LAW OF CONTRACT Flashcards
Types of Contracts
Bilateral, Unilateral, Inchoate (incomplete contract), E-Contracts and Quasi-Contract
Quasi-Contract
A quasi-contract is not an actual
contract, but is a legal substitute for a contract formed to impose equity between two
parties.
E-Contract
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
Inchoate (incomplete contract)
Where the agreement remains incomplete in
relation to certain terms.
Unilateral
This is where the offer specifies
performance as the only permitted method of acceptance
Bilateral
This is where the offer is open
as to a method of acceptance
Offer
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
What are not offers
A Mere Statement of Intention, A Mere Supply of Information and An Invitation to Treat
What are invitations to treat?
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,
Ads are normally invitations to treat except when:
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)
To Whom Can An Offer Be Made?
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.
Termination of the Offer
✓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:
The way acceptance is done?
✓ Word of mouth (orally)
✓ In writing
✓ Or by conduct
Instances where the offeror waives his right and the offeree does not need to communicate acceptance to the offeror.
There is Silence, There is a Unilateral Contract and where the postal rule is applied
Instances where the postal rule rule WILL NOT apply
- 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.
- Where the letter is not properly addressed.
- 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.
- It was said in Holwell Securities that the rule would not be applied where it would produce a “manifest inconvenience or absurdity”.
- 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.
Consideration
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.
Capacity
The legal ability to make the contract.
Persons who don’t have the capacity to make a contract
Minors, Drunks and Mentally Ill Persons
Representation
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.
IMPLIED TERMS
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.
Implied terms may be enforced by
Custom or usage, as a matter of fact and by Statute
Terms fall under which three types?
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.
Vitiating Factors
Anything within a contract that which will cause a contract
to become invalid. E.g. Misrepresentation and Duress
Misrepresentation
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.
Duress
Where a person is pressured into signing a document or contract, they can be coerced or threatened with violence.
What are the remedies available to an innocent party for
misrepresentation?
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
Identify three (3) main sources of law and give a brief explanation of each
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.
The Three Organs of the State
The Legislature, Executive and Judiciary
The Procedure for making a Bill the Law
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.
The two key principles in the case Carlill v Carbolic Smokeball Company
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.
What is Frustration?
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.
Situations where a contract may become frustrated
- 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];
Three types of Mistakes
- Common
- Mutual
- Unilateral
Common Mistake
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.
Mutual Mistake
The parties misunderstand each other and are at cross purposes.
Unilateral Mistake
Only one of the parties is mistaken. The other knows, or must be taken to know, of his mistake.
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
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.
Types of rules (laws):
- Laws that forbid certain types of behavior under penalty;
- Laws that compensate a person who is injured by another; and
- Laws which specify criteria for certain human activity such as to marry, form a company or make a will.
Common Law
One body of unwritten rules
Case Law
The Common Law cannot be found in any code or body of legislation as it only exists in past decisions of judges (case law).
What is a Legal System?
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.
Purpose of a legal system
The purpose of a legal system is to provide a systematic, orderly, and predictable mechanism for resolving disagreements.
Statutory Interpretation
Statutory interpretation may be defined as the process whereby statute (legislation) is
interpreted and applied to a given situation.
Rules of construction
(a) The Mischief Rule;
(b) The Literal Rule;
c) The Golden Rule; and
d) The Purposive Rule.
The Mischief Rule
This rule attempts to look at the defect, wrong or mischief that Parliament was attempting to
correct when the particular statute was enacted.
The Literal Rule
The words of the statute are given their plain ordinary meaning once they are clear in
Themselves.
The Golden Rule
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.
The “Modern Mischief” or “Purposive” Rule
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.
Four ways discharge of a Contract happens
By agreement;
By performance;
By frustration; and
By breach.
What are the two types of breach
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.
