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FLK1 > Contract Law > Flashcards

Contract Law Flashcards

1
Q

what are the 3 requirements for a binding contract?

A
  1. offer and acceptance
  2. intention to create legal relations
  3. consideration
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2
Q

who is the offeror?

A

the person making the offer

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3
Q

who is the offeree?

A

the person receiving the offer

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4
Q

what must an offer be?

A

offer must be clear and certain
‘may be prepared to sell’ is not clear

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5
Q

what approach is taken for intention to be bound?

A

it is an objective approach - what a reasonable person would say the parties intend

may vs will

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6
Q

what is a bilateral contract?

A

each party assumes an obligation to other party by making a promise to something
eg, sell item for exchange of payment (common contract)

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7
Q

what is a unilateral contract?

A

make offer/proposal in terms which call for an act to be performed by one or more other parties.

actual performance of the required act constitutes performance

eg, if you find my watch and return in 10 days then I will immediately give you £100

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8
Q

what are the 4 different invitations to treat?

A
  1. adverts
  2. display of goods
  3. invitations to tender
  4. auctions
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9
Q

what is the general rule for adverts?

A

they are invitations to treat

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10
Q

what is the exception to the general rule for adverts?

A

general rule doesnt apply where adverts amount to unilateral offer

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11
Q

what are the 2 requirements that Carlill makes clear of a unilateral offer?

A
  1. a prescribed act; and
  2. a clear intention to be bound
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12
Q

what is an invitation to tender?

A

a request for tender is used where a party (usually a company or public body) wishes to purchase a major item or service.

deemed as an invitation to treat

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13
Q

what is the exception to the general rule that invitation to tender is an invitation to treat?

A

a displacement of the general principle has been firmly recognised where invitation to tender expressly contains an undertaking to accept the highest or the lowest bid.
this is a form of unilateral contract: required act is making the highest/lowest bid, and when this is carried out, the other party is bound

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14
Q

what are the circumstances where an invitation to tender could give rise to binding contractual obligation? (outlined in Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council)

A

a) the tenders had been solicited from specified parties who were known to the requesting party
b) there was an absolute deadline for submission
c) party requesting tenders had laid down absolute and non-negotiable conditions for submission

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15
Q

what is the difference between an auction and an auction sale without reserve?

A

auction - bid is the offer which is accepted by the fall of the auctioneer’s hammer.
in auction sale without reserve, the auctioneer can be sued if they refuse to sell the highest bidder.

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16
Q

what are the 3 ways a party can terminate an offer?

A

1) rejection
2) lapse
3) revocation

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17
Q

when does rejection take effect?

A

it doesnt take effect until it is actually communicated to the offeror as only then will the of error now they are free from the offer.

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18
Q

what is the effect of a counter-offer on an offer?

A

a counter-offer makes the original offer deemed to have been rejected and therefore, cannot be accepted

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19
Q

what are the 2 ways that a lapse of offer can occur?

A

a) by the passage of time; and
b) by the death of one of the parties

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20
Q

how does an offer lapse through the passage of time? (there are 2 circumstances)

A

1) where acceptance is not made within the period prescribed by the offeror
2) where no period is prescribed and acceptance is not made within a reasonable time

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21
Q

if the offeror is dead = what is the effect of this?

A

if the offeree knows = then offer lapse

if the offered is unaware = then doesnt lapse

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22
Q

if the offeree is dead = what is the effect of this?

A

if offeree is dead then the offer cannot be accepted

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23
Q

can an offer be revoked after acceptance?

A

no it cannot be revoked as it has been validly accepted

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24
Q

what is the effect of the request for further information about an offer?

A

this is not a counter-offer and doesn’t amount to a rejection of the original offer

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25
Q

when is communication of the revocation become effective?

A

upon actual notice of it reaching the offeree. when revocation is communicated by post, then it takes effect from the moment it is received by offeree and not from time of posting

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26
Q

what is the general rule on revocation of a unilateral offer?

A

unilateral contracts, acceptance is perceived as the complete performance of the act(s) required by the terms of the unilateral offer therefore, it is possible to revoke any time BEFORE completion of the required act.

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27
Q

what is the exception to the general rule on revocation of a unilateral offer?

