Contract Law - Key terms

Question 1

Define an Offer

Answer 1

‘an expression of willingness to contract on certain terms made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed’ (Treitel The law of contract)

Question 1

Define Acceptance

Answer 1

Contract acceptance is the act of agreeing to form a legally binding agreement based on an offer provided by the other party. It is an essential element of a contract, and without it, a contract will not be valid or binding.

Question 2

Define Certainty

Answer 2

Certainty in contract law refers to the clarity and precision of the terms and conditions within a contractual agreement. All parties involved in a contract need to fully understand and interpret its terms. A contract should be a complete and final agreement, leaving no room for ambiguity or misunderstanding.

Question 3

Define Consideration

Answer 3

In legal terms, consideration refers to the value exchanged between parties in a contract. It is a fundamental element that differentiates a contract from a mere agreement or promise. Consideration is the inducement to a contract; it’s what each party brings to the table, making the contract worthwhile.

Question 4

Define Intent/Intention (to create legal relations)

Answer 4

Intention to create legal relations, otherwise an “intention to be legally bound”, is a doctrine used in contract law, particularly English contract law and related common law jurisdictions.

Question 5

Define Agreement

Answer 5

An agreement in contract law is the consent of two or more persons concurring, respecting the transmission of some property, right or benefit, with a view of contracting an obligation. An agreement is a promise that involves consideration, which is a gain or advantage for each party. An agreement becomes a contract when it is legally binding and enforceable in a court of law.

Question 6

Define Classical contract theory

Answer 6

The classical model of contract law stated that for a contract to come into existence some specific elements must be present; intention to create legal relations, an offer followed by a matching acceptance, the presence of consideration, privity between the parties and certainty of the terms.

Question 7

Define Freedom

Answer 7

Freedom of contract is a fundamental principle in civil law that grants individuals the right to freely enter into, shape, and terminate contracts.

Question 8

Define Objectivity

Answer 8

Defined in the following terms by Blackburn J in Smith v Hughes (1871): If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting upon the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.

Question 9

Define Silence

Answer 9

Accepting a contract without saying anything or replying is one notion connected to contract acceptance. This is referred to as quiet acceptance. According to this theory, if one party makes an offer and the other side does not reply or take any action, no response means acceptance

Question 10

Define Ethos

Answer 10

Ethos means any Contract: (a) to which Ethos or any of its Subsidiaries is a party; (b) by which Ethos or any Ethos IP Rights or any other asset of Ethos is or may become bound or under which Ethos has, or may become subject to, any obligation; or (c) under which Ethos or any of its Subsidiaries has or may acquire any right or interest.

Question 11

Define Restitution

Answer 11

Restitution is a remedy which can operate alongside or distinct from contractual or tortious claims, and which can be available in a claim which arises either as a matter of law or in equity. Restitution restores the claimant to the position it was in before the defendant had been unjustly enriched at its expense.

Question 12

Define Unjust enrichment

Answer 12

when someone is said to have been “unjustly enriched,” this means that he has benefitted at someone else’s expense, due to chance or mistake. In such situations, the law of equity dema: A promise (offer) in return for an act (acceptance). Acceptance of the offer is performing the act.

Question 13

Define Bilateral Contracts

Answer 13

A promise (offer) in return for an act (acceptance). Acceptance of the offer is performing the act. Effectively this contract places obligations upon and grants rights to both parties.

Question 14

Define Unilateral Contracts

Answer 14

In a unilateral contract, the offeree makes no promise and so is under no obligation to do anything.Essentially an exchange between two parties is immediately binding. With unilateral contracts the promiser is bound to perform, if and only if, the person (or persons) with whom the promise is made performs the specified act. (i.e. carlill v carbolic smoke)

Question 15

Define The principle of objective intention

Answer 15

Words are to be interpreted as they were reasonably understood by the person to whom they were spoken, not as they were understood by the person who spoke them.

Question 16

Define Estoppel

Answer 16

a principle, originating in the courts of equity, that is difficult to define but essentially embodies the general idea that if you say or do something and another person takes you at your word or at face value, and relies on what you have said or done, you cannot later change your mind or resile from your position—this would be unconscionable so you will be prevented or ‘estopped’ from doing so

Question 17

Define Proprietary estoppel

Answer 17

a principle, originating in the courts of equity, that is difficult to define but essentially embodies the general idea that if you say or do something and another person takes you at your word or at face value, and relies on what you have said or done, you cannot later change your mind or resile from your position—this would be unconscionable so you will be prevented or ‘estopped’ from doing so

Question 18

Define Estoppel by convention:

Answer 18

Estoppel by convention: allows the court to give a remedy in the relatively common situation where a landowner encourages a claimant to believe that he has or will be given an interest of some kind in the landowner’s land, either actively by making an assurance to that effect or passively by acquiescing in the claimant’s mistaken belief

Question 19

Define Suspensory (estoppel)

Answer 19

Suspensory (estoppel) The most common view in cases and commentary is that promissory estoppel is merely suspensory. (a promissory estoppel can be part-extinctive, part-suspensory).

