contract

Question 1

what elements form a contract?

Answer 1

• offer and acceptance
• consideration
• intention to create legal relations.

Question 1

what is executory consideration?

Answer 1

the parties make promises to each other to perform something in the future once the contract has formed.

Question 2

what is consideration?

Answer 2

the promise to provide something in return for the goods/service provided in the contract e.g. money.

Question 3

what are the rules governing consideration?

Answer 3

• need not be adequate
• must be sufficient
• must not be past
• must move from the promisee.

Question 4

what is executed consideration?

Answer 4

at the time of formation the consideration has already been performed e.g. price paid.

Question 5

what does consideration must not be past mean?

Answer 5

consideration must be at the time of formation e.g. a promise that is made after the contract has been formed.

Question 6

what is the exception to the past consideration rule?

Answer 6

• the act must have been done at the promisor’s request
• the parties must have understood that the act was to be rewarded either by a payment or some other benefit.
• the payment or benefit must have been legally enforceable had it been promised in advance.

Question 7

what is duress?

Answer 7

when someone is forced or pressured into making an agreement against their will.

Question 8

what is the consideration must move from the promisee rule?

Answer 8

a party who has not provided consideration can not bring action to enforce a contract.

Question 9

what is the doctrine of privity of contract?

Answer 9

only a person who is party to a contract may sue or be sued on that contract.

Question 10

what is the consideration need not be adequate rule?

Answer 10

that the value of what is being exchanged in a contract doesn’t have to be exactly equal or fair.

Question 11

what is the general rule regarding minors?

Answer 11

a person is not bound by a contract is they are under 18 even if the other party does not know this fact or the minor has lied about their age.

Question 12

what are the exceptions making minors bound to a contract?

Answer 12

1. contracts that are for employment, apprenticeship or education if it benefits them.
2. the contract includes necessaries, in which the minor must pay a reasonable price rather than the actual cost.

Question 13

if a minor enters into a contract but turns 18 through the contracts duration is it enforceable?

Answer 13

yes.

Question 14

when does someone lack mental capacity?

Answer 14

if they are unable to make a decision for himself in relation to the matter, whether that is temporary or not.

Question 15

how can we establish if someone has mental capacity?

Answer 15

1. do they understand the relevant information?
2. can they retain that information?
3. can they use that information to communicate a decision?

Question 16

what is the test of intention regarding the intention to create legal relations?

Answer 16

objective. would reasonable people regard the agreement as intended to be binding?

Question 17

what is the general legal stance with commercial and domestic contracts regarding legal intention?

Answer 17

it is presumed that there is an intention to create legal relations with a commercial contract, but not with domestic contracts.

Question 18

what is ‘subject to contract’?

Answer 18

this creates a strong inference that the parties do not intend to be bound until the formal execution of a contract.

Question 19

what is the test for certainty?

Answer 19

objective test, have all the parties agreed to all the terms they considered to be a precaution to creating legal relations.