A

exception to the rule: where offeree has partly performed obligation.
therefore, after starting performance of obligation, cannot revoke.

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28
Q

what are the 4 key rules in relation to acceptance?

A

1) acceptance must be in response to the offer
2) acceptance must be unqualified
3) may be necessary to follow prescribed mode of acceptance
4) acceptance must be communicated.

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29
Q

if there is not a prescribed mode of acceptance - how can a party accept?

A

can use another mode of acceptance that is no less advantageous to the offeror

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30
Q

can a third party communicate acceptance?

A

yes they can, but need authority of the offeree

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31
Q

what is the postal rule?

A

acceptance takes effect from the moment the letter of acceptance is properly posted - (official letterbox or hands of postal operative)

32
Q

does postal rule apply if acceptance is delayed or lost in the post?

A

yes, it does apply

33
Q

when does the postal rule not apply (4 situations)?

A

1) if it is not contemplated that post would be used
2) if letter is incorrectly addressed
3) if the offeror disapplied the postal rule
4) doesnt apply to letters revoking offers

34
Q

when an acceptance is made by instantaneous communications (eg, telephone) when is communication effective?

A

acceptance takes place at the moment acceptance is received by the offeror

35
Q

do you need to communicate acceptance in a unilateral contract?

A

no because acceptance is done by performance

36
Q

what is executory consideration?

A

when contracting parties make promises to each other to perform something in the future after the contract has been performed

37
Q

what is executed consideration?

A

where, at the time of the formation of the contract, the consideration has already been performed

38
Q

what are the 3 exceptions to the rule that consideration must not be in the past?

A

a) act must have been done at the promisor’s request
b) parties must have understood that the act was to be rewarded, either by a payment or the conferment of some other benefit
c) payment, or conferment of other benefit, must have been legally enforceable, had it been promised in advance

39
Q

what does it mean ‘consideration must move from the promisee’?

A

a party who has not provided consideration may not bring an action to enforce a contract

40
Q

when can an existing obligation be good consideration?

A

when the new contract constitutes a practical benefit and criteria in Williams v Roffey is satisfied

41
Q

if carrying out an obligation imposed by a public duty is this sufficient consideration?

A

no, generally not good consideration

42
Q

if a party is obliged to do something owed to a third party - is there consideration?

A

yes, good consideration

43
Q

what are the exceptions to the rule that part payment of a debt is not good consideration?

A

1) if creditor introduces a new element eg, pay to different place ect
2) payment of a lesser sum by a third party
3) practical benefit

44
Q

what is promissory estoppel?

A

an equitable doctrine that effectively allows a promise to be enforced, despite not being supported by consideration. stops a person from going back on a promise when a party has relied on such a promise.

45
Q

what are the 4 parameters of promissory estoppel?

A

1) acts as a Shield not a sword
2) clear and unequivocal promise that strict legal rights will not be fully enforced
3) change of position in reliance on the promise
4) inequitable to allow promisor to go back on their promise

46
Q

what does the use of ‘subject to contract’ create? (intention to create legal relations)

A

it creates a strong inference that the parties do not intend to be bound until the formal execution of the contract

47
Q

what is the law’s assumption on social and domestic agreements = are they binding? (intention to create legal relations)

A

there is a presumption that a there is not an intention to create legal relations (can be rebutted with clear evidence)

48
Q

what is the presumption for commercial contracts (intention to create legal relations)?

A

there is a presumption that there is an intention to create legal relations

49
Q

what are the 2 exceptions when a minor can enter and be bound by a contract?

A

relates to necessaries
contract of employment, apprenticeship or education

50
Q

if a minor ratifies a contract after turning 18 - is the contract binding?

A

yes because they have ratified the contract (eg, can be made by making payment)

51
Q

if a person is intoxicated and enters a contract when is it voidable?

A

if the intoxicated person can prove they did not understand what they were doing due to their intoxication and the other party was aware or should have been aware of their impaired state.

52
Q

can an intoxicated / person without capacity remain liable for contract of necessaries?

A

yes, they are still liable to pay a reasonable price for necessaries

53
Q

if a person doesnt have capacity - when is the contract voidable? (what needs to be proved)

A

if it can be shown that the person was unable to understand the nature of the transaction due to their mental state, and the other party was aware or should have been aware of their condition.

