Contract Topic Flashcards
(106 cards)
1
Q
Key Terms
Contract
A
Set of promises which the law will enforce. For contract you will need an offer and acceptance. Offer is normally the starting point of an contract.
2
Q
Key Terms
Offer
A
A propsoal or promise showing a willingness to contract on firm and definite terms
3
Q
Key Terms
Invitation to treat
A
An indication that one person is willing to negotiate a contract with another is not yet willing to make a legal offer
4
Q
Key Terms
Reqeust for information
A
A general inquiry (Normally for price)
5
Q
Key Terms
Bilateral Contract
A
Both the offer and offeree are required to do something
6
Q
Key Terms
Unilateral Contract
A
An agreement to pay in exchange for a performance, if the potential performer chooses to act
7
Q
Key Terms
Rejection
A
The offeree refuses the offer- this ends the offer
8
Q
Key Terms
Counter-offer
A
A respone to an offer which makes a firm proposal that materially alters the term of the offer
9
Q
Key Terms
Acceptance
A
Final and unconditional agreement to all the terms of the offer
10
Q
Ways an offer can be made
A
Person
Partnership
Company
Machine
Thorton V Shoe Lane Parking
11
Q
Offer
Ways an offer can end
A
Rejection
Counter Offer
Lapse of time (Ramsgate Victoria hotel)
Death
12
Q
Acceptance
What must acceptance be
A
Positive and unqualified. Silence can not be accpetance
Felthouse V Bindley
13
Q
Methods of communictaion
Postal Rule
A
- Only applies if post is the usual method and expected method of communication
- Letter must be properly adressed and stamped
- Offeree must be able to prove that the letter was posted
Adams V Lindsell
14
Q
Acceptance
What happens when the letter is posted
A
The acceptance takes place as soon as it is posted
15
Q
Acceptance
What happens when a message/email is sent
Electronic methods
A
The acceptance takes place when the message is opened
Entores
Thomas and gander V BPE
16
Q
Consideration
A
Both parties give something to the other by way of exchange. This can be done by :
Executed consideration- An act in return for a promise
Executionary Consideration- Promise in return for a promise
17
Q
Adequacy
Rule 1 Considertaion
A
Does not need to be adequate but must be sufficent.
Suffiency must be real
White V Bluett
Ward V Bytham
18
Q
Past consideration
Rule 2 Condsideration
A
Past consideration is no consideration
McArdle
19
Q
Promisee
Rule 3 Consideration
A
The consideration must move to the promisee
Tweddle V Aktinson
20
Q
Pre-Existing duty
Rule 4 Consideration
A
Performing a Pre-existing duty can not be consideration for a new contract
21
Q
Rule 4 Consideration
When can Pre-existing duty occur
A
- A duty is imposd by a public duty to act.
* Police doing what they are required to do(Colins V Godfrey)
* A duty under existing contract(Stilk V Myrik)
* A promise to pay exisiting debt (Pinnel’s)
22
Q
Consideration
Promissory Estoppel
A
If one party to an existing contrat agrees to vary the contract amd the other reies on that promise the promissor can go back on it.
Central London property Trust V high trees house
23
Q
Consideration
Promissory Estoppel Limitations
A
- Can not be used to found a new contract
- Promisee must have relied to his or her detriment on the promise
- It may suspend rights but not extinguish the rights of the promisor
- Equitbale principle anyone relying on it muts have acted equitably(Builders V Rees)
24
Q
Privity
What is privity of contract
A
Only those who are party to a contract are bound by it and can benefit from it. Based on the need for consideration to pass from promisee
Jackson V Horizon
25
# Privity
What are the exceptions to Privity of Contract
* Agency
* Collateral damage
* Contract (Rights of third parties)
26
# Privity
What is agency
One party is authroised to make a contract on behalf of another person. The principal will be bound
27
Collateral damage
This is subsidary contract which induces a person to enter into a main contract or which depends upon the main contract
| Shanklin Pier V Detel
28
# Privity
Contract ( Rights of third parties) Act 1999
Someone who is not party to the contract can enforce the contract against either or both the actual parties
29
# Privity
Contract ( Rights of third parties) Act 1999. What needs to be shown to pass
* Third party is expressly identified by name or as member of a class or awnsering or particular description
* The contract expressly provides that a third party may enforce it
* The contract term is an attempt to confer the benefit
30
# Privity
Intention to create legal relations- Business setting
* Presumed in a business. Agreements presumtion can be rebutted
* Deteremined by facts of the case objectivley
* Content letters are not leaglly binding
31
# Privity
Intention to create legal relations- Domestic setting
* Intention in not preusumed
* Can be rebutted
* If money changes hand it is more likely to be considered that parties had intention to create legal relations (Simpkins, Wilson V burnett)
32
Consumer Contracts
* Effects remedies- Term being breached will lead to a claim of breach of contract
