Topic 8 - Contract Law (part 1)

Question 1

What is a contract?

Answer 1

A legally enforceable agreement made in writing, verbally or implied by the conduct of the parties.

Question 2

What’s essential to a simple apparent contract?

Answer 2

Intention, Agreement and consideration.

Question 3

What are the parts that make up a simple apparent contract?

Hint: I Always Consider Chocolate Consumption Legal

Answer 3

Intention, Agreement, Consideration, Capacity, Consent, Legality

Question 4

Why is intention important?

Answer 4

The intention of parties distinguishes legally binding contracts for other types of arrangements.

Question 5

How is intention determined?

Answer 5

The conduct of the parties is looked at and asked whether they were behaving in a way that indicated that they intended the agreement to be legally enforceable.

Question 6

What two presumptions are made when using the objective test to identify intention?

Answer 6

• where the agreement is made in a social, or domestic, context, it is presumed that the agreement wasn’t intended to be legally enforceable (Balfour v Balfour 1919)
• where the agreement is made in a commercial, or business, context, it is presumed that the agreement was intended to be legally enforceable (Edwards v Skyways 1964)

Question 7

What was the legal principle of Balfour v Balfour (1919)?

Answer 7

In domestic arrangements there is a presumption that there is no intention to create legal relations. The presumption can be rebutted depending on the circumstances.

Question 8

What was the legal principle of Edwards v Skyways (1964)?

Answer 8

In commercial arrangements there is a presumption that there is an intention to create a legal contract.

Question 9

What was the legal principle of Ermogenous v Greek Orthodox Community of SA Inc. (2002)?

Answer 9

There was intention to create legal relations and relying on the presumption, applying to religious arrangement, could lead to wrong conclusions where the full circumstances weren’t properly considered.

Question 10

What was the legal principle of Trevey v Grubb (1982)?

Answer 10

There was intention to create a legal relationship (despite the presumption regarding social arrangements). Partie’s must’ve contemplated winnings to be shared in the event of winning.

Question 11

What are the four cases relating to Intention?

Answer 11

• Balfour v Balfour (1919)
• Edwards v Skyways (1964)
• Ermogenous v Greek Orthodox Community of SA Inc. (2002)
• Trevey v Grubb (1982)

Question 12

What is agreement?

Answer 12

When there had been a valid offer made and that offer has been accepted therefore bringing a contract into existence where the parties become legally obliged to proceed.

Question 13

What is an offer? Who is the offeror and offeree?

Answer 13

An offer occurs when a person has expressed a willingness to immediately enter into a contract with the person to whom the offer is directed.

Offeror is the person making the offer.

Offeree is the person receiving the offer.

Question 14

What happens when an offer is accepted?

Answer 14

An agreement is made.

Question 15

What happens when a counter offer is made?

Answer 15

The offeree has rejected the first offer and is therefore terminated (Hyde v Wrench 1840)

Question 16

What happens when an offer is not accepted or rejected?

Answer 16

The offeror can revoke the offer even in they promised to keep the offer open for a particular period. Unless consideration has been provided to keep the offer open.

Question 17

What are the legal principles of Hyde v Wrench (1840)?

Answer 17

A counter offer is effectively a rejection - once rejected, an offer cannot be revived by the subsequent acceptance.

Question 18

What is not the same as making an offer?

Answer 18

Responding to a request for information.

Question 19

Explain an invitation to treat.

Answer 19

It is not an offer and the party who responds to the invitation will be the one making the offer. (Pharmaceutical Society of Great Britain v Boots 1953)

Question 20

What are the legal principles of Pharmaceutical Society of Great Britain v Boots (1953)?

Answer 20

Advertising and placing goods on display are invitations to treat. They express a willingness to negotiate and don’t themselves constitute offers to sell.

Question 21

What are the legal principles of an automatic vending machine?

Answer 21

Automatic vending and ticket dispensing machines aren’t considered invitations to treat as the display of goods in the machine is the offer which the offeree accepts by inserting coins in the machine and pressing the button.

Question 22

What must an offeree do to indicate acceptance?

Answer 22

Indicate by words of actions that they’re willing to immediately enter into a legally enforceable contract with the offeror on the terms offered. The offeree cannot change their mind after accepting.

Question 23

Acceptance must be what?

Answer 23

• Unqualified: offeree must accept the offer without modifying it
• Communicated: acceptance must be communicated to the offeror (Felthouse v Bindley 1862)
• Accepted by the offered in reliance on the offer (R v Clarke 1927)

Question 24

What are the legal principles of Felthouse v Bindley (1862)?

Answer 24

An offeror cannot insist that a failure to respond (silence) is acceptance of an offer.

Question 25

What are the legal principles of R v Clarke (1927)?

Answer 25

Acceptance must be made in reliance on (response to) the offer.

Question 26

What are the four cases relating to Acceptance?

Answer 26

• Hyde v Wrench (1840)
• Pharmaceutical Society of Great Britain v Boots (1953)
• Felthouse v Bindley (1862)
• R v Clarke (1927)

Question 27

What is consideration?

Answer 27

An agreement isn’t a contract unless both parties to the agreement have paid, or promised to pay, a price (consideration).

Question 28

What forms can consideration come in?

Answer 28

• payment of money
• provision of goods
• provision of a service
• undertaking of an onerous obligation
• Refraining from doing something
• A promise to do any of these things

Question 29

Who is the promisee?

Answer 29

The person receiving the promise and must provide consideration for that promise.

Question 30

Where does consideration go?

Answer 30

Consideration must move from the promisee but doesn’t have to go to the promisor

Question 31

What are the legal principles of Thomas v Thomas (1842)?

Answer 31

Consideration need not be adequate - contract law doesn’t require each party to pay a fair/adequate price, only a price of some legal value.

Question 32

Consideration must be sufficient and not what?

Answer 32

• a vague promise (uncertain or of no legal value)
• past consideration (price paid for a promisee was paid before the promise was made) (Roscorla v Thomas 1842)
• a prior legal obligation (public: Collins v Godefrey 1831, contractual: Glasbrook Bros v Glamorgan County Council 1925)

Question 33

What are the legal principles of Roscorla v Thomas (1842)?

Answer 33

Consideration must not be past

Question 34

A promise’s legal obligation can be one that is owed as what? (consideration)

Answer 34

• a public duty (Collins v Godefrey 1831)

- a contractual duty (Glasbrook Bros v Glamorgan County Council 1925)

Question 35

What are the legal principles of Collins v Godefrey (1831)?

Answer 35

If the price paid by the promisee is the fulfilment of a prior legal obligation, then this is considered insufficient consideration

Question 36

What are the legal principles of Glasbrook Bros v Glamorgan County Council (1925)?

Answer 36

If the promisee does something beyond their legal or contractual duty, this consideration will be sufficient

Question 37

What are the four cases relating to Consideration?

Answer 37

• Thomas v Thomas (1842)
• Roscorla v Thomas (1842)
• Collins v Godefrey (1831)
• Glasbrook v Glamorgan County Council (1925)

Question 38

What is a deed?

Answer 38

A written, formal contract signed by parties before a witness and ‘sealed and delivered’

Question 39

A promise is only enforceable when?

Answer 39

It is supported by consideration