Law1 Part2 - Contract Law Flashcards
What is a contract?
A contract may be defined as an agreement or set of
promises between 2 or more persons that is intended to be enforceable at law
Explain the key word of “agreement” in the definition of a contract
must be a mutual assent or a mutual understanding between the parties
What are the elements of a contract? (6)⭐⭐⭐
i. Intention to create legal relations
ii. Offer and Acceptance
iii. Consideration
iv. Capacity
v. Genuine consent
vi. Legality
Explain: (i) Intention to create legal relations
• Parties must intend that their agreement be
enforceable at law
• Commercial agreements will normally give rise
to such an intention
• Social/domestic arrangements, such as
between friends and family, may not
Explain ‘offer’ of (ii) Offer and Acceptance
An expression of willingness to contract made with the intention that it will become binding on the person making it as soon as it is accepted by the person to whom it is addressed
Explain ‘Acceptance’ of (ii) Offer and Acceptance
A final and unqualified expression of assent to the terms of the offer”
Explain ‘Counter offer’ of (ii) Offer and Acceptance
destroys original offer and substitutes a new offer
Explain Invitations to treat
⭐⭐⭐
• Invitations to make an offer
• A “feeling” towards a contract – a preliminary step
• Not a promise to be bound if accepted but rather
a signal of preparedness to negotiate entering a
contract
• e.g. advertisements, catalogues, price lists and
signs, calls for tenders, goods displayed on shelves
Explain: (iii) Consideration
⭐⭐⭐
• Each party gives the other something and
each party gets something in return
– “The price of the promise”
• Must be sufficient (real and valuable)
• But it need not be adequate (up to the parties
to decide)
– e.g. money, goods, services, forbearances, and
peppercorns.
Explain: (iv) Capacity
Minors
• A minor is a person who is under the age of 18
• Contracts are unenforceable against minors, unless a
court finds the agreement to be fair and reasonable
• Some contracts are always enforceable against minors: employment agreements, life insurance contracts and contracts that have been pre‐approved
by a court
Intoxicated
• If a person is so intoxicated they do not know what they are doing an this is appreciated by the other party then the contract is voidable by the first person.
Explain: (v) Genuine consent
⭐⭐⭐
• A party is the victim of unfair treatment if you can
show their consent was given under either:
– Duress – threats of physical damage to person or
property; or
– Undue Influence – domination of the mind
• Or there is:
– Unconscionability – poverty, illiteracy, illness that has been taken advantage of; or
– Mistake/Misrepresentations that induce the contract
Explain: (vi) Legality
• Contracts may be void for reason of illegality
– Contrary to a statute
– Contract to commit a crime, tort, fraud
– Contracts that interfere with the administration of
justice
• In such cases the courts have power to effect a
fair outcome
QUESTION 1
• Kerry emailed Gust Engineering offering to buy a 4.5kW Vertical Axis Wind Turbine advertised on Gust’s website for $7300. In the email Kerry said “if I don’t hear from you by Friday 28 July at 5pm I will consider we have a deal at that price”.
• Gust made no reply to Kerry’s letter and sold the turbine to a
third party on Saturday 29th.
• Is there valid acceptance here?
i.e. a contract between Kerry and Gust.
No, silence does not amount acceptance
No expression of agreement
QUESTION
• Is there a contract? Give your reason(s).
– You along with five other friends and flatmates
were sitting in the sun, drinking a few beers and
listening to music outside your Hinau St flat two
weeks ago when your flatmate (Sarah 23 y/o) just
said out of the blue “I’m giving up my UC studies,
I’ve accepted a job at Google, I’m off to Santa
Clara in a week. I leave you all my text books. You
said great thanks!” She didn’t leave you her text
books.
Gift rather than contract
No intention to create a legally enforceable obligation
