Elements of Contract Flashcards
Past consideration
past consideration is an act that has been performed before the promises are exchanged. The action was done independent of the promise given. Hence, past consideration is no consideration.
For past consideration to be enforceable, all 3 criteria of the Pao On’s case must be met.
1) Act done at promisor’s request
2) Parties understood that the act would be remunerated by payment or conferment of some other benefit
3) contract must be enforceable had it been promised in advance; it must not have any vitiating factors
Consideration question, how will you go about it?
- Definition: Consideration is smt that moves from the promisor to the promisee and consideration need not be adequate but must be sufficient.
- Type of consideration: Executed, Executory, Past
- Is consideration sufficient?:
yes) monetary items/ forbearance to sue/ perf of existing contractual duty owed to 3rd party
no) vague promises/ perf of existing contractual duty owed to promisor/ part payment of existing debt/ perf of existing public duty
Scenario: A and B has a valid contract - $1000 for a bike, and A paid $600 and said “I’ll pay u later bro” and B agreed. But sometime later, A needed to pay ahlong so he cant give B the remaining $400. B had no choice to accept.
Part payment does not discharge the entire debt unless the part payment was made at the request of the creditor and the payment was made EARLIER, at a DIFFERENT PLACE, OR IN CONJUNCTION WITH SOME OTHER VALUABLE CONSIDERATION.
Promissory Estoppel
- seen as an exception to Pinnel’s case; that even without fresh consideration, promisor cannot discharge agreement.
- can only be used as a shield, not a sword.
CENTRAL LONDON PROPERTY v HIGH TREES HOUSE LTD - ALL must be fulfilled
1. Parties must have existing legal rs
2. Clear and unequivocal promise which affects the legal rs
3. Promisee relied upon promise, leading to altered position
4. Inequitable for promissor to go back on his promise.
Once P.E is established, it suspends the promissor’s rights temporarily: Suspensive
(Rarely) - Extinguishes rights: Extenctive
How do we know if Intention to Create Legal Relations is present?
If intention is absent, the promise cannot create a binding contract at all.
The Court makes a general presumption that-
Social and Domestic agreements lack the necessary intention to form a contract.
Exceptions: if there is a written contract, or that a lawyer is consulted.
Commercial agreements are transactions at arm’s length and there is necessary intention to create legal relations
Exceptions:
1) Honour Clauses that state agreement is not to be legally binding
2) Enforcing a letter of comfort, intent or memorandum of understanding: lack necessary intentions
3) Administrative Relationships: May be unclear if a legal rs is administrative or commercial in nature
Only parties to a contract can sue and be sued
Privity of contract. Exceptions: Agency rs Letter of Credit Assignment of Choses in action Contracts (Rights of Third Parties) Act [CRTA]
Contracts (Rights to Third Parties) Act
s2(1a), s2(1b), s2(2), s2(3), s2(6)
According to s2 to CRTA, a 3rd party to a contract is able to enforce any term of the contract if:
s2(1a): The contract expressly stated so.
s2(1b): The contract confers a benefit on him
BUT s2(2): but will not apply if evidence shows that the parties did not intend the term to be enforceable by 3rd party
s2(3): The 3rd party is expressly identified in the contract by name, as a member of a class, or a particular description, although he need not have existed at the date of contract.
s2(6): Entitles the 3rd party to take advantage of any exemption or limitation clauses in the contract
𝐏𝐫𝐢𝐜𝐞 𝐯 𝐄𝐚𝐬𝐭𝐨𝐧
Privity of contract
- Debtor owed Price £13. Debtor made an agreement to do work for Easton while Easton paid off the debt to Price. Debtor did his work but Easton did not pay Price. Price sued Easton.
Held: Price did not succeed as he was not a party in the contract between Debtor and Easton.
Acceptance
1) Acceptance is a final and unconditional assent to all of the terms in the offer.
2) The offeree must be aware of the offer.
3) Acceptance must be communicated to the offeror.
Exceptions:
a) when there is a waiver of communication
b) when both parties agree for silence to be acceptance
c) when the postal acceptance rule applies
Postal Acceptance Rule
Pre-requisites to PAR:
- Reasonable to use post and not been prohibited by terms of offer
- Method of postal communication is contemplated or agreed by parties
Acceptance is deemed to be effective as soon as the letter is posted, regardless as to when it reaches the offeror or whether it reaches him at all.
To override: “Acceptance is not valid until physically received by the offeror”
Is there a valid offer?
- Is there intention for both parties to be bound?
- Was the “offer” communicated to the offeree?
- Has the offer been revoked or lapsed?
Unilateral Contract
It is when an offeror makes an offer to the world and Is open for anyone to accept it.
𝐂𝐚𝐫𝐥𝐢𝐥𝐥 𝐯 𝐂𝐚𝐫𝐛𝐨𝐥𝐢𝐜 𝐒𝐦𝐨𝐤𝐞 𝐁𝐚𝐥𝐥 𝐂𝐨.
- D stated that they will pay anyone who contracted influenza after using the smoke ball. P used it but still contracted influenza, so she sued.
Held: The ad, in this case, is an offer to the whole world.
Invitation to treat or offer?
Advertisements, display of goods & prices in shops, catalogues, menus, internet orders, auctions… are all invitations to treat and have no legal effect.
𝐏𝐡𝐚𝐫𝐦𝐚𝐜𝐞𝐮𝐭𝐢𝐜𝐚𝐥 𝐒𝐨𝐜𝐢𝐞𝐭𝐲 𝐨𝐟 𝐆𝐫𝐞𝐚𝐭 𝐁𝐫𝐢𝐭𝐚𝐢𝐧 𝐯 𝐁𝐨𝐨𝐭𝐬 𝐂𝐚𝐬𝐡 𝐂𝐡𝐞𝐦𝐢𝐬𝐭𝐬 (𝐒𝐨𝐮𝐭𝐡𝐞𝐫𝐧) 𝐋𝐭𝐝
Where the display of goods and prices constituted to an invitation to treat, and the mere fact that a customer picks up a bottle of medicine from the shelves does not amount to an acceptance to an offer to sell, but an offer by the customer to buy.
Provision of Information
𝐇𝐚𝐫𝐯𝐞𝐲 𝐯 𝐅𝐚𝐜𝐞𝐲
- D merely provided information to P regarding the price of the product.
- There was no offer made by D for P to accept as it was a provision of information.
