Contract GAPS Flashcards
Formation
Agreement (Offer and Acceptance)
Consideration
Intention
Past Consideration
Not usually sufficient - Exception:
- Act must have been done at promisor’s request
- Parties must have understood that the act was to be remunerated either by payment or some other benefit
3- Payment or other benefit must have been legally enforceable had the promise been made in advance
Performance of existing contractual duty?
Only if there is practical benefit
Part-payment of debt
- Where debt is disputed in good faith
- Unliquidated claims - where amount owed is uncertain
- Payment at different place or earlier payment
- TP makes payment
- Payment is by different means at the request of the party accepting the lesser amount
- Composition with creditors
When can a third party enforce rights?
Contract expressly provides that they can
Contract purports to confer benefit on third party and it appears from the terms of the contract the parties intended for the term to be enforceable by a third party - expressly named in contract or member of benefitting class
Exclusions from C(RTP) 1999
Employment contracts
Articles of association
If the contract excludes the Act
Term or representation?
Viewed objectively from the perspective of a reasonable person having regard to the conduct of the parties
Take account of:
- Importance of the statement
- Stage in negotiations it was made
- Whether statement maker had any specialist knowledge or information
Terms Implied by Statute - SOGA 1979
Goods will made description
Good will be of satisfactory quality (fit for purpose good are generally used)
Fit for purpose known to seller
(Treated as conditions)
Terms Implied by Statute - SGSA 1982
B2B - Services
Carry out services within reasonable time and with reasonable care and skill
(Treated as innominate term)
Terms Implied by Statute - CRA 2015
Consumer - Supply of goods:
Should match description be of satisfactory quality and be fir for purpose
Supply of services:
Carried out with reasonable care and skill
Completed in accordance within information consumer relies on
Completed for reasonable price (if not agreed)
Completed in reasonable time (if not agreed)
Terms implied by courts
Only prepared to imply terms to give the agreement ‘business efficacy’
officious bystander test
Servering terms
Courts will only do this if it does not harm the substance of the agreement
Exclusion clause requirements
Must be incorporated into contract
Properly drafted to exclude the liability
Not be prohibited by statute
(Remember contra proferentum)
Incorporation of exclusion clauses
Signature
Notice
(Must be brought to the attention of the other party at or before contract signing)
Unfair terms - UCTA 1977
Regulates B2B
Excluding death or personal injury by negligence are void
Other loss by negligence are void unless reasonable
Implied condition as to title under SGA 1979 void unless reasonable
Cannot restrict performance of contract at all unless reasonable
UCTA 1977 - What does reasonable mean?
Looks at:
- Strength of bargaining positions
- Whether there was opportunity to enter a similar contract without term
- Whether customer knew or ought to have known
- Whether compliance was practicable
- Any special order of the customer
Unfair terms - CRA 2015
Regulates Consumer contracts
- Cannot limit or exclude statutory implied terms as to title, compliance with description, quality or fitness for purpose
- Cannot limit implied term that service must be provided with reasonable care and skill, within a reasonable time or for reasonable price
- Cannot exclude PI or death through negligence
Unfair terms - CRA 2015
Contract remains valid bar the offending term
Variation
Same as for discharge, all the parties must agree and the agreement must be supported by consideration
Vitiating Factors
Void = contract without legal effect
Voidable= Valid unless innocent party elects to rescind it
VF - Mistake
Must be so fundamental that it prevents formation or creates an agreement fundamentally different from what was intended
VF- Misrepresentation
Voidable
- Silence will not amount to a misrepresentation (unless they do not correct a statement that was true but is now false)
Can be fraudulent, innocent, or negligent
Burden is on party to prove that statement was true or they believed it was true
Termination
Goods delivered - Must return and claim damages
Rescission of voidable contract - treated as though it was never effective (entitled to be put in position they would have been in had the contract never been entered into)
Affirmation - once affirmed the right to terminate is lost
Frustration
- If frustrated the contract is automatically discharged (no further liability and no damages)
- Events must be outside of the parties
- Impossibility of performance
- Continued performance is illegal
Things that do not constitute frustration
- More difficult or expensive to perform
- Self-induced frustration (nothing more than breach of contract)
- Events that could be foreseen
Restitutionary Damages
- Designed to prevent unjust enrichment
Requirements:
- Innocent part must show a legitimate interest in preventing the party in breach from keeping any profit
Remedies
Damages - compensate for losses:
- Expectation interest = put innocent party in position they would have been in had contract been performed
- Reliance interest = Compensation for losses incurred in relying on the contract up to the date of breach
When are damages assessed?
At the date of breach
Specific performance
Cannot be used for employment or where it would cause undue hardship
Guarantees
Promise by A (guarantor) to ensure that B, who is party to the contract, will perform their obligations
Must be in writing
