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Contract Law > TB1 > Flashcards

TB1 Flashcards

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1
Q

(Agreement) What are the two possible routes to an agreement?

A

Offer + acceptance = agreement

Invitation + offer + acceptance = agreement

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2
Q

(Agreement) What are ITTs?

A

Invitations to treat
An offer to do business or to signify that the person is open to negotiation
There is no intention to be legally bound

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3
Q

(Agreement) What 3 things must contracts have?

A

Agreement between parties
Consideration
Intention to create a legally binding agreement

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4
Q

(Agreement) What are some examples of ITTs?

A

Display of goods in a shop
Most adverts
Advertising for auction
Auctioneers calling for bids

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5
Q

(Agreement) What are some of the reasons for an extinguished contract?

A 
If the offer is rejected
If a counter-offer is made 
If the offer is revoked by the offeror 
If the deadline for the offer has lapsed 
If a reasonable time period has passed 
Death of one of the parties
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6
Q

(Agreement) What are unilateral contracts and what do they look like?

A

When an offer states that one party promises to do something if the other party completes a set of conditions
Unilateral contracts are normally ‘if’ statements e.g if you do this, I will pay you £X

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7
Q

(Agreement) What are some examples of unilateral offers?

A

Rewards e.g if you find my lost pet I will pay you
Promotions e.g BOGOF promotions
Challenges e.g first person to fly the channel, Google Lunar X Prize

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8
Q

(Agreement) What are the rules for revoking a unilateral contract?

A

The offeror must give reasonable notice
Revocation is effective even if not everyone who saw the original sees the revocation
The revocation must be as notorious as the original offer
The offer cannot be revoked against someone who has already started to perform the requirements

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9
Q

(Agreement) What is the postal rule?

A

A posted acceptance is binding from the moment of posting, not the moment of receiving the acceptance

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10
Q

(Agreement) What are the circumstances where the postal rule does not apply?

A

The postal rule will not apply if it would lead to manifest inconvenience and absurdity
The postal rule does not apply to revocations of offers

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11
Q

(Acceptance) What is acceptance?

A

An unconditional promise to be bound by the terms of the offer

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12
Q

(Acceptance) What is the communication rule?

A

Acceptance is not valid if it is sent but doesn’t arrive

The place where the acceptance is received is where the contract came into existence

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13
Q

(Acceptance) The postal rule still applies if…?

A

The letter is late
The letter never arrives
The offeror doesn’t know the letter was sent

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14
Q

(Consideration) What is consideration?

A

The price for which a promise is bought - an exchange for something of value
It must have some economic value but doesn’t need to be fair or a good deal

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15
Q

(Consideration) What are the 3 rules for consideration?

A

It must be executed or executory, not past
Consideration must move from the promisee
Must be sufficient but need not be adequate

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16
Q

(Consideration) What are executory bilateral contracts?

A

The obligations are yet to be performed

Each party incurs an obligation and provides consideration for the promise of the other party

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17
Q

(Consideration) What is past consideration?

A

Someone does a task and then someone promises to pay them for it
The promise didn’t exist when the task was done so it is not good consideration

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18
Q

(Consideration) What is executed consideration?

A

When the person promises to pay, and the other party completes the task in return

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19
Q

(Intention, capacity and form) What are the presumptions for intention?

A

Social domestic arrangements are not intended to be legally binding unless proven otherwise
Commercial arrangements are normally intended to be legally binding unless proven otherwise

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20
Q

(Intention, capacity and form) What is the capacity of minors?

A

Contracts formed with minors are generally enforceable against the adult but not the minor
Can only be enforceable if it is proven that the minor is purchasing necessaries or beneficial services

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21
Q

(Intention, capacity and form) What is the capacity of corporate bodies?

A

Corporate bodies have separate legal identities
Their capacity may be limited by statutes or the company’s constitutional documents
They have no capacity to act beyond their powers

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22
Q

(Intention, capacity and form) When is form important?

A

Form is rarely significant in deciding whether a binding agreement exists

Exceptions to this include:
Land (must be written)
Financial services (must be written)
Guarantees (must be written)

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23
Q

(Terms of a contract) What are the 3 types of pre-contractual statement?

A

Mere puffs - an opinion that nobody would take seriously, no legal consequences if they are inaccurate
Representations - statements of fact made in advance of the contract to persuade the other to agree, may lead to misrepresentation if untrue
Terms - each term is an obligation, could sue for breach if a term isn’t completed

24
Q

(Terms of a contract) How do you distinguish between terms and representations?

A

Time interval - the later the statement was made, the more likely they are to be terms
Reduction into writing - if the statement is left out when writing the contract then it is more likely to be a representation
Knowledge and skills - the more skilled the maker of the statement is the more likely it is to be a term
Strength of statement - the stronger the statement, the more likely it is to be a term

25
Q

(Terms of a contract) What are express terms?

A

Terms referred to explicitly by the parties either verbally or in writing

26
Q

(Terms of a contract) What are implied terms?

A

Terms not stated explicitly but they still form a part of the contract

27
Q

(Terms of a contract) How can terms be implied?

A

By statute - inserts certain terms automatically
Customary practice
Trade usage - terms commonly found in contracts for that trade
Matter of fact - gives business efficacy, makes sense to be in there

28
Q

(Terms of a contract) What are conditions?

