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SQE 1 > Contract Law - FLK1 > Flashcards

Contract Law - FLK1 Flashcards

1
Q

What are the five requirements to make a contract?

A
  1. Offer and acceptance (agreement)
  2. Consideration
  3. An intention to create legal relations
  4. Certainty
  5. Capacity
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2
Q

What is an offer in an agreement?

A

An offer is a promise to be bound if the offeree agrees to the terms.

An offer needs to be distinguished from an invitation to treat, which is an invitation, to negotiate or make offers.

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3
Q

What does termination of an offer mean?

A

An offer cannot be accepted once it has been terminated.

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4
Q

How can termination of an offer happen?

A
  1. Rejection
  2. Withdrawal
  3. Lapse of time
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5
Q

What is acceptance in an agreeement?

A

Acceptance is the final and unqualified agreement to all the terms contained in the offer.

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6
Q

Can an offer be amended before acceptance?

A

Adding or amending an offer amounts to a counteroffer and is not acceptance. This cancels the original offer.

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7
Q

What is the postal rule for acceptance?

A

Takes effect wheen it is posted, rather than when it is communicated unless it is clear that it will only take effect through communication.

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8
Q

Are agreements to accept/agree legally binding?

A

No, letters of intents are essentially agreements to agree at a future date and are not binding.

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9
Q

What is consideration in the formation of a contract?

A

Consideration means each party must give something in return for what is gained from the other party.

Either a benefit to the promiser or a detriment to the promisee, or both.

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10
Q

What are the main principles of consideration?

A
  1. It need not benefit the promisor
  2. It must not be past - as it wouldn’t be good consideration
  3. It must be sufficient
  4. It must be of economic value
  5. It can be a promise not to sue
  6. It can exist through the performance of an existing duty
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11
Q

When can a contract be binding without consideration?

A
  1. Waiver
  2. Promissory Estoppel
  3. Agreement by deed
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12
Q

When will an agreement be legally binding?

A

When the parties intend it to be binding and intend to create legal relations.

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13
Q

What are the presumptions for intention to create legal relations?

A
  1. Social and domestic agreements are NOT intended to be legally binding (this presumption can be rebutted)
  2. Commercial agreements are intended to be legally binding (clear words needed to rebut this)
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14
Q

What is certainty?

A

In order to be a binding contract an agreement must be certain. If an agreement is vague or incomplete it will not be binding.

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15
Q

What does a court consider to establish certainty?

A
  1. Any provisions for clarification
  2. Terms to be implied by statute
  3. The parties previous course of dealing
  4. Reasonableness
  5. Industry Custom
  6. The ‘officious by-stander test’
  7. Whether a term is sufficiently unimportant to be removed
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16
Q

What is capacity?

A

The legal ability to make a binding contract.

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17
Q

What is privity of contract (contract law)?

A

A person who is not a party to a contract (third party) cannot enforce the provisions of that contract or rely on its protections even if they benefit off of those provisions.

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18
Q

What are the exceptions to privity of contract, rights to third parties?

A

Third parties can sue if:
1. The contract expressly provides that they may do so; or
2. The contract purports to confer a benefit upon them, unless the partied do not intend it to be enforceable.

An authorised agent may bind a principal to a contract with a third party where the agent has actual authority (express or implied)

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19
Q

What are express terms?

A

A term that is put into the contract by one or both of the parties and which is expressly undertaken and agreed to by the parties. Term can be written or oral.

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20
Q

What are implied terms?

A

A term the party has not agreed to or mentioned but which are implied into a contract in certain circumstances.

Terms may be implied by:
i) common law (custom or trade usage)
ii) the courts
iii) statute

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21
Q

What are the ways a written term can be incorporated into a contract?

A
  1. By signature
  2. By reasonable notice
  3. By a previous course of dealing
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22
Q

What is the parole evidence rule?

A

Written contracts are treated as whole, extrinsic evidence cannot be added to or contradict the writing.

23
Q

What are the statutory implied terms in B2B contracts?

A
  1. Description
  2. Satisfactory quality
  3. Standard of quality
  4. Fit for purpose
  5. Reasonable care and skill
  6. Reasonable time
  7. Reasonable price
24
Q

What are the statutory implied terms in B2C contracts?

A
  1. Satisfactory quality
  2. Fit for purpose
  3. Description
  4. Reasonable care and skill
  5. Reasonable time
  6. Reasonable price
25
Q

What is a consumer entitled to if their rights are breached?