Question 20

Define Instantaneous methods of communicating vs non instantaneous

Answer 20

One of the defining features of Digital Communication is its ability to enable immediate and real-time interaction. Whether it’s through instant messaging, video calls, or live chat, Digital Communication allows individuals to connect and communicate with each other instantly, transcending geographical barriers

non-instantaneous is Post etc

Question 21

Define Executed consideration

Answer 21

Relates to payment for promise in the present time (e.g. buying groceries in a shop, paying for them straight away)

Question 22

Define Executory consideration

Answer 22

Executory consideration: relates to payment for a promise in the future (Hiring equipment, payment happens in the future once equipment is delivered for use)

Question 23

Define Trivial consideration

Answer 23

Trivial consideration: When we characterize something as trivial, we emphasize its lack of significance and the fact that it doesn’t warrant much attention or consideration. Trivial matters or details are typically minor, inconsequential, and not worthy of substantial thought or concern.

Question 24

Define the Doctrine of Privity:

Answer 24

Doctrine of Privity: The doctrine of privity of contract is a common law principle that states that a contract cannot confer rights or impose obligations upon anyone who is not a party to that contract. It imposes rights and obligations to parties of a contract and restricts non-contractual parties from enforcing the contract. The doctrine means that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it.

Question 25

Define Agency

Answer 25

Agency: agency agreements are legally binding contracts that form a relationship between an agent and another business. Typically in a contract, the business retaining the agent is known as ‘the principal’ and wishes to use the agent’s knowledge or expertise to buy, sell or acquire specialist service

Question 26

Define Collateral contracts

Answer 26

Collateral contracts are independent oral or written contracts that are made between two parties to a separate agreement or between one of the original parties and a third party.
They are usually made before or simultaneously with the original contract. A collateral contract is usually a single term contract, made in consideration of the party for whose benefit the contract operates agreeing to enter into the principal or main contract, which sets out additional terms relating to the same subject matter as the main contract.

Question 27

Define what is meant by an Incorporation of express terms

Answer 27

Incorporation of express terms: A term may be incorporated into the contract either expressly or impliedly. Express terms are those which have been explicitly communicated between the parties orally or in writing. The intention of the parties is clear and there is little discussion to be had of these.

Question 28

Define the ‘Non est factum’ principle:

Answer 28

Non est factum is a Latin phrase that means “it is not my deed”. It is a principle that developed to mitigate the harshness of the common law principle that a party is bound by his signature to the content of a document, whether he understood it or not1. A successful plea of non est factum makes the contract void ab initio2. It is a defense allowing a party to avoid terms in a contract that the said party has signed because the said signature was by mistake.

Question 29

Define what its meant by an Incorporation by notice

Answer 29

Incorporation by notice: Where a signature is not present, a Contract term may be incorporated by Notice, which must be given at, or before, the time of contracting and reasonable steps taken to bring the term to the Notice or the other Party.

Question 30

Define what us meant by the ‘factual matrix’

Answer 30

‘factual matrix’ - that the literal approach should prevail unless there are very good, precisely defined reasons for looking outside the text.

Question 31

Can someone claim if someone breaches a condition?

Answer 31

Condition: breach always gives innocent party option to terminate contract and claim damages;

Question 32

Can someone claim if someone breaches an Innominate term?

Answer 32

Innominate term:
innocent party can always claim damages and might also be able to terminate contract if the effect of breach is serious enough;

Question 33

If a warranty is breached can someone claim?

Answer 33

Warranty:
breach never gives innocent party option to terminate contract; he can only claim damages.

Question 34

Define termination

Answer 34

Termination: Terminating a contract means legally ending the contract before both parties have fulfilled their obligations under the terms of the contract.

Question 35

Define a breach

Answer 35

Breach: an act of breaking or failing to observe a law, agreement, or code of conduct:

Question 36

Define Exhaustion:

Answer 36

Exhaustion is the unforeseen termination of a contract as a result of an event that either renders its performance impossible or illegal or prevents its main purpose from being achieved.

Question 37

Define Defective performance:

Answer 37

Defective performance: Defective performance is when someone does not fully comply with what they agreed to do in a contract. This can happen if they are late or if they do not do everything they promised. It is important to do what you said you would do in a contract, otherwise you may be responsible for any problems that result from your actions.

Question 38

Define Non-performance

Answer 38

Non-performance of a contract refers to a situation where one or both parties fail to fulfil their obligations under the terms of the agreement they entered into. Under the law in England and Wales, non-performance of a contract can result in legal consequences, including breach of contract claims for damages or other remedies.

Question 39

Define Repudiation

Answer 39

Repudiation of contract is a serious breach of contract, which gives the innocent, or aggrieved, party the right to terminate the contract and potentially claim damages. Such breaches are demonstrated through the repudiating party’s conduct, which objectively shows that they are no longer able to substantially fulfil their contractual obligations

Question 40

Define an Anticipatory breach

Answer 40

An anticipatory breach, or repudiation, preempts a failure of a party to meet its contractual obligations to another party. Parties claiming an anticipatory breach are obliged to make every effort to mitigate their own damages if they wish to seek compensation in court.

