Contracts Flashcards
Definition
An agreement made between two or more parties whereby legal rights and obligations are created which the law will enforce.
Examples of contracts
- NDA
- Buying/selling a house
- Applying for a credit card
- Netflix
- Applying for a loan
3 elements of a contract
- Intention to create legal relations
Is there an agreement between two parties? - Offer and acceptance
Did they intend their agreement to be legally binding? - Consideration
Was the agreement supported by consideration?
Offer
A proposal by one party to enter into a legally binding contract with another. Can be made orally, in writing, or by conduct.
Principles to an offer
- Made to a particular person, class of person, or to all the world
- Offer must be communicated to the person accepting the offer
- Terms must be communicated by the offeror to the offeree, and brought to his/her notice
- May specify conditions to be followed by the person accepting the offer
- An offer can be withdrawn at any time before acceptance
An offer will lapse if not accepted within a time stated.
Invitation to treat
Invitation to a party or parties to make an offer or what might appear to be an offer is a mere willingness to trade or deal. E.G. Shop owner displaying goods is inviting customers to make an offer.
What are Terms
Promises/statements that parties have agreed will form part of their contract.
Representations
Statements made by parties in the negotiating phase, does not become terms of the contract.
Why is it important to state terms in a contract?
Because damages for breach of contract will be unavailable unless the statement breach was of a written term.
Types of Terms
Conditions and Warranties
Conditions
- Most important
- Breach of a condition will allow the other party to end the contract and seek damages
Warranties
- Less important
- Not essential to a contract and are regarded as a subsidiary of the main purpose
- Basic nature of a contract is not changed by a failure to perform a warranty term.
Express terms + example
- Promises or statements that the parties have made known to each other (oral or written)
- E.g. A tiler does the job but he does it well.
Implied terms + example
- Implied a fact through the course of dealings, by necessity or by custom or trade usage.
- Implied by custom: routinely followed by the industry
- E.g. A repair man has the implied term that reasonable care and skill will be exercised in the performance
Exclusion Clauses
- Seek to exclude or limit the liability that one party owes the other
- Business people attempt to limit their responsibilities under a contract so risk is reduced.
- Must be listed as a term of the contract.
- Must be known to the public.
E.g. parking contracts, postage/transit contracts.
Grounds for voiding contracts
- Lack of legal capacity
- Lack of genuine consent
- Legality of object
Lack of legal capacity
- Parties must have the power to enter into an agreement
- Contracts which are entered into between people who aren’t equal
Examples of lack of legal capacity + brief explanation
- Minors and Contractual Capacity Minors have protection and require contractual capacity, and contracts can’t be enforced unless it is for necessaries (Basics like food, education, health care, etc) or beneficial (Mostly work contract, enables to allow minors to earn a living)
- Mistake of Law/Fact
Parties cannot claim they did not know applicable law when entering contract. Parties make a mistake of the facts in a contract, when entering.
Lack of genuine consent
Where both of either party did not fully agree with the contract.
Examples of lack of genuine consent + brief explanation
- Misrepresentation
Statement of fact which is untrue and misleads one party, can be innocent or deliberate. - Duress
Forcing someone to sign a contract through excessive pressure. - Undue influence
When someone uses their power over another person - Unconscionable Conduct
When one party has taken advantage over a special disability of the other party
Legality of object
If the object (purpose) of a contract is illegal the contract is void and has no legal effect.
Examples of legality of object + brief explanation
- Restraint of Trade
Purpose is to protect business interests/secrets. Involves terms that limit where, who, or what the employee may work. - Void and Voidable contracts
Formal contract that is illegitimate ad unenforceable because there was no true agreement at the information stage.
Recession
Act of party ending a contract
Types of discharge (There’s 5) + brief explanation
- By performance: Both parties have carried out their obligations
- By agreement: Contract ends when parties mutually agree to end it
- By operation of the law: Statute specifies that contracts will be ended without reference to wishes of the parties
- Frustration: Contracts cannot be performed because of circumstances
outside the control of the parties - Breach of Contract: Contract can be breached by breaking part of the contract or renouncing the contract
