Law of Contract

Question 1

What is a contract? (simplified)

Answer 1

• Written or spoken agreement enforceable by law
• Doesn’t always have to be in writing but it can be problematic in event of any dispute

Question 2

What is a contract? (non-simplified)

Answer 2

• Jurist Sir William Arson;
  A legally binding agreement made by two or more parties by which the rights are acquired by one or more to the acts or forbearances on the part of the other or others.

Question 3

What are the essential elements of a contract?

Answer 3

1. Offer
2. Acceptance
3. Consideration

Question 4

Guthing v Lynn (1831)?

Answer 4

• Offer must be stated clear and not vague
• Buyer promised to pay seller extra £5 if the horse is lucky
• Court decided too vague to be enforceable

Question 5

Essentials of offers?

Answer 5

1. To form contract offeror needs to make an offer & party (offeree) needs to unconditionally accept, only then can a contract be made.
2. Can be made orally, in writing or by conduct.

Question 6

When an offer is made to an individual or group?

Answer 6

Only they can accept

Question 7

If offer is made to the public as a whole?

Answer 7

Can be accepted by anyone who meets the conditions of the offer.

Question 8

When an offer has been made it may terminate:

Answer 8

1. On death of offeror or offeree before offer is accepted.
2. Expiry of any time limit specified in offer if acceptance isn’t made.
3. Expiry of a reasonable period of time (court decides what is reasonable)
4. By revocation of offer. Offeror can revoke at any time, needs communicated by offeror to offeree.
5. By rejection of offer by the offeree.
6. If counter offer is made by offeree.

Question 9

How can an offer be accepted?

Answer 9

1. Written
2. Orally
3. By conduct
   However, if offer states a particular acceptance method, then this must be used.

Question 10

Jones v Daniel (1894)?

Answer 10

• Acceptance must be identical to the offer
• Court held that when person to whom the offer was made responded by sending out a contract with additional terms, this amounted to a counteroffer rather than acceptance.

Question 11

Consideration must? (4)

Answer 11

1. Be real & genuine & of some value
2. Not be in the past
3. Must be legal
4. Must move from the promise, i.e the person to whom the promise was made.

Question 12

Consideration is usually what?

Answer 12

1. Money
2. Can be promise of transfer or sale of land or promise of performance of a service.

Question 13

What is privity of contract?

Answer 13

Contract is private agreement between the contracting parties & general rule is that only a person who is party to the agreement can sue on it.

Question 14

How can a contract be discharged? (5)

Answer 14

1. Performance, usual way. Each party to contract completing their obligations w/in the terms of the contract.
2. Breach, one party fails to perform obligations under the contract or repudiates liability under the contract before performance of contract is due.
3. Frustration, circs may change which prevent performance of contract through no fault of either party or performance of contract depends on specific event happening.
4. Agreement or waiver, parties of contract can by mutual agreement bring contract to an end.
5. Operation of law.

Question 15

When there is a breach of contract, the remedies include (4)

Answer 15

1. Rescission - annulment of the contract.
2. Damages - award damages to compensate a party for the monetary loss suffered due to breach of contract.
3. Specific performance - requires that the party in breach of contract fulfil their contractual obligations.
4. Injunction - similar to SP, it is an order of the court preventing the defendant from breaking his contract.

Question 16

Courts will allow exclusion clauses to be incorporated but will apply them strictly according to liberal interpretation. Exclusion clauses must be;

Answer 16

1. Properly incorporated into the contract & the other party is aware.
2. Wording of clause is clear & unambiguous
3. Have no legislation that would render the exclusion invalid.

Question 17

Contra proferenetem rule?

Answer 17

• When doubt about meaning of word or phrase, word or phrase will be used against the party who put it forward.
• Will only apply when there is a genuine ambiguity over meaning of contract that cannot be resolved by applying other ordinary rules

Question 18

Currie v Misa (1875)?

Answer 18

• DEFINED CONSIDERATION AS;
  “some right, interest, profit or benefit accruing to one party or some forbearance, determent, loss or responsibility suffered or taken by another.”

Question 19

Person performing contract without payment?

Answer 19

Not a legally binding contract.

Question 20

Contract - Intention to create legal relations?

Answer 20

• Domestic, family, social agreement not intended to have legal relations.
• Commercial & Business transactions; will be enforceable & provided given that contract can be verified by oral or written evidence

Question 21

Doctrine of Performance?

Answer 21

• Performance of contractual obligations must be precise & exact.
• One party has to pay AFTER other performed obligation, if performance is not precise, payer does not need to pay any part of the price.

Question 22

Void contracts?

Answer 22

Simply not valid, eg;
1. Illegal activity
2. Fulfilment of contract is impossible.
3. Contract relates to an event already in the past

Question 23

Voidable contracts?

Answer 23

One party has option to void, but may choose not too, eg;
- Minor breach in policy is voidable at insurers discretion

Question 24

Illegal contracts?

Answer 24

• No action arises from a wrongful cause
• Contract which involves commission of a legal wrong cannot be enforced eg;
  1. Commit of a crime or civil wrong
  2.Against public morality
  3. Seek to interfere w the administration of justice.