Chapter Five - Contract Law Flashcards
Define the term ‘contract’.
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.
- Mutual agreement.
- Competent parties.
- 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.
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?
A mutual mistake refers to a situation in which the parties made different mistakes.
A unilateral mistake is a mistake made by only one party to a contract and the other party knows or must be taken to know.
Cite a situation where ‘non est factum’ might be used.
The courts may give relief to a party and call the contract void when it is obvious that one of the parties was not aware of what he or she was agreeing to.
In this situation, the court decides whether the parties have signed documents that do not represent the very essence or nature of the agreement.
If one party to a contract misrepresents some fact material to the contract during the negotiations, what rights does the other party to the contract have?
In general, there is no duty for Party A to disclose any facts to Party B which might influence Party B’s judgement when entering into a contract. However, should Party A make statements of fact that influence Party B in their decision to enter into the contract and those statements turn out to be untrue, they are misrepresentations. The validity of the contract will be affected if a party makes a false statement of fact (not an opinion) that induces another party into a contract. The party who was misled has the right to rescind or continue with the contract. However, they should act within a reasonable time period. If they do not, they may be deemed to have accepted the contract complete with its misrepresentation. 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 and breach of contract.
What is the difference between a frustrated contract and a contract with self-induced frustration?
Frustration covers 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. It must be emphasized that the doctrine of frustration can only be applied to actions that are unforeseen by the parties when entering into the contract. Self-induced frustration occurs when 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.
- Equitable Remedies.
Under what circumstances is Specific Performance likely to be granted by the courts?
Using this remedy, the court can order the party causing the breach (the defendant) to perform the promises included in the contract. Courts, where possible, will avoid ordering specific performance if monetary damages will suffice.
The courts will not use specific performance as a remedy in personal service contracts.
