Lecture 2 - Formation of a Contract Flashcards
What is a contract?
A legally binding agreement between two or more parties which will be enforceable through the courts.
Distinguish between contract and tort.
In contract, a party can’t say “It’s not my fault I can’t do what I agreed to” and get away with it. However, with tort, it has to be proven that the other party is in some way responsible for the wrong that has occurred.
What are the six elements of a contract?
Offer Acceptance Consideration Intention Capacity Privity
What are invitations to treat?
An extension of an invitation to someone to make an offer, such as displaying goods in a shop window. (Contract is performed when the items are run through the till.)
In what ways can an offer be terminated?
Rejection Counter-Offer Lapse of Time Death Revocation
What is the postal rule, with regards to acceptance?
A letter of acceptance is effective from when it is posted.
However, a letter of offer or withdrawal is effective once received.
What are the rules on consideration?
It must not be past consideration
Performance must be legal
Performance must be possible
Must be sufficient (though not necessarily adequate)
It cannot be an existing legal or public duty
It cannot be an existing contractual duty
Consideration must move from the promisee
Part-payment is not normally sufficient consideration
What is Promissory Estoppel?
Where a promise is enforceable by law, even though there is no consideration involved.
What presumptions are made regarding intention to create legal relations?
In social and domestic settings, there is NO intention.
In commercial settings, there IS intention, unless strong words are used to the contrary.
Is a contract made by someone who is under the influence valid?
In the first instance, it is deemed to be valid, unless it can be proven that:
- The person was so affected that they were incapable of understanding the nature and consequences.
- And the other party ought to have known of their incapacity.