54
Q

how does duress to the person be proved? (significant cause)

A

actual or threatened violence
amounts to one factor influencing the decision to enter into the contract (need not be decisive)

55
Q

how does duress to property be proved? (significant cause)

A

seizure or damage to owner’s property (or threat of this)
but for the duress, the agreement would not have been entered into

56
Q

how does economic duress be proved? (significant cause)

A

lack of practical choice
caused by illegitimate pressure
but for the duress, the agreement wouldn’t have been entered into

57
Q

what are the key things that need to be proved (generally) for duress?

A

must be pressure
creating lack of choice for V
which is illegitimate
which is a significant case inducing the C

58
Q

for duress to be established does the threat need to be the main factor influencing the decision to enter the contract?

A

no - it can be established if threat was one of the factors influencing the decision to enter the contract - it doesnt need to be the sole reason

59
Q

if a bank is aware of a non-commercial relationship between guarantor and debtor - what should they do? (undue influence)

A

they are put on inquiry and they must take reasonable steps to ensure that the weaker party understands the transaction and is independently advised to prevent situations where weaker party may be under undue influence

60
Q

if a party was to allege it has been unduly influenced what must they show?

A

relationship of trust and confidence
transaction which requires explanation

61
Q

what is the difference between representation and a term?

A

representation induces the party into making the contract whereas terms are statements of facts which are intended on being binding to the parties

62
Q

what will the court consider when deciding if a statement is a term or representation? (5 things)

A

1) importance of the statement
2) timing of the statement
3) the reduction of the contract into writing
4) special knowledge or skill of the person making the statement; and
5) assumption of responsibility by the person making the statement

63
Q

what terms are implied by the sale of goods act? (business to business)

A
  • seller has the right to sell the goods
  • goods correspond with their description
  • goods are of satisfactory quality
  • goods should be fit for purpose
  • goods suitable for any purpose made known to the seller
  • goods comply with any sample
64
Q

for supply of goods and services act when are terms implied (what 3 situations)?

A

1) transfer of property in goods
2) contracts for hire of goods
3) contracts for supply of services

65
Q

if a party does not understand or read the terms, are they bound by the terms in the contract?

A

yes - party can express an intention to be bound even if they do not understand or have read contract

66
Q

what must a party do if they want to incorporate terms that are adverse to the other party?

A

when a clause is particularly onerous it needs to be ‘printed in red ink, with a red hand pointing to it, or something equally startling’.

67
Q

if the breach is slight (sale of goods act 1979) that it is unreasonable for buyer to reject the goods = what is the remedy?

A

should be treated as a breach of warranty - as the breach is so slight that it is unreasonable for buyer to reject the goods and repudiate the contract (only entitles the buyer the claim damages)

68
Q

what is implied under supply of goods and services act 1982 for transfer of goods contracts? (there are 4)

A
  • title
  • description
  • quality or fitness
  • transfer by sample
69
Q

what is implied under supply of goods and services act 1982 for hire goods? (there are 4)

A
  • right to transfer possession
  • description
  • quality or fitness
  • transfer by sample
70
Q

what is implied under supply of goods and services act 1982 for contracts for the supply of services?

A
  • supplier carries out service with reasonable care and skill
  • carry out service within a reasonable time
  • party contracting with supplier will pay a reasonable charge
71
Q

what type of contracts does the consumer rights act 2015 imply terms in?

A

consumer contracts for goods, digital content and services

72
Q

what are the 3 remedies available for non-conforming goods (contract for goods) (consumer rights act)?

A

1) short term right to reject
2) right to repair or replace
3) right to price reduction or the final right to reject

73
Q

what are the 2 remedies available for contracts for digital goods? (consumer rights act)

A

right to repair or replace
right to price reduction

74
Q

what are the 2 remedies available for contracts for services (consumer rights act)?

A
  • right to require repeat performance; and
  • right to a price reduction
75
Q

what is the difference between a condition and a warranty?

A

condition: is an important term that does to the root of the contract
warranty: less important term not going to the root of the contract

76
Q

what is an innominate term?

A

it is a term that is on the outset neither a condition or warranty but is of an immediate nature.

(if breached: need to prove that consequence of breach substantially deprived party of the whole benefit of the contract)

FLK1 (6 decks)

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