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ICAS TC BA > Module 11 Entering into Contracts > Flashcards

Module 11 Entering into Contracts Flashcards

1
Q

Contract

A

An agreement that gives rise to obligations which the law will enforce.

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2
Q

There are six elements of a valid contract

A
  • Offer plus acceptance
  • Consideration
  • Consent
  • Capacity
  • Formality
  • No legal prohibition
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3
Q

Offer plus acceptance

A
  • Agreement on all material aspects (consensus in idem)
  • When an offer has been accepted, the contract is viewed as final and no new terms can be inserted into the contract.
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4
Q

Consideration

A
  • Each party is required to bring something of value to the contract
  • English law only, not Scots law
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5
Q

Consent

A
  • The parties must intend to be legally bound
  • Should not be possible to unintentionally enter into a valid contract
  • Intention to be bound could be implied from the way a person acts
  • Full, free and voluntary
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6
Q

Capacity

A
  • The parties entering into a contract must be legally able to enter into the contract
  • In Scotland, an adult is classed to be an individual of 16 years of age or older
  • In England, an adult is an individual of 18 years of age or older.
  • Intoxication and adults with incapacity can also lack the capacity to consent.
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7
Q

Formality

A
  • The contract must conform to any requirements regarding its form.
  • Example some contract must be in writing or witnessed
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8
Q

No legal prohibition

A
  • The agreement must not be prohibited by law
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9
Q

Offer

A

Definite, capbale of being accepted and the person making the offer intends to be bound by the consequencess.

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10
Q

Statment of intention

A
  • Not equivalent to an offer
  • Statment has too many uncertanties
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11
Q

Supply of information

A
  • Not equivalent to an offer
  • Not capable of being accepted by the buyer
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12
Q

Invitation to treat

A
  • This does not constitute an offer
  • You’re in a shop and want to buy a bottle of juice, price is displayed on the shelf as £1.50, you then walk to the checkout, at that point as a customer you’re making an offer to the shop to purchase the goods. No contract is in place until the offer of purchase is accepted by the shop.
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13
Q

Revoking an offer

A
  • Express revocation - The offeroer clearly states to the other party the offer is being withdrawn
  • Implied revocation - The offer lapses without any need for communication
  • In Scotland, an offeror can revoke their offer at any time prior to acceptance
  • In England, a contract requires consideration and promises to keep an offer open are generally not valid due to a lack of consideration
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14
Q

Counter offer

A
  • Will terminiate the original offer
  • If not accepted the party cannot fall back on the original offer
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15
Q

Acceptance

A
  • The acceptance must match the offer in every respect
  • Agreement to a set of terms, normally by signing an agreement
  • Need for communication, can be express or implied
  • Passive inaction is not sufficient to acceptance.
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16
Q

Void Contract

A
  • No contract ever existed
  • Those defective on grounds of capacity
  • Illegal contracts
  • Contracts which lack the fundamental matter to constitute a contract
  • Contracts contrary to public policy
17
Q

Voidable Contract

A
  • Contract has flaws, however, these flaws are less serious
  • It is regarded as valid and binding
  • At most, one party to the voidable contract will be bound by it
  • A contract entered into following misrepresentation
  • Entering a contract under duress
  • A contract entered into with a minor
18
Q

Methods of discharge

A
  • Agreement
    • Both parties agree to end the contract
  • Performance
    • Both parties have fully performed their obligations under the contract
  • Frustration
    • If it becomes impossible or illegal to perform the contract
  • Breach
    • One of the parties to the contract fails to meet their obligations
19
Q

Breach of Contract

A
  • Material breach (breach of a condition)
    • The innocent party has access to greater remedies including the right to bring the contract to an end and to make a claim for damages.
  • Non material breach (breach of a warranty)
    • The innocent party has no right to bring the contract to an end. They will be able to claim damages or other remidies.
20
Q

Damages

A
  • Defined as a sum of money to compensate the innocent party for losses resulting from the breach of contract
21
Q

Principles that may limit liability

A
  • Causation
  • Mitigation
  • Remoteness of loss
22
Q

Other remidies for breach of contract

A
  • Rescission - The innocent party be entitled to declare the contract at an end
  • Specific implement / specific performance - force them to perform their obligations
  • Interdict / injunction- An order that requires the contract breaker not to do something
  • Retention - Party not in breach withholds performance of their own obligations such as payment
  • Lien - The party not in breach retaining or refusing to deliver the other party’s goods in their possession until it performs obligations
23
Q

Elements to misrepresentation

A
  • There must be a false statement of fact
  • A statement of opinion cannot normally amount to a misrepresentation
  • The misrepresentation must have been material in inducing the other party into the contract
  • (A false statement of law cannot amount to misrepresentation as everyone is presumed to know the law.)
24
Q

Three types of misrepresentation

A
  • Fraudulent Misrepresenation - false statement of material fact
    • Knowing it to be false
    • Beliving it to be false
    • Not caring if it is true or false
  • Negligent Misrepresentation
    • Duty of care to the other party
  • Innocent Misrepresentaiton
    • Reasonable grounds to believe that the statement was true
25
Q

Requirement for traders to provide some key information to their consumer

A
  • A description
  • The total price
  • Cost of delivery and details of who pays for the cost of returning items
  • Details of any right to cancel
  • Information about the seller
26
Q

Cancelling goods

A
  • 14 days from which the consumer recives the good
  • 14 days is the time the consumer can decicde
  • Further 14 days to return the goods
  • No valid for perishables, custom goods and sealed goods like CD’s
27
Q

Refunds to customers

A
  • Entitled to a refund within 14 days
  • The refund must include basic delivery costs
28
Q
A

ICAS TC BA (16 decks)

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