The concept of Contract Flashcards
Define a Contract
A contract is legally binding agreement giving rise to obligations which can be enforced or recognised by law. A contract can be either oral or written.
Explain the legal requirements for the formation of an enforceable contract
- Offer and Acceptance – One of them has to make an offer which the other has accepted.
- Consideration - the parties must have each contributed something of value for e.g., money.
- Intention - The parties must intend to create a legal relationship/ legally binding agreement.
Explain who can enforce a contract.
Generally, only a party to a contract can enforce that contract however C(RTP)A 1999 may be considered as this allows for a third party to benefit or sue upon a contract that purports to confer a benefit of them.
Explain Contracts (Rights of Third Parties) Act 1999
The rule of privity generally states only parties to a contract can sue however Contracts (Rights of Third Parties) Act 1999 may be considered as this allows for a third party to benefit or sue upon a contract that purports to confer a benefit of them.
What does the phrase “privity of contract” mean?
The rule of privity of contract states that, generally, only parties to a contract are bound by it.
List examples of everyday contracts?
- Mobile phone – contract between xx and the phone supplier
- Car – contract between xx and the garage.
- Bus – contract between xx and the Bus company when purchasing the bus ticket.
- College Course – Contract between xx and the College, the College to provide tuition.
- Employment contract – Contract between xx and xx Employer. The Employer has an obligation to pay her wages whilst xx has an obligation to observe and perform the conditions set out in the contract.
- EuroMillions ticket: Contract between xx and EuroMillions. An Agreement for EuroMillions to pay out should someone win on the ticket.
- Credit Card – Contract between xx and the Credit Card Company. Credit
Explain how a phone contract is legally binding?
Phone contract:
1) Offer and Acceptance – EE advertised an offer on their website. I accepted this offer when I signed my phone contract and began using their service.
2) Consideration - me paying a bill every month, EE have provided me with a phone service (calls, text, data allowance).
3) Privity – This contract is only binding between EE and me.
4) Intention to create legal relationship.
What is the leading case for third party contract? [1861]
Tweddle v Atkinson [1861]
The primary issue for the court was whether or not the son could, as a third party to the agreement, enforce the contract between the fathers,
. It was held that the groom was not a part of the agreement between the fathers and he did not provide any consideration for the promise made by the father of the bride. Also, as a stranger to the contract, the son could not enforce it. On this basis, the court found in favour for the executor of the will
Explain the ratio in Dunlop v Selfridge [1915]
Selfridge argued that Dunlop could not enforce the contract as Dunlop was not part of the agreement between the dealer and Selfridges.
The court found that firstly, only a party to a contract can claim upon it. Secondly, Dunlop had not given any consideration to Selfridge and therefore there could be no binding contract between the parties.
Contracts (Rights of Third Parties) Act 1999
Explain section 1(1)(a) and (b)
(1) Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract if—
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
Contracts (Rights of Third Parties) Act 1999
2)Subsection (1)(b) provides..
2)Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party
