Week 7 Law

Cards (52)

  • 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