THE CONCEPT OF CONTRACT

Question 1

WHAT IS A CONTRACT?

Answer 1

A contract is an agreement giving rise to obligations which are enforceable or recognised by law. The parties must be in agreement and their agreement must be of a kind that the law will recognise and enforce

Question 2

WHAT ARE THE THREE LEGAL REQUIREMENTS FOR A VALID CONTRACT?

Answer 2

1. The parties must be in agreement – one of them has made an offer which the other has accepted
2. The parties must have each contributed something of value to the bargain, known as consideration
3. The parties must intend to create a legal relationship

Question 3

WHAT IS THE RULE OF PRIVITY OF CONTRACT?

Answer 3

The rule of privity of contract states that, generally, only the parties to a contract are bound by it – no one other than the parties to a contract can bring a court action to enforce a contract

Question 4

WHAT IS THE LEADING CASE IN RESPECT OF THE RULE OF PRIVITY OF CONTRACT?

Answer 4

Tweddle v Atkinson [1861]

Question 5

WHAT IS THE EXCEPTION TO THE RULE OF PRIVITY OF CONTRACT ESTABLISHED UNDER S11 MARRIED WOMEN’S PROPERTY ACT 1882?

Answer 5

A husband or wife who insures his or her life for the benefit of their spouse, civil partner or child will create a trust in favour of those.

This means that the surviving spouse, civil partner or child can sue on the policy even though he or she was not a party to the contract

Question 6

WHAT IS THE EXCEPTION TO THE RULE OF PRIVITY OF CONTRACT ESTABLISHED UNDER S11 MARRIED WOMEN’S PROPERTY ACT 1882?

Answer 6

A husband or wife who insures his or her life for the benefit of their spouse, civil partner or child will create a trust in favour of those.

This means that the surviving spouse, civil partner or child can sue on the policy even though he or she was not a party to the contract

Question 7

WHAT CASE EXTENDED THE EXCEPTION TO THE RULE OF PRIVITY OF CONTRACT ESTABLISHED UNDER S11 MARRIED WOMEN’S PROPERTY ACT 1882?

Answer 7

Jackson v Horizon Holidays Ltd [1975

Question 8

WHAT IS THE EXCEPTION TO THE RULE OF PRIVITY OF CONTRACT ESTABLISHED UNDER S1 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999?

Answer 8

Under s1 C(RTP)A 1999, a third party can enforce a term of the contract if either the contract expressly says they may (s1(1)(a)) or the term in question purports to confer a benefit on him (s1(1)(b))

Question 9

WHEN WILL A THIRD PARTY NOT BE ABLE TO ENFORCE A TERM OF THE CONTRACT UNDER S1(1)(B) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999?

Answer 9

If it appears from the contract that the parties did not intend the third party to enforce the contract (s1(2)); nor will it be enforceable provision unless the third party is expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into (s1(3))

Question 10

WHAT CAN A CONTRACTING PARTY DO UNDER S1(4) CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999?

Answer 10

The contracting parties are free to include an express term in the contract, to exclude third parties’ rights to sue