A

Goods
1. Refund
2. Repair or replace
3. Price reduction

Services
1. Repeat performance
2. Price reduction

Reasonable time
1. Price reduction

26
Q

What is an exemption clause?

A

Contract term which purports to restrict or exclude one party’s liability and/or the remedies which would be available to thee non-breaching party.

27
Q

What are the statutory controls on exemption clauses in B2B contracts?

A

Two methods: declaring them void or making them subject to reasonableness:

  1. Liability for negligence
  2. Liability for non-performance of an express term
  3. Liability for breach of implied terms in sale of goods and supply of goods and services contracts
28
Q

What are the statutory controls on exemption clauses in B2C contracts?

A
  1. Trader and consumer
  2. Unfair term
  3. Liability for negligence
  4. Liability for satisfactory quality
  5. Liability for fit for purpose
  6. Liability for description
  7. Reasonable care and skill
  8. Reasonable price and reasonable time
29
Q

What are the three classifications of a contract term?

A

Conditions, warranties, and innominate terms.

30
Q

What happens if a condition is breached?

A

A part can regard the contract as repudiated, terminate the contract, and claim damages.

31
Q

What happens if a warranty is breached?

A

Claim damages only, cannot terminate.

32
Q

What happens if a innominate term is breached?

A

Parties have to wait and see what the consequences of the breach will be.

If breach deprives them of the intended benefit, contract can be terminated.

Breach is serious, then it is a condition, breach is minor, it is a warranty.

33
Q

What is a contractual variation and how is it enforced?

A

An alteration promise, thee party must show that it has provided additional consideration for that promise.

34
Q

What are the two main types of alteration promises?

A
  1. To pay more
  2. To accept less
35
Q

What is misrepresentation?

A

An untrue statement of fact by one party which has induced the other party to enter into thee contract.

36
Q

What is required for misrepresentation to be actionable?

A
  1. Statement of fact
  2. Untrue statment
  3. Inducement
37
Q

What are the three types of misrepresentation?

A
  1. Fraudulent misrepresentation
  2. Negligent misrepresentation
  3. Innocent misrepresentation
38
Q

What are the remedies for misrepresentation?

A
  1. Rescission, unless barred by:
    - Affirmation
    - Lapse of time
  2. Damages - fraudulent and negligent misrep
39
Q

What are the types of mistakes in contract law?

A
  1. Common mistake
  2. Cross-purposes mistake
40
Q

What are the general principle that apply to mistake?

A
  1. Objective principle - looking at facts objectively
  2. Mistake must precede the contract
  3. Mistake must induce the contract
  4. Mistake can be of fact or law
41
Q

What is an unfair term?

A

Term is unfair, if contrary to good faith, it causes significant imbalance in parties rights and obligation, to the detriment of the consumer.

Not binding on the consumer, but remains valid.

42
Q

What is duress?

A

Where violence, threats or pressure have been used to coerce a party to enter into a contract.

Contract may be voidable on the grounds of duress.

43
Q

What is undue influence?

A

Where one party abuses their position of trust and influence over the other to take unfair advantage of them and persuade them to make a contract.

Contract may be voidable on the grounds of undue influence.

44
Q

What are the factors to illegality?

A

A contract can be illegal:
1. At the time it is made
2. Because of the way it has been performed.

It is void and unenforceable.

45
Q

What is severance?

A

Dividing the illegal provisions of the contract, and enforcing the provision which are legal.

46
Q

Ways to terminate a contract

A
  1. Performance (completion)
  2. Breach
  3. Frustration
47
Q

What is the entire performance rule?

A

If a part fails to perform the contract in its entirety, they are not entitled to anything under the contract from the other party.

48
Q

What are the ways the entire performance rule can be mitigated?

A
  1. Substantial performance
  2. A severable contract
  3. Voluntary acceptance of partial performance
  4. Prevention of performance by other party
49
Q

What are two types of breaches?

A
  1. Repudiatory breach
  2. Anticipatory breach
50
Q

What are the remedies for breach?

A

Damages

Specific performance

Injunctions

Duty to mitigate

Indemnities

Guarantees

51
Q

What is frustration?

A

A contract is frustrated when events happen that make the performance of the contract impossible, through no fault of the parties.

52
Q

What is restitution?

A

An equitable remedy to unjust enrichment.

53
Q

What are the three main areas where restitution is claimed?

A
  1. Total failure of consideration under a contract
  2. Partial failure of consideration under a contract
  3. Compensation for work done
54
Q

What limitations are damages subject to?

A

Causation, Remoteness, Mitigation.

SQE 1 (10 decks)

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