Contract Law Flashcards
What are the three fundamental elements in any simple contract?
- Agreement (offer and acceptance)
- Intention
- Consideration
How does the postal rule work?
Where post is used to communicate an acceptance, the acceptance takes effect from the moment the letter is properly posted.
It appears this rule is displaced if the letter is incorrectly addressed.
The offeror may require actual communication of the acceptance (displacing the postal rule).
Where instantaneous communication is used, the postal rule does not apply.
How can an offer be terminated?
- Rejection: must be actually communicated
- Revocation: only effective upon actual notice
- Lapse: when acceptance is not made within a reasonable time
When is a term implied into a contract?
- Implied by law: implied to give effect to provisions of a statute or common law
- Implied by fact: give effect to the presumed but unexpressed intentions of the parties (strict approach taken - BGC Brokers).
How can a contract come to an end?
- Performance
- Agreement
- Breach (where a condition or serious breach of innominate term)
- Frustration (impossibility, supervening illegality, or non-occurrence of an event)
What remedies are available for breach of contract?
Condition: termination and damages, or just damages
Warranty: damages
Serious breach of innominate term: termination and damages
Minor breach of innominate term: damages
Unliquidated damages - designed to compensate. Subject to rules of remoteness and mitigation of loss
Liquidated damages - a genuine pre-assessment of loss agreed by the parties
Equitable remedies of specific performance or injunction possible where damages not sufficient
What is a letter of comfort?
Often used in loan finance transactions, where a parent company seeks to provide comfort to a bank that the subsidiary can repay the loan.
Not usually intended to be legally binding.
A grey area whether or not the bank can sue the parent company if the subsidiary defaults.
What are the heads of terms?
Used to outline the agreed intentions of the parties before negotiating the formal contract.
Commonly intended to be non-binding.
When can a third party enforce the terms of a contract under the CRTPA?
Either when there is an express provision to that effect,
Or a term purports to confer a benefit on a third party, unless the parties did not intend the party to have that right.
What is assignment and novation?
Assignment - the benefit of the contract has been transferred to a third party. Can be legal or equitable.
Novation - the benefit and the burden of the contract is transferred.
What terms are implied into a contract for the sale of goods?
- The trader has the right to sell the goods; the goods will be free from any undisclosed encumbrance; the consumer will enjoy a right to quiet possession of the goods (s.17 CRA).
- Correspond with the description (s.11)
- Satisfactory quality (s.9)
- Fit for purpose (s.10)
- Sale by sample (s.13)
What terms are implied into a contract for the supply of services?
- Care and skill (s.49 CRA)
- Reasonable consideration (s.51)
- Reasonable time of performance (s.52)
What are the requirements for execution of a deed?
- The deed must make it clear on is face that it is a deed
- The deed must be delivered
- The deed must be executed properly (depending on whether the party is a company or an individual)
What is an offer?
An articulation by the offeror that it is prepared to contract on specified terms and to become contractually bound.
Must be clear, complete, certain and final and capable of acceptance.
Must be distinguished from a mere invitation to treat (advertisements, goods on display etc).
How is intention to create legal relations assessed?
Objectively.
Generally, a commercial agreement will be presumed to be legally binding.
A domestic agreement will be presumed to not be legally binding.
These assumptions can be rebutted.
