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Contract 1 Flashcards

1
Q

Requirements for offer

A

Clear, certain, show intention to be legally bound

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2
Q

Unilateral contract

A

Offer calling for act to be performed.
Acceptance is actual performance of required act.
Everyone with notice is offeree.

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3
Q

Bilateral contract

A

Each party assumes an obligation to the other party by promising to do something (sell/pay)

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4
Q

Invitation to treat (not an offer- cannot be accepted)

A
  1. Advertisements (unless unilateral offer)
  2. Displays of goods (incl. websites)
  3. Invitations to tender (unless commit to accept highest/lowest bid -> unilateral offer)
  4. Auctions- bid is offer (auction without reserve, must sell to highest bidder)
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5
Q

Terminating an offer

A
  1. Rejection/counter offer
    When communicated to offeror
    Request for further information doesn’t extinguish OG offer, counter offer does
  2. Lapse
    Specified time period/reasonable time/offeree’s death + if offeree knows of offeror’s death
  3. Revocation
    At any time before acceptance.
    Unilateral contract- implied that offeror won’t prevent offeree from completing act once they start
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6
Q

Acceptance must be :

A
  1. In response to the offer (only offeree can accept )
  2. Unqualified (correspond exactly to terms of offer- mirror image, no additional terms)
  3. Follow prescribed mode of acceptance (unless mandatory, any other no less advantageous mode binding)
  4. Communicated
    (never silence, 3rd party with authority can communicate on behalf)
    Postal rule- from moment acceptance is properly posted
    Instantaneous means- acceptance effective when received by offeror (unless at fault for non-receipt) consider office hours
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7
Q

Postal rule

A

Applies when acceptance is delayed/lost in post
Not when
- not contemplated post would be used
- letters revoking offers- must be received
- incorrectly addressed
- disapplied by offeror (requires receipt of letter)

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8
Q

Certainty

A

Objective test seeing if all material terms are certain and complete, and a precondition to creating legal relations.
Last resort- striking down contract for uncertainty.

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9
Q

Consideration

A

act/forbearance or promise of, from 1 party is the price for which the promise is bought

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10
Q

Executory consideration

A

Future consideration- promised but not yet provided

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11
Q

Executed consideration

A

Consideration performed before contract formed. (unilateral offer)

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12
Q

Consideration Requirements

A
  1. Must not be past (not be prior to promise to pay unless
    a) done at promisor’s request
    b) it was understood that act would be rewarded
    c) payment would be legally enforceable if promised in advance
  2. Must move from the promisee (only they can enforce the promise)
  3. Need not be adequate
  4. Must be sufficient (some value in law)
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13
Q

Existing obligation from existing contract cannot be good consideration for new contract

A

Unless new contract constitutes a practical benefit (Williams v Roffey- factual consideration- nothing new promised + no duress)
Legal consideration- exceeding their contractual obligation

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14
Q

Carrying out a public duty imposed by law is not sufficient consideration.

A

Police officer goes above public duty (prevention of crime) when giving information to private individual- should be paid as has provided consideration.

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15
Q

Promise to do something which party already obliged to do due to an obligation to a third party is good consideration.

A

Risk of double liability if not done- action from 2 parties.

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16
Q

Agreement to pay part of a debt is not good consideration.

A

Except where:
- Fresh consideration + part payment of death
- Creditor cannot sue debtor for difference after accepting lesser sum from third party in full satisfaction of debt.
Practical benefit not applicable here.
- Promissory estoppel

17
Q

Promissory estoppel

A

Exception to rule that part payment of debt without fresh consideration cannot discharge whole obligation.
Part payment accepted as result of pressure- not inequitable, full amount owed.
Acts as shield not sword- only used as defence (discretion of court)
Must be clear + unequivocal promise or representation that existing legal rights will not be fully enforced (express/implied)
Promisee must have relied on that promise to their detriment
Doctrine only applies when inequitable for promisor to go back on promise
Suspends not extinguishes- reasonable notice given unless impossible/inequitable for other party

18
Q

Intention to create legal relations

A

Commercial agreement- presume yes
Social/Domestic - presume no
Unless rebutted (separated spouses)
‘subject to contract’ -> implies they don’t intend to be bound until formal execution of contract

19
Q

Adults have full contract capacity

A

if sound of mind + not suffering from impeding factor like drunkenness

20
Q

Minor not bound by contract unless relating to necessaries or contract of employment/education which benefit them

A

even if other party doesn’t know/ minor has lied
Must pay reasonable price for necessaries not actual cost (they must be required )

