Contracts Flashcards
What is the difference between an offer and an invitation to treat?
When an offer is accepted, the deal is legally binding whereas an invitation to treat is simply an inquiry of the price of a good or service.
How does the law decide if there was an intention to create legal relations?
There must be unconditional assent (the mirror rule) to all terms. The last shot rule applies.
Explain the concept of consideration in Anglo-American law
A party gives something of value in return for something of value. Can be unilateral or bilateral.
What is the doctrine of privity of contract? Name 2 exceptions to this doctrine.
A contract cannot infer rights or impose its obligations upon any person who is not a party of the contract.
What effect do exclusion clause have on consumer contracts?
- Agents entrusted to execute the contract
2. People who would receive benefit from the contract
What is the effect of the ‘parol evidence rule?
If the contract is in written terms, no outside evidence can be used to vary the terms of the written contract
What is the difference between a void and a voidable contract?
- Void contracts are unenforceable by law
- Voidable contracts are valid agreements, but one or both parties can void the contract at any time
What is meant by ‘common mistake’. What is the effect of a ‘common mistake’ on a contract?
Both parties are mistaken by the same thing.
What is a misrepresentation?
- A statement of fact
- Stated at time before or of contract
- Induced other party to join contract
What are three forms of misrepresentation?
- Innocent misrepresentation
- Negligent misrepresentation
- Fraudulent misrepresentation
What constitutes undue influence?
When someone is pressured to enter into a contract. For example where there is a fiduciary relationship
Explain the term rescission
The discharge of a contract by:
- Performance
- Agreement
- Breach
- Frustration
What is a contract in restrain of trade and is this a legal contract?
A legal contract that prevents the sellers or employee from engaging in a similar business within a specified geographical area and within a specified period
To be classed as a contract for the sale of goods, there must be:
- A contract
- Sale of goods
- Transfer of property
- Money consideration
What is the general rule for transfer of ownership and risk in B2B?
The moment risk pass from seller to the buyer depends on the intention of the parties, as expressed in their agreement
What is the retention of title clause?
Seller retains ownership fo the goods until they are paid for in full, but the buyer is allowed to take possession of the goods. But the risk of loss or damage to the goods did pass on to buyer
What are the 5 rules for transfer of ownership and risk for specific goods?
- Unconditional sale of good in deliverable state: ownership passes at the time contract is made
- Unconditional sale of good not in deliverable state: ownership passes when the good are made in a deliverable state, and notification has been given to buyer
- Specific goods in a deliverable stat but some action must first be take to determine price: ownership passes when action is done and buyer is notified
- When goods delivered subject to approval: ownership passes when approval given or the time for the return of goods has expired
- For unascertained goods: ownership passes when the goods are identified and have been removed for the bulk
What is the transfer of ownership rule for consumer?
The goods remain at the seller’s risk until they have been delivered to the consumer
What are the 5 implied terms?
- Seller has the right to sell
- Description
- Satisfactory quality
- Fit for purpose
- Model, sample and installation
What are the aspects of statutory product liability?
It imposes strict liability for products. The consumer does not need to show fault because of a breach of duty of care. Only need to prove the product was defective and it caused the damage
What is the privity of contract? What are three exceptions to this?
Only the parties to the contract are entitled or bound by the terms of contract. Exceptions are agency, leasing and insurance.
What are three elements for the formation of a contract?
- Offer and acceptance
- Intention to create legally binding relationship
- Presence of consideration
What is a warranty?
A breach of warranty gives the innocent party the right to claim damages. It does not give the innocent party the right to treat contract as terminated.
What are the requirements for the validity of exclusion clauses?
- Contra proferentem rule: The exclusion clause must cover the exact circumstances in question
- Main purpose rule: The clause is not intended to defeat the main purpose of contract
- Fundamental breach: Judges decide if the parties really meant to exclude liability for fundamental breach
