Contracts Part 1

Question 1

What is a contract?

Answer 1

A legally binding agreement between two or more parties, which can be in writing or orally

Question 2

What can happen if one party fails to fulfil their obligations under a contract?

Answer 2

The other party may seek to have their rights enforced, as parties to a contract have rights which are protected by the contract

Question 3

What must every contract contain?

Answer 3

An intention to create legal relations, an offer, an acceptance of the offer, consideration and clarity of terms

Question 4

What must be in place for a contract to be legally enforceable or binding?

Answer 4

The parties must have the intention to create legal relations

Question 5

Why are domestic agreements usually not regarded as enforceable?

Answer 5

Because the agreement is usually not legally binding, such as between parents and children

Question 6

What are commercial or business agreements?

Answer 6

Contracts made with an intention to create legal relations, such as buying shares or property

Question 7

What is an offer?

Answer 7

An act, oral or written statement which indicates that an offer has been made and tat the offeror is willing to be bound if the offer is accepted

Question 8

When can an offer be withdrawn by the offeror?

Answer 8

Prior to acceptance, provided this is clearly communicated to the consumer

Question 9

What is an acceptance?

Answer 9

An oral or written statement indicating acceptance of an offer

Question 10

What is an invitation to treat?

Answer 10

An invitation for another person to make an offer, not an offer itself

Question 11

What are price tags on goods and services examples of?

Answer 11

Invitations to treat, not offers, and the seller of the goods is not bound to sell the goods at the price marked

Question 12

When does postal or email acceptance occur?

Answer 12

When the acceptance is posted or sent, not when it is received

Question 13

Once postal or email acceptance has occurred, can an offeror withdraw their offer?

Answer 13

No, because an acceptance has occurred

Question 14

When is an offer of a reward legally binding?

Answer 14

Only if the person who finds the item for which the reward is offered is aware of the offer

Question 15

What is a counteroffer?

Answer 15

A rejection of the original offer, which cancels out any previous offers

Question 16

What does consideration mean?

Answer 16

Each party to the contract must give something of value to the other party

Question 17

What are some of the criteria of consideration?

Answer 17

A promise to do something in the future is also valid, it does not have to be equal or fair, but does have to be more than $1

Question 18

What must every contract contain in regards to terms?

Answer 18

It must contain clear terms of what is expected from each party, and cannot be in general terms

Question 19

What is an example of a contract which is too general?

Answer 19

A contract to sell a car for $5000, which must specify which car is for sale

Question 20

What kind of terms may some contracts also include?

Answer 20

Implied terms, that must be implied so that the contract makes sense

Question 21

What is an example of a term which is implied by legislation?

Answer 21

Goods sold must be fit for the purpose for which they are intended