Chapter 2: What is a contract? Flashcards
What types of contracts must be in writing to be valid and enforceable?
Bills of exchange
Regulated Consumer Credit Agreements
Transfers of land (must be evidenced by Deed, knows as speciality contracts)
Guarantees
What is a simple contract?
A contract which does not need to be in writing.
What are the 2 capacity issues in contracts?
If a minor enters into a contract, the contract is voidable at the option of the minor.
Parties of unsound mind or drunkards do not have capacity to enter into contracts.
When is a contract enforceable?
A contract must be valid to be enforceable, if it contains a defect it may be void or voidable or unenforceable.
What is a void contract?
A void contract is not a contract at all.
Examples of Void Contracts
A contract intended to achieve an illegal purpose or one contrary to public policy.
Where a company acts outside any restriction on its powers (in its constitution) to enter into a contract.
What is a voidable contract?
A voidable contract is one which can be set aside at the choice of the injured party.
Examples of Voidable Contracts
Where a party has been made to enter into the contract by duress or undue influence.
Where one party makes a pre-contractual statement that is intended to and does cause the other party to enter into the contract and that statement is untrue (a misrepresentation), the other party can avoid the contract.
What is an unenforceable contract?
An unenforceable contract is a valid contract, but if either party fails to fulfil his or her part of the contract the other party may not be able to compel them to do so.
Examples of Unenforceable Contracts
Where the contract is not in the correct form. A guarantee (a contract whereby a guarantor promises to pay a creditor the debtor’s debts in the event the debtor fails to pay) need not be in writing but the terms must be evidenced in writing and signed or acknowledged by the guarantor before any action can be brought against him or her.
If there is a transfer of property or a Regulated Consumer Credit Agreement
and these are not in writing.
What is an example of legislation intervening to change the terms of a contract?
The Consumer Rights Act 2015 implied terms into a contract whereby goods sold in the course of a business must be fit for the purpose for which they are supplied (for contracts entered into before 2015 these terms were implied due to the Sale of Goods Act 1979).
