WEEK 4 Flashcards
Intention to create legal relations
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
Social, domestic and family arrangements
Generally presumed that these arrangement are not legally binding
Exemptions to the presumption
If there is clear evidence that legal relations were intended to be created
Commercial or business arrangements
Generally a presumption that both parties intend to create legal relations
Rebutting the presumption
Occasionally, some companies use an ‘honour code’, which can specifically state that the agreement is not legally binding
Capacity to contract
Some people may be limited in their powers to make contracts I.e. they lack contractual capacity
Minors
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
Beneficial service contracts for minors
A contract for training, education or employment is binding on a minor as long as it is, on the whole, for their benefit.
Contracts voidable by minors
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
Unenforceable contracts with minors
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
Intoxication
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.
Consideration
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
Elements in Condiseration
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.
Executory consideration
The promise to do something in the future
Executed consideration
Consideration that has already been completed
Past consideration
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
A request with an implied promise to pay
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
Consideration must be sufficient, but it need not be adequate
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.
Privity of Contract
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
Exemptions to the rule of Privity
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
Void contract
If contract is void it means that contract effectively never existed
Contract will be voided if
Made by parties without the capacity to agree
Contains unlawful goods e.g. illegal drugs
No consideration offered
Voidable
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
Unenforceable contract
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
