Module 11 Entering into Contracts Flashcards
1
Q
Contract
A
An agreement that gives rise to obligations which the law will enforce.
2
Q
There are six elements of a valid contract
A
- Offer plus acceptance
- Consideration
- Consent
- Capacity
- Formality
- No legal prohibition
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.
4
Q
Consideration
A
- Each party is required to bring something of value to the contract
- English law only, not Scots law
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
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.
7
Q
Formality
A
- The contract must conform to any requirements regarding its form.
- Example some contract must be in writing or witnessed
8
Q
No legal prohibition
A
- The agreement must not be prohibited by law
9
Q
Offer
A
Definite, capbale of being accepted and the person making the offer intends to be bound by the consequencess.
10
Q
Statment of intention
A
- Not equivalent to an offer
- Statment has too many uncertanties
11
Q
Supply of information
A
- Not equivalent to an offer
- Not capable of being accepted by the buyer
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.
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- Express revocation - The offeroer clearly states to the other party the offer is being withdrawn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
14
Q
Counter offer
A
- Will terminiate the original offer
- If not accepted the party cannot fall back on the original offer
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.
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
