Contract Law

Question 1

What are the essential elements of a contract?

Answer 1

• offer
• mutual consideration
• communicated acceptance

Question 2

What is an offer?

Answer 2

a proposal to enter into legall binding contractual relations based on a given set of terms

Question 3

When is the consideration element of a contract not required?

Answer 3

When a contract is executed under seal, because at law, the use of a seal is considered a sufficient indicator of the parties’ mutual intention to create binding contractual relations.

Question 4

What must happen for acceptance to be effective?

Answer 4

Acceptance must be communicated to the offeror.

Question 5

When is communicated acceptance not required?

Answer 5

in the instance of a unilateral contract, where a company’s advertisement of promises x in the event of purchase

Question 6

What is a counter offer?

Answer 6

a proposal for changed terms in response to an offer. The recipient of a counter offer is then free to accept or not accept the counter offer or to make a further counter offer

Question 7

The form of a contract can be either

Answer 7

in writing or oral. A contract may be evidenced by written instruments without being reduced to a single, signed document

Question 8

Negotiations that are intended to produce a signed, written agreement but that fail to produce one may nevertheless

Answer 8

result in a binding contract

Question 9

Where a contract term is so vague or uncertain that they cannot be easily understood, the vagueness or uncertainty is

Answer 9

sufficient to preent a finding that the essential terms were agreed upon, therefore the contract is of no force and effect.

Question 10

What are penalty clauses?

Answer 10

Terms that provide for a specific amount payable by the defaulting party in the event of a breach of contract. Will be unenforceable if deemed unconscionable.

Question 11

what are liquidated damages clauses?

Answer 11

generally enforced unless they do not represent a legitimate attempt to pre-estimate the damages that would result in a breach of contract

Question 12

What are exclusionary clauses?

Answer 12

Clauses that exclude, excuse or limit a party’s liability in the event of a breach. Question of enforceability turn on:
- whether the clause, properly interpreted, applies to the particular facts
- whether the clause was inconscionable and therefore invalid at the time of contract

Question 13

What torts are possible when misrepresentations have been made during contracting?

Answer 13

The torts of negligent misrepresentation and fraudulent misrepresentation

Question 14

What is the first and foremost rule of contract interpretation?

Answer 14

to interpret the agreement from the perspective of what a reasonable objective bystander would take it to mean

Question 15

If ambiguous terms have been drafted by one of the parties, the rule of

Answer 15

contra proferentem applies to resolve the ambiguity against the interpretation desired by that party.

Question 16

What is the most common remedy for breach of contract?

Answer 16

Compensatory damages, to place the non breaching party in the position they would have been in had the contract not been breached.

Question 17

When might aggravated damages for mental distress be awarded in breach of contract cases?

Answer 17

Where the plaintiff establishes:
- it was within the reasonable expectations of the parties, at the time of contract formation, that breach would cause mental distress
- a sufficient degree of mental distress was in fact suffered.

Question 18

A claimant is not entitled to recover for losses that could have been avoided through reasonable measures is known as

Answer 18

the common law duty to mitigate

Question 19

To prove failure to mitigate, the defendant must prove on a balance of probabilities:

Answer 19

that other measures should have been taken to reduce the loss

Question 20

What is rectification?

Answer 20

Where both parties have through error entered ino a contract in which a term is misstated. In effect, the court deems the contract to express the relevant term in the manner that was intended by both parites at the time of the contract.

Question 21

Define frustration of contract

Answer 21

Where performance of contract has become impossible through some intervening cause for which neither party is responsible

Question 22

At common law, and unless the contract contains other terms assigning the risk of loss to one party or the other….

Answer 22

the contract may be held to have been frustrated by the intervening loss of the property contracted for.

Question 23

What is specific performance?

Answer 23

Where damages would be in inadequate remedy, the plaintiff may be entitled to an order that the defendant perform the contract. The requirement of proof for uniqueness is generally difficult for plaintiffs to overcome.

Question 24

To rescind a contract is to find it to be

Answer 24

of no force and effect. Essentially the goal is to put parties in the position they were in prior to the contract