Chapter 2 - Contract formation Flashcards
What is a valid contract?
Legally binding agreement between 2 parties which agreement may be evidenced by writing, words or action.
What is meant by void and voidable?
Void - There is no contract and goods should be returned (even from a third party)
Voidable - The contract can be set aside by the “injured” party
What factors make a contract void/voidable?
Void - illegality
Voidable:
- Lack of capacity
- Absence of free will
- Misrepresentation
What contracts cannot be oral?
Transfer of land and credit agreements - must be in writing
Guarantees - evidenced in writing
Are email exchanges valid as a contract?
Yes
What is an offer?
A definite promise made by an offeror to be bound on specific terms.
Must not be vague
What is an invitation to treat?
A statement of willingness to enter into negotiations.
E.g. Advertisements
What are the ways an offer can be terminated?
rejection
counter-offer
revoke
lapse of time
failure of pre-condition
What is the definition of acceptance?
An unqualified agreement to all the terms of the offer.
Some act is required
How is acceptance communicated?
General rules is that acceptance is not effective until it is communicated to the offeror.
Any reasonable means of communication
What are the exceptions to the communication rule?
Communication has been waived - unilateral contracts (no need)
What are the conditions of the postal rule?
Use of post is reasonably within the contemplation of the parties.
The letter must be correctly addressed and the correct postage paid.
Applies only to acceptance, not revocation.
Acceptance by notice in writing overrides postal rule
Doesn’t apply to instantaneous communication
What are the court’s 2 rebuttable presumptions made to decide whether intention exists?
Social, domestic and family - no intention to create legal obligations
Commercial - intention to create a legally binding contract
What is executed consideration?
An act performed or executed in return for a promise
What is consideration?
Right, interest, profit or benefit accruing to one party or something borne by the other
Price for which the promise of another is bought
What is executory?
A promise given for a promise
What is past consideration?
Generally invalid
What are the exceptions to when consideration is not required?
When a contract is made by deed, contracts that are required to be made by deed:
Conveyancing - transfer of property
Leases over 3 years
Promises unsupported by consideration
Does consideration need to be adequate and sufficient?
Adequate - no
Sufficient - yes, must have some identifiable value
Is the performance of an existing statutory duty considered?
No
What is the rule for the wavering of an existing debt?
Must be supported by consideration
E.g. Foakes vs Beer
What are the exceptions to the rules in Foakes vs Beer?
Third party payment
Bargain by creditors that each will accept part payment acceptable despite no consideration
What are terms of an oral contract?
If wholly oral, must ascertain what was expressly agreed
Oral evidence won’t usually be admitted to add to, vary or contradict written terms
What are the terms of a written contract?
Must be substantially complete
How can additional terms be implied?
By reference to custom provided the custom is not inconsistent with the express terms of the
contract
By statute
By the courts
What is the rule for privity of contract?
Only a party to a contract can enforce it
Is advertising at an auction an offer?
No, statement of intention
What is the postal rule?
Effective when posted unless offeree negligent and post within contemplation of parties
What is meant by subject to contract?
Strong presumption that there isn’t a legally binding contract
What is the presumption used when major works are being carried out?
Contract already formed
Is the performance of an existing contractual duty considered?
No unless:
- Can be shown that the promise is giving/doing something over and above the scope of obligation
- Other party obtains some extra practical benefit
- Performance of a contractual duty owed to a third party
- Forbearance of existing rights
Can a statement of fact become a term in a contract?
Yes
If it was made before the signing and induced the other party to sign
What is the Road Traffic Act 1972?
Person injured can claim against motorist’s insurers
Can an agent enforce a contract?
No, contract is between their principal and third party
What is a deed?
Formal promise between parties which must be signed and in writing
Where a contract is in the form of a deed, is consideration required?
No
What contracts must be in the form of a deed?
Conveyances - where property is transferred
Leases exceeding 3 years
Promises unsupported by consideration - promise to pay a regular amount to another party with nothing expected in return
What is Rome II?
EU legislation adopted by Uk after brexit
Where does Rome II apply?
If parties are based in different Eurpoean countires and have a commercial/civil dispute
Not agreed which countries law to apply
Applicable law is the law of the country where the damage occurs
What happens if the event or circumstances on which an offer is conditional does or do not transpire?
Offer is terminated
