Contract Law

Question 1

What is an offer?

Answer 1

a proposal made by the offeror to the offeree subject to the terms with a promise to be bound by that proposal if the offeree accepts the proposals

Question 2

what is a contract?

Answer 2

a legally binding agreement

Question 3

what are the core elements of a contract?

Answer 3

• agreement (offer + acceptance)
• intention: need to have the intention to be legally binding to the agreement.
• consideration: a promise to give something or to do something.

Question 4

what is a bilateral contract?

Answer 4

A promise by one party is exchanged for a promise by the other

it is enforceable on the basis of the exchanged promise.

e.g., the buyer promises to pay the price, and the seller promises to deliver the goods.

Question 5

what is a unilateral contract?

Answer 5

Only one party makes a promise to do something in return for an act by the other party.

Acceptance of an offer by an offeree need not be communicated to the offeror.

Performance of the condition to fulfil the promise is taken as acceptance.

eg - offer of a reward.

Question 6

which classes have ‘limited capacity’

Answer 6

• minors (under 18)
• mentally incapacitated persons
• intoxication persons
• corporations

Question 7

what are the rules for minors in terms of capacity?

Answer 7

Minors - so the contract is not enforceable on them. And they are enforceable on the other party and are voidable at the minor’s petition.

EXCEPTION: where the contract is beneficial to the minor. so for goods and services
eg - food, education, earning a living, contract of employment.

Question 8

what is the liability for a minor (capacity)?

Answer 8

Restitution - but the court is likely to protect the minor or impose indirect limited liability on them.

Question 9

what does mentally incapacitated persons mean?

Answer 9

A person who is unable to make decisions for themselves due to their impairment ( can be temporary or permanent)

Question 10

how can a contract be voidable for a person who is mentally impaired?

Answer 10

• The person didn’t understand the nature of the contract.
• the other persons knew of the impairment.

Question 11

is a contract still valid if entered with a mentally incapacitated person?

Answer 11

yes, unless it can be shown the reason that
- the person didn’t understand the nature of the contract.
- the other persons knew of the impairment.

Question 12

how can an intoxicated person void the validity of a contract?

Answer 12

• the person didn’t understand the nature of the contract.
• the other persons knew of the impairment.

( but there is ratification after sobering up, or at any point, renders the contract enforceable.

Question 13

how can a corporation void the validity of a contract?

Answer 13

the ultra virus rule - so the act or contract was undertaken beyond the power of the company (ie article of association). Then it is void.

But for third parties, if there was good faith, then the ultravirus would not count here.

Question 14

What is a term?

Answer 14

A promise amounting to a term of the contract will allow a cause of action for breach of contract if unfilled

Question 15

What is a representation?

Answer 15

A statement made by one party that persuades or encourages the other party to agree to a contract.

Question 16

How can you terminate an offer?

Answer 16

• rejection or counteroffer
• revocation
• lapse of time
• death
• failure of condition precedent ( if a condition of an offer fails there can be no offer)

Question 17

what factors distinguish a term and a representation

Answer 17

• timing
  skills knowledge/ skill
• importance of the statement
  reduction of oral agreement to writing

Question 18

What is the incorporation of written terms?

Answer 18

so incorporated terms generally stem from unsigned written standard form contracts. a party to the contract may protest that a particular clause should not be considered as being included in the contract, because they are unaware of it for some reason, and otherwise would have objected to it.

Question 19

What is meant by construction in terms of a written contract?

Answer 19

If the parties disagree about what a particular clause is intended to mean, the court makes an objection evaluation of what the intention of the parties was.

Question 20

What is the parol evidence rule?

Answer 20

So, if the dispute is an entirely written contract, such cases engage the parol evidence rule.

this means that the evidence, whether written or oral, from outside the contract itself cannot be admitted to add to, vary to, or contract a deed or other written instruments.

Question 21

What exceptions fall outside the parol rule.

Answer 21

• ambiguity
• an incomplete written agreement
• trade usage or custom
• collateral contract
• operating status of the contract.