Week 1 - Contracts and Contract Documentation

Question 1

What is statute law ?

Answer 1

Statute Law is law made by the government

Question 2

What are the two types of precedent ?

Answer 2

Binding Precedent and Persuasive precedent

Question 3

How is it determined whether a precedent is binding or persuasive ?

Answer 3

the level of court in which it was decided. Judgements made in the highest courts - i.e. HoL - are binding on lower courts.

Question 4

What did the Constitutional Reform Act 2005 establish?

Answer 4

Established the replacement of the Lords with the Supreme Court on 1st October 2009.

Question 5

What is Ratio Decendi ?

Answer 5

When the principle of law has been used by the judge in making a decision and the reasons for doing so

Question 6

What is Obiter dicta ?

Answer 6

Statements of the judge which are made in passing and do not have binding force on other courts; but they may be persuasive.

Question 7

Essentials of a valid contract

Answer 7

offer and acceptance
consideration
intention to create a legal relationship
genuine consent
the parties must have capacity
legal formalities

Question 8

What is an Offer ?

Answer 8

An undertaking by the offeror to be bound in contract by the terms of the offer, if there is a proper acceptance of it.

Question 9

What is an invitation to treat ?

Answer 9

Where party A is wishing party B to make an offer which party A is then free to accept or reject. I.e. an item priced in a shop window.

Question 10

How does an offer end ?

Answer 10

1) Proper Acceptance
2) with reasonable time, it can lapse
3) it can be revoked
4) It can be rejected
5) by a counter offer - which kills the original offer

Question 11

What is acceptance ?

Answer 11

An unconditional agreement to all the terms of the offer, communicated to the offeror and made with the intention of accepting.

Question 12

What are the advantages of a deed

Answer 12

Deeds increase the limitation period from 6 years to 12 years

Question 13

What is a limitation period and when does it start ?

Answer 13

A limitation period is the period of time during which claims for a breach of contract can be made. The period starts from the moment when a breach occurs.

Question 14

What is consideration ? when is this not needed ?

Answer 14

Consideration is the payment of money in return for goods or services. Consideration is not required for deeds.

Question 15

What is the main form of consideration ?

Answer 15

paying or promising to pay money in return for goods or services.

Question 16

What does ‘vitiating factors’ mean ?

Answer 16

Barriers to a proper contract

Question 17

What are the four principle vitiating factors ?

Answer 17

Duress and undue influence
Illegality
Mistake
Misrepresentation

Question 18

What is duress ?

Answer 18

Duress could be the threat of violence or intimidation. parties subject to this can take the matter to court and have the contract declared void.

Question 19

What is undue influence

Answer 19

Undue influence is concerned with the exercise of unfair power by two parties in a particular type of relationship.

Question 20

What would illegality in contract terms entail?

Answer 20

this could include contracts to commit a crime, or a fraud , or prejudicial to public safety, or to promote corruption.

Question 21

Areas of mistake recognised by the courts

Answer 21

operative mistakes : contract would not have been made if the error had not occurred. It goes to the heart of the agreement, influencing a party’s decision to enter into the contract in the first place.

Question 22

What are the three different types of mistakes ?

Answer 22

Common mistake
Mutual mistake
Unilateral mistake
These types of mistakes can affect the enforceability of the contract, and the court may intervene to provide remedies such as cancellation or rectification.

Question 23

What is a common mistake ?

Answer 23

Both parties share the same mistaken belief about a fact.

E.g. Couturier v. Hastie (1852) - captain sold the fermented grain before the voyage was completed - so not available for the grain sale to other parties.

Question 24

What is a mutual mistake

Answer 24

Both parties are mistaken, but each in a different way about the contract’s terms or subject.

e.g. Raffles v. Wichelhaus (1864) - there were two ships and the seller was selling the cargo on one ship, whilst the buyer through he was buying the cargo on the other. Contract was void for mistake.

Question 25

What is a unilateral mistake ?

Answer 25

Only one party is mistaken, and the other party knows or ought to have known about the mistake.

Question 26

What is the general rule with signing contracts / documents ?

Answer 26

As a general rule someone signing a document is deemed to have read and understood the document.

Question 27

In what instance is a signed document voidable ?

Answer 27

Where someone has been induced to sign a document by fraud or misrepresentation.

Question 28

What is misrepresentation ?

Answer 28

When untrue or misleading statements produce a contract based on false promises.

Question 29

Three categories of misrepresentation ?

Answer 29

Fraudulent - statements made knowing they are untrue
Negligent - the person making the statement has reasonable grounds for believing it to be true.
Innocent - the person making the statement has no reason to think it is untrue.

Question 30

What are legal formalities with contracts ?

Answer 30

for most contracts, there are few legal formalities. Most contracts can be formal or informal, written or verbal.

Question 31

Difference between representation and terms

Answer 31

Representations are statements made before the contract. They can be innocent, negligent or fraudulent.

Terms are in the contract, usually written. These include conditions and warranties. They can be implied by a court only where needed.

Question 32

Consequence of false representation ?

Answer 32

the remedy is a claim of misrepresentation - a vitiating factor.

Question 33

Consequence of when a term of the contract is broken ?

Answer 33

action for breach of contract which can lead to damages, or to the contract being rescinded.

Question 34

What are express terms ?

Answer 34

Where parties agree any terms they wish, provided they are lawful. Usually written down, but not always. when these are missing and a dispute ends up in court, then the court may imply terms.

Question 35

difference between conditions and warranties ?

Answer 35

important terms : conditions
less important : warranty - breaches only gives the injured party rights to sue for damages.

Question 36

three types of implied terms :

Answer 36

terms implied by the courts to give business efficacy
terms implied by custom or regular usage in a particular trade or profession in respect of which the contract is silent.
terms implied by statute

Question 37

What are the four ways a contract can end ?

Answer 37

1. Performance - a truly complete performance of all obligations under the contract.
2. Breach of contract
3. Discharge by agreement - consideration should be available for the discharge.
4. Frustration - when some event makes further performance impossible or illegal.

Question 38

What are the two types of damages ?

Answer 38

unliquidated - granted by a court with the intention of placing the claimant in the same financial position as it would have been if the contract had been properly formed.
liquidated - pre-estimate for damages for a specified breach, and are written into the contract.

Question 39

What is specific performance ?

Answer 39

an order of the court compelling the defendant to perform its part of the contract. Awarded when damages are an inadequate remedy.

Question 40

what is an injunction

Answer 40

granted to enforce a negative stipulation in a contract where damages would be an inadequate remedy.

Question 41

what is quantum meruit ?

Answer 41

= as much as is deserved; i.e reasonable payment for work performed where the other party is in breach of contract.

Question 42

What is a limitation period ?

Answer 42

period in which a legal action can be brought.
- 6 years from when the cause of action accrued for a simple contract.
twelve years from when the cause of action accrued for a deed, or a contract under seal.