Contract - ALL Flashcards
What is a contract?
A legally binding agreement which imposes duties on the parties, breach of which gives the innocent party a remedy that the law will enforce.
What three elements are required for a contract?
- Agreement (offer and acceptance)2. Intention to be legally bound3. Consideration (i.e. something of value given in support of the agreement)
What are three ways a simple contract can come into existence?
- In writing2. Orally3. Through conduct of parties
What are three examples of contracts which must be in writing?
- Guarantees2. Contracts for sale/disposition of an interest in land3. Consumer credit agreementsNote, for the majority of contracts, there are no formal requirements.
How are contracts in electronic form typically treated?
They will be considered properly executed as if they were in writing
What is a deed?
A document which makes it clear on its face that it is a deed.Requirements:1. Executed by the parties to it in the presence of a witness2. Delivered (i.e. the parties have shown their intention to be bound)Certain contracts must be made by deed to be enforceable including promises for no consideration and a conveyance of land.
In the context of a deed, what does delivered mean?
Any act indicating the parties’ intention to be boundThis is typically one by including words such as “Delivered as a deed on [date]”
What are two instances where a contract must be made via deed to be enforceable?
- Promises where nothing is received/promised in return (avoids consideration issue)2. Conveyance/transfers of land (the actual land itself; not to be confused with the contract to sell/dispose of an interest in land)
What is the timing advantage in having a contract made by deed as opposed to a contract not made by deed?
12 years to bring a claim for breach with a deed, as opposed to 6 years for a simple contract
Contract formation
Agreement* Offer (promise, undertaking, or commitment with definite and certain terms communicated to offeree) AND Acceptance before termination by revocation, rejection, or operation of law* Whether this is present is determined on an objective standard: did the words or conduct of the parties manifest a present intention to enter into a contract?Consideration* Bargained-for exchange of something of legal value OR Substitute for consideration e.g. promissory estoppelIntent * Presumption of intent in commercial arrangements (but not in domestic/social situations)Capacity* Minors/Mentally incapacitate people may not have capacity. Lack of capacity results in the contract being unenforceable
What is an offer?
A: * promise, undertaking or commitment * with definite and certain terms * communicated to the offereewhich creates a power of acceptance in the offeree and a corresponding liability on the part of the offeror.
What is required for a communication to be an offer?
It must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of all material terms contained in the offer
An expression of what is required for a communication to be an offer?
An expression of a promise, undertaking, or commitment to enter into a contract with definite and certain terms (i.e. not a mere invitation to begin preliminary negotiations)If it is too vague, uncertain or incomplete it will not be an offer.Example: * A to B: “I will sell you my car for £5,000” - very clearly an offer.* A to B: “I am thinking of selling my car. I reckon it is worth around £5,000. Would you be interested in it at that price?” - not an offer, A has not said that he actually intends to sell his car, and the price is only a potential asking price.
What is the basic enquiry required to determine if an offer contains definite and certain terms?
Whether enough of the essential terms have been provided so that a contract including them would be capable of being enforced* “I will sell you my car for £5,000” is enforceable as there is a clear intent and certainty as to which car A is referring to and the price. * “I might sell you a car for around £5,000”, there is no certainty that A does in fact want to sell, which car he is referring to, or the price.
Does an offeree need to have knowledge of an offer?
Yes.Note, an offer can be made to a specified individual or group, or to the world at large.
How does an offeree acquire knowledge of an offer?
The offer must be communicated to them
Which 2 types of communications do not amount to an offer?
Responses to requests for information * Example: “Will you sell me your house? Email lowest cash price”. Response: “Lowest cash price for my house is £290,000”. This is not an offer.Invitations to treat (i.e. an invitiation to make an offer)* Advertisements * Shop Sales* Price Lists* Tenders * Auctions * Price quotations
Is a statement made in response to a request for information an offer?
No
What is an invitation to treat?
The first step in the negotiations for a contract, but it falls short of actually being an offer. An invitation to treat is often an invitation to the other party to make an offer.These are often in the form of:* Advertisements * Shop Sales* Price Lists* Tenders * Auctions * Price quotationsExample: A asks B if they would be interested in buying A’s car for £5,000. This is an invitation to treat. B may make an offer in response to A’s enquiry, and that offer could lead to further negotiations or acceptance.
Is an advertisement an offer?
Generally, no. If it were, the number of acceptances might quickly exceed the number of items for sale. The advertisement is therefore an invitation to treat, and an offer to buy is made by anyone who contacts the seller in response to the advert. The seller is then free to accept that offer (or not).
Is a pricelist an offer?
Generally, no, they are invitiations to treat, like advertisements. Example: A supplier of vehicle parts publishes a list of prices for parts for BMWs. The price list is an invitation to treat, not an offer. If a mechanic places an order for BMW air filters based on the price list, the mechanic’s order is an offer. The supplier can choose to accept or reject the order. They might want to reject it if they were going to find it difficult to obtain enough air filters to fulfil the order.
Is a price quotation an offer?
Whether a price quotation constitutes an offer or merely an invitation to treat is a question of fact based on the intention of the parties, deduced through prior correspondence. It is unlikely that you will have to make such a judgment call in an exam question.
Is an auction an offer?
- An auction catalogue is not an offer; it is merely an invitation to treat. Owner of the goods listed and the auctioneer can withdraw lots* An auctioneer’s request for bids is also an invitation to treat. The persons taking part in the auction make offers by placing bids. These offers can be revoked at any time until the hammer falls. When the hammer falls, the auctioneer has accepted the highest offer/bid (as long as any reserve price has been met).
Is a tender an offer?
No, a tender is an invitation to interested parties to submit bids setting out the terms on which they are prepared to carry out a piece of work. Example: A retailer needs a new computer system to manage its stock and its sales. It invites IT suppliers to submit bids in which they will describe the goods and services that they are offering and the terms on which they are prepared to supply them. The retailer’s invitation to tender is an invitation to treat, not an offer. The bids submitted by the suppliers are offers. The retailer can decide which offer to accept.