Contract Law

Question 1

What are the elements of a legally enforceable contract?

Answer 1

Intention to create legal relations
Agreement (offer & acceptance)
Consideration

Question 2

What is intention to create legal relations?

Answer 2

Whether a reasonable person would consider the agreement to have the intention to be legally binding

Question 3

What is agreement?

Answer 3

Offer & Acceptance. An offer needs to be made by the offeror and acceptance by the offeree needs to happen for an agreement to happen.

Question 4

What is consideration?

Answer 4

Consideration is the exchange of something of value for each party, for gain or for benefit.

Question 5

What is an invitation to treat?

Answer 5

The invitation to make an offer (items in an advertisement or on the shelf of a store)

Question 6

What is an offer?

Answer 6

A offer to do something (or not) in exchange for the offeree to do something (or not).

Question 7

What is the difference between an invitation to treat and an offer?

Answer 7

An offer is a promise to do something (or not do something) in the return that the offeree does something (or not do something). However, an invitation to treat is not an offer, it is an invitation to make an offer. An example of an invitation to treat is items advertised for sale or items on a shop shelf.

Question 8

What is the case of Carlil v Carbolic Smoke Ball Company (1893).

Answer 8

• Carbolic Smoke Ball company advertised that anyone would be rewarded if they found the flu remendy, Carbolic Smoke Ball, did not work after taking it according to the intrusctions.
• Mrs Carlil met those conditions & followed the instructions and sued the company for 100 pouds because they refused to pay her
• Decision was that the advertisement was an offer, due to having direct instructions, not an invitation to treat.

Question 9

What is the Postal Rule?

Answer 9

Acceptance happens when the letter is sent for postal acceptance. Both parties must be aware that acceptance, is happening via mail.

Question 10

What is Electronic Communication/Instantaneous Communication?

Answer 10

Acceptance happens when the email/acceptance is recevied

Question 11

What is the 3 legal criteria?

Answer 11

Rule of law (all people are equal before the law)
Common law (court made law) or statutory law
Just and equitable outcomes for all stakeholders

Question 12

What is the difference between Equality and Equity?

Answer 12

Equality = Everyone gets treated the same (person A gets treated the same as person B even though Person B has a disability)
Equity = Everyone gets treated FAIRLY (person B gets given an extra 15 minutes on their exam due to their disability to make it fair)

Question 13

What are the 3 reasons why a contract can end?

Answer 13

Lack of legal capcity
Lack of genuine consent
Legality of object

Question 14

What does lack of legal capacity mean?

Answer 14

• Capacity is the ability for people to enter into a contract and properly understand their obligations
• Bankrupts, criminals, persons with mental illness are said to lack capacity to contract
• Those whom the law considers infants (under the age of 18) are also said to lack legal capacity to contract `

Question 15

What does lack of genuine consent mean?

Answer 15

A ‘meeting of the minds’ needs to happen for both parties. Sometimes the state of mind of each party at the moment means that this ‘meeting of the minds’ doesn’t occur.

Question 16

What is Mistake of Law and Mistake of Fact? Explain the difference.

Answer 16

Mistake of Law – sometimes mistaken as to the legal responsibilities of the agreements they enter. These mistakes, however, do not void a contract unless it is for illegal purposes
Mistake of Fact – Parties may be genuinely mistaken as to certain important facts which are the subject of the contract.

Question 17

What is a misrepresentation and what are the types?

Answer 17

A statement that is made as a representation, but is false.
Types:
Innocent – Statement made by a party in the belief that it is true as unaware that it is incorrect. Contract may be rescinded (taken back) but damages may not be sought
Negligent – Statement is made by a party without taking reasonable care to ensure that the statement is true (should have known better). Contract rescinded (taken back) can be sought.
Fraudulent – Statement is made knowing it is false or reckless or does not care if it is true or false. Contract rescinded (taken back) damages sought.

Question 18

Define Duress.

Answer 18

Threatened or actual application of violence towards a party in order to influence them to induce them to enter into a contract

Question 19

Define Undue Influence.

Answer 19

Party A enters a contract because of the pressure Party B put onto them. Party A then couldn’t form an independent judgement about whether to enter the contract

Question 20

Define Unconscionable Conduct.

Answer 20

Being taken unfair advantage of, doesn’t matter if its not particularly advantageous, court may set aside contract

Question 21

Define Caveat Emptor.

Answer 21

the buyer beware; an obligation for a buyer to reasonably examine any property before purchasing it

Question 22

What is Legality of Object?

Answer 22

If the object (the purpose of which it came to being) of the contract is illegal, the contract is void and of no legal effect.
Agreements entered by 2 or more people to commit a crime are not enforceable at law.
Example: The agreement made by a person driving a getaway vehicle for a group of bank robbers.

