SU 3 requirements for the formation of a valid contract and transfer of personal rights Flashcards
What are the requirements for the formation of a valid contract?
(a) Consensus: This comes from the Latin word meaning “unanimity”, or “agreement to the same thing”.
(b) Capacity to act: This is the ability in law to perform the act of entering into (concluding) the contract.
(c) Juridical possibility: The agreement must be juridically possible – in other words, legally possible. So, for example, an agreement to rob a bank is not
juridically possible, because it is against the law.
(d) Physical executability: The rights and duties must be physically executable.
(e) Formalities. If any formalities are prescribed, they must be observed.
What is a contract?
A contract is an agreement between two or more persons. This agreement is entered
into with the intention to create legal obligations.
If the agreement does not create
a legal obligation that is enforceable, then that agreement is not a contract. This
means that not all agreements are contracts; however, all contracts are agreements.
Therefore, the main difference between contracts and other agreements is the
requirement that there must be intention to create legal obligations
Is a social appointment a contract?
No, Because this is a social appointment and there was no intention to create
legal obligations
What is consensus?
Consensus: This comes from the Latin word meaning “unanimity”, or “agreement to the same thing”.
Consensus can only reached if:
(a) every party has the serious intention to be contractually bound
(b) the parties have a common intention — in other words they mus have in mind the
same commitment, and
(c) every party makes his or her intention known to every other party by means of a
declaration of intention.
What is the intention to be contractually bound?
Every party to a contract must have the serious intention to be contractually bound.
Thus, each of the parties must have the serious intention of creating particular rights and
duties which will legally bind them. Intend to create a legal obligation.
What is common intention and what does it fall under?
Falls under consensus and The parties must also agree on the contractual obligations or commitments they wish to
create. They must therefore have a common intention to contract with each other and
must intend to create the same legal relationship.
What is making the intention known and what does it fall under?
Falls under consensus and Consensus can exist only if the parties are aware of one another’s intention. In other
words, all the parties must be aware of their true agreement. The mere existence of two
independent but corresponding intentions cannot create a contract. F
How does one make their intention known?
This falls under consensus. Eg It
can be done in writing, orally or by means of conduct.
How do we determine if consensus has been reached?
Look for offer and acceptance
How do parties make their intentions known to each other?
Through offer and acceptance
What is an offer?
An offer is a declaration made by a person (the offeror) in which he or she
- indicates an
intention to be contractually bound by the mere acceptance of the offer, and
- in which the
person sets out the rights and duties he or she wishes to create.
The offeror invites
another party or other parties (offeree/s) to consent to the creation of (an) obligation(s)
between the offeror(s) and the offeree(s).
What is acceptance?
An acceptance is a declaration by the offeree (the person to whom the offer was made)
through which it is indicated that he or she agrees to the terms of the offer exactly as put
in the offer.
What are the requirements for offer and acceptance?
5 things for offer and acceptance. Page 28/36 of study guide
When does an offer fall away?
- Expiry
- Revocation, offeror withdraws offer before it has been accepted
- Rejection, offeree rejects offer
- Counter offer, eg in selling something and trying to negotiate a lower price.
- Death by either party before offer has been accepted
what is a mistake?
Mistake exists when one or more of the parties to a proposed contract misunderstand a
material fact or legal rule relating to the proposed contract. If such a misunderstanding
exists, there is no consensus and consequently no contract will arise
