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SQE2 > Contract > Flashcards

Contract Flashcards

1
Q

What 3 kinds of contracts need to be in writing?

A

a) Guarantees;
b) Dispositions in land; and
c) Consumer credit agreements.

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2
Q

What are the 3 requirements for a deed?

A

a) It must be executed by the parties;
b) In the presence of a witness; and
c) It must be delivered.

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3
Q

What are the 3 elements required for a contract to be formed?

A

a) Agreement;
b) Consideration; and
c) Intent.

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4
Q

What is required for a communication to count as an offer?

A

It must create a reasonable expectation in the offeree that the offeror is wiling to enter into a contract.

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5
Q

How is it decided if a contract is definite and certain?

A

Are there enough essential terms that the contract would be capable of being enforced?

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6
Q

What gives the offeree power to accept?

A

Knowledge of the offer.

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7
Q

What is an invitation to treat?

A

An invitation to the other party to make an offer.

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8
Q

What 5 things are invitations to treat?

A

a) Adverts;
b) Shop sales;
c) Price lists;
d) Tenders; and
e) Auctions.

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9
Q

Can an offeror revoke a contract by informing a third party?

A

Yes, if the offeree receives correct information from a reliable source of acts of the offeror which would indicate to a reasonable person that they have revoked the offer.

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10
Q

Until what point can offers be revoked?

A

Until acceptance.

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11
Q

At what point does a unilateral contract become irrevocable?

A

After performance has begun.

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12
Q

Can an offer be accepted by performance?

A

Yes, if the offeror has not stipulated a method of acceptance.

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13
Q

When is a rejection by the offeree effective?

A

When received.

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14
Q

What does a counteroffer do?

A

Rejects the original offer and counts as a new offer.

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15
Q

Can an acceptance be qualified?

A

No, as then it would constitute a counteroffer.

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16
Q

What method of acceptance is permitted if there is no method stipulated by the offeror?

A

Any reasonable manner and any reasonable medium.

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17
Q

What is the exception to the rule that a stipulated method of acceptance is the only way to accept a contract?

A

If the method used is no less advantageous to the offeror.

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18
Q

When is a unilateral contract formed?

A

On completion.

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19
Q

What is the postal rule?

A

Acceptance by post creates a contract at the moment of posting.

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20
Q

In what situations is there a presumption against intention to be legally bound?

A

Domestic.

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21
Q

What is the general rule regarding contracts with minors?

A

They are voidable.

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22
Q

What are the 3 exceptions to the rule that minors cannot enter contracts?

A

a) Necessaries;
b) Employment contracts; and
c) Contracts for acquisition of permanent interest in property.

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23
Q

When will contracts with people who lack capacity be considered voidable?

A

If the other party knew they lacked capacity.

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24
Q

When does someone lack capacity according to the Mental Capacity Act 2005?

A

When they are unable to make a decision for themselves in relation to the matter.

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25
Q

What is executory consideration?

A

An act of forbearance in the future.

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26
Q

What are the four requirements for consideration?

A

a) It must move from the promisee;
b) It must be sufficient but need not be adequate; and
c) It cannot be to fulfil an existing duty; and
d) It cannot be an act done in the past.

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27
Q

What does ‘consideration must move from the promisee’ mean?

A

Consideration must be provided by the parties to the contracts themselves, not third parties.

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28
Q

What does ‘consideration must be sufficient not adequate’ mean?

A

It must have some value, even if very small.

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29
Q

What is the exception to the rule that consideration cannot be to fulfil an existing duty?

A

When the existing contractual duty confers a practical benefit on the party offering additional consideration e.g. offered more money to work quicker.

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30
Q

What is the exception to the rule that an act done in the past cannot be good consideration? What are its three requirements?

A

When there was an implied understanding of payment. The three conditions are:
a) The act must have been done at the promisor’s request;
b) The parties must have understood that the act was to be remunerated; and
c) The payment must have been legally enforceable if it had been promised before.

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31
Q

Is part payment of a debt good consideration?

A

No.

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32
Q

What are the 6 exceptions to the rule that part payment of a debt cannot be good consideration?

