Week 7 Law

• Contract


  An exchange of promises that is legally binding

  An agreement between two parties is only legally binding if four elements are present.
• Essential elements of a valid contract


  • Offer
  • Acceptance
  • Consideration
  • Intention to create legal relations
  • Capacity and legality
• Simple contract


  A contract that can be in any form - written, verbal, or implied by conduct
• Contracts for the sale of land must be in writing
• Having contracts in writing is a good idea to have evidence of the terms agreed, but in most situations it is not a legal requirement
• Offer


  A definite and unequivocal statement of willingness to be bound on specified terms without further negotiations
• Form of offer


  • Can be in writing, verbal, or by conduct
  • Must be communicated to someone to form a contract (E.g. you find a missing cat and return to its owner unaware there is a reward = no contract.)
  • Can make an offer to a person, a group of people or the whole world.
• What is not an offer

  • A mere statement of selling price
  • A mere statement of intention to sell
  • Invitations to treat
• Invitation to treat


  An invitation to another party to make an offer, not an offer itself
• Examples of invitation to treat


  • Most advertisements
  • Shop window displays
  • Goods on a shop shelf
• Offer of an unilateral contract

  
  

  • Most contracts are bilateral. E.g. both parties make a promise to each other.
  • In a unilateral contract where one party makes an offer, then only one promise is made; the offeror promises to do something in return if the offeree performs a specific act and the offeree makes no promise.
• Ways of terminating an offer


  • Revocation (withdrawing)
  • Rejection
  • Death/Lapse of time
• Revocation


  This can happen any time before acceptance, even if the offeror agreed to keep the offer open

  Revocation must be communicated to the offeree either by the offeror or a reliable third party.
• Rejection


  Once an offer is rejected it can no longer be accepted.

  Rejection can be outright or by counteroffer.
• Acceptance


  The unqualified and unconditional assent to all terms of the offer
• Acceptance is not effective until it is communicated to the offeror
• Postal rule of acceptance


  Acceptance is communicated when the letter is posted, not when it is received by the offeror
• Consideration


  An act or promise to do something of value or the price paid for a promise

  Basic rule:

  • All simple contracts must be supported by consideration from both parties.
• Types of valid consideration


  • Executed Consideration (occurs at the time of agreement)
  • Executory Consideration (occurs after the time of agreement)
• Past consideration


  Past consideration is not valid.

  Consideration is past if it occurs before the agreement to receive payment is made.
• Exception to general rule of past consideration:

  If payment was reasonably expected before doing the work (e.g. in employment/business situations)
• Promising to do something you were already legally obliged to do is not valid consideration
• Exceptions where performing existing legal duties is valid consideration


  • Exceeding your existing legal duties
  • Performing existing legal duties provides extra practical benefits to the other party
• Intention to create legal relations

  Both parties must intend to enter into a legal relationship and contemplate legal action may arise if not fulfilled
• The presumption of intention to create legal relations can be rebutted if there is clear evidence to the contrary
• Terms of a contract


  Statements/particulars/promises that form a part of a contract
• Terms of a contract


  • The matters that have been agreed between the parties, and which are legally binding
• Issues to consider regarding terms of a contract


  • Representations/misrepresentations
  • Express/implied terms
  • Types of term
  • Exclusion clauses
• Representation


  Statements/promises which do not form part of a contract
• Misrepresentation


  When a representation turns out to be false and it was relied upon to enter into a contract
• Misrepresentation


  The injured party (claimant) can sue the civil offence of misrepresentation, but not breach a contract
• Types of misrepresentation


  • Fraudulent
  • Negligent
  • Innocent
• Fraudulent or negligent misrepresentation


  Damages and/or rescission
• Innocent misrepresentation


  Rescission only
• Express terms


  Terms specifically agreed between the parties, usually written into a contract for clarity
• Implied terms


  Terms that the law will imply into a contract in the absence of express terms, legally binding on the parties
• Ways terms are implied into a contract


  • By the courts
  • By statute
• Courts implying terms


  • It was the clear intention of the parties for the term to exist
  • It is customary for the term to exist, such as in a particular trade or industry
  • It is necessary to make the contract sensible or complete
• Statutes implying terms

  • These are terms imposed by legislation
  • These implied terms are usually made for the protection of consumers or other more vulnerable parties to a contract
  • They are usually brought in where there is inequality between the relative bargaining power of the parties.
  • Examples are: Consumer Rights Act 2015, Unfair Contract Terms Act 1977, Consumer Credit Act 2006, Employment Rights Act 1996.
• Consumer Rights Act 2015


  • Product quality must be satisfactory, fit for purpose, and as described
  • 30 days right to reject if product < quality
  • Repair or replace if product > quality but > 30 days lapsed
  • 6-month rule - fault assumed to exist at purchase if discovered in first 6 months