a condition or warranty so the court will decide its status.

Question 14

What is the difference between a void and voidable contract?

Answer 14

Void - never existed

Voidable - will only end if one of the parties decides to do so

Question 15

What are the 3 types of misrepresentation?

Answer 15

Fraudulent, negligent and innocent.

Question 16

When is the right to rescission lost?

Answer 16

• the contract is affirmed
• a reasonable time has passed
• the parties cannot be restored to their original places
• an innocent third party has acquired the right to the subject matter of the contract.

Question 17

How can a contract be discharged?

Answer 17

1. Performance
2. Breach
3. Agreement
4. Frustration - an event that makes the performance of a contract impossible.

Question 18

What are the remedies for breach of contract?

Answer 18

Damages, specific performance, injunction and consumer rights act 2015.