A

a) Debt is disputed in good faith;
b) Unliquidated claims;
c) Payment at a different place, or earlier payment;
d) A third party makes the payment;
e) Payment is made by different means; or
f) A composition with creditors.

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33
Q

What is promissory estoppel?

A

An equitable principle that gives legal effect to an agreement unsupported by consideration. It stops a party going back on a promise.

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34
Q

What are the three requirements for promissory estoppel?

A

a) There must be a clear and unequivocal promise by the promisor that they will not rely on existing legal rights;
b) The promisee must have altered their position relying on this promise; and
c) It must be inequitable for the promisor to go back on their promise.

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35
Q

What does the doctrine of privity of contract mean?

A

Only the parties to a contract may sue and be sued under it.

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36
Q

In what 2 scenarios does the Contracts (Rights of Third Parties) Act 1999 allow a third party to enforce a term of a contract?

A

a) The contract expressly provides that the party may enforce the term; or
b) A term of the contract purports to confer a benefit on the party and it appears from the terms of the contract that the parties intended it to be enforceable by them.

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37
Q

What is the requirement for a third party to sue under the Contracts (Rights of Third Parties) Act 1999?

A

They must be expressly named in the contract.

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38
Q

What is required if the parties want to vary or rescind a contract but a third party has agreed to a right benefitting them or has relied or is likely to rely on it?

A

The consent of the third party.

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39
Q

What are the 5 common law exceptions to the Contracts (Rights of Third Parties) Act 1999?

A

a) Agency;
b) Assignment;
c) Subrogation;
d) Collateral contracts; and
e) Trusts.

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40
Q

What can be assigned under a contract?

A

The benefit, NOT the burden.

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41
Q

What is required if someone wants to assign the burden of a contract?

A

A novation.

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42
Q

What are terms of a contract contrasted with?

A

Representations.

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43
Q

What are the two kinds of terms?

A

a) Conditions; and
b) Warranties.

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44
Q

When are terms incorporated into the contract during negotations?

A

When the parties intended them to form part of the contract.

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45
Q

What is a representation?

A

A statement of fact or law made to induce the other party into entering the contract.

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46
Q

How do you determine whether a statement is a term or a representation?

A

By determining the intentions of a party viewed objectively having regard to the conduct of the parties.

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47
Q

What three factors will the court take into account when considering whether a statement is a term or a representation?

A

a) The importance of the statement;
b) The stage of negotiations; and
c) Whether the party making it had any specialist knowledge.

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48
Q

What are the two classifications of terms?

A

a) Conditions; and
b) Warranties.

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49
Q

What can an innocent party do when the other party has breached a condition?

A

Repudiate the contract and claim damages.

50
Q

What is a condition?

A

A term of the contract that is so fundamental that it goes to the root.

51
Q

What is a warranty?

A

A term that is incidental or collateral to the main terms.

52
Q

What is an innominate term?

A

A term as to which it is unclear at the outset whether it is a condition or warranty.

53
Q

What will the courts do to determine if a innominate term is a condition or a warranty after it has been breached?

A

Consider whether the breach of the term results in the innocent party losing substantially the whole of the benefit of the contract.

54
Q

What happens if a party breaches a contract in which time is of the essence?

A

They commit a repudiatory breach.

55
Q

What is the general presumption regarding time in commercial contracts?

A

That it is of the essence.

56
Q

When will a term form part of a contract?

A

If the other party has reasonable notice of it.

57
Q

What does the parol evidence rule mean?

A

There is a general presumption that external evidence cannot add to, subtract from, contradict or vary the terms of a written contract.

58
Q

What are the 4 ways terms can be implied into a contract?

A

a) Statute;
b) The courts;
c) Custom and usage; or
d) A course of dealings between the parties.

59
Q

What are the 4 terms implied by the Sale of Goods Act 1979?

A

a) The seller has title to the goods;
b) The goods will match any description given;
c) The goods will be of satisfactory quality; and
d) They will be fit for purpose made know to seller.

60
Q

What does ‘satisfactory quality’ mean in the Sale of Goods Act 1979?

A

Fit for the purpose for which such goods are generally used.

