contract law

Question 1

What does a contract requiire?

Answer 1

• Agreement
• Consideration
• Intention to create legal relations

Question 2

AGREEMENT

Answer 2

An agreement consists of
Offer – promise to be bound (cf invitation to treat)

Acceptance – final and unqualified agreement to all terms contained
in the offer (cf counter offer)

Two types of agreement:
Bilateral agreement (promise in exchange for promise)
Unilateral agreement (promise in exchange for act)

Question 3

OFFER

Answer 3

s a definite promise to be bound if the offeree agrees to the offer terms.
It must be actually communicated to the offeree(s).
Generally there is no requirement as to form, except for certain
contracts such as the sale of land (must be written). Can be oral,
written, implied from conduct…
Can specify which types of acceptance are required.
Can be revoked by the offeror at any time before acceptance, revocation
must be communicated to the offeree.

Question 4

Gazumping

Answer 4

where the vendor accepts a higher offer or raises the price for land or sale of buildings where an offer has been
accepted but no legally binding contract has been made

Question 5

Gazundering:

Answer 5

where the buyer reduces an agreed offer
immediately before exchange of contracts.

NB there is no general presumption of good faith in English
contract law Walford v Miles [1992] 2 AC 128.

Question 6

ENFORCEABLE CONTRACT

Answer 6

There must be an intention and capacity to be bound (eg Carlill v Carbolic Smoke Company, money deposited with bank)

Consideration is required.
* “… some right, interest, profit or benefit accruing to one
party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Currie v Misa

• It must be something of value but need not be ‘adequate’, Thomas v Thomas (1842) 2 QB 851, Chappell
  & Co Ltd v Nestle Co. Ltd [1960] AC 87

Contract must not be void or voidable:
* must have certainty of terms
* there has not been a mistake which prevents the parties
from reaching an agreement (contract term, identity,
attributes)
* duress or undue influence were involved
* Void = automatically of no effect from the very
beginning
* Voidable = can be set aside

Question 7

PRIVITY OF CONTRACT

Answer 7

• Common Law general rule: a third party
  cannot enforce the provisions of a contract or
  rely on its protections
• Consideration must not be from third party
• There have been some devices created.

Question 8

PRIVITY OF CONTRACT ACT

Answer 8

• Contracts (Rights of Third Parties) Act 1999 – allows for some third party
  beneficiaries to enforce contract provisions (if expressly provided for or purports
  to confer benefit but not if parties did not intend for third party to be able to
  enforce)
• If Act not applicable, a promisor may be able to enforce a third party’s benefit.
  This is a court device, to avoid the ‘black hole’ problem.
• Agency/Eurymedon case - New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite &
  Co. Ltd., The Eurymedon [1975] AC 154.
• Court may order specific performance (where damages would not be sufficient)