* A represenation if untrue will give rise to a remedy for misrepresentation
* Decided by courts on case by case basis
33
# Terms In Contracts
How to decide if it is a term or representation
* Importance attached to represenation- The more obviously important the more likely it is to be a term
* Special knowledge/skill of person making statement
* Time lag- Bigger the gap less likely it is to be a term
* Whether there is a written contract- If there is, the court will assume everything the parties wanted as a term is included
34
# Terms In Contract
Condition
A term that is so important that failure to perform it would destroy the main point of the contract. Results in the person suffering the failure to end the contract by repudiation
| Poussard V Speirs and Pond
35
# Consumer contracts
Innomiate term
A term that is not clearly a condition or a warranty. Result can be either that of a condition or a warranty depending on the severity
| Hong Kong fir V Kawasaki
36
# Consumer contarcts
Warranty
A minor term - only damages can be claimed- contract does not end
| Bettini V Gye
37
# Consumer contracts
What are terms implied by business efficacy
The courts will imply terms to ensure the contract works on business like basis
38
# Cosumer contracts
Officious by-stander test
* Is term necessary to make the contract effective
* If parties had thought about it would they have agreed that the term was obviously going to be a contract
| (Shirlaw v Southern foundries) (Mans V BNP Paribas)
39
# Consumer contracts
Express and implied terms
Express terms are terms which have bneen specifcally agreed between the parties. Implied are not
40
# Counsumer contracts-Terms implied by common law
Custom
Terms must be veiwed in light of custom
Prior conduct may indicate the terms to be implied.
41
# Consumer contracts
Statute based implied terms
Business to business transaction- sale of goods act 1979/ supply of goods and services act 1982
Business to consumer transcation- Counsumer right act 2015
42
# Consumer contracts- Remedies
Contract to supply goods
* S.9- Satisfactory quality
* S.10-Fitness for purpose
* S.11- As described
* S.20 Right to reject
* S.23 Right to repair or replacement
* S.24 Right to price reduction or rejection
43
# Consumer contracts- Remedies
Contract to supply services
* S.49 Reasonable care and skill
* S.52 Within reasonable time
* S.53 right to require repeat performance
* S.56 Right to price reduction
44
# Exclusion Clauses
Types of exclusion clauses
* Limit the value of a claim to the purchase price of the goods
* Limit time for a defect to be discounted to 14 days
* Exclude the rights of 3rd party beneficaries to bring a claim
* Limit or exclude liablity for a breach of contract
45
# Exclusion Clauses
Basic Rules on interpreting contract
* The contract should be considered as a whole to establish intentions of the parties
* Interpretation is not an excat science the trend is for more purposive approach
* If the words are clear and unambigious then they will be treated as representing the parties intentions
* If they are not then an objective test is used
46
# Excluson clauses
What is the obejcetive test in basic rules interpreting contracts
* Reasonable man interpret to be the meaning of the contract
* Parties intentions may be shown by post contrcatual actions
* Commericial practice and common sense will also be a guide
47
# Exclusion clauses- Common laws+ incorportaion
Common law controls incorporation
* Is the agreement signed- If signed they are bound by it(L'estrange V Graucob)
* If the effect of the clause is misrepresentaion by the party seeking the exclusion it would be interpreted in accordance with the misreprisentation(Curtis V Chemical cleaning and dying co)
* Is any notice with the term in it incorportaed by reasonable notice- occurs when the exclusion are contained on a notice or form but the contract itself is unwritten
* Introducing law later will fail (Olley V Marlborough court hotel)
* Is any notice with the term in it incoporated by previous dealings of the parties- Needs to be consistent with dealings ( Hollier V Rambler Motors)
48
# Exclusion clauses
Reasonable notice
* Must be contractual document distinct from the reciept (Barry)
* Must be reasonable steps to draw the exclusion clause to the others partys attention (Parker)
* Must be reasonable notice given before the conclusion (Olley,Thorton)
49
How Common law controls the effect of exclusion clauses on third parties to contract
Exclusion clauses are ineffective for 3rd party who want to rely on them (Scruttons V Midland silicone)
50
How common law controls Contra Profernten Rule
Where there is a doubt about the meaning of a term, the words will be constructed against the person who put them in the contract- Applies to exclusion clauses ( Transocean Drilling )
51
What are the statutory control of exclusion clauses
UCTA 1977
Consumer Rights Act 2015
52
What are the 3 Reasonableness tests
* Knowledge Test
