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ICAEW LAW > Chapter 2 - Contract Formation > Flashcards

Chapter 2 - Contract Formation Flashcards

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1
Q

What are the steps to create a valid contract

A

Offer
Acceptance
Consideration
Intention
Capacity and Form

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2
Q

What is a void contract?

A

There is no contract and goods should be returned (even from a third party)

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3
Q

What is a voidable contract?

A

The contract can be set aside by the “injured” party

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4
Q

What 4 factors can make a contract either void or voidable?

A

Lack of capacity
Absence of free will
Illegality
Misrepresentation

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5
Q

What is the rule and effect of lack of capacity?

A

Rule - An individual should be of sound mind and aged 18 or over

Effect - Voidable

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6
Q

What is the rule and effect of absence of free will?

A

Rule - There should not be duress or undue influence

Effect - Voidable

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7
Q

What is the rule and effect of illegality?

A

Rule - Contract must not be illegal or against public policy

Effect - Void

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8
Q

What is the rule and effect of misrepresentation?

A

Rule - An incorrect statement of fact made pre contract which is intended to and does cause the party to enter into the contract

Effect - Voidable

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9
Q

What contracts must be in writing?

A

Transfer of land
Consumer credit agreements

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10
Q

What contracts must be evidenced in wirting?

A

Guarantees

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11
Q

Does the court accept email exchanges as evidence?

A

Yes

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12
Q

What is an offer?

A

An offer is a definite promise made by an offeror to be bound on specific terms.

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13
Q

Is an invitation to treat the same as an offer?

A

No
An invitation to treat is not an offer but a statement of willingness to enter into negotiations. An invitation to treat cannot be accepted but is an invitation to other parties to make an offer.

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14
Q

Examples of an invitation to treat

A

Advertisement
Goods displayed for sale

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15
Q

Does an offer have to be to a specific person?

A

No an offer can be made to the world at large

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16
Q

How can an offer be terminated?

A

Rejection
Counter-offer
Lapse of time
Revocation by the offeror
Failure of a pre-condition

17
Q

How is an offer terminated by rejection?

A

Rejection by the offeree terminates the offer

18
Q

How is an offer terminated by counter-offer?

A

When the offeree proposes new or amended terms, thereby terminating the original offer

19
Q

How is an offer terminated by lapse of time?

A

Can be expressed in the offer or after a reasonable period of time

20
Q

How is an offer terminated by revocation by the offeror?

A

The offeror may revoke his offer at any time before acceptance either expressly or by implication. This is effective only when it is communicated to the offeree.

21
Q

How is an offer terminated by failure of pre-condition?

A

An offer will automatically lapse if pre-condition is not satisfied

22
Q

What is acceptance?

A

An unqualified agreement to all the terms of the offer.

23
Q

Is silence enough to be an acceptance?

A

No

24
Q

Acceptance - Postal rule

A

Acceptance by post is valid from the moment the letter is posted regardless or whether it is actually received.

25
Q

What is the presumption on the intention to create legal obligations through social and domestic?

A

No intention to crate legal obligations

26
Q

When can a social and domestic legal obligation be rebutted?

A

If husband and wife are separated when the agreement was made.

27
Q

What is the presumption on the intention to create legal obligations through commercial?

A

Intention to create a legally bindining contract

28
Q

What is consideration?

A

Each party must provide some form of consideration under the contract

29
Q

What is invalid consideration?

A

Past consideration cannot form the basis of a legally binding contract

30
Q

Where is consideration not required?

A

When a contract is made by deed

e.g. Leases and conveyancing

31
Q

Does consideration need to be adequate?

A

No, a bad bargain is still a contract

adequate is when the it equals in value to the consideration received in return

32
Q

Does a contract have to be sufficient?

A

Yes, consideration must be sufficient

Sufficient is when it has some identifiable value in order to be capable in law of being regarded as valid consideration

33
Q

What consideration would be seen as insufficient?

A

Performance of existing statutory duty - unless it can be shown that some extra service over the scope is also being offered

34
Q

What is the rule of the privity of contract?

A

Only a person who is a party to a contract has enforceable rights under the contract

35
Q
A

ICAEW LAW (10 decks)

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