LAW OF CONTRACT

Question 1

Types of Contracts

Answer 1

Bilateral, Unilateral, Inchoate (incomplete contract), E-Contracts and Quasi-Contract

Question 2

Quasi-Contract

Answer 2

A quasi-contract is not an actual
contract, but is a legal substitute for a contract formed to impose equity between two
parties.

Question 3

E-Contract

Answer 3

These are any kind of contract formed in the
course of e-commerce by the interaction of two or more individuals using electronic
means or agents

Question 4

Inchoate (incomplete contract)

Answer 4

Where the agreement remains incomplete in
relation to certain terms.

Question 5

Unilateral

Answer 5

This is where the offer specifies
performance as the only permitted method of acceptance

Question 6

Bilateral

Answer 6

This is where the offer is open
as to a method of acceptance

Question 7

Offer

Answer 7

An offer is a willingness to enter into a contract on specified terms, provided that these terms
are, in turn, accepted by the party or parties to whom the offer is addressed

Question 8

What are not offers

Answer 8

A Mere Statement of Intention, A Mere Supply of Information and An Invitation to Treat

Question 9

What are invitations to treat?

Answer 9

Ads in a newspaper (or on a billboard, on the
internet, light pole etc) are an invitation to treat (Partridge v Crittenden) or where goods are displayed in a showcase (Fisher V Bell) or on a self,

Question 10

Ads are normally invitations to treat except when:

Answer 10

Unless they contain words of limitation such as “first come, first serve” as in the American case of
(Lefkowitz) or where there are words such as “we’ll accept the lowest bid offered”.

Where an advertisement can be accepted through performing some act and there is no need for any communication these ads can be offers made to the whole country or the world as in the case of (Carlill v Carbolic Smoke Ball Company)

Question 11

To Whom Can An Offer Be Made?

Answer 11

To a particular party or parties and cannot be accepted by anyone else:
Boulton v Jones

To the entire world through some medium as an advertisement in a newspaper:
Carlill v Carbolic Smoke Ball Company.

Question 12

Termination of the Offer

Answer 12

✓Acceptance
✓ Rejection
✓ Lapse of time: (a) after a specific period of time; or (b) after a reasonable time has
passed.
✓ Revocation – this means cancellation of the offer. To cancel an offer, these things
must be satisfied:

Question 13

The way acceptance is done?

Answer 13

✓ Word of mouth (orally)
✓ In writing
✓ Or by conduct

Question 14

Instances where the offeror waives his right and the offeree does not need to communicate acceptance to the offeror.

Answer 14

There is Silence, There is a Unilateral Contract and where the postal rule is applied

Question 15

Instances where the postal rule rule WILL NOT apply

Answer 15

1. Where the letter of acceptance has not been properly posted, as in Re London and Northern Bank (1900), where the letter of acceptance was handed to a postman only authorised to deliver mail and not to collect it. The postal rule did not apply.
2. Where the letter is not properly addressed.
3. Where the express terms of the offer exclude the postal rule, i.e. if the offer specifies that the acceptance must reach the offeror. In Holwell Securities v Hughes (1974), the postal rule was held not to apply where the offer was to be accepted by “notice in writing”. Actual communication was required.
4. It was said in Holwell Securities that the rule would not be applied where it would produce a “manifest inconvenience or absurdity”.
5. Revocation of Posted Acceptance – The case of Dunmore v Alexander appears to. permit such a revocation but it is an unclear decision. A strict application of the postal rule would not permit such withdrawal. There is no clear English law.

Question 16

Consideration

Answer 16

All contracts require something to be given in return for something else from the other party.
That “something” is called consideration and each party to a contract must supply consideration for the contract to be valid.

Question 17

Capacity

Answer 17

The legal ability to make the contract.

Question 18

Persons who don’t have the capacity to make a contract

Answer 18

Minors, Drunks and Mentally Ill Persons

Question 19

Representation

Answer 19

A representation is a statement of fact made by one party which induces the other to enter into the contract. They do not form a part of the contract agreed upon between the parties and if these statements turn out to be incorrect the innocent party may sue for misrepresentation.

Question 20

IMPLIED TERMS

Answer 20

These terms do not appear within the body of the contract, but are held by the courts to exist, just as if the parties had agreed upon them at the time of making the contract.

Question 21

Implied terms may be enforced by

Answer 21

Custom or usage, as a matter of fact and by Statute

Question 22

Terms fall under which three types?

Answer 22

Conditions – these are very important terms that go to the heart or root of the contract and where a party breaches them, the other party can terminate the contract and seek
redress from the courts

Warranties: these terms are very important, but do not go to the root of the contract and where they are breached, the contract cannot be terminated.

Intermediate or Innominate Terms – these arise where no distinct remedy has been identified if they are breached. Such terms may be either conditions or warranties, based on the wording of the contract and the intention of the parties.

Question 23

Vitiating Factors

Answer 23

Anything within a contract that which will cause a contract
to become invalid. E.g. Misrepresentation and Duress

Question 24

Misrepresentation

Answer 24

An untrue statement of fact by one party which has induced the other party to enter into the contract. A misrepresentation renders a contract voidable and may give rise to a right to damages depending on the type of misrepresentation.

Question 25

Duress

Answer 25

Where a person is pressured into signing a document or contract, they can be coerced or threatened with violence.

Question 26

What are the remedies available to an innocent party for misrepresentation?

