Contract formation

Question 1

What are the 3 types of contract?

Answer 1

• void
• voidable
• unenforceable

Question 2

Describe a void contract and why may a contract be void?

Answer 2

• no contract at all

- if it is illegal

Question 3

Describe a voidable contract and why may a contract be voidable?

Answer 3

• can be set aside

If:

• there is a lack of capacity
• lack of free will
• contract made due to misrepresentation

Question 4

Describe an unenforceable contract and why may a contract be unenforceable?

Answer 4

• valid contract made, but cannot be enforced

- e.g. mistakes in contract

Question 5

What are the main elements of a contract?

Answer 5

• agreement (offer and acceptance)
• intention to create legal relations
• consideration

Question 6

Describe what an offer is

Answer 6

• definite promise to be bound on specific terms

- made by an offeror to an offeree (can be one person, group of people, or the whole world)

Question 7

What are not an offer?

Answer 7

• invitation to treat (an invitation to someone to make an offer)
• statement of intention

Question 8

How long does an offer last?

Answer 8

Lasts until it is terminated by:

• rejection
• counter-offer
• lapsed over time
• revocation
• failure of a pre-condition

Question 9

Describe the forms of an acceptance

Answer 9

• unqualified agreement to all the terms on offer
• can be verbal, in writing or inferred by conduct
• offeror cannot dictate that silence will be acceptance
• acceptance must be communication unless the offeror dispenses with that requirement

Question 10

Intention to create legal relations

Answer 10

• presumption based on type of relationship
  - social/domestic - presume no intention
  - commercial - presume intention
• presumption may be rebutted if clear evidence to the contrary

Question 11

What is consideration?

Answer 11

What each party gives/agrees to give

Question 12

What are types of good consideration?

Answer 12

• executed - act performed at time of agreement
• executory - promise to do something in the future
• sufficient not adequate - as long as it has value, does not matter if it is not equal
• forbearance of existing rights

Question 13

What are types of not good consideration?

Answer 13

• past - already performed at time of agreement
• performance of an existing statutory duty - unless exceeded
• performance of existing contractual duty - unless exceeded or a new contract with a third party

Question 14

What is the privity of a contract?

Answer 14

Only the parties to the contract can enforce/be sued under it

Question 15

What are the exceptions to the privity of contract?

Answer 15

• agency law

- contract (rights of third party) act