Contract Law: Formation and Content Flashcards
Contract
An agreement between two or more parties that is legally enforceable
The privity of contract rule
States that only the parties that are involved in the contract are bound or entitled by its terms. Third parties have no obligations, but also no rights (there are exceptions).
Formation of a contract, what are the elements?
- Agreement consistent of offer and acceptance
- Intention to create a legally binding relationship
- Presence of consideration
An offer becomes legally binding if it fulfills these points:
1) It is unequivocal (ondubbelzinnig)
2) It is communicated
3) Terms are certain
4) Offer must not have been terminated
Offer
Statement of willingness to contract according to the terms proposed with the intent that it will become a binding contract if accepted
Invitation to treat
Invitation to negotiate
Invitation to tender
It invited people to state how much they are going to charge to supply a good or a service. If a person responds by making a tender, it becomes an offer. If accepted, the terms that were agreed upon in the tender are then binding.
When can an offer be terminated?
When it has been REVOKED (withdrawn by offeror), LAPSED (it automatically terminates after reasonable time interval or specified time limit), or when is met with a COUNTER OFFER
Postal rule
The acceptance via post becomes effective once the letter has been posted. In civil law systems, acceptance via post becomes effective only once it is received.
Last shot rule
Conditions laid down in acceptance will govern the contract
Two types of consideration
- Bilateral / Executory (tweezijdig)
(sides exchange promises) - Unilateral / Executed (eenzijdig)
(an act that was done in return for a promise)
Characteristics of consideration
- Must be mutual
- Does not need to be adequate (value doesn’t have to be equal)
- Must be sufficient (it needs to have a recognizable economic value)
Parol Evidence Rule
If a contract is in a written form and can be treated as an entire contract, no external evidence will be considered. This can be circumvented if the party can prove that the contract was partly oral and partly written.
Representation
Refers to a statement that was made only as an inducement to enter the contract
Contract terms are classified into…
- Conditions
- Warranty
- Innominate term
Express terms
Terms that have been specifically agreed upon. However, the court does not have to accept these own classifications as warranties or conditions.
Implied terms
Terms that are implied into the contract. This can be done through customs, statute, or by court.
The English law has a two stage approach for exclusion clauses
1) Judicial rules (rules of construction)
2) Legislation
Judicial rules applied to exclusion clauses are:
- Contra proferentem rule:
Exclusion clause must cover the exact circumstances in question. the exclusion clause will be interpreted strictly and any ambiguity will be interpreted as a disadvantage for the party relying on the clause - Main purpose rule:
Presumes that the exclusion clause is not intended to defeat the main purpose of the contract - Fundamental breach:
Parties should not have meant to exclude liability for fundamental breach
Exclusion clause / Exemption clause
Excludes all liability of the party for breach of contract, misrepresentation or negligence
Limitation clause
Aims not to exempt a party from all liability, but to reduce that liability
The acceptance via post becomes effective once the letter has been posted. In civil law systems, acceptance via post becomes effective only once it is received.
Postal rule
Aims not to exempt a party from all liability, but to reduce that liability
Limitation clause
Excludes all liability of the party for breach of contract, misrepresentation or negligence
Exclusion clause / Exemption clause
