Law of Contract Flashcards
In relation to the law of contract illustrate your understanding of capacity to contract. (10 Marks)
CAPACITY TO CONTRACT- both the offeror and the offeree must have the legal capacity to enter into a contract. It is an important element of a legally binding contract.
EXAMPLES-A teenager has capacity to contract if purchasing an item that represents a normal purchase for someone of that age. A company has capacity to contract if following its objectives as set out in its memorandum of association.
Describe the ways in which a contract can be terminated.
20 Marks
PERFORMANCE- here both parties to a contract have received consideration. E.G. A professional footballer at the end of a 3 year contract.
BREACH- here one side has broken their agreement. A condition is a fundamental part of a contract. If this is broken the contract can be terminated. E.G. A professional footballer fails a drug test.
AGREEMENT- here both parties decided it’s in their mutual benefit to end the contract. E.G. Professional footballer granted a free transfer.
FRUSTRATION- here are some unforeseen event occurs that makes performance of the contract and possible. E.G. Professional footballer dies in the middle of a three year contract.
Describe the remedies available for a breach of contract.
20 marks
DAMAGES- The injured party can sue for damages if they have suffered a loss. E.G. Robbie Williams manager successfully sued for compensation after the judge found that he honoured all terms and conditions for his contract.
RESCIND THE CONTRACT- this involves cancelling the contract and going back to the original position. E.G. Returning a faulty good to a store and receiving a full cash refund.
SEEK SPECIFIC PERFORMANCE- This involves taking the other party to court and forcing them to go through with the contract as agreed. E.G. Buying and selling of property.
Specific performance is the term used in contract law. Explain what it is and when it would be used.
(10 marks)
SPECIFIC PERFORMANCE- this is a remedy used by an injured party when a contract is broken. This involves bringing the other party to court and forcing them to go through with the contract as agreed.
EXAMPLE- A buyer of the house bringing the vendor to court to force them to go through the sale as agreed in the written contract.
Distinguish between a condition and a warranty as it applies to the law of contract.
(15 marks)
CONDITION- A condition is a fundamental part of the contract. If you break a condition of the contract you have breached the contract for example a professional footballer who fails a drug test can have his contract terminated by his club.
WARRANTY- this is a less important term of the contract. Breaking the term of the contract will not result in the contract being breached. For example if a professional footballer Misses training he has broken a term of his contract but the club cannot terminate his contract
Distinguish between offer and acceptance as they apply to the law of contract.
(10 marks)
OFFER- this is a promise by the offeror to be bound by the terms and conditions of the contract. For example Manchester United offers Wayne Rooney a three year contract.
ACCEPTANCE-this occurs when an offeree accepts the contract offer unconditionally. Foreign sample Wayne Rooney signs the three-year contract offer for Manchester United.
Describe the elements that make up a legally binding contract (35 marks)
AGREEMENT- for a contract to be valid there must be an offer and acceptance which can be oral, written or implied by conduct. Conditional acceptance is not acceptance but represents a brand new offer.
CONSIDERATION- both parties to a contract must receive something of financial value. E.G. There is consideration when buying a car but not with the giving of a gift.
CONSENT TO CONTRACT- both parties must enter into the contract of their own free will.
E.G. You can’t pressurise someone into buying a house.
CAPACITY TO CONTRACT- both parties must have the legal capacity to enter into a contract.
E.G. If either party is insane are drunk when the contract is formed then there is no capacity to contract.
INTENTION TO CONTRACT- both parties intended for the contract to be legally binding. There is intention to contract for all business agreements. E.G. Taking out insurance but not for social agreements. E.G. Going on a date.
LEGALITY OF FORM- A contract must be drawn up in its proper form. E.G. The sale of property must be in writing.
LEGALITY OF PURPOSE- you can not enter into a contract to commit a crime. E.G. There is legality of purpose when buying a house but not drugs.