Answer 26

Rescission and Damages. Rescission: The innocent side can simply choose to not perform their side of the contract and the opposing side cannot force them to. Damages: A misrepresentation renders a contract voidable and may give rise to a right to damages depending on the type of misrepresentation

Question 27

Identify three (3) main sources of law and give a brief explanation of each

Answer 27

The Constitution: This is the supreme law in Trinidad and Tobago. Any law contrary to the constitution is considered null and void. Case Law: These are unwritten rules. There is no code or body of legislation as it only exists by the decisions of judges to be used in similar cases. Legislation: This is where the written laws are kept for use at a late date.

Question 28

The Three Organs of the State

Answer 28

The Legislature, Executive and Judiciary

Question 29

The Procedure for making a Bill the Law

Answer 29

First Reading: The bill is introduced in the House of Representatives but there is no debate. Second Reading: There is a debate in this stage but no amendments are made The Committee stage: The bill is examined by the standing committee, and amendments are made if necessary Report Stage: The bill (as amended) is sent back to the House of Representatives Third Reading: The final approval is done in this stage and general comments are made Once the Bill is approved, it is then sent to the President/Governor General for Assent. A proclamation date could be set.

Question 30

The two key principles in the case Carlill v Carbolic Smokeball Company

Answer 30

Acceptance - The satisfying conditions for using the smoke ball constituted acceptance of the offer. Consideration – By them using and buying the smoke ball constitutes for positive consideration as they experienced an inconvenience when using the product.

Question 31

What is Frustration?

Answer 31

A contract automatically comes to an end if it is discharged by frustration.Frustration operates by way of law, in some circumstances, where some form of impossibility arises after formation of the contract.

Question 32

Situations where a contract may become frustrated

Answer 32

1. an unforeseeable event – something that the parties did not expect to happen and didn’t make provision for in the contract. Example: *Where destruction of the subject-matter of the contract has occurred: Taylor v Caldwell [1863]; *That is no fault of either party HOWEVER, it must not be a self-induced impossibility as in Maritime National Fish v Ocean Trawlers that makes performance impossible *The death of one of the parties or where personal performance is necessary *The fact that the contract is more difficult or more expensive to perform is not sufficient. Tsakiroglou & Co v Noblee and Thorl [1962];

Question 33

Three types of Mistakes

Answer 33

1. Common 2. Mutual 3. Unilateral

Question 34

Common Mistake

Answer 34

Both parties make the same mistake. Each knows the intention of the other and accepts it, but is mistaken about some underlying and fundamental fact.

Question 35

Mutual Mistake

Answer 35

The parties misunderstand each other and are at cross purposes.

Question 36

Unilateral Mistake

Answer 36

Only one of the parties is mistaken. The other knows, or must be taken to know, of his mistake.

Question 37

A statute states that a person could be arrested if found drunk in charge of a carriage on a highway In CORKEY V CARPENTER (1951) the defendant had been arrested for being drunk in charge of a bicycle on a highway. Was the arrest lawful under the act

Answer 37

This arrest was indeed lawful under the act. Based on the law and the reasoning behind such law, the defendant did “break” the law. He was in charge of an object which operated like a carriage while drunk. Held: The court applied the mischief rule holding that riding a bicycle was within the mischief of the Act as the defendant represented a danger to himself and other road users.

Question 38

Types of rules (laws):

Answer 38

1. Laws that forbid certain types of behavior under penalty; 2. Laws that compensate a person who is injured by another; and 3. Laws which specify criteria for certain human activity such as to marry, form a company or make a will.

Question 39

Common Law

Answer 39

One body of unwritten rules

Question 40

Case Law

Answer 40

The Common Law cannot be found in any code or body of legislation as it only exists in past decisions of judges (case law).

Question 41

What is a Legal System?

Answer 41

A Legal System refers to the set of laws of a country and the ways in which they are interpreted and enforced. Therefore, all the laws of Trinidad and Tobago constitute our legal system.

Question 42

Purpose of a legal system

Answer 42

The purpose of a legal system is to provide a systematic, orderly, and predictable mechanism for resolving disagreements.

Question 43

Statutory Interpretation

Answer 43

Statutory interpretation may be defined as the process whereby statute (legislation) is interpreted and applied to a given situation.

Question 44

Rules of construction

Answer 44

(a) The Mischief Rule; (b) The Literal Rule; c) The Golden Rule; and d) The Purposive Rule.

Question 45

The Mischief Rule

Answer 45

This rule attempts to look at the defect, wrong or mischief that Parliament was attempting to correct when the particular statute was enacted.

Question 46

The Literal Rule

Answer 46

The words of the statute are given their plain ordinary meaning once they are clear in Themselves.

Question 47

The Golden Rule

Answer 47

If the literal meaning leads to an absurdity then courts give effect to the common sense meaning. This rule proceeds upon the assumption that Parliament does not intend an absurd or ineffective result. Therefore, to prevent such absurdity, words would be implied into a statute if they are absolutely necessary.

Question 48

The “Modern Mischief” or “Purposive” Rule

Answer 48

The courts do recognize that sometimes the meaning of the words under construction may yet be uncertain despite the context. The modern approach is to seek to determine the PURPOSE behind the law.

Question 49

Four ways discharge of a Contract happens

Answer 49

By agreement; By performance; By frustration; and By breach.

Question 50

What are the two types of breach

Answer 50

Breach of contract may be either actual or anticipatory. Actual breach occurs where one party refuses to form his side of the bargain on the due date or performs incompletely. Anticipatory breach occurs where one party announces, in advance of the due date for performance, that he intends not to perform his side of the bargain. The innocent party may sue for damages immediately upon the breach being announced.