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Corpoorate Governance & Law > Contract Law > Flashcards

Contract Law Flashcards

1
Q

What are the 2 Types of breach of contract?

A
  1. A repudiatory breach
  2. An anticipatory breach
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2
Q

What is a repudiatory breach of contract?

A

A breach that occurs after the time to fulfil the contract terms has started.

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3
Q

What is an anticipatory breach of contract?

A

A breach that occurs when a contract has been made, but before the time to fulfil the terms has came.

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4
Q

When can you sue for anticpatory breach of contract?

A

Either:
* As soon as it becomes apparent that a breach will occur.
* When the breach actually occurs.

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5
Q

What is express anticipatory breach?

A

This ocurs when one party announces in advance that they will not carry out the contract and will be in breach of contract.

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6
Q

What is implied anticipatory breach?

A

This occurs when the party does not exprerssly state that they will not fulfil the contract, but does something that makes a breach inevitable.

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7
Q

What are the 4 main remedies for breach of contract?

A
  1. Damages
  2. Specific performance
  3. Injunction
  4. Recscission
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8
Q

Explain the remedy Damages.

A

The party commiting the breach of contract is required to make a payment to the injured party for the loss that the injured party suffered.

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9
Q

Explain the remedy Specific Performance

A

The court orders the person committing the breach to carry out their obligations under the contract.

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10
Q

Explain the remedy Injunction.

A

An injunction is a court order directing a person NOT to do something. This may be used to enforce a negative promise or undertaking in a contract.

A negative promise, is the promise to not do something.

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11
Q

Explain the remedy Rescission.

A

Rescission is where the contract is void and the injured party can treat the contract as if it had never been made.

Note: Ther injured party can demand the restitution of all the money and

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12
Q

Which of the following is a common law remedy for breach of contract?
A: Damages
B: Specific Performance
C: Injunction
D: Rescission

A

All of the answers

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13
Q

What are unliquidated damages?

A

Unliquidated damages are when the court has to decide the amount of damages to be paid for a breach of contract.

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14
Q

What is the intended purpose of damages?

A

To put the injured party back in the financial position that they would have been had the breach not occured and the contract fulfiled.

Note: Not to punish the party commiting the breach.

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15
Q

What 2 issues does a court need to consider when deciding the amount of unliquidated damages?

A
  1. The remotness of loss.
  2. The measure of damages.
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16
Q

Explain the term remoteness of loss.

A

It considers how “remote” a loss was from the breach and whether it is too remote to be included in the award of damages. A breach of contract may have some knock on effects that where not forseen when the contract was agreed.

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17
Q

What are the 2 instances in which a damage will not be considered too remote to be included in the remedy?

A
  1. The loss occured naturally as a result of the breach.
  2. The loss did not occur naturally as a reult of the breach but both parties may have reasonably expected it to occur.
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18
Q

What is the standard amount of damages?

A

Enough to sufficiently compensate the injured party for their loss suffered from the breach of contract.

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19
Q

What is the Market Rule in relation to damages?

A

If buying goods & the seller is in breach - the loss is the difference in the price paid on the market & the price in the contract

If selling goods & the buyer is in breach - The loss is the difference between the price obtained in the market & the price in the contract

Note: if the injured party does not suffer a loss there will be no damag

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20
Q

What is the duty to mitigate losses?

A

The injured party has a duty to take all reasonable steps to mitigate losses as a result of breach of contract.

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21
Q

What is the exception to the rule that damages may not be awarded for anxiety, vexation or aggravation?

A

When the contract is intended to provide relaxation, pleasure or peace of mind.

E.g. When a holiday is cancelled at the last minute damages may be award

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22
Q

What are liquidated damages?

A

Damages that are paid as a result of a term in the contract stating what damages should be in the event a breach of contract occurs.

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23
Q

What is a penalty clause in a contract?

A

A contract term in which the amount payable for a breach of contract is deemed excessive in relation to the loss and will not be enforced by the court.

Note: in this case, the normal method for determining damages will be us

24
Q

Name a type of contract in which freedom of contract not apply?

Hint: There are 4 options.

A

Any of the following:
1. Consumer credit legislation
2. Standard form contracts (such as customer to utility)
3. Employment contracts
4. Contracts restricted under legislation.

25
Q

Finish: A deed is a specialty contract that must be…

A

In written form.

26
Q

What is the presumption in domestic & social agreements?

A

That there was NOT intention to create a legally binding agreement.

27
Q

What is the presumption in commercial agreements?

A

That there WAS an intention to create a legally binding agreement.

28
Q

Where is the burden of proof on:
1. Domestic & social agreements
2. Commercial agrements

A
  1. On the person claiming there was a legally binding agreement.
  2. On the person claiming there was NOT a legally binding agreement.
29
Q

True/false: A letter of comfort is a legally binding offer.

