Parties & Capacity & Contents Flashcards
Privity of contract
Only the actual parties to the contract are bound by it and therefore have rights and obligations under it.
Only a contracting party can sue for breach of contract or otherwise be liable for breach.
Are minors bound by contracts they have entered?
No, unless the contract is for ‘necessaries’
In this case it will bind the minors.
‘Necessaries’
Include not just the supply of necessary goods and services, but also contracts of service for a minors benefit.
If a person has mental incapacity when entering a contract, will the contract be valid?
Mental incapacity - covers people suffering from mental impairment and those who were drunk.
Contracts made with someone in either state will be valid unless at the time the contract was made the person was incapable of understanding the nature of the transaction and the other party knew that to be the case.
If a person with mental incapacity did not underhand the nature of the transaction, when entering into a contract, is the contract void or voidable?
It is a voidable contract.
Binding unless, and until, the person suffering from the mental impairment or inebriation (drunkness) terminates it.
How are terms incorporated into a contract?
(A) signature - if you sign a contract you are bound by it.
(B) reasonable notice - have to give reasonable notice at or before the time of the contract.
(C) previous consistent course of dealing - parties must have had a lot of regular dealings in the past that were all on exactly the same terms and conditions.
What is the difference for terms that are classed as ‘conditions’ and terms that are classed as ‘warranties’?
Condition - important terms, can terminate contract and claim damages.
Warranties - minor terms, only remedy is damages.
What are implied terms?
Intention of the parties.
To make sense of what has been expressly agreed.
Terms implied by custom
If it reflects what are regarded as the well-known and legally binding customs of a particular trade.
Terms implied in fact
Where the parties have not expressly agreed something, but the contract would be unworkable without the relevant term.
Something that is so obvious it goes without saying.
Terms implied in law
Law regards it as necessary.
E.g. employment contract - there is an implied duty on the employer to provide a safe environment for the employee to work in.
Terms implied by statute
Business to business contracts for the sale and supply of goods/services
Innonimate terms
Terms that are neither a condition nor a warranty - where the consequences of breach depend on its effect.
Innocent party will be entitled to terminate the contract if the breach effectively deprives them of substantially the whole intended benefit.
