Contract Practice Flashcards
(21 cards)
What is a letter of intent
A document expressing the intention to enter into a contract at a future date but creates no contractual relationship until that future contract has been entered into.
What is a comfort letter of intent?
Expressing interest to act in a particular way at some point in the future or at the time of issuing the letter. Does not form a contract but may impose either or both parties to obligations in relation to payment.
What is a Instruction to proceed with consent to spend letter of intent?
A letter with instruction to proceed and content to spend as if in a contract. Allow contractor to proceed before the contract has been finalized. Legally binding but superseded after main contract begins.
What is a contract?
A legally enforceable agreement that gives rise to rights and duties between those who agree to it’s terms
What is a bilateral contract?
Contains a set of promises that each party has made to another
What is a unilateral contract?
Only one party makes a promise to do something if the other party does something stipulated by the former
What is required to create a contract
Offer,
Acceptance,
Consideration,
Intention to create legal relations,
Certainty of terms.
What is an offer?
An offer is a promise from one party to enter a contract on certain terms.
Offers must be specific, complete, capable of acceptance and made with the intent of it being accepted.
What is the difference between an offer and an invitation to treat
An invitation to negotiate e.g. adverts or shop displays
What is acceptance?
Must be certain and unambiguous. This can be written or oral.
A counteroffer can be made and does not qualify as an acceptance. If the offer does not match it is up to the offerer to accept or not.
What is consideration?
Consideration in a contract is the exchange of anything of value by each party. Most often, services or goods are exchanged or promised in a contract. The items do not have to be of equivalent value.
What is intention to create legal relations
Mutuality of the contract is required. If there is no intention this needs to be stated clearly in the documentation.
What is Mutuality of contract
That the parties are capable of making a contract e.g. of required age, not illegal, of sound mind etc.
What is certainty of terms
There must be no ambiguity of the terms. Any terms open to interpretation must be defined within the contract. Examples of ambiguous terms are; lots, large many and ish.
How can a contract be terminated
There are numerous ways to terminate a contract including;
Notice under section 8,
Default by the Contractor,
Insolvency of Contractor,
Corruption,
Frustration,
Convenience,
Recission
What is Default by the Contractor,
If the one of the parties to a contract fails to perform as required by the contract, this may constitute a breach of contract. If the breach of contract is serious (a material breach), then the innocent party may also consider that it is discharged from any further obligations under the contract.
What is Frustration
Frustration occurs when circumstances that are not the fault of either party to a contract mean it is impossible to continue with the contract. This does not constitute a breach of contract.
What are some relevant events that could lead to a contract to be terminated due to frustration
The government imposing unforeseen restrictions on building.
Laws being passed that make it illegal to undertake what was promised under the contract.
The building where works were to be carried out being destroyed.
An event that was crucial for the contractual obligations being cancelled.
What is the difference between a force majeure and a frustration event
Force majeure provisions might provide for circumstances that could otherwise be considered frustration events, and so result in termination of the contract. However, most stipulated force majeure qualify as a relevant event which will lead to an extension of time rather than the termination of the contract.
What is Practical Completion
Under the JCT Standard Building Contract (SBC) and the Design and Build Contract (DB) practical completion is not defined.
PC is often described as ‘Beneficial occupation’ which is a term that can be used to describe a building that is capable of being used for its intended purpose, even though it may have some minor defects. JCT IBC Contract Section 2·21 sets out Practical completion and certificates.