A

False

A letter of comfort is a Statement of intention, not a legally binding o

30
Q

Give an example of an invitation to treat.

A
  1. Advertisements
  2. Shop window displays
  3. Goods on a shop shelf
  4. Catalogues
31
Q

What 4 ways can a contract offer be terminated?

A
  1. Rejection of offer
  2. Making a counter-offer
  3. Lapse of the offer.
  4. Revocation
32
Q

When can an offer be Revoked?

A

Any time before it is accepted provided the offeror knows.

33
Q

An offeror deletes an acceptance email for a contract without reading it. What is the legal status of the contract?

A

The contract is considered to be accepted and has came into existance.

34
Q

What are the requirements for acceptance under the postal rule?

A
  • The letter has been posted (need not be recieved)
  • Has been properly adressed & stamped
  • Must be in the mind of both parties that post may be used.
35
Q

What is meant by forbearence as a form of consideration?

A

Forbearing an act. To not do something or to give up a right or benefit.

36
Q

What is executed consideration?

A

This means to give consideration now.

37
Q

What is executory consideration?

A

This means to give consideration in the future. Ie a promise to pay for goods in the future (credit terms).

38
Q

Consideration must be:
1. Adequate
2. Sufficient
3. Both

A
  1. Sufficient

Consideration does not need to be adequate (A fair exchange of value)

39
Q

What is deemed as sufficient consideration in contract law?

  1. Executed consideration
  2. Past consideration
  3. Executory Consideration
  4. Performance of an existing contract?

May be more than 1 Answer

A

1 & 3 - Executed & Executory consideration

40
Q

What is Pinnel’s rule in relation to part payment as a settlement of debt?

A

That payment of a lesser sum in satisfaction of a larger debt is not legally binding.

This is because there has been no consideration recieved for acceping th

41
Q

What are the 3 exceptions to Pinnel’s rule?

A
  1. Composition with creditors
  2. Part payment by a third party
  3. Primissory estoppel.
42
Q

What does it mean to be “estopped” under primisory estoppel docorine?

A

To be stopped from enforcing a legal right based on the law of equity (fairness).

43
Q

John enters into a contract for building work with Allan on the basis that he hires Steve to do the electrial work because of a promise Steve made to complete any work faster than any competitor. What is the legal relationship between John and Steve?

A

John and Steve have also entered a Collateral contract and John maybe able to sue Steve for damages if there is a breach of contract.

44
Q

Which of the following are contract terms?
A. Conditions
B. Warranties
C. Represenations
D. Innominate terms

  1. A,B
  2. A,B,D
  3. C,D
  4. All
A
  1. A,B & D
45
Q

True/False: If a condition of a contract is breached, the injured party can repudiate the contract.

Repudiate = Terminate

A

True

46
Q

Ture/False: A warranty is a fundamental part of a contract, that is vital to its overall purpose.

A

False.

47
Q

What is the remedy for breach of warranty?

A

The injured party may sue for breach of contract but not terminate the contract.

48
Q

What is the remedy for a breach of an innominate term?

A
  1. If the consequenses of the breach mean that the injured party loses the whole benefit of the contract, then they may terminate the contract. Treated like a condition.
  2. If they do not lose the whole benefit of the contract, they may only sue for damages. Treated like a warranty.
49
Q

What is an Express contract term?

A

These are contract terms that are actualy specified (in writing or orally) as terms.

50
Q

What is an Implied Contract term?

A

A term that is not expressly stated but incluided as a term by implication.

51
Q

What are the 3 main types of implied contract terms implied by?

A
  1. Custom or usage
  2. The courts
  3. Statute
52
Q

What is an Exclusion clause in a contract?

A

It is a contract term that aims to exempt or limit the liability for a breach of contract.

53
Q

When would an Exclusion clause not be considered valid?

A

If it is considered an unfair contract term.

54
Q

Under the Consumer Rights Act, in what time frame can you return faulty goods for a full refund?

A

Within 30 days of purchase.

55
Q

Name an unfair term under the Consumer Rights Act

A

Any of:
* Fees or charges hidden in small print
* Something that limits the consumers rights
* excessive charges for early termination.
* Disproportionate charges for a default by the consumer

56
Q

What are the 5 possible defects in a contract that could make a contract void?

A
  1. Misrepresentation
  2. Mistake
  3. Duress or undue influence
  4. Illegality
  5. Incapacity
57
Q

What type of misrepresentation is the following?

A false statement made carelessly by the defendant. It does not need to be knowingly misleading but defendant should have taken reasonable steps to establish the facts.

A

Negligent misrepresentation

Corpoorate Governance & Law (8 decks)

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