Cluster 2 - Contractual Flashcards
The creation of the contract
1.Intent to be bound
2.Agreement between parties
3.Consideration (getting somethin in return like money) (This is only in Common law ex: English)
Difference between common law and civil law
Common Law is used by England and its former colonies
Civil Law is based on Roman Law
Contents of Contract (Clauses)
Kinds of clauses:
1. Clauses that describe the obligations of parties, including possible conditions
2. Clauses regulating whether certain outside events are attributable to a party (force majeure)
3. Clauses regulating the kinds of remedies that are available, and limitations to and conditions of these remedies.
In particular remedies limiting damages are common (limitation clauses, liquidated damages)
4. Clauses regulating the termination of the contract: under what conditions can the contract be terminated, and
what are the consequences?
5. General clauses regulating issues such as formalities for sending notice, applicable law etc.
Damages (Contractual)
The most important remedy is the award of damages.
It can be devided between:
1. personal injury,
2. property damage, and
3. pure economic loss.
What is a tacit consent? (Contractual, Consent)
Tacit consent – consent by not protesting ( websites).
Define representation and terms (Contents of contract)
representations (certain state of facts supposed to be true) vs. terms
(promises to be fullfiled: conditions, warranties, intermediate warranties)
Can the legal system be
chosen by the
contracting parties?
Where should it be
specified?
In general, the parties can include a provision in the agreement in which a choice is made regarding the applicable law.
Good Faith in Civil Law countries is more powerful than in Common Law
Example: Mistake & Representation.
In civil law systems the relation between parties are usually described as relations governed by good faith; this has
several aspects or functions:
- Supplementary function by which possible gaps in the contract can be filled in by the court.
- Interpretative function whereby the interpretation of the contract is guided by what reasonable parties are supposed to have intended (subjective interpretation)
- Restrictive function whereby unreasonable behaviour is disallowed.
What is required to start a claim based on breach?
What does it depend on?
Most legal system - not allowed to directly start a claim on the basis of a breach:
Default – if the “breacher” had a chance to remedy the breach, and still didn’t
Notice of default – some time is provided to remedy the breach after it happened
What is a force majeure? How does its recognition influence damages claims?
If non-performance due to a factor not attributable (force majeure), remedies
cannot be claimed. What counts can be specified in the contract.
What types of losses can be distinguished
Losses can be direct (recoverable) and consequential (not directly related,
may not have been foreseeable
What are the 3 types of damages:
There are 3 kinds of damages:
personal injury, property damage and pure economic loss. For p.e.l., remedies not always
allowed.
How can one assure recovery for pure economic loss?
some jurisdictions don’t always allow recovery (e.g. US).
To avoid: add a clause for liquidated damages for certain breaches
Termination (Contractual) - 3 Main types of Termination
Besides damages and specific performance there is also the possibility to terminate the contract.
Termination may mean several things.
- Termination for breach . Termination is a response to breach of contract by the
other party.
- Termination for cause . This means that the termination is based on
a ground that justifies terminating the contract. Examples are death or insolvency of a party,
behaviour that justifies termination. - Termination at will. This means that a party is free to terminate without having
to provide any reasons.
What is a remedy? What
are the 3 main types of
remedies we consider?
Remedies – what is invoked when a contract is not fully performed (e.g. specific
performance, damages, termination)
