Wk 8 - Simple Apparent Contracts

Question 1

What is a contract?

Answer 1

Business is about making deals:
. Buyers and sellers (contract for sale)
. Wholesalers and retailers (contract for goods)
. Banks and borrowers (loan)
. Landlord and tenants (lease)
A legally enforceable agreement

Question 2

Three essential elements of a contract

Answer 2

Agreement (an offer & acceptance) + intention (to create legal relations) + consideration (the price)

Question 3

If a contract is lacking, makes a contract invalid:

Answer 3

Capacity of the parties to enter a contract
Consent that is genuine
Legality of objects

Question 4

Agreement

Answer 4

A meeting of minds and exists when two or more people share understanding and intention
Usually means there has been a valid offer made and that this offer has been accepted
Once an agreement is reached, the contract comes into existence and the parties become legally obliged to proceed with the contract
At point of acceptance, negotiations and expressions of interest turn into legally binding promises

Question 5

Agreement: offer

Answer 5

Person making the offer is the offerer and the person(s) receiving the offer is called the offeree
An offer can be:
. Written
. Verbal
. Implied by conduct

Question 6

What is an offer?

Answer 6

Must be distinguished from an invitation to treat:
An offer to consider offers and cannot create an agreement if there is a purported acceptance
E.g. advertisements, catalogues, price lists, goods in shop windows and shelves

Question 7

What isn’t an offer?

Answer 7

Responding to a request for information is not the same as making an offer
An invitation to treat is not an offer

Question 8

Terminating the offer

Answer 8

Acceptance, rejection, revocation,,,,,, lapse, death, condition failure

Question 9

An offeree can reject the offer:

Answer 9

. Counter offer is considered a rejection of the original offer
. So if the offer is rejected or a counter offer is made the offeree cannot later change her mind and accept the og offer
. If the offer is not accepted or rejected, the offeror can revoke the offer but only if it has not yet been accepted
. Offeror can revoke offer even if they have promised to keep offer open for particular period
. If offer is not accepted, rejected or revoked it will lapse and the offer ends

Question 10

Agreement: acceptance

Answer 10

Must be:
Unqualified
Communicated
Made in reliance on the offer

Once offeree accepts the offer an agreement has been reached
. Offeree cannot change mind after accepting, unless the offeror agree to release them from the contract

Question 11

Acceptance must be unqualified

Answer 11

Offeree must accept offer without modifying it
If an acceptance is qualified, it is likely a modification of the og 9ffer and so constitutes a counter offer meaning:
. Og offer is rejected
. Offeree is instead making a new offer to og offeror
. Offeree cannot later change their mind to accept the og offer

Question 12

Agreement: acceptance must be communicated

Answer 12

Acceptance not complete until offeree communicates their acceptance to offeror
If offeror has specified the specific mode of acceptance, then acceptance is not valid unless it is communicated that way

Question 13

Agreement: acceptance must be in reliance on the offer

Answer 13

. Only offeree can accept the offer
. Acceptance must be in reliance on the offer - Acceptance must be in relation to the offer and intended response to the offer
. So a person cannot accept something that weren’t offered and they can’t accept something they don’t know about - there is no meeting of minds

Question 14

Intention

Answer 14

Not every agreement is a contract
The intention of the two parties distinguishes legally binding contracts from other types of arrangements
Court looks at the conduct of the parties from the perspective of an objective observer and asks whether the parties were behaving in a way that indicated that they intended the agreement to be legally enforceable

Question 15

Intention: traditional presumptions

Courts have traditionally made two important presumptions

Answer 15

. Where agreement is made in a social/domestic context, it is presumed that the agreement was not intended to be legally enforceable
. Where the agrerment is made in a commercial/business context, it is presumed that the agreement was intended to be legally enforceable

However these are only presumptions - they can be rebutted - it is very hard to rebut the presumption in a commercial/business setting

Question 16

Social/domestic agreements

Answer 16

. Agreements between friends in a social setting or between members of a household are presumed not to be legally enforceable
. Does not mean friends/relationships/family cannot make contracts with each other xause the presumption can be rebutted

Question 17

Rebutting the presumption

Answer 17

One of the parties can seek to convince the court that, given particular circumstances of the agreement, parties appear to have intended it to be legally enforceable

Question 18

Consideration

Answer 18

An agreement is not a contract unless both parties to the agreement have paid (or promised to pay) price called consideration

The key is both parties provide something of value
As a consequence, we concentrate on two aspects of consideration:
1. Consideration must move from the promisee (not necessarily to the promisor)
2. Consideration needs to be sufficient but need not be adequate

Question 19

Consideration can take the form of:

Answer 19

. Payment of money
. Provision of goods
. Provision of a service
. Undertaking of an onerous obligation.
. Refraining from doing something e.g. agreeing not to sue
. Promise to do any of these things

Question 20

Consideration: must move from the promisee

Answer 20

Promisse is person receiving promise. Must provide consideration in return for that promise
Consideration must move from the promisee but it does not necessarily have to go to the promisor (could go to someone else)

Question 21

Consideration: must be adequate

Answer 21

Must be sufficient but need not be adequate

3 key insufficient consideration:

1. Vague promise
2. Past consideration
3. Promise to do something one is already legally obliged to do (prior legal obligation)

Question 22

Insufficient consideration 1: a vague promise

Answer 22

Uncertain/no legal value

Question 23

Insufficient consideration 2: past consideration

Answer 23

If price paid for a promise was paid before the promise was made (past consideration) it is insufficient consideration

Question 24

Insufficient consideration 3: prior legal obligation

Answer 24

If price paid by promisee is the fulfilment of a prior legal obligation, then this is considered insufficient consideration
But if the promisee does something beyond their legal/contractual duty, this consideration will be sufficient

Question 25

Deeds: an exception to consideration

Answer 25

A deed is a formal contract. It is a written contract signed by the parties before a witness and ‘sealed and delivered’
Contracts not in the torm of a deed are known as simple contracts (most are simple contracts) - consideration is required for somple contracts

Question 26

21st century contract law

Answer 26

It is important to understand these key concepts as they apply to contracts entered into today, and even when the law changes, these concepts are referred to
Contact law is open to determination based on individual cases/facts