existence and formation of contract

Question 1

5 requirements to create a contract

Answer 1

agreement between parties
consideration
intention to create legal relations
certainty
capacity

Question 2

offer

Answer 2

promise to be bound if the offeree agrees to the terms

Question 3

Invitation to treat?

Answer 3

an invitation to negotiate or make offers

Question 4

Offer to the general public?

Answer 4

offer accepted if acted upon by a member of the public

Question 5

Display of goods in a shop?

Answer 5

invitation to treat

Question 6

If the price is incorrectly displayed?

Answer 6

the shop is not obliged to sell at that price

Question 7

How does customer make an offer to buy?

Answer 7

presents the goods at checkout

Question 8

Advertisement?

Answer 8

invitation to treat

Question 9

Adverts of reward?

Answer 9

offers that are accepted when specific condition is met

Question 10

Auctions?

Answer 10

invitations to bid

Question 11

Acceptance of last bid?

Answer 11

acceptance of an offer

Question 12

When can an offer not be accepted?

Answer 12

Offer can’t be accepted once it has been terminated

Question 13

Termination can happen by?

Answer 13

rejection
withdrawal
lapse of time

Question 14

Acceptance?

Answer 14

final and unqualified agreement to all the terms of the offer

Question 15

Counteroffer?

Answer 15

adding or amending an offer, it is NOT an acceptance as it cancels the original offer

Question 16

Acceptance must be…

Answer 16

unconditional and communicated by the offeree

Question 17

Does silence amount to an acceptance?

Answer 17

Silence does not amount to acceptance UNLESS conduct which indicates acceptance

Question 18

How must acceptance be followed?

Answer 18

Acceptance MUST follow a specified method IF stipulated.

Question 20

Postal rule?

Answer 20

Acceptance takes place when posted unless clear that acceptance takes place when communicated

Question 21

3 documents that aren’t legally binding?

Answer 21

Agreements to agree
Letters of intent
Agreements subject to contract

Question 22

Consideration?

Answer 22

Each party must give something in return

Question 23

6 principles of consideration

Answer 23

Doesn’t need to benefit the promisor
Must not be in the past (unless at promisor’s request)
Sufficient
Economic value
Can be a promise not to sue
Exceeding the public or contractual duty

Question 24

contract can be binding without consideration in three circumstances

Answer 24

• Waiver - one party promises not to enforce their rights
• Promissory estoppel - party promises not to enforce a contractual right,
  can’t enforce it later if inequitable, promise relied on by the other party.
• Agreement by deed - contract executed as deed

Question 25

when is an agreement legally binding?

Answer 25

if parties intend

Question 26

social and domestic agreements?

Answer 26

NOT intended to be legally binding (can be rebutted).

Question 27

Commercial agreements?

Answer 27

INTENDED to be legally binding (clear words needed to rebut this)

Question 28

what is a binding contract?

Answer 28

agreement must be certain

Question 29

what is a non-binding contract?

Answer 29

agreement vague or incomplete

Question 30

To establish certainty the court will look at 7 things.

Answer 30

* Any provisions for clarification * Terms to be implied by statue * Parties previous course of dealing * Reasonableness * Industry custom * Objective test * Whether a term is sufficiently unimportant to be removed.

Question 31

capacity?

Answer 31

legal ability to make a binding contract

Question 32

How are some people's ability to make a contract limited?

Answer 32

limited by law for their own protection

Question 33

minors?

Answer 33

under 18 years normally not bounds by a contract they make.

Question 34

exceptions?

Answer 34

necessaries - goods/services minor's benefit - training and experience

Question 35

what situations are contracts of people with mental incapacity valid?

Answer 35

A person is capable of making the decision one party lacked capacity, and the other party didn't know.

Question 36

contract with a person who is intoxicated will be invalid if...

Answer 36

* At the time he was incapable of understanding the nature of the transaction and * Other party knew this to be the case

Question 37

Which contracts can registered companies make?

Answer 37

within their stated activities but are bound if the other party acted in good faith.

Question 38

which contracts can statutory corporations make?

Answer 38

make contracts for the purposes stated in the statute.

Question 39

which contracts can LLPs make?

Answer 39

unlimited capacity to contract

Question 40

Privity of contract?

Answer 40

Third-party can't enforce the provisions of the contract or rely on its protections even if intended for the third party. Third parties can't sue or be sued.

Question 41

Two situations when a third party who is not a party under the contract can sue?

Answer 41

* Contract says so * Contract purports to confer a benefit upon them UNLESS parties don’t intend it to be enforceable.

Question 42

When can an authorised agent bind a principal to a contract with a third party?

Answer 42

if they have actual authority (express or implied)

Question 43

If agent has apparent authority instead of actual authority, they can still bind the principle under 3 conditions.

Answer 43

* Principal represented that the agent had authority (by words or conduct) * Third party relied on this representation AND * Third party entered into the contract.