61
Q

What are the terms implied by the Sale of Goods Act 1979 generally treated as?

A

Conditions.

62
Q

When will the terms implied by the Sale of Goods Act 1979 be considered a warranty?

A

When the breach is so minor that it would be unreasonable for the buyer to reject the goods.

63
Q

What terms does the Supply of Goods and Services Act 1982 imply?

A

a) The supplier will carry out the service in reasonable time;
b) The service will be carried out with reasonable care and skill; and
c) Any goods supplied will have the same terms implied by the SGA.

64
Q

What kind of terms are implied by the Supply of Goods and Services Act 1982?

A

Innominate terms.

65
Q

What are the four terms implied by the Consumer Rights Act 2015?

A

The same as the SGA and services will be carried out:
a) With reasonable care and skill;
b) In accordance with any information which the consumer relies on;
c) For a reasonable price; and
d) Within a reasonable time.

66
Q

Can the terms of the CRA 2015 be excluded?

A

No.

67
Q

When will the courts imply terms?

A

Rarely - only to give the contract business efficacy. The term must be ‘so obvious to a reasonable person that it goes without saying’.

68
Q

What are the three requirements for an exclusion clause to work?

A

a) It must have been incorporated;
b) It must have been properly drafted to be construed; and
c) It must not be prohibited.

69
Q

What are the three ways an exclusion clause can be incorporated into a contract?

A

a) By signature;
b) By notice; and
c) Through custom or course of dealings.

70
Q

When must an exclusion clause have been brought to the attention of the other party if incorporated by notice?

A

Immediately before or at the time the contract was concluded.

71
Q

How must a party intending to rely on an exclusion clause show it was incorporated effectively by notice?

A

They must show that they took reasonable steps to bring it to the attention of the other party.

72
Q

What is the contra preferentum rule?

A

Any ambiguity in an exclusion clause is held against the party seeking to rely on it.

73
Q

What two kinds of clause are automatically void under the Unfair Contract Terms Act 1977?

A

a) Any term purporting to exclude liability for death or personal injury caused by negligence; and
b) Any term purporting to exclude the implied condition as to title under SGA 1979.

74
Q

What three kinds of clause will only be effective if reasonable under UCTA 1977?

A

a) Any clause purporting to exclude liability for any loss except death or personal injury by negligence;
b) Any of the terms except the one as to title under SGA 1979; and
c) If relying on standard terms & conditions, any clause that excludes or restricts liability to actually deliver the contract in the way agreed.

75
Q

What 5 things will the courts consider when determining whether a clause is reasonable under UCTA 1977?

A

a) The strength of the bargaining parties;
b) Any inducement received;
c) Whether the customer knew about the clause;
d) Whether compliance was practicable; and
e) Whether there was a special order of the customer.

76
Q

At what point in time does the test under UCTA 1977 consider the reasonableness of the clause?

A

When it was included in the contract, not whether it is reasonable to rely on it.

77
Q

To what kind of agreements does UCTA 1977 apply?

A

Business to business.

78
Q

What terms are prohibited under the CRA 2015?

A

Any clause that purports to exclude liability for the terms implied by the CRA 2015 and that purports to exclude liability for personal injury as a result of negligence.

79
Q

When is a term unfair under the CRA 2015?

A

When it causes a significant imbalance to the detriment of the consumer.

80
Q

What two terms cannot be deemed unfair?

A

Terms relating to the main subject matter of the contract and to the price payable, so long as they are prominent and transparent.

81
Q

What two things can render a contract void?

A

a) Mistake; and
b) Illegality.

82
Q

What are the two ways a mistake can render a contract void?

A

a) It operates to prevent formation; or
b) It makes the agreement fundamentally different from what was intended.

83
Q

What is common mistake?

A

The parties have made the same mistake (often subject matter).

84
Q

What is mutual mistake?

A

The parties are mistaken about different things.

85
Q

What is a unilateral mistake?

A

Where one party is mistaken and the other party is aware of it e.g. error in price.

86
Q

What is the mistaken identity test?

A

Would the parties have contracted irrespective of the identity of the other party?

