The Law of Contract

Question 1

contract

Answer 1

legally binding agreement between 2 or more people that is enforceable by law. All contracts have several elements in common.

Question 2

Elements of a Contract

Answer 2

1 Agreement
2 intention
3 consideration
4 capacity
5 consent
6 legality of form
7 legality of purpose

Question 3

agreement

Answer 3

agreement occurs when an offer has been accepted. Parties must accept all the terms of the deal exactly as set out- this can be in writing, oral, or implied by conduct

Question 4

intention to contract

Answer 4

in order for a contract to take place there must be a willingness and knowledge on both sides that they are entering into a legal contract.

Question 5

offer

Answer 5

an offer is made when 1 person asks another to enter into a deal in writing, verbally, or by conduct
an offer can be withdrawn at any time before the other party accepts it

Question 6

invitation to treat

Answer 6

not legal offers
advertisements, price tags, shop displays, goods on a shelf
the item doesn’t have to be sold at a mistaken price

Question 7

acceptance

Answer 7

agreement occurs when an offer has been accepted
parties must all accept the terms of the deal as set out
eg in writing, oral, implied by conduct

Question 8

consideration

Answer 8

something of value must be exchanged between parties to be a legally valid contract. It need not reflect the full monetary value of the item

Question 9

capacity to contract

Answer 9

people entering into a legally valud contract must have the legal ability to do so

• U18
• under the influence of drugs or alcohol
• bankruptcy

Question 10

consent to contract

Answer 10

the contract must be made voluntarily
must not be entered under duress,
you must prove you were intimidated

Question 11

legality of form

Answer 11

refers to the manner in which the contract is drawn up eg oral, in writing, implied by conduct

certain contracts must be written to be legally valid

Question 12

how to terminate an offer

Answer 12

1 counter offer
2 rejection of the offer
3 a revocation (person who made offer backs out)

Question 13

legality of purpose

Answer 13

the contract must not break any laws. Legally binding contracts must be for legal transactions. Agreements to commit a crime won’t hold up in court

Question 14

4 ways to terminate a contract

Answer 14

1 performance
2 agreement
3 frustration
4 breach

Question 15

1 performance

Answer 15

both parties carry out their side

Question 16

2 agreement

Answer 16

both parties agree to end the contract

Question 17

3 frustration

Answer 17

some unforeseen event makes it impossible to carry out the contract

Question 18

4 breach

Answer 18

1 party to the contract breaks an essential condition of the contract

Question 19

3 remedies for a breach

Answer 19

1 rescind
2 financial compensation
3 specific performance

Question 20

1 rescind the contract

Answer 20

abandon the contract
all money exchanged and goods returned
innocent party no better or worse off

Question 21

2 financial compensation

Answer 21

injured party can sure for compensation

innocent party doesn’t lose out financially and may receive extra money for any inconvenience caused

Question 22

3 specific performance

Answer 22

the courts can order the original contract to be carried out
the innocent party gets exactly what he contracted for
builder ordered to complete