Chapter 3: Law of Contracts Flashcards
What is a contract?
A contract is a legally binding agreement that the courts will recognise and enforce.
What are the four types of contracts? Think SSUB.
Seal: formal contract which is in writing and witnessed.
Simple: all other types of informal contracts.
Unilateral: where only one party is legally bound by their promise.
Bilateral: where each party makes a promise to the other party and both are bound.
What is an example of a Unilateral Contract?
Missing Pet Reward. The owner is offering money to whomever finds the pet.
What is an example of a Bilateral Contract?
An insurance policy. The policyholder promises to pay the premium and the insurer promises to pay the claim.
What is the difference between a void and a voidable contract?
Void: a void contract means there is no longer a binding effect on either party
Voidable: contract still binding
What are the 5 elements to forming a contract?
- Agreement (offer and acceptance)
- Intention to create legal relations (i.e. it’s not just a passing comment)
- Consideration (of the agreement)
- Agreement in the form as required by law (i.e. in writing)
- Parties are able to contact (i.e. not minors or drunk)
How is Agreement established?
Established through offer and acceptance.
When does an “Offer” end?
If the time limit imposed has elapsed.
Death of either contracting party.
Acceptance of the offer (becomes a contract not just an offer).
Revocation of the offer.
Rejection or counter offer.
How does a contract come into being?
It comes into being via contract acceptance, assuming all terms have been adhered to.
Has to be positive acceptance (i.e. not just no response / silence).
What is the Posting Rule?
Acceptance is effective from the moment it is posted, not only when it is received.
However, only where it was reasonable for them to use post and not another form of communication.
What is Contract Consideration?
This is the price which supports the promise. Each party gains a benefit and suffers a detriment.
The consideration must be real and genuine, however the compensation doesn’t have to be adequate (tough shit if you just made a crap deal).
What happens if a promise is made without consideration?
Promissory Estoppel. It cannot be enforced by the courts but can be used as a legal defence.
What is “Form” in relation to the formation of a contract?
Form is how the law demands a contract be written.
EG: Contracts Under Seal must be signed and witnessed.
Contracts in Writing are for all land sales post 1989.
What Act set the age of a minor at 18?
The 1969 Family Law Reform Act.
What is “Restitution”?
Situations where a person is liable to restore property to another.
This is difficult in the case of minors who can’t be made to pay for some things.
What did the 1987 Minor’s Contract Act enforce?
The court may require minors to transfer any property they have acquired if equitable and reasonable to do so.
Are contracts made by those with Mental Health Conditions valid?
Yes. Unless the patient was unable to fully understand the agreement, and the other contracting party was aware of this.
Define Ultra Vires?
Beyond the powers of.
Used when talking about statutory corporations and registered companies invalidating contracts if beyond the powers of the corporation.
What are the two types of Contract Terms?
Express (based on the words spoken / written)
Implied
What are the three types of Implied Terms?
In Fact: not stated but presumed to be intended.
By Custom: based on the market or customs of a country.
In Law: based on which law is applicable to the contract.
What are some things that the 2015 Consumer Rights Act imply?
Implies that the goods sold are fit for purpose.
Implies that the goods sold match their product description.
What does the 1906 Marine Insurance Act imply?
That every vessel must be sea-worthy.
What are Standard Terms?
When contracts are drawn up with the intention to be used for a lot of people (i.e. standard motor insurance), terms are standardised to save time and simplify dealings.
How can T&C’s be incorporated into a contract?
By signing documents that include a “small print”.
By displaying a notice or on a ticket / receipt.
You need to prove that you tried to make the other party aware of the t&c’s.
What was the 1949 Olley v Marlborough Court Ltd case? Think hotel.
Hotel had a note in the room relinquishing liability for damage or loss to property.
Not enforceable as the contract between the hotel and guest is made at the front desk, so the patron can’t have known all conditions at the point / time when they signed the contract.
Context is the patron had stuff stolen.
What was the case involving the hotel liability waiver in the bedroom?
Olley v Marlborough Court Ltd
What does the 1977 Unfair Contracts Terms Act restrict?
It restricts the effectiveness of the reliance on exemption clauses.
What are excluded from the 1977 UCT Act?
Insurance Contacts.
What does Section 2 of the 1977 UCT Act state? Think liability.
You can’t exclude liability for death or bodily injury due to negligence, even if you have a little sign saying otherwise.
What is an “Unfair Terms”
Defined by the 2015 Consumer Rights Act.
An unfair term is something which causes a significant imbalance in the rights and duties to the detriment of the consumer.
Does the UCTA or CRA deal with business contracts?
It’s the 1977 Unfair Contracts Terms Act.
What is the difference between a Condition and a Warranty?
Condition: important aspect of the agreement.
Warranty: minor aspect of the agreement.
In insurance, a warranty is a major term.
How can a contract become defective?
- Illegality
- Improper Pressure
- Mistake
- Misrepresentation
- Non Disclosure
When is a contract illegal?
If it involves undertaking a legal wrong or by doing something that is harmful to public policy or society.
Can be contrary to law (forging bank notes), public policy (prostitution or perverting the course of justice) or trade (restrictions on trade are unreasonable).
