Contract Law for International Finance Flashcards
What is a Contract?
“A contract is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes as a duty.”
American Law Institute | Restatement Second of the Law of Contracts – Section 1.
What are the Fundamental Ingredients of a Contractual Agreement?
- Offer.
- Acceptance.
- Consideration.
- Intention.
- Capacity.
- Definitveness.
What is an Offer?
A proposition to contract upon a set of terms, made with the intention to enter into a legally-binding agreement upon acceptance by the offeree.
What are the Core Characteristics of an Offer?
A valid offer is one which:
- (a) demonstrates an Intention to contract;
- (b) is Clearly communicated to the offeree; and
- (c) is Definitive in outlinie the terms of the agreement.
For how long is an offer valid?
Until it has been either accepted, rejected, or revoked, or until a reasonable amount of time has passed without response.
Routledge v Grant (1828) 130 English Reports 920; Dickinson v Dodds (1876) 2 Ch D 463.
What is Acceptance?
An indication by the offeree to be legally-bound, unconditionally, by the terms of the offer as they stand.
Harvey v Facey [1893] AC 552; Hyde v Wrench (1840) 49 English Reports 132; Gibson v Manchester City Council [1979] 1 WLR 294.
How must Acceptance be demonstrated?
By clear communication to the offeror, either by words or by action.
Felthouse v Bindley (1862) 142 English Reports 1037.
Can one accept an offer that one is unaware of?
No.
Tinn v Hoffman (1873) 29 LT 271.
What is Consideration?
It is, “either some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.” Curry v Misa (1875) LR 10 Ex 153.
Generally speaking, who is empowered to enforce a contract?
Those with consideration, i.e. the Doctrine of Privity, subject to any exceptions in the contract.
Contracts (Rights of Third Parties) Act 1999.
In the context of Contract Law, what is Intention?
The willingness to enter into a legally-binding agreement with another.
When would a Court Imply a Term into a Contract?
If it is so compelled by:
- Statute;
- Common law;
- Previous dealings;
- Business customs; or
- Parties’ intentions.
With respect to Parties’ Intentions, when specifically will a Court see fit to Imply a Term?
When either the Business Efficacy Test or the Officious Bystander are satisfied, in addition to the term being clearly expressable and in accord with all express terms.
The Moorcock (1889) 14 PD 64; Southern Foundries Ltd. v Shirlaw [1940] AC 701.
What is Frustration?
The termination of a contract due to an unforeseen event rendering it impossible to perform.
Davis Contractors Ltd. v Fareham UDC [1956] AC 696.
What is the Object of Interpretation?
The intention expressed by the words used in a contract, as viewed against the factual background.
River Wear Commissioners v Adamson (1877) 2 App Cas 743.
What is the Central Test that Interpretation is subject to?
The Test of Reasonableness.
§11(1) Unfair Contract Terms Act 1977; Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28.
Through which Lens are Interpretations constructed?
The Lens of Objectivity.
Attorney General of Belize v Belize Telecom Ltd. [2009] UKPC 10.
What do the Courts seek to Accomplish when interpreting a contract?
To give effect to the presumed intention of the parties.
Marquis of Cholmondeley v Clinton (1820) 2 Jac & W 1.
How do Courts Primarily go about discerning the parties’ Intentions?
By observing their use of language against the factual background.
Bank of Credit and Commerce International SA v Ali [2001] UKHL 8.
What may be Classified as Relevant Context?
“Anything which would have affected the way in which the language of the document would have been understood by a reasonable man.”
Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28.
Are Previous Negotiations admissible?
No, unless they are being used in an action for rectification.
Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28.
Is Post-Contractual Performance admissible?
No.
Lexington Insurance Co. v AGF Insurance Ltd. [2009] UKHL 40.
How should the Meaning of Words be observed?
Words should be given their ‘natural and ordinary meaning’.
Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28.
Does the Commercial Purpose of a contract for a part of the Factual Background?
Yes.
Gold Coast Ltd. v Caja de Ahorros del Mediterraneo [2002] EWCA Civ 1806.