Question 23

How can a contract be discharged?

Answer 23

Performance: Contract comes to a natural end because the contract has been fulfilled
Agreement: Mutual agreement to end the contract
Operation of Law: Bankruptcy
Frustration: A painter dies before they can paint a portrait
Breach of contract: Where one party fails to comply with a term of the contract

Question 24

What are the 2 main types of Remedies? Give examples.

Answer 24

Damages:

• Money
• Put the party back in the same position they would have been had the contract been performed

Injunction:
- A direct order to a party ‘not to do something’

Question 25

How can you resolve disputes?

Answer 25

Negotiations – can have lawyers involved but don’t need too, its informal, not infront of a judge, require both parties to be corporative
Mediation – uses neutral third party to help sport things out, mediator doesn’t decide the case, but makes suggestions to help parties settle, helps preserve relationships, still requires a negotiation
Arbitration – more formal than both the other options (not quite as formal as court proceedings), the arbitrators word is legally binding, expensive
Sue - most formal, legally binding, expensive, takes a long time

Question 26

What is QCAT and what’s its purpose?

Answer 26

Queensland civil and administrative tribunal act (2009)

Purpose: To prevent unnecessary cases from progression to court

Question 27

Explain the difference between a term and a representation? Provide an example?

Answer 27

A term is any provision which is forming a part of a contract whereas a representation is an oral statement of fact which doesn’t amount to the terms of the contract and sometimes it might not be true (no legal obligation). For example, a puff such as sales talk and exaggerated comments about a product are representations (this car will make you feel like 1 million dollars). No reasonable person would believe them.

Question 28

Explain the difference between a condition and a warranty? Provide an example?

Answer 28

A condition is a fundamental term of a contract, without these the parties never would have made the contract. Breaching a condition can result in contract terminated and damages. A warranty is a less important term to which the parties still would have entered into the agreement had they not been in the contract. A breach of warranty can result in damages only, the contract must still continue.

Question 29

Define Void.

Answer 29

no legal affect; essentially does not exist

Question 30

Define Voidable.

Answer 30

Can be cancelled or returnable

Question 31

Define Breach.

Answer 31

Broken rule or promise

Question 32

What is the Parol Evidence Rule?

Answer 32

States that the terms of the contract will be in writing and no other additional terms (such as oral agreements) can be added.

Question 33

What are the 2 different types of Terms?

Answer 33

Implied: An implied term is a verbal part of the contract
Express: An express term is a written part of the contract

Question 34

What is the difference between Social/Family (Domestic) agreements and commerical/Business Agreemens

Answer 34

Social/Family agreements are assumed that the parties do not intend to create legal relations whereas a commercial/business agreements are assumed that the parties intended to create legal relations

Question 35

If a catalogue says the wrong price in the store, do they have to sell it to you at the advertised price?

Answer 35

No, advertisements are an invite to treat ONLY, however most likely in good faith they will.

Question 36

What is a contract?

Answer 36

A contract is an agreement made between two parties that creates legal rights or obligations

Question 37

What are the general principals of an offer?

Answer 37

1) An offer may be made to a particular person, to a class of persons, or to all the world.
2) The offer must be communicated to the person accepting the offer.
3) All the terms of the offer must be communicated to the person accepting the offer and brought to his/her notice.
4) The offer may specify conditions to be followed by the person accepting the offer.
5) An offer can be withdrawn (revoked) at any time before acceptance.
6) An offer will lapse if not accepted within the time stated or within reasonable time, where no time for acceptance has been stated.

Question 38

What are the general principals of acceptance?

Answer 38

1) Acceptance must be actually communicated unless the offer requires an act to be done.
2) A qualified acceptance cannot be made.
3) Any conditions stated in the offer must be followed
4) Acceptance can be made only by the parties to whom the offer was made.
5) Once acceptance is communicated, it cannot be withdrawn
6) Acceptance must be made within the time prescribed, or if no time has been prescribed, within a reasonable time.
7) The person accepting an offer must know that it exists (EG: giving information to the police about someone who is wanted then walking outside and seeing you can get a reward for it, then going back inside and demanding money)

Question 39

What are the general principals of consideration?

Answer 39

1) Consideration must exist in every simple contract.
2) As long as there is consideration, the court is not concerned as to its adequacy, provided it is of some value.
3) Consideration must not be illegal or unlawful.
4) Consideration must be definite.
5) Consideration offered now in return for past performance is not good consideration.
6) Consideration must be possible to carry out.
7) The consideration must be provided by the person who has made the promise.
8) If someone promises to do something or does something which he/she is already obliged to do under a contract, then that promise is not further consideration.

Side Note:

• A promise to refrain from taking legal action may be consideration.
• Agreeing to compromise (settle) a claim against another party may be consideration.