Part 1b - Contract Law Flashcards
Bilateral:
You’ve promised a certain action to another person or party in response to that person or party’s action.
What is a contract?
- An agreement between 2 or more parties which is legally binding and enforceable by law
○ Not all agreements with people are contracts
§ Often the difference between agreements and contracts are the intention to create legal relation.
Contract Formula
Contract = Offer + Acceptance
3 most common issues in contract law:
- If there is or isn’t a (legally binding) contract
- An agreement must be something the law recognizes
- When do the obligations of the parties to the contract come to an end?
Unilateral + Case
Allow only one person to make a promise or agreement. Communication of acceptance is not necessary, just performance or action.
i.e. Reward contract, insurance contracts
- Case: Carlill vs Carbolic Smoke Ball Co.
There are 5 requirements in order to create a legally binding contract:
- Agreement/ mutual assent —> offer and acceptance
- Consideration —> Promise to give or do in return for a similar promise
- Intention to create legal relations
- Capacity to contract—> They have to be fit for duty.
- Compliance with formality requirements—> Some need to be in writing
i.e. If you are to buy a house, you need to go to a notary and legally sign the document (therefore it needs to be in writing).
Requirements for an offer: (3)
- An offer must be clear
- An offer must be distinguished from an invitation to treat
- An offer must be communicated to another party
How can you ensure an offer is clear? + Case
- The terms of the offer must not be vague
○ i.e. “I will buy some apples” vs “I will buy 10kg of apples”
An offer must indicate the terms and conditions on which the offer is prepared to make a contract.
Case: Gushing v Lynn (1831)
What is the difference between an offer and an invitation to treat? + Case
Offer: Willingness to enter into a legally binding contract
Invitation to treat: Supplying info to tempt someone into making an offer.
Case: Pharmaceutical Society of Great Britain vs Boots.
Offer
Offer: Willingness to enter into a legally binding contract
- This must be clear and communicate by the offeror to the offeree.
i.e. Company directly contacts another company.
Invitation to treat
Invitation to treat: Supplying info to tempt someone into making an offer.
- Open to negotiations
- This can however be preliminary stage of making an offer but it is not an offer yet!
○ i.e. Pharmacist puts medicine on the shelf
§ Putting the medicine on the shelf is an invitation to treat.
§ The customer going to the till and saying they want to buy the product is an offer.
In what way can an offer be communicated to another party?
- May be written or spoken, even whatsapp is legal.
- Can be by conduct
○ Shopping, vending machines, etc…
○ Conduct is more the tradition of what is a reasonable action would entail
There are 5 ways to terminate an offer:
- Termination by revocation
- Withdrawal of offers in unilateral contracts
- Termination by rejection and counter offer
- Lapse of time
a. Reasonable time- based on the circumstances of the case. - Death (of the offer or or offeree)
Termination by revocation
This is where the offeror withdrawal’s his offer ANY moment prior to it’s acceptance.
When would termination by revocation come into effect?
Once the offeree has received notice of the withdrawal.
When does termination by revocation no longer become an option?
In a unilateral contract where the offeree has started performing.
i.e. If you put a poster up for a lost dog and someone finds the dog, you cannot revoke your agreed reward.
Void, voidable, unenforceable contracts:
Void: Illegal (crime, prostitution, gambling)
Voidable: Injured or blamed party involved, enforceable but can be made void.
Unenforceable: Valid but missing legal requirement (i.e. Stamps, Signatures)
Discharging a contract (4)
- By agreement
- By performance
- By frustration (force majeur)
- By breach of contract
Discharging a contract by agreement
Both parties decide and agree that they would like to bring the contract to an end before all obligations under it have been compeleted.
Discharging a contract by performance
This means that both parties have completed their obligations as agreed upon.
Discharging a contract by force majeur + Cases (4)
This is where a large event occurs where no parties in the contract are to blame, resulting the contract to be discharged.
1. Destruction of subject matter
a. Tayler v Caldwell
2. Incapacity of a party
a. Condon v Barron Knights
3. Non-occurrence of event
a. Krell v Henry
4. Subsequent illegality
a. Fibrosa v Fairbaim
What if the contract is discharged before a project is done? (4)
- Substantial performance: The court may order the party to cover the uncompleted obligations, but also may be entitled to partial compensation for what has already been done.
- Divisible contracts: Where a contract is created in sections, so if one section were to fail, the entire contract does not collapse.
- Acceptance of partial performance: When the party voluntarily accepts partial performance and pays for the work that has been completed so far.
- Prevention of complete performance: Party (1) is entitled to recover costs for partial performance when party (2) has played a role in preventing party (1) from completing their contractual obligations.
Party (1) is eligible (in this case) to sue party (2) for damages in preventing completion.
CISG
- Aims to harmonize international trade law
- It only covers the formation of a contract and the obligations of the parties to the contract.
- Internationality is a requirement. What matters is the place of business:
○ CISG laws apply when states are member states
Even if both aren’t member states, it can be applied if performance is in member state!
Who communicates acceptance?
The offeree himself or his agent, not by third parties.
