CONTRACT LAW

Question 1

What are the basic requirements to form a legally binding contract?

Answer 1

1. consideration
2. intention to create legal relations
3. agreement (offer and acceptance)

An OFFER must be valid (clear, certain and addressed to offeree), communicated to offeree; and not rejected revoked or lapsed.

ACCEPTANCE must be a mirror image of the offer, made by the offeree in response to offer; and communicated to the offeror.

Question 2

Most contracts do not need to be in writing to be enforceable. What are the exceptions?

Answer 2

1. a guarantee
2. a contract for the sale of land
3. consumer credit transactions

*** A claim under a simple contract must be brought within 6 years.

Question 3

What makes a DEED?

Answer 3

A deed is a document that makes it clear on its face that is a deed. Additionally:
1. It must be executed in the presence of a witness, and
2. it must be delivered to be effected
3. A promise to make a gift (that is, to give something without receiving consideration) is enforceable if made by deed
4. A conveyance of land must be by deed

*** A claim under a contract by deed must be brought within 12 years.

Question 4

When is there a valid offer?

Answer 4

An expression of willingness to contract on specified terms made with the intention that it is to become legally binding as soon as it is accepted by the person to whom it is addressed.

Question 5

An offer must be…

Answer 5

1. clear and certain (no further clarification needed);
2. addressed (from offeror) to the offoree; and
3. demonstrates intention to enter into a legal relationship (this is PRESUMED in commercial relationships. NOT presumed in non-commercial and family agreements –> this can be rebutted with evidence)

Question 6

What is an INVITATION TO TREAT? (consider exceptions)

Answer 6

an invitation to treat is the preliminary stage of negotiations e.g., ADVERTISEMENTS. An ITT is NOT an offer.

Examples:
1. the display of goods in a shop window.
2. placing goods on supermarket shelves.

EXCEPTIONS:
1. an advertisement of a REWARD usually constitutes an offer.
2. An advertisement may be a UNILATERAL OFFER - it prescribes an act, the performance of which constitutes acceptance [Carlill v Carbolic Smoke Ball: use of the ball constituted acceptance of the offer; created a contract].