Question 41

Define Compensation

Answer 41

Compensation: something, typically money, awarded to someone in recognition of loss, suffering, or injury:

Question 42

Define a Quantification of loss

Answer 42

Quantification of loss is the process of determining the amount of compensation that should be paid to the claimant to put it in the same position that it would have been but for the wrongful act1. This process involves the presentation of both oral and written evidence, and may also involve the leading of expert evidence, depending on the complexity of the matter2. The quantification of financial loss usually underpins any compensatory claim for damages3.

Question 43

Define Damages

Answer 43

Damages: In contract law, damages refer to a sum of money paid to the innocent party in compensation for a breach of contract1. Typically, damage awards are in the form of monetary compensation to the harmed party2. Damages are imposed if the court finds that a party breached a duty under contract or violated some right.

Question 44

Definen Wasted expenditure

Answer 44

Wasted expenditure: It is one of the losses that may be recovered for breach of contract. It refers to the expenses incurred by the claimant in reliance of the contract being performed. The aim of damages for reliance loss is to put the claimant in the position they would have been in had the contract never been made.

Question 45

Define Consequential loss

Answer 45

Consequential loss: Non-dominant losses from a breach of contract
Consequential loss, also known as indirect loss, refers to non-dominant losses from a breach of contract1. These losses are not the direct result of the breach but subsequent losses incurred2. They are consequences that may not have been contemplated by the parties at contract formation

Question 46

Define The burden of proof:

Answer 46

The phrase burden of proof refers to the obligation of a party who initiates a legal action (the “ plaintiff ”) to prove his or her claims. If that party cannot prove sufficiently that the other party has committed a wrong, whether civil or criminal, he loses

Question 47

Define Causation

Answer 47

Causation is a legal concept that refers to the relationship of cause and effect between one event or action and the result1. It is an overarching area of law that restricts the amount of compensation in damages which may be recovered which arises from a legal wrong.

Causation ensures that a defendant guilty of a legal wrong only pays for the loss for which they are legally responsible. The concept of causation is central to many insurance claims, most especially as it regulates the necessary link between an insured peril and the insured harm.

Question 48

Define Contributory negligence

Answer 48

Contributory negligence refers to a plaintiff’s neglect of their own safety. It could reduce the plaintiff’s compensation if their negligence increased the chance of an incident occurring. Courts decide how much damage was caused by the policyholder’s actions, and payment of the policy could be denied.

Question 49

Define normal vs abnormal losses

Answer 49

Normal losses (those arising in the usual course of things); and

Abnormal losses (those arising out of special circumstances).

Question 50

Define Non-pecuniary loss

Answer 50

: Non-pecuniary damages are compensatory damages that cannot be quantified in monetary terms. They are sometimes called general, intangible or non-economic damages. This can be things such as pain and suffering, or loss of quality of life, or other things that cause the plaintiff pain but aren’t measurable in monetary terms.

Question 51

Define a penalty

Answer 51

A penalty: A penalty has traditionally been defined as a clause designed as a threat to compel performance by penalizing the other for non-performance and as not amounting to genuine compensation because it was unrelated to the amount of the likely loss

i.e. not being a genuine pre-estimate of the likely loss or being ‘an exorbitant alternative to common law damages’. It followed that a liquidated damages clause was generally defined as a clause which represented a genuine attempt to pre-estimate the loss so that it was in line with the compensatory principle.

Question 52

Define what an offeror and offeree are

Answer 52

Offeror - person making the offer

Offeree - person to whom the offers being made to

Question 53

Define Agency

Answer 53

Agency is a legal relationship between an agent who is a person having the authority or capacity to create legal relations between a principal and third parties.

The agent is a person who has the authority to act on behalf of the principal and consents to do so. The relationship called ‘agency’ or ‘principal-agent relationship’ depends on the nature of the agreement and the circumstances.

If the substance of the agreement intends that the alleged agent act on his own behalf and not on the behalf of the principal then notwithstanding explicit language in the agreement describing the person as agent, the relation of agency will not have arisen. Conversely, an agency relationship may arise superseding a clause in an agreement that it shall not.

Question 54

Define Actual authority (agency)

Answer 54

Actual authority is the most straightforward form of authority. According to a classic definition from Diplock LJ, it is a “legal relationship between principal and agent created by a consensual agreement to which they alone are parties.” Actual authority comes in two forms: express and implied. Crucially, both express and implied actual authority are binding.

Question 55

Define Implied authority (agency)

Answer 55

Implied authority, is more nuanced, and is more likely to involve the concepts of “usages of the trade” or “the course of business.” Holding the job title of chief executive, for example, will naturally imply an authority to carry out certain transactions, unless explicitly stated otherwise.

Question 56

Define Apparent or ostensible authority (agency)

Answer 56

Apparent or ostensible authority: If principal’s acts or words lead another to believe that he has appointed the agent to act on his behalf. Principal will generally be estopped from denying agent’s authority though in fact no agency really existed. The agent is said to have apparent or ostensible authority