Principles of Contract: Formation, Parties and Terms Flashcards
In order to form an agreement what is needed?
An unequivocal offer which is accepted in its entirety by the other party
What is an invitation to treat?
Where a party is not agreeing to be bound but instead is seeking an offer from another party themselves
What are some examples of an invitation to treat?
- goods displayed in a shop
- auctions
- circulation of a price list
- advertisements
What is a unilateral contract?
Where only one party will promise to do something and the promise only becomes binding if another party performs some specified act (reward cases)
When can an offer be withdrawn?
At any time before it is accepted even if the time limit for accepting the offer has not expired
The revocation must be what to be valid?
Communicated - it does not have to be communicated by the person who made the offer but it must be made to the party whom the offer had been made
How can a unilateral offer be withdrawn?
The revocation should be communicated in the same way that it was made
When can a unilateral offer be withdrawn?
It is generally accepted that an offer cannot be revoked once the act has started, so once a party has started performing the act, even if not complete, the offer cannot be withdrawn
Can there be a time limit on offers?
Yes and if the offer is not accepted within the tie frame it will lapse
What happens if there is no time limit on an offer?
The offer should be accepted within a reasonable time depending on the circumstances on each offer
What happens if the person who made the offer dies?
The offer cannot be accepted if the other party has notice of death however if they are not aware of the death they can still accept the offer unless it is for a service provided personally by the deceased
What happens if the offer is subject to a condition?
If the condition is not fulfilled by the other party, then they ill not be able to accept the offer
What happens if someone makes a counter offer?
It will terminate the original offer but be careful it is not just a request for further information rather than a counter offer
Can silence constitute acceptance?
No, acceptance must be communicated in order for a contract to be formed
If communication of acceptance is posted when is the offer deemed accepted?
As soon as the acceptance is posted, not when it is received even if it is never received however the party who posted the letter will need evidence to prove they did
Are there any exceptions to the postal rule for acceptance?
Yes:
- the letter must have been properly posted
- it must also be acceptable to use post to accept the offer
- the rule will not operate where the terms of the offer say that the acceptance has to be received (interpreted quite broadly)
What must parties have to make an agreement legally binding?
Intention to create legal relations
What is an honour clause?
It is a clause parties can insert that indicates their agreement will have no legal consequence
When can a minor enter into a contract?
When they need to buy necessities such as food, clothing and housing and also if they need to buy necessities they can also enter a contract of employment providing it is a benefit to them
What are contracts entered into by minors considered to be?
Voidable - a minor can terminate the contract before the age of 18 or within a reasonable time after they turn 18
What is the final element required for a binding contract?
Consideration
If consideration is provided before the contract is made is this sufficient?
No, it cannot be before unless potentially employment
What is the doctrine of promissory estoppel?
Where a party cannot go back on its promise not to enforce a contractual right if the other party has relied on the promise and it would be inequitable to allow the promise to be enforced
What are the general principles of promissory estoppel?
- there must be a pre-existing contractual relationship
- there should be a clear and unambiguous promise evidence by either words or conduct
- the party who the promise was made must have relied on the promise although this does not have to be to their detriment
The doctrine can only be used as a shield not a sword - therefore only a defence and not to form the basis of an action
What is the doctrine of privity of contract?
A contract can only create rights and obligations that bind those who are parties to the contract
What is the exception to the privity rule in the Contract (Rights of Third Parties) Act 1999?
Essentially a person who is not party to a contract may have a right to enforce a term of the contract if a contract expressly provides that they may or the terms purports to confer a benefit on them
What are the key common law exceptions to the privity rule?
- agency
- collateral contracts
- assignment
- claiming damages on behalf of another
- constructive trust
What are the legal requirements for a contract?
- Offer and acceptance
- consideration
- intention to create legal relations
- certainty
- capacity
