e2.6 - The principles of the law of contract

Question 1

Definition of a contract

Answer 1

An agreement between two parties which is intended to have legal consequences, verbal or written

Question 2

Terms of contract

Answer 2

Express terms:

Spoken or written
Specifically agreed

Implied terms:

Not written or spoken
Not specifically agreed
Expected through custom and practice
Interpretations may be decided by court

Certain things ‘go without saying’ and therefore shouldnt be in the contract

Question 3

Essential elements of a contract

Answer 3

1. Offer and acceptance
2. Consideration
3. Verbal or Written
4. Capacity
5. Genuineness of consent
6. Legality

Question 4

Offer and Acceptance

Answer 4

Must be an agreement - Accepted with clarity

Question 5

Consideration

Answer 5

Something of value given by one party in exchange for the fulfillment of a promise by the other

Question 6

Verbal or Written

Answer 6

Both are acceptable although verbal more difficult to prove

Question 7

Capacity

Answer 7

Both parties must have legal capacity to make the contract
Adults have full capacity
Minors (under 18) cannot make trading contracts - can some others (e.g. Contracts of apprenticeship)

Question 8

Genuineness of consent

Answer 8

Due to mistake, misrepresentation, duress

Question 9

Legality

Answer 9

Freedom of contract subject to public ploicy which has created categories of illegal contracts

Committing crimes

Sexual immorality

Corruption of public life

Contracts to defraud the revenue

Question 10

Contract terms between Clients and contractors

Answer 10

Compliance with legal requirements

Contractor to comply with site H&S rules and attend induction training

Contacts nominated with defined H&S responsibilities (client and contractor)

Defined H&S responsibilities of client and contractor

Undertaking of risk assessments and development of safe systems of work

Right of client to monitor contractor during work

Right of client to stop unsafe work/expel persons carrying out unsafe activities

Establishing who is responsible for providing welfare facilities

Responsibility of the contractor to use safe equipment

Provision of emergency procedures

Contractor to provide competent personnel

Requirement for contractor to have employers’ and public liability insurance

Question 11

Unfair contract terms act 1977

as amended by Consumer Rights act 2015

Answer 11

Covers ‘transactions between businesses’

Places some restrictions on terms businesses can agree

Restricts vendors using exclusion clauses to limit liability

Excluding liability for death/injury is not permitted

Excluding liability for losses caused by negligence is permitted only if it is reasonable

Excluding liability for defective or poor-quality goods is also permitted only if it is reasonable

Question 12

Relationship between vendor and consumer

Answer 12

Producer responsible for ensuring safety and quality of product and ensuring this when passed to vendor

Vendor has responsibility for ensuring product is only sold as intended

Vendor may be responsible for inspection of product before sale
(for example second hand car)

With other products this will not be possible (tinned food), therefore producer retains responsibility

Consumer is the user of the article or product

Vendor neither manufactures nor amends the product usually

Vendor may have legal duty to inspect goods before sale

Question 13

Remedies for breach of contract

Answer 13

Damages:

Financial loss, personal injury, damage to property, compensation for disappointment etc.

Limitation Act 1990:

Six years from the cause of the action (not when contract was made)

Three years if for personal injury/illness disease (illness - 3 years start from date of knowledge)