Topic 4: Contract Law: Establishing the Contract Flashcards
Consideration, Intention to create legal relations and Certainty of terms.
What are the two types of consideration? & Explain
1) Executed consideration - One party promises to do something in return for the act of another;
Example of unilateral – Mrs Carlill’s conduct amounted to executed consideration.
2) Executory consideration - Both parties promise to do something in the future. (Remains to be done) i.e. make the contract first, then perform.
Definition of consideration
Consideration is the bargain element of a contract - the price paid for a promise.
What are the consideration rules?
- Consideration must not be past (Re McArdle 1951) unless it was done in response to a request (Lamplight v Braithwaite 1615)
- Consideration must be sufficient but need not be adequate (must be of some value)
- Performing an existing duty cannot be good consideration (unless the party promises to exceed their existing duty)
What is needed to accept a part-payment of a debt in consideration?
FRESH CONSIDERATION
The agreement to accept lower is not binding unless supported by fresh consideration.
Whats the general rule for part-payment of a debt?
An agreement to a lesser amount will not prevent the party owed money from later claiming the balance even if they agree to take the lower sum.
What is the doctrine of promissory Estoppel?
Stops a party that had made a gratuitous promise from reneging on that promise. (its an equitable defence made by courts)
Whats the main case for Promissory Estoppel?
Central London Property Trust v High Trees House Ltd 1956
What are the 4 key parts for Promissory Estoppel to be applied?
- Pre-existing contractual relationship.
- One party agrees to waive some of their rights.
- Knowing that the other party would rely on this waiver
- The other party does actually rely on the waiver.
What is privity of contract?
Anyone who is not party to a contract cannot sue or be sued on that contract.
How must a third part be identified in a contract for them to sue or be sued on that contract?
Identified by:
Name,
Member of a class
Answering a particular description
What are some of the exceptions to the privity of a contract?
Agency - third party aware they are an agent and conductingon behalf of someone else.
Collateral contracts - contract established between two may create a contract with a third party
Trusts
Insurance contracts
Restrictive covenants
What does ‘legal relations’ mean in intention to create legal relations?
The parties view the agreement as a legally enforceable contract and a breach of the contract could result in a remedy being sought.
Social and domestic arrangements are generally presumed as not intended to be legally binding, unless this is specifically established in the agreement.
Business and commercial arrangement, the presumption is that the parties do intend to create legal relations
What is the name of a contract that returns parties to their original position?
Void contract