A

Major terms of the contract, often terminate the contract if broken
If broken, innocent party can sue for damages or repudiate the contract

29
Q

(Terms of a contract) What are warranties?

A

Minor terms of a contract
If broken, innocent party can sue for damages but cannot repudiate the contract as the main part of the contract was still intact

30
Q

(Terms of a contract) What are innominate terms?

A

A term that is not a condition or a warranty

Breach of an innominate term could be treated as either a condition or a warranty

31
Q

(Discharge of a contract) What are the 4 ways a contract can be discharged?

A

Agreement
Performance
Breach
Frustration

32
Q

(Discharge of a contract) What is agreement when discharging a contract?

A

Both parties agreeing to discontinue a contract

Both sides must give consideration

33
Q

(Discharge of a contract) What is performance when discharging a contract?

A

Both parties have completed their obligations

Contract is complete

34
Q

(Discharge of a contract) What is breach when discharging a contract?

A

When one party fails to complete their obligations

May allow the other party to discharge the contract

35
Q

(Discharge of a contract) What is frustration when discharging a contract?

A

When an unforeseen event occurs after the contract was made that causes the contract to be impossible to complete
Automatically discharges the contract

36
Q

(Discharge of a contract) What is the strict performance rule?

A

A person who performs his side of the contract is discharged from their obligations
Anything less than exact performance entitles the other side to not pay

37
Q

(Discharge of a contract) What are the 4 exceptions to the strict performance rule?

A

De minimis non curat lex
A divisible contract
Partial performance
Substantial performance

38
Q

(Discharge of a contract) What is de minimis non curat lex?

A

The law does not concern itself with trivial matters

Statutory recognition

39
Q

(Discharge of a contract) What is a divisible contract?

A

Where a contract is completed in distinct stages - a supplier is entitled to be paid for the stages he did complete even if he didn’t complete all of the stages

40
Q

(Discharge of a contract) What is partial performance?

A

When one party fails to fully complete his side of the contract
If C accepts what D has done but wants someone else to complete the contract, D is entitled to be paid for what was done
If C has no choice but to accept the partial performance, he doesn’t need to pay D

41
Q

(Discharge of a contract) What is substantial performance?

A

One party almost completes their obligations, besides small shortfalls
Can claim the full price minus the price it would cost to correct the shortfalls

42
Q

(Discharge of a contract) What are the 2 types of breach?

A

Actual breach

Anticipatory breach

43
Q

(Discharge of a contract) What is an actual breach?

A

When the due date of the obligations has passed and the obligations haven’t been completed

44
Q

(Discharge of a contract) What is an anticipatory breach?

A

When one party indicates in advance that they will not be able to perform their obligations
The innocent party can either sue immediately, affirm the contract and wait until the due date to sue, or they can try to complete the contract themselves and then sue for the full contract

45
Q

(Discharge of a contract) What is a time term?

A

Specifies the due date for obligations

Normally treated as a warranty unless stated otherwise

46
Q

(Damages) What are the 2 main categories of remedy for breach?

A 
Common law remedies (damages) 
Equitable remedies (injunctions, specific performance)
47
Q

(Damages) What are damages?

A

Compensatory reward
Do not aim to punish the defendant
Do not aim to unjustly enrich the claimant

48
Q

(Damages) What are the Hadley v Baxendale rules?

A

Loss cannot be recovered if it is too remote, unless:
It arises naturally from the breach
It was in the contemplation of both parties as being a consequence of the breach when the contract was formed

49
Q

(Damages) What is expectation interest?

A

Equates to the net value of what the innocent party would have received if the contract had been performed

50
Q

(Damages) What is reliance interest?

A

The extent to which the innocent party is worse off as a result of relying on the contract

51
Q

(Damages) What is restitution interest?

A

Focuses on the defendant’s gain rather than the claimant’s loss - the defendant has to give back some or all of the profits that he made from the breach of contract

52
Q

(Damages) What are the two types of damages?

A

Liquidated damages - agreed by parties in the contract

Unliquidated damages - assessed by the courts

53
Q

(Damages) What are liquidated damages?

A

Sums of money agreed by the parties when the contract occurs
Establishes the amount of money that would be paid if a breach were to occur
Doesn’t matter how much damages actually occurred, party will pay the amount in the contract

54
Q

(Damages) What are the 6 Dunlop guidelines for liquidated damages?

A
  1. Is it a penalty to frighten the offending party or a genuine pre estimate of likely loss?
  2. Was it judged at the time of contracting?
  3. A penalty is an extravagant amount compared to the greatest conceivable loss
  4. A penalty is if the non payment breach and liquidated damages exceeds the amount of debt
  5. A penalty is if the same sum is payable for different breaches
  6. Ignore the labels - look at the substance of the clause
55
Q

(Damages) What are unliquidated damages?

A

Damages that are assessed by the courts rather than agreed by the parties

56
Q

(Damages) What is mitigation of losses?

A

C has to take reasonable steps to mitigate its losses

If mitigating act wipes out the losses, C may recover nominal damages

57
Q

(Damages) What are the limitations for starting a claim according to the Limitation Act 1980?

A

Simple contract - action must be started within 6 years of the breach
Deeds - action must be started within 12 years of the breach

Contract Law (2 decks)

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