Contract Flashcards
Four requirements for a contract.
- Offer and acceptance
- Consideration
- intention to create legal relations
Offer and acceptance
Offeror - person making the offer
Offeree - person whom the offer is made
Objective test - determine whether an agreement has been formed
subjective test - existence of an agreement
Where the offeree knew or ought to have known that the offeror has made a mistake
OFFER - agrees to be legally bound with another party
ITT - negotiate/discuss terms, which goods sold - lead to a contract at a later date.
Offer
Bilateral offer - offer or promise in exchange for an offer or promise
Unilateral offer - offer in exchange for a specified act.
Acceptance
Complete agreement to the terms of the offer
acceptance of a bilateral offer -
1. must be communicated
2. postal acceptance - as soon as posted
Acceptance of unilateral offers
Accepts by conduct - doesn’t need to be communicated.
Termination
Once offer is terminated, it cannot be accepted.
Revoke offer
Must be communicated - postal does not apply.
Cannot revoke unilateral offers.
Counter offers
Terminate any offers.
Consideration
an act or promise of value, in exchange for an act, promise or value.
Consideration
Rule is that consideration must be sufficient but doesn’t need to be adequate. Consideration must not be past.
Adequate
no requirement for consideration to reflect the economic or monetary value of what is provided in exchange.
Sufficient
Provided it was what the promisor requested in exchange for this promise.
Consideration - existing duties
Starting point for agreement amendments to pay more than was initially agreed is that they are not enforceable unless
- doing more than originally agreed
- promisor obtains a practical benefit
To note
Paying less is not consideration
Pay more - not consideration unless they benefit
Must not be passed
Promissory estoppel
doctrine that provides a defence to a debtor to stop a creditor going back on his promise to accept a smaller amount than is owed under the original agreement.
Criteria for promissory estoppel
Shield and not a sword.
must be clear and unambiguous that they will not enforce their rights under the contract.
- applies to amendments of contracts not formation of contracts.
- promisee must have relied on the promise.
- must be inequitable (unfair) for the promisor to go back on promise.
CONTRACT
Intention to create legal relations - intent to be legally bound.
Rebuttable Presumption
Whether the parties had the intention to create legal relations.
Two types of rebuttable presumption
- In the social and domestic context. RP that parties did not have intent.
- Commercial content. RP that parties to an agreement have the intention.
RP in the social and domestic context.
Presumption can be rebutted if:
- the terms of the agreement are certain
- the parties are not on friendly terms when the agreement was made.
- the agreement is serious’
- one party has relied on the agreement to their detriment.
RP in the commercial context.
Presumption can be rebutted if:
- clear words that the agreement should not have legal effect
- uncertainty in the agreement terms
INTENT
Certainty
- too vague
- is not complete
- one/both parties are mistaken
VOID
Has no legal effect
VOIDABLE
Valid and binding but can be set aside by party that has a remedy.
CAPACITY
- mental capacity
- intoxication
- minors
- companies
PRIVITY OF CONTRACT
3rd party cannot acquire rights or be subject to its burdens.
EXCEPTIONS
The Contract (rights of third parties) Act 1999
- enforce remedies for breach of C
- rely on a clause that limits or excludes his liability
Assignment
a person who has rights can assign them to 3rd party.
- permitted under the terms of the relevant agreement
- absolute
- in writing
PRIVITY
Agency - must be clear in the main agreement that 3rd party protected.
- clear acting as agent
- must have authority from 3rd party to act as agent
- 3rd party must provide consideration to the party to the main contract
COLLATERAL CONTRACT
A tells B to buy paint from C, Paint is useless. A has a claim against C although B made the purchase.
REMEDIES - 3RD PARTY
- damages
- specific performance
- injunctions