87
Q

What are the 3 kinds of duress?

A

a) Duress of the person;
b) Duress of goods; and
c) Economic duress.

88
Q

What is a general requirement for duress?

A

Illegitimate pressure.

89
Q

What is required for economic duress?

A

A coercion of the will so as to vitiate consent and illegitimate pressure.

90
Q

What is the result if a contract is found to have been made under duress?

A

It is voidable.

91
Q

What are the two ways of proving undue influence?

A

a) Actual undue influence due to overt acts; and
b) Presumed undue influence because of a relationship between the parties.

92
Q

When does presumed undue influence arise?

A

When there is a relationship of trust and confidence between the parties.

93
Q

When is there a presumption of undue influence?

A

When there is a special relationship between the parties and the underlying transaction calls out for explanation.

94
Q

Does silence amount to a misrepresentation?

A

No.

95
Q

What is a misrepresentation?

A

A false statement of fact or law that induces the other party to enter a contract.

96
Q

What will the courts consider when deciding if a misrepresentation induced the party?

A

Whether it was material and whether a reasonable person in the claimant’s position would have been influenced.

97
Q

What are the three kinds of misrepresentation?

A

a) Fraudulent;
b) Negligent; and
c) Innocent.

98
Q

What does the party against whom a claim of negligent misrepresentation have to prove to be found innocent?

A

Any misrepresentation is actionable unless the person making the statement can prove that they had reasonable grounds for believing, and did believe, the facts were true.

99
Q

What is the main remedy available for all 3 kinds of misrepresentation?

A

Rescission.

100
Q

What are the 4 bars to rescission?

A

a) Affirmation;
b) Lapse of time;
c) Impossibility of restitution; and
d) Third-party rights.

101
Q

In what two kinds of misrepresentation claims are damages available?

A

a) Fraudulent; and
b) Negligent.

102
Q

What are the two requirements for a contract to end by agreement?

A

a) All the parties must agree; and
b) Consideration.

103
Q

Why can parties agree to discharge a contract if they all have remaining obligations under it?

A

They are each offering to extinguish rights/obligations under the contract as consideration.

104
Q

How can a contract be discharged if only one party has remaining obligations?

A

By deed.

105
Q

What is the disadvantage of a waiver?

A

The party waiving their rights can reinstate them by notice.

106
Q

What is the entire obligations rule?

A

Only full performance will discharge a contract.

107
Q

What is a common law exception to the entire obligations rule?

A

Substantial performance.

108
Q

When can a party terminate a contract after receiving notice of an anticipatory breach?

A

a) When they receive the notice; or
b) When performance is due.

109
Q

What are the 3 ways a contract can be frustrated?

A

a) Impossibility;
b) Illegality; or
c) Substantially different.

110
Q

What does the Law Reform (Frustrated Contracts) Act 1943 allow a party to a frustrated contract to do?

A

A party can claim back all sums paid in respect of the contract before the frustrating event and any expenses incurred.

111
Q

What should expectation damages do?

A

Put the party into the position that they would have been in had the contract been properly performed.

112
Q

What can the innocent party do if expectation damages are too speculative to measure?

A

Claim reliance damages.

113
Q

What do reliance damages cover?

A

Any expense incurred in reliance on the contract before the date of breach.

114
Q

When are damages assessed?

A

At the date of breach.

115
Q

What are the two requirements for remoteness in contract?

A

a) The damages should fairly and reasonably be considered to arise naturally from the breach; or
b) Have been in the reasonable contemplation of the parties as a probable result of the breach.

116
Q

What will the courts consider regarding causation?

A

Was the breach an effective cause of the loss.

117
Q

When is contributory negligence available as a defence?

A

When liability is the same in both contract and tort.

118
Q

What must an innocent party do to ensure they receive full damages?

A

Mitigate their loss.

119
Q

What is a valid liquidated damages clause?

A

One that is a genuine pre-estimate of loss.

120
Q

What will the court do to penalty clauses?

A

Strike them out.

121
Q

What are three examples of equitable remedies?

A

a) Specific performance;
b) Injunctive relief; and
c) Rescission.

SQE2 (8 decks)

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