Topic 8 - Contract Law (part 1) Flashcards
What is a contract?
A legally enforceable agreement made in writing, verbally or implied by the conduct of the parties.
What’s essential to a simple apparent contract?
Intention, Agreement and consideration.
What are the parts that make up a simple apparent contract?
Hint: I Always Consider Chocolate Consumption Legal
Intention, Agreement, Consideration, Capacity, Consent, Legality
Why is intention important?
The intention of parties distinguishes legally binding contracts for other types of arrangements.
How is intention determined?
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.
What two presumptions are made when using the objective test to identify intention?
- 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)
What was the legal principle of Balfour v Balfour (1919)?
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.
What was the legal principle of Edwards v Skyways (1964)?
In commercial arrangements there is a presumption that there is an intention to create a legal contract.
What was the legal principle of Ermogenous v Greek Orthodox Community of SA Inc. (2002)?
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.
What was the legal principle of Trevey v Grubb (1982)?
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.
What are the four cases relating to Intention?
- Balfour v Balfour (1919)
- Edwards v Skyways (1964)
- Ermogenous v Greek Orthodox Community of SA Inc. (2002)
- Trevey v Grubb (1982)
What is agreement?
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.
What is an offer? Who is the offeror and offeree?
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.
What happens when an offer is accepted?
An agreement is made.
What happens when a counter offer is made?
The offeree has rejected the first offer and is therefore terminated (Hyde v Wrench 1840)
What happens when an offer is not accepted or rejected?
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.
What are the legal principles of Hyde v Wrench (1840)?
A counter offer is effectively a rejection - once rejected, an offer cannot be revived by the subsequent acceptance.
What is not the same as making an offer?
Responding to a request for information.
Explain an invitation to treat.
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)
What are the legal principles of Pharmaceutical Society of Great Britain v Boots (1953)?
Advertising and placing goods on display are invitations to treat. They express a willingness to negotiate and don’t themselves constitute offers to sell.
What are the legal principles of an automatic vending machine?
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.
What must an offeree do to indicate acceptance?
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.
Acceptance must be what?
- 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)
What are the legal principles of Felthouse v Bindley (1862)?
An offeror cannot insist that a failure to respond (silence) is acceptance of an offer.
