Chapter 5 - Contract Law Flashcards
Define the term contract.
- An exchange of enforceable promises.
- involves at least two parties, a promisor and a promisee,
- an outward expression of common intention and of expectations to the declaration or assurance contained in the promise.
- a contract is an enforceable mutual understanding or agreement between two or more capable parties to perform some lawful act for legal consideration.
State the six elements of a contract.
The follow elements must be present for a contract to be valid:
● Mutual agreement, demonstrated by an offer, acceptance and meeting of the minds.
● Competent parties or capacity.
● Consideration or seal.
● Proper or legal subject matter.
● Intention to be bound.
● Enforceable form.
When may consideration not be a legal requirement of a contract?
Where no consideration is present in the form of promises or other mutual exchange of something valuable, a contract is only valid when sealed. A document normally bears a red paper wafer or is marked with the word “seal’ and these must be present when the parties sign the document. The contract is then a formal contract and no consideration is required.
The sale or disposition of land must be evidenced in writing. Why?
This is a requirement of the Statute of Frauds.
What is the difference between a mutual mistake and a unilateral mistake?
Mutual mistake - a situation in which the parties made different mistakes.
Unilateral mistake - a mistake made by only one party to a contract and the other party knows or must be taken to know.
What is non est factum?
when it is obvious that one of the parties was not aware of what they were agreeing to. The courts may give relief to a party and call the contract void.
“it is not my act because my mind did not go with my pen.”
The party is only likely to succeed if misrepresentation is shown to have taken place. For example, the party was led to believe they were signing something other than what was actually being signed. If this misrepresentation by the other party to the contract was done on purpose, then it would not be an error but rather an act of fraud.
What rights does a party to a contract have if one party misrepresents some fact material to the contract during the negotiations?
The party who was misled has the right to rescind or continue with the contract.
The misled parties must not continue to benefit from the agreement once the misrepresentation is known as this may affect their claims for damages. Rescission will be allowed only when the injured party revokes the contract (when they know about the misrepresentation) and where the parties can actually be restored to their original positions and the property rights have not been legally passed on to a third party.
List the methods in which a contract may be discharged.
Contracts may be discharged by:
- performance
- agreement
- contracts own dissolution
- frustration
- operation of law
- breach of contract
What is the difference between a frustrated contract and a contract with self-induced frustration?
Frustrated contract - the occurrence of some unforeseen event after the contract has been
entered into, which impedes or prevents the performance of the contract or makes its performance quite useless.
Self-induced frustration - a party deliberately brings about a situation where the contract cannot be performed and then claims frustration. It is considered a breach of contract and is not covered by frustration.
What remedies are available for Breach of Contract?
- damages
- quantum meruit (reasonable value of services)
- equitable remedies (specific performance and injunction)
What is Specific Performance?
Order the party causing a breach of contract (the defendant) to perform the promises included in the contract.
Courts will avoid ordering specific performance if monetary damages will suffice.
Courts will not provide the remedy of specific performance for:
- sale of goods that can easily be bought elsewhere
- personal service contracts (entertainer, engineering services)