21
Q

Mental incapacity s2 Mental Capacity Act 2005

A

Unable to
- understand, retain, use the relevant information (consequences of either option) and communicate a decision
Contract binding unless person claiming incapacity can prove they didn’t understand and that the other party knew
Still liable to pay reasonable price for necessaries (applies to drunk too)

22
Q

3 types of duress

A
  1. Duress to the person
    Actual/threatened violence +
    1 factor influencing decision to enter contract (not decisive)
  2. Duress to property
    Threat/Seizure or damage to owner’s property +
    But for duress, wouldn’t enter contract
  3. Economic duress
    Lack of practical choice +
    illegitimate pressure +
    But for duress, wouldn’t enter into/vary contract
23
Q

Legal effect of duress

A

Contract is voidable
Remedy is rescission (returning parties to the situation they were in before contract was entered)
Bar to rescission- affirmation of contract (innocent party doesn’t challenge in timely manner/acts in compliance with contract)

24
Q

Economic duress (DSND Subsea)

A

Lack of practical choice (unable to find alternative in time)
Illegitimate pressure
- actual/threatened breach of contract
- exerting pressure in good/bad faith (reasonable)
- whether victim protested at time of duress
- whether victim affirmed the contract after the duress ceased (must take immediate action after pressure ceased)
Must show that but for duress, wouldn’t have entered into contract

25
Q

Court increasingly likely to find consideration in practical benefit, supporting variation of contract.

A

Doctrine of economic duress increasingly important to ensure party can seek relief from variations where justifiable (test validity of renegotiation)
Legal consideration: exceeding their contractual obligation

26
Q

Undue influence (RBS Etridge)

A

Contract results from:
1. Overt acts of improper pressure or coercion
Deceitful/fraudulent- 1 factor inducing entering contract
Not deceitful/fraudulent- but for behaviour, would they have entered contract?
2. relationship of influence/ascendancy of which unfair advantage is taken
based on trust and confidence
also vulnerable/dependent relationship
Irrebuttably presumed in parent/child, guardian/ward, trustee/beneficiary, solicitor/client, doctor/patient

27
Q

Party alleging undue influence shows relationship of trust and confidence AND a transaction which requires explanation (suspicious, high value)

A

Burden shifts to defendant- must produce evidence to show no undue influence (comprehensive independent advice given- not conclusive though)

Transaction here doesn’t include matrimonial home as security for loan to spouse’s business -> prove unfair advantage instead

28
Q

Effect of proven undue influence

A

Contract/gift set aside.
Equitable - discretionary, not allowed where innocent party delayed/engaged in underhanded conduct (clean hands, delay defeats equity)

29
Q

Undue influence + third parties (Barclays v O’Brien)

A

Victim persuaded to enter into a contract (security to a bank) based on undue influence from 3rd party (not bank)
Bank doesn’t exert undue influence
Contract can’t be set aside unless proven that bank had actual/constructive notice of the undue influence
Bank always has constructive notice where guarantee + borrower have non-commercial relationship unless the bank takes reasonable steps to warn the weaker party of risks /advise them to get independent advice (don’t have to meet wife/ provide solicitor but explains deal to solicitor/ tells solicitor if they think there is undue influence)
-> solicitor should explain practical risks (losing home), seriousness, that they have a choice (if solicitor fails- action of negligence against solicitor not bank)

30
Q

Representation or term of contract?

A

Do parties intend it to be binding?
- importance of statement
so important, that party wouldn’t have entered into contract without it
- timing of statement
earlier in negotiation- more likely to be a term
- reduction of contract into writing important oral statements included
- special knowledge/skill of person making the statement
- assumption of responsibility
accept responsibility for soundness of sale-> term
Yes: term (breach -> breach of contract claim)
No: representation (if false, misrepresentation claim) or mere puff (no legal effect)

31
Q

Express terms

A

Signed written contract
- unless orally misrepresented clause
- signed document doesn’t have contractual effect - not binding
Incorporation by notice
- reasonable steps to make other party aware before/at time of contracting (not after)
- where terms adverse to other party, must highlight them
document giving notice must intend to have contractual effect
Incorporation by course of dealing
- 1 of several contracts between parties (3 over 5 years insufficient)
- Course of dealing must have been consistent + regular over a period of time
Other ways of agreeing express terms:
- conversation/email
- incorporation/exclusion clauses

32
Q

Entire agreement clause

A

Parties agree that this agreement is the entire agreement between them (supersedes previous understandings/arrangements whether oral/written)
Easy to know terms
Know there are no binding oral terms
Courts uphold where they attempt avoid misunderstanding
Cannot exclude liability/misrepresentation in it.

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