Nature of Contract Flashcards
What is a contract?
Contracts are agreements that are legally enforceable
What are the 5 positive criteria for the formation of a valid contract?
- Offer
- Acceptance
- Consideration
- Intention
- Capacity
What is a unilateral contract?
A contract where one party pays another to perform an action
Eg, a reward for a lost pet or advertisements that offer to pay the public
The offeror makes an offer that is so detailed that the offeree (the public) knows exactly what to do, and what the end result will be. This all comes from the advert or statement.
Only the offeror has taken on a promise. The offer is conditional and is implemented so long as the offeree fulfils all of its conditions
E.g, Insurance companies
What is a bilateral contract?
A contract that is formed of two promises
E.g, Transactions where one party promises to sell and the other party promises to buy.
Most common type of situation
Typically adverts. They may show things such as cars, but no further information such as damage. This is why both parties must communicate before an offer is made.
Both parties have agreed to do something for one another
What is a collateral contract?
A secondary contract to the main contract which may override or add to the terms in the main contract
Why might a collateral contract be implemented?
- Some terms were left out when the main contract was agreed
- There were mistakes made in the original contract
- There are other parties involved
