Part 1b - Contract Law

Question 1

Bilateral:

Answer 1

You’ve promised a certain action to another person or party in response to that person or party’s action.

Question 2

What is a contract?

Answer 2

• 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.

Question 3

Contract Formula

Answer 3

Contract = Offer + Acceptance

Question 4

3 most common issues in contract law:

Answer 4

1. If there is or isn’t a (legally binding) contract
2. An agreement must be something the law recognizes
3. When do the obligations of the parties to the contract come to an end?

Question 5

Unilateral + Case

Answer 5

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.

Question 6

There are 5 requirements in order to create a legally binding contract:

Answer 6

1. Agreement/ mutual assent —> offer and acceptance
2. Consideration —> Promise to give or do in return for a similar promise
3. Intention to create legal relations
4. Capacity to contract—> They have to be fit for duty.
5. 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).

Question 7

Requirements for an offer: (3)

Answer 7

1. An offer must be clear
2. An offer must be distinguished from an invitation to treat
3. An offer must be communicated to another party

Question 8

How can you ensure an offer is clear? + Case

Answer 8

• 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)

Question 9

What is the difference between an offer and an invitation to treat? + Case

Answer 9

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.

Question 10

Offer

Answer 10

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.

Question 11

Invitation to treat

Answer 11

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.

Question 12

In what way can an offer be communicated to another party?

Answer 12

• 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

Question 13

There are 5 ways to terminate an offer:

Answer 13

1. Termination by revocation
2. Withdrawal of offers in unilateral contracts
3. Termination by rejection and counter offer
4. Lapse of time
   a. Reasonable time- based on the circumstances of the case.
5. Death (of the offer or or offeree)

Question 14

Termination by revocation

Answer 14

This is where the offeror withdrawal’s his offer ANY moment prior to it’s acceptance.

Question 15

When would termination by revocation come into effect?

Answer 15

Once the offeree has received notice of the withdrawal.

Question 16

When does termination by revocation no longer become an option?

Answer 16

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.

Question 17

Void, voidable, unenforceable contracts:

Answer 17

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)

Question 18

Discharging a contract (4)

Answer 18

1. By agreement
2. By performance
3. By frustration (force majeur)
4. By breach of contract

Question 19

Discharging a contract by agreement

Answer 19

Both parties decide and agree that they would like to bring the contract to an end before all obligations under it have been compeleted.

Question 20

Discharging a contract by performance

Answer 20

This means that both parties have completed their obligations as agreed upon.

Question 21

Discharging a contract by force majeur + Cases (4)

Answer 21

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

Question 22

What if the contract is discharged before a project is done? (4)

Answer 22

1. 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.
2. Divisible contracts: Where a contract is created in sections, so if one section were to fail, the entire contract does not collapse.
3. Acceptance of partial performance: When the party voluntarily accepts partial performance and pays for the work that has been completed so far.
4. 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.

Question 23

CISG

Answer 23

• 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!

Question 24

Who communicates acceptance?

Answer 24

The offeree himself or his agent, not by third parties.

Question 25

What are the methods of acceptance? (2)

Answer 25

• “Any reasonable method”
• Exceptions: Postal rule

Question 26

Postal rule

Answer 26

If an accepted offer is sent through the mail, acceptance is effective upon posting, even if it is delayed or lost.
Companies have to specify to exclude the postal rule as a method of acceptance if they do not want this to happen.

Question 27

Mirror principle

Answer 27

What you see is what you get. You should fully agree with the exact terms set by the offeror.
If someone does not fully agree and proposes to alter, remove, or add a term, this terminates the initial offer and creates a new one from the offeree’s standpoint.

Question 28

Remedies of a Breach of Contract (5)

Answer 28

The remedies have the goal to put a person in the position the claimant would have been in, if the contract had been carried out:
1. Specific performance –> Court order
2. Injunction
3. Quantom meriut: Compensation for actual economic loss
4. Damages (unliquidated or liquidated)
5. Repudiation- where one party is unable to perform their obligations- generally an anticipatory breach.