Contract Flashcards
Condition
term so fundamental that it goes to the root of the contract - contract doesn’t work without it.
Innocent party can terminate contract and claim damages, but if they carry on with contract (affirm it) then can’t terminate - damages only
Innominate term
unclear if warranty or condition, courts will look at effect of breach to determine the remedy
breach does not bring contract to an end
Warranty
term that is incidental or collateral to contract
courts will look at effect of the breach to determine the remedy
What are innocent party’s rights if other party doesn’t perform obligation at time required by contract?
depends if “time is of the essence”
if it is, the obligation is a condition so can terminate contract
if not, warranty so only remedy is to claim damages
presumption in commercial contracts that time is of essence if time for delivery has been agreed
Parol evidence rule
general presumption that external evidence cannot add to, subtract from, contradict or vary terms of written contract
Entire agreement clause
common term written in contracts that provides the document constitutes the entire agreement between parties
Court will uphold unless seen as attempt to avoid liability for misrepresentation
Actionable misrepresentation
False statement of fact or law made by one party to induce other to enter into a contract
Uberrimae fidei
Contracts of utmost good faith: incumbent on parties to make full disclosure as one party has knowledge essential to contract that is not possible to check
Fraudulent misrepresentation
From tort of deceit
statement made knowingly, recklessly (careless as to whether it’s true) or without belief in its truth
Negligent misrepresentation
Created by Misrepresentation Act 1967
any misrepresentation is actionable unless person making statement can show they had reason to believe it, did believe it until the contract was entered into
burden of disproving negligence is on party who made misrepresentation
Innocent misrepresentation
Not made fraudulently or negligently, had reasonable grounds for believing it’s true
damages not available
What contracts must be in writing?
Consumer credit agreements
Sale or disposition of interest in land
Guarantees
What contracts must be by deed?
Conveyance of land
Promise where nothing received in return - promise to make a gift
When is offer terminated by operation of law?
Death of either party
Destruction of subject matter
Supervening illegality
Failure of a condition in the offer
When is revocation effective?
On receipt
When is rejection effective?
On receipt
When is rejection effective?
On receipt
When is acceptance effective?
When posted
This doesn’t apply to instantaneous methods of communication: email acceptance effective when offer or opens email
What contracts are minors bound by?
Necessaries: necessary goods or services at reasonable price
Employment
Permanent interest in property (unless expressly repudiate it)
If they ratify/adopt contract when they turn 18
When is a contract entered into by someone who lacks mental capacity voidable?
If other party knew they lacked capacity
Only voidable by the individual who lacked capacity
Not voidable if they ratify it on recovery or contract was a necessary that they paid a reasonable price for
Same rule for intoxication
Performance of an existing duty is not good consideration unless
It confers a practical benefit on party offering additional consideration (like avoiding a sanction)
Its promise to perform duty owed to a third party
Part payments of debt - generally not sufficient as no fresh consideration/benefit
Exceptions to part payment rule:
Debt disputed in good faith
Unliquidated claims: amount owed is uncertain
Payment at different place or earlier payment
Third party makes payment
Payment made by different means at request of party accepting less amount
A composition w creditors
Under CRPTA 1999, when does a third party have a right to enforce a contact?
Contract expressly provides they can
Or
A term of the contract purports to confer a benefit on the third party and it appears from the terms of the contract the parties intended it to be enforceable by the third party
Either expressly named or member of a benefiting class
Does not apply if contract explicitly says it won’t - common to have this clause in commercial contracts
If third party has rights under a contract, parties can’t change it to their detriment without their consent if:
Third party has communicate their agreement to the term
Third party has relied on the term and the promisor is aware of it
Or
Promisor should have foreseen that the third party would rely on it and they have in fact relied on it
If third party has rights under a contract, parties can’t change it to their detriment without their consent if:
Third party has communicate their agreement to the term
Third party has relied on the term and the promisor is aware of it
Or
Promisor should have foreseen that the third party would rely on it and they have in fact relied on it
Common mistake
Both made same mistake
Usually regarding existence of subject matter
Mutual mistake
Mistaken about different things
One party thinks subject is one thing but other party is intending another thing —> void because totally ambiguous contract
Unilateral mistake
One party mistaken about terms and other aware
Ex. Errors in price —> no agreement between parties
Mistake about identity
One party thinks they are contracting with someone else
Void if identity fundamental to decision to enter contract
Non est factum
Sign document and it’s fundamentally different to what you think you’re signing
Not due to carelessness but because have special difficulties in understanding document
Business efficacy test
Court will imply a term if it is necessary to make the contract work as intended
(Driving school must have insurance)
So can sue if don’t have it
