CONTRACT LAW

Question 1

What’s a contract?

Answer 1

A contract has been defined as a legally binding agreement. In the words of Sir Fredrick Pollock: ‘a
promise or set of promises which the law will enforce’.

Question 2

Speciality contracts

Answer 2

These formal contracts are also known as deeds. They have to be in writing , ‘signed, sealed and
delivered’. The signature of the person must be witnessed and attested. Attestation involves making a
statement to the effect that the deed has been signed in the presence of a witness. Certain contracts,
such as conveyances of land, must be made in the form of a deed.

Question 3

Simple contracts

Answer 3

Contracts which are not deeds are called simple contracts. They are informal contract, and may be
made in any way that is orally, in writing or they may be implied from conduct

Question 4

What is an Offer?

Answer 4

An offer is a proposal made on certain terms by the offeror together with a promise to be bound by that
proposal if the offeree accepts the terms.

Question 5

Carlill v Carbolic Smoke Ball Co.1893

Answer 5

The company inserted advertisements in a number of newspapers stating that it would pay £100 to
anyone who caught flu after using its smoke balls as directed for 14 days. The company further stated
that to show its sincerity in the matter, it had deposited £1000 at the Alliance Bank to meet possible
claims. Mrs Carlill bought one of the smoke balls, used it as directed but still caught flu. She claimed
the E100 reward but was refused, so she sued the company in contract. The company put up a number
of arguments in its defence

Held: In this kind of contract, which is known as a unilateral contract, acceptance consists of performing
the requested act. Notification of acceptance is not necessary. The court concluded that Mrs Carlill was
entitled to recover the £1000 reward

Question 6

Executed consideration

Answer 6

Executed consideration is where one party promises to do something in return for the act of another, for
example give a reward. A contract with ‘cash with order’ terms is an example of executed consideration

Question 7

Executory consideration

Answer 7

Executory consideration is where the parties exchange promises to perform acts in the future, eg ‘cash
on delivery’ terms.

Question 8

Consideration must not be in the past

Answer 8

If one party voluntarily performs an act, and the other party then makes a promise, the consideration for
the promise is said to be in the past. Past consideration is regarded as no consideration at all

Question 9

Terms

Answer 9

The obligations undertaken by parties in a contract are known as terms of a contract. Statements made by the parties to a contract may be classified as terms or representations.

Question 10

Express terms

Answer 10

The contract itself may provide the machinery to resolve any disputes about the operation of the
agreement.

Question 11

Implied terms

Answer 11

A court can ascertain the terms of a contract by reference to statute, court judgement a trade or custom
or a previous dealing between the parties.

Question 12

Methods of discharge

Answer 12

 Performance
 Agreement
 Frustration
 Breach

Question 13

Quantum meruit

Answer 13

Instead of claiming a precise sum, the claimant may be able to sue on a quantum meruit for payment
for work he has actually done. A quantum meruit claim can arise either contractually or quasi
contractually in the following situations:
(a) Contractually: where the contract is for the supply of goods and services but the parties have not
fixed a sum to be paid.
(b) Quasi-contractually: where:
 The defendant has abandoned or refused to perform his part of the contract (Planche v
Colburn 1831)
 Work has been performed by the claimant and accepted by the defendant under a void
contract. In Craven- Ellis v Canons Ltd 1936 a managing director of a company was able
to recover a reasonable sum by way of remuneration for work he had done until it was
discovered that his appointment was invalid under the company’s articles.
 One party confers a benefit on the other with the intention on both sides that the benefit is
to be paid for even though a contract is not finally concluded

Question 14

What is a valid contract?

Answer 14

is a legally-binding agreement, formed by the mutual consent of two parties

Question 15

The three essential elements of a contract

Answer 15

are offer and acceptance, consideration and intention to enter
into legal relations.

Question 16

What is an offer

Answer 16

An offer is a definite promise to
be bound on specific terms and must be distinguished from the mere supply of information and an
invitation to treat.

Question 17

what are the ways in which a contract maybe terminated

Answer 17

In the absence of acceptance, an offer may be

terminated by rejection, counter-offer, lapse of time, revocation, failure of a condition or death.

Question 18

When is acceptance valid?

Answer 18

Acceptance must be an unqualified agreement to all the terms of the offer. Acceptance is generally not
effective (and hence there is no contract) until communicated to the offeror, except where the postal rule
applies.

Question 19

what is Consideration?

Answer 19

This is what each party brings to the table. Consideration may be an act or a promise. It may not be past. It need not be adequate but it must be
sufficient.

Question 20

What is an intention to enter legal contracts

Answer 20

Business or commercial arrangements are generally assumed to be based on an intention to create legal
relations, whereas social and domestic arrangements are not.

Question 21

what persons are considered not to have capacity to enter into contracts

Answer 21

Some persons have restricted capacity to enter into contracts. Minors cannot enter into contracts for
goods other than necessities. Those who lack mental capacity or who were intoxicated can avoid
contacts if they can show that they did not understand the nature of their actions and the other party
ought to have known about their disability.

Question 22

Misrepresentations

Answer 22

Misrepresentations can be classified as fraudulent, negligent or innocent. Any misrepresentation results
in the contract being voidable by the injured party.

Question 23

when is a person said to be in breach of a contract?

Answer 23

party is said to be in breach of contract when, without lawful excuse, he does not perform his
contractual obligations precisely.