Formation Of Contract 2

Question 1

Intention to create legal relations

Answer 1

• there is a presumption in business agreements that a contract will be legally binding. This is not necessarily the case in a domestic agreement
• ‘gentlemen’s agreement’ are binding in honour only
• competition prizes
• ‘letter of comfort’

Question 2

Business or domestic agreement, social and domestic agreement

Answer 2

• sometimes there are cases that fall between business and domestic agreement
• social and domestic arrangements are not regarded as legally binding, but this presumption can be rebutted
• jones v padavatton

Question 3

Consideration - what it is?

Answer 3

• in contract law consideration is concerned what the bargain of the contract. A contract is based on an exchange of promises. Each party to a contract mistakenly be each a promised and promises
• ## consideration must be something of value in the eyes of law

Question 4

Therefore, consideration means that

Answer 4

• consideration is the understanding what a contract requires a bargain or giving something in exchange for something else
• educated consideration - where this has been carried out
• executory consideration - a promise to perform acts in the future
• consideration need to be adequate but must be sufficient - parties must agree that the value of things being exchanged is acceptable
• consideration must be sufficient in that it must be real and have some valye

Question 5

Past consideration is no consideration and consideration must move from the promisee

Answer 5

• consideration has no value if it has already been done at the time the agreement was made
• if there is any hint of a promise to pay for a particular task that has been implied however, there will be exceptions
• a person cannot sue or to be sued under a contract unless they have provided consideration for it. This what consideration must move from the promise means - tweddle v Atkinson

Question 6

Performing a pre existing duty cannot be the consideration for a new contract

Answer 6

• if there is a pre existing duty that you are already legally obliged to do, this cannot form the basis of a new contract
• if there is an extra element required for a new payment however, this is different and there is consideration
• a more modern example is Williams v roffery bros and Nicolls

Question 7

Contractual duties that may owed to a third party

Answer 7

• if there is a contractual obligation to a third party, this too can provide consideration for a contract

Question 8

A promise to accept party payment of an existing debt in place of the whole debt is not consideration

Answer 8

• in other words, the payment of a lesser sum on the day a debt is due cannot in satisfaction of the greater debt
• pinnels case - the creditor will be able to claim the remainder of the debt even if they have agreed with the the debtor that a part payment will clear it, unless there is early repayment

Question 9

Privity

Answer 9

• only those party to a contracts as bound by it - Beswick v beswick
• however, the rights of third parties are now covered in the contracts act 199 if the third party is either expressly named or is a member of a class or group named, if the contract says that the third party can enforce.
• however, mist consumer contracts exclude third parties nowadays anyway
• the rule of privity says that consideration must move from the promise, but this can sometimes be avoided by the courts in order to avoid injustice - Jackson v horizon holidays