WEEK 4

Question 1

Intention to create legal relations

Answer 1

In order for an agreement to be legally binding the parties must intend for legal relations (i.e rights and obligations) to be imposed on them

Question 2

Social, domestic and family arrangements

Answer 2

Generally presumed that these arrangement are not legally binding

Question 3

Exemptions to the presumption

Answer 3

If there is clear evidence that legal relations were intended to be created

Question 4

Commercial or business arrangements

Answer 4

Generally a presumption that both parties intend to create legal relations

Question 5

Rebutting the presumption

Answer 5

Occasionally, some companies use an ‘honour code’, which can specifically state that the agreement is not legally binding

Question 6

Capacity to contract

Answer 6

Some people may be limited in their powers to make contracts I.e. they lack contractual capacity

Question 7

Minors

Answer 7

A minor is regarded as a person under 18
A contract with a minor for necessaries will be binding on the minor, as long as it does not contain harsh terms that are detrimental to the minor e.g. a travel pass for school
What is regarded as necessary will depend on the minor and their social standing

Question 8

Beneficial service contracts for minors

Answer 8

A contract for training, education or employment is binding on a minor as long as it is, on the whole, for their benefit.

Question 8

Contracts voidable by minors

Answer 8

Certain contracts can be voidable by a minor I.e. they can be voided by the minor before or just after reaching the age of 18

Question 9

Unenforceable contracts with minors

Answer 9

Contracts with minors that are not for necessaries beneficial service not fall under voidable will be regarded as unenforceable
It includes contracts for non-necessary goods and services, also loans

Question 10

Intoxication

Answer 10

It is presumed that people under the influence of alcohol or drugs still have the capacity to know what they are doing, therefore will be bound by the contract
However, a contract will not be unenforceable if the intoxicated party does not comprehend the nature of the transaction AND
.. the other party was aware of this but carried on with the transaction regardless.

Question 11

Consideration

Answer 11

A binding contract must have consideration from both parties
Unless made under deed, gratuitous promises will not be enforced
Consideration is the promise to give, do something or refrain from doing something

Question 12

Elements in Condiseration

Answer 12

Promisor - person who makes a promise
Promisee - person who receives a promise
In many contracts, there is an exchange of promises, meaning that both parties are promisors and promisees at the same time.

Question 13

Executory consideration

Answer 13

The promise to do something in the future

Question 14

Executed consideration

Answer 14

Consideration that has already been completed

Question 15

Past consideration

Answer 15

This occurs when a promise is only made AFTER an act has been done
E.g. If a person were to find and return an expensive item to you before you’d realised you lost it
Usually not accepted as consideration

Question 16

A request with an implied promise to pay

Answer 16

If a request is made for a service and the request implies a promise to pay for it, then completing the service is consideration, not past consideration
E.g hiring a taxi or ordering at a restaurant

Question 17

Consideration must be sufficient, but it need not be adequate

Answer 17

Sufficient - it must have some measurable and material value, and it must be real, legal and certain.
Need not be adequate - provided it has some value in the eyes of the law, the consideration will be regarded as valid.
Parties have freedom to make their own contracts, the courts do not care if the parties make a good or bad bargain.

Question 18

Privity of Contract

Answer 18

Contract is binding between the offeror and the offeree.
Contract is binding between the offeror and the offeree
Privity of contract = persons not party to the agreement (i.e third parties) cannot be bound by the terms or take action if the terms are broken

Question 19

Exemptions to the rule of Privity

Answer 19

As the rule could cause injustice the courts developed a number of exceptions
E.g. if contracts were made for the benefit of a group of people such as a family

Question 20

Void contract

Answer 20

If contract is void it means that contract effectively never existed

Question 21

Contract will be voided if

Answer 21

Made by parties without the capacity to agree
Contains unlawful goods e.g. illegal drugs
No consideration offered

Question 22

Voidable

Answer 22

One party has the option to void the contract but until that point, it treated as a valid contract and goods can be legally transferred it

Question 23

Unenforceable contract

Answer 23

Is a valid contract, but if one of the parties does not carry out their side of the contract, the courts will not enforce it.
E.g the agreed terms of the contract are too vague