End of Chapter - Law of contract

Question 1

Types of contract?

Answer 1

Can be under seal (formal, in writing and witnessed) or simple
Can be bilateral or unilateral - always two persons but unilateral means a unilateral offer is made which may or may not be accepted, but if it is, the offeror cannot reject the acceptance but is bound by it
Contracts can be void or voidable (i.e., not fully valid in law)

Question 2

Five essentials for the formation of a valid contract?

Answer 2

1. Agreement (offer and acceptance)
2. Intention to create legal relations
3. Consideration (for simple contracts)
4. Form required by law
5. Parties have the capacity to contract

Special rules apply to minors, mental patients and drunk persons

Question 3

Contract terms

Answer 3

Terms can be express or implied
Exclusion clauses must be incorporated into the contract to be valid
- Unfair Contract Terms Act 1977 governs commercial contracts
- Consumer Rights Act 2015 governs consumer contracts
Terms can be classified into conditions and warranties - in general, condition goes to the root of the contract and a warranty only affects a minor element of the contract (this is different in insurance law!)

Question 4

Contracts can be defective due to…

Answer 4

• illegality
• improper pressure
• mistake
• misrepresentation
• non-disclosure

Question 5

Contracts can be discharged by…

Answer 5

• performance
• breach
• frustration
• agreement
• operation of law

Question 6

Remedies in the law of contract…

Answer 6

• termination
• action for damages
• action for specific performance
• action for an injunction
  Claims for breach of contract are governed by the Limitation Act 1980 - the claimant has 6 years to bring a claim on a simple contract

Question 7

Privity of contract?

Answer 7

A doctrine that restricts the rights and duties created by a contract to the persons who originally made it

Question 8

Assignment…

Answer 8

• when an original party to the contract may be able to assign their rights under the contract to another who then stands in their place
• can be statutory or equitable
• assignment of insurance contracts occurs in three ways:
  1. assignment of the subject matter of the contract
  2. assignment of the benefit of the contract - statutory or equitable assignment
  3. assignment of the contract itself - personal contracts are not freely assignable ; life policies are and marine cargo policies are