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Law > Contract formation > Flashcards

Contract formation Flashcards

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1
Q

what is a simple contract?

A

a contract which does not need to be in writing

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2
Q

what types of contracts need to be in writing?

A
  • bills of exchange
  • regulated consumer credit agreements
  • transfers of land (specialty contracts)
  • guarantees
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3
Q

What is a void contract?

A

There is no contract and goods should be returned (even from a third party)

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4
Q

What is a voidable contract?

A

The contract can be set aside by the “injured” party

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5
Q

What 4 factors can make a contract either void or voidable?

A

Lack of capacity
Absence of free will
Illegality
Misrepresentation

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6
Q

What is the rule and effect of lack of capacity?

A

Rule - An individual should be of sound mind and aged 18 or over

Effect - Voidable

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7
Q

What is the rule and effect of absence of free will?

A

Rule - There should not be duress or undue influence

Effect - Voidable

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8
Q

What is the rule and effect of illegality?

A

Rule - Contract must not be illegal or against public policy

Effect - Void

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9
Q

What is the rule and effect of misrepresentation?

A

Rule - An incorrect statement of fact made pre contract which is intended to and does cause the party to enter into the contract

Effect - Voidable

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10
Q

Does the court accept email exchanges as evidence?

A

Yes

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11
Q

What are the steps to create a valid contract

A

Offer
Acceptance
Consideration
Intention
Capacity and Form

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12
Q

what is an offer?

A

An offer is a definite promise made by an offeror to be bound on specific terms.

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13
Q

Is an invitation to treat the same as an offer?

A

No
An invitation to treat is not an offer but a statement of willingness to enter into negotiations. An invitation to treat cannot be accepted but is an invitation to other parties to make an offer.

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14
Q

what are some examples of invitations to treat?

A
  • Adverts
  • Shop window displays
  • Goods on shop shelves
  • Company prospectus
  • Circulation of a price list or displays on a website
  • Tenders
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15
Q

what are the different ways in which an offer can be terminated?

A

-Rejection
-Counter-offer
-Lapse of time
-Revocation by the offeror
-Failure of a pre-condition

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16
Q

How is an offer terminated by rejection?

A

Rejection by the offeree terminates the offer

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17
Q

How is an offer terminated by counter-offer?

A

When the offeree proposes new or amended terms, thereby terminating the original offer

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18
Q

How is an offer terminated by lapse of time?

A

Can be expressed in the offer or after a reasonable period of time

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19
Q

How is an offer terminated by revocation by the offeror?

A

The offeror may revoke his offer:
- can be made at any time before acceptance
- can be made even if the offeror has agreed to keep the offer open
- revocation must be communicated to the offeree by the offeror or a by a reliable third party

20
Q

what are the 2 exceptions for revocation of a contract?

A
  • If the offeree pays offerer to keep offer open this creates a collateral contract
  • in a unilateral contract
21
Q

How is an offer terminated by failure of pre-condition?

A

An offer will automatically lapse if pre-condition is not satisfied

22
Q

how is an offer terminated by lapse of time?

A

an offer ceases to exist if not accepted within a specified time limit and if no time limit is specified then it will lapse after a reasonable time

23
Q

What is acceptance?

A

An unqualified agreement to all the terms of the offer.

24
Q

Acceptance - Postal rule

A

Acceptance by post is valid from the moment the letter is posted regardless or whether it is actually received.

25
Q

What is consideration?

A

Each party must provide some form of consideration under the contract

26
Q

What is invalid consideration?

A

Past consideration cannot form the basis of a legally binding contract

27
Q

Where is consideration not required?

A

When a contract is made by deed (specialty contracts)

e.g. Leases and conveyancing 3 years or more

28
Q

what is a valid consideration?

A

both executed and executory consideration

29
Q

what is an executed consideration?

A

performed act in exchange for a promise
eg paying for goods at the time goods are delivered

30
Q

what is executory consideration?

A

promise given in exchange for a promise
eg promise paying for goods that are to be delivered at a later date

31
Q

Does consideration need to be adequate?

A

No, a bad bargain is still a contract

adequate is when the it equals in value to the consideration received in return

32
Q

Does a contract have to be sufficient?

A

Yes, consideration must be sufficient

Sufficient is when it has some identifiable value in order to be capable in law of being regarded as valid consideration

33
Q

What consideration would be seen as insufficient?

A

Performance of existing statutory duty - unless it can be shown that some extra service over the scope is also being offered

34
Q

what is sufficient consideration?

A

consideration which can be given a value

35
Q

what is adequate consideration?

A

consideration which is equal in value

36
Q

What is the presumption on the intention to create legal obligations through social and domestic?

A

No intention to create legal obligations

37
Q

When can a social and domestic legal obligation be rebutted?

A

If husband and wife are separated when the agreement was made.

38
Q

What is the presumption on the intention to create legal obligations through commercial?

A

Intention to create a legally bindining contract

39
Q

what is privity of contract?

A

only a person who is a party to a contract has enforceable rights or obligations under it

40
Q

what are express terms?

A

elements of the contract which have been specifically agreed. These terms are specifically inserted into the contract by either or both parties. Must be clear to be enforceable

41
Q

what are implied terms?

A

terms which are not expressly included but are still part of the contract

42
Q

Three essential elements of a contract:

A
  • agreement
  • an intention to create legal relations
  • consideration
43
Q

what contract is used for transfer of land and long leases?

A
  • Specialty contracts (contract by deed)
  • signed, sealed and delivered to be binding
44
Q

Carlill vs carbolic smoke ball

A

offer can be made to whole world an advert makes it clear to be an offer unless makes it clear no further negotiations

45
Q

what is the postal rule for acceptance?

A

acceptance is complete as soon as the letter is posted

46
Q

what is sufficient consideration?

A

consideration which can be given a value

47
Q

what is part payment problem and what are the three exceptions? (waiver of an existing debt)

A
  • can still go back and get the rest of the money that is owed to you
  • Alternative consideration - debtor offers alternate type of consideration
  • Bargain between creditors- group of creditors jointly agree to part payment
  • Payment by third party - payment made by another party this can be good consideration

Law (13 decks)

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