Contract Law

Question 1

Law of Contract

Answer 1

Concerned with binding promises

• What constitutes the promise
• How it was made
• Remedies for breach
• Who is entitled to those remedies

Question 2

Elements of a contract that should be satisfied

Answer 2

• Offer and acceptance
• Intention to create legal relations
• Consideration given by both parties
• Legal capacity to contract
• No vitiating factors such as duress or illegal subject matter
• Valid contracts
• Voidable contracts
• Unenforceable contracts

Question 3

Offer and Invitation to treat

Answer 3

For a valid contract to exist, usually one party must have made an offer and the other must have accepted it making it binding for both parties

Question 4

Invitation to treat

Answer 4

Some transaction involve a preliminary stage in which one party invites the other to make an offer
Means to negotiate
It is not an offer

Question 5

Bilateral Contract

Answer 5

Entered into by way of exchange of promises between parties
The offer of a promise becomes a promise by acceptance
Most contracts are this

Question 6

Unilateral Contract

Answer 6

Involves action undertaken by one person or group alone

allow only one person to make a promise or agreement

Question 7

Ways to accept

Answer 7

Expressed words - written, oral, implied from conduct

Communication - Post, emails, fax, telephone, letter

Question 8

Privity of contract

Answer 8

Is the relationship that exists between the immediate parties to a contract which is necessary to enable one person to sue another on it
(anyone who did not enter contract cannot sue)

Question 9

Contract (rights of third parties) act 1999 third party can sue if

Answer 9

1. contract expressly state that third party is entitled to have right to sue on the contract
2. Intended to confer a benefit on third party then third party is entitled to sue on contract to enforce benefit

Question 10

Illegal Contract and Consequences

Answer 10

illegal contracts are void ab initio at common law provided illegality was present at time contract was formed
where contract has been tainted by illegality contract will be void ab initial

Question 11

Voidable contract

Answer 11

where a party has the option to avoid the contract and his contractual obligations
if the party with option chooses to ratify contract both must fully perform contract

Question 12

Contracts may be avoided by:

Answer 12

minors
mentally incapable 
intoxicated persons 
persons acting under duress, undue influence or fraud 
cases involving mutual mistake

Question 13

Discharge contract

Answer 13

when parties have both fully performed obligations under contract it is discharged and ceases to exist

Question 14

5 ways to discharge contracts

Answer 14

1. Performance
2. Agreement
3. Frustration
4. Breach
5. Statutory cooling-off period