Chapter 2 - Contract Formation Flashcards
What’s a simple contract?
Not in writing
What types of contracts need to be in writing to be valid and enforceable (4 Points)
> Bill of exchange
Regulated Consumer Credit Agreements
Transfer of land (Deed - speciality contracts)
Guarantees
What are the four essential elements of a contract?
An offer
Acceptance
Consideration
Intention to be legally bound
What’s an invitation to treat in regards to make offers?
Someone else to make an offer to you
How can an offer be terminated?
> Rejection
Revocation
Lapse of time
Failure of a pre-condition
What is Recocation, when can it be done and when can it not be done? (5 points)
When the offeror withdraws their offer
Can be done at any time before acceptance
Communicated to the offeree by the offeror or a reliable third party
If the offeree pays the offeror to keep the offer open as this creates a collateral contract.
In a unilateral contract
What is a lapse of time in relation to accepting an offer?
Offer doesn’t exist if it passes a specified time limit or if the offeror dies
What is a unilateral contract?
Made one to the whole world so it’s virtually impossible to notify everyone who saw the offer of the revocation.
What are the three conditions for an acceptance of an offer?
- Oral or written or by conduct
- Must be communicated during business hours if it’s fax or email
- For postals the moment it’s posted you accept the offer, unless stated that a letter of acceptance must be received to be binded.
What is consideration in contract law?
Essentially, exchanging something of value with each other
Why is consideration required in simple contracts but not speciality contracts?
Simple contracts require consideration to be legally binding so something of value exchanged between the involved parties.
Whereas speciality contracts are written agreements that are signed, witnessed and delivered and therefore do not require consideration to be legally binding.
What is a deed?
Speciality contract - Formal promise between the parties that must be in writing and signed.
Certain contracts must be in the form of a deed including conveyances and leases for three years or more
What are examples of valid consideration?
Executed and executory considerations are capable of being valid considerations
What is an executed consideration?
Act in exchange for a promise, e.g., paying for goods at the time the goods are deliveredW
What are executory considerations?
Promise given in exchange for a promise e.g., a promise to pay for goods that are to be delivered at at a later date
What is sufficient consideration?
Consideration capable of given a value
In contract law, sufficient consideration is when a party provides something of value to another party in exchange for a promise. The consideration must be sufficient, but not necessarily adequate. This means that the courts are looking for some value in the exchange, even if it’s not the full market value.
What is inadequate consideration?
Unequal in value. Parties have freedom to contract under any terms and court cannot try to make it fair as long as you can identify value
What is invalid consideration?
Involves something that’s already been done at the time of the promise made. E.g., RE Macardle carried out some works and a promise was made to pay them after but because it was after there’s no consideration.
What does subject to contract mean
Strong presumption that there is no intention to create an immediately binding contract.
What does privity of contract mean?
Only a person who is party to a contract has enforceable rights to it
There are three exceptions for privity of contract which are what?
- Contracts (Rights of Third Parties Act 1999)
> A person not involved with the contract can enforce it as long as the contract was for their benefit - Trust
> Allows a beneficiary to enforce a trust, as a third party to enable their rights in court. - Agency
> Agent can enter into a contract with a third party on behalf of his or her principal
What is a term?
Part of the contract
What is a representation?
Something said by the offeror to induce the offeree to enter into the contract. And then later becomes a term
What are express terms?
Elements of a contract that have specifically agreed
What are implied terms?
Terms that are still part of the contract but aren’t expressly included
In what situations can terms be implied?
- Implied due to type of contract
- Implied by court to give business efficacy - If both parties failed to cover a matter the court can imply parties presumed intentions
- Implied to comply with custom and usage - If they are felt to be usual in that type of agreement
- Implies by Acts of Parliament - Statutory protection
What’s the Consumer Rights Act 2015 and the Partnership Act 1890
Consumer Rights Act - Goods must be of satisfactory quality and fit for purpose
Partnership Act - In absence of an express provision to the contrary profits will be shared equally between partners
What’s the factual matrix
The background knowledge which would reasonably have been available to the parties in the situation in which they found themselves at the time of the contract/document