* Test in relation to exclusions of the sale of goods act/ supply of goods act/ services act
* Section 11(4)
53
# Exclusion Clauses- Reasonablness tests
Knowledge test
S.11(1) UCTA 1977- is the insertion of the clause reasonable in light of what was known by the parties at the time of the contract
54
# Exclusion Clauses- Reasonablness tests
Test in relation to the exclusions of the sale of goods/supply of goods/ Services act
* Strength of bargaining position of the parties
* Whether teh customer recevied an inducment to agree to the term
* Whether the customer knew of existence and extent of the term
* Where the term excludes or limits liability if some condition is not complied with, Whether it was reasonable at that time of the contract to expect that complaince with it would be practicable
* Whether the goods were manufactured/processed or adapted to customer
55
# Exclusion Clauses- Reasonablness tests
S.11(4)
This relates to the limitation clauses
* The resources which the defendant could expect to be available for meeting his or her liabilty should it arise
* How far it was open to the defendant to cover him or herself by insurance against any successful claim
56
# Exclusion clauses
CRA 2015
Effect of s.31 and s.57
* s.31 states that you can not exclude liablity for: s.9,10,11,14,15
* S.57 prohibits excluding or limiting liabilty relating to the sale of services s.49,50,51,52
57
# Economic Duress
What are Vitating factors
These are things that make the contract void or voidable
58
# Economic duress
What is Economic duress
Contract made where one party is forced into it should not be valid. Threat to damage a business or person financially. Threats must be " Improperly coercive"- though not neccserially unlawful
59
# Economic Duress
Undue Influnece
Pressure which deprived victim of independent judgement.It is presumumed where there is a relationship of trust one party will benefit at the exspense of another
| Alcard V Skinner
60
# Economic Duress
Duress
Threats such as blackmail or violence to persuade the victim to sign
61
Economic Duress Test
1. Must be pressure
* The effect of which is that there is a lack of pratical choice for the victim, which is illeegitimate and a significant cause inducting the claimant to enter the contract
2. Evidnece that pressure was illegitamate can be
* Did C Protest about pressure
* Did C have any other available courses of action that were reasonable
* After entering did C try to make contract Void
62
# Economic Duress
Remedies Economic Duress
Court can order an restitution of money extracted or property taken. And aslo the avoidance of any contract made under duress.
This is equitable and discretionary
63
# Economic Duress- Misrepresentation
What is Misrespresentation
This is a false statement ehich can be verbal or written but can also be an action
64
# Economic Duress- Misrepresentation
Misrepresntaion and silence
| When Can silence be misrep
1. Half truths
2. Where parties relationship is based on trust
3. If a statement has been made then there is a change ( making statement untrue) parties must be notified
4. Inusrance contracts and contracts made in good faith
65
# Economic Duress- Misrepresentation
Misrepresentation and being material in fact
This must have led the person to make the contract and influence the mind of the person making it.
Can not be an opinon
Not future Intention
66
# Economic Duress- Misrepresentation
Misrepresenation and being a party to the contract
This can include a persons agent.
It can be avoided by Negligent Missastatement
| Hedley Bryne V Heller
67
# Economic Duress- Misrepresentation
Misrepresentation and inducing other to enter contract
Must be a critical part of their decision making
Does not matter if they could have discovered the truth by taking reasonable steps
68
# Economic Duress- Misrepresentation-Omissions
Omissions in a consumer context
1. S.12 the Pre-contractual information must be given to the consumer prior to the contract for it to be valid
2. Any changes must be agreed expressly or it will be misrep
3. Misleading omissions include
* Not giving information needed to make an informed decisions
* Hides or provides material information in an unclear or untimley manner
69
# Economic Duress-Types of Misrepresentation
Innocent
| Misrep Act 1967
A false statement but one genuinley held on reasonable grounds
Remedy is recission or damages
Recission is equitable aims to put in a position before Pre contractual position
70
# Economic Duress-Types of Misrepresentation
Negligent
A false statement made by a person who honestly believed the statement was true but had no reasonable ground for believing it was true
Misrep Act must show
* Misrep results in contract then suffers loss.
* Burden is on person making statement to show that there was reasonable grounds to make it
71
# Economic Duress- Types of misrepresentation
Fraudulent
This comes from the tort of decit.
Person making the represnatation knows it to be untrue, or is reckless as to whether it is untrue.
72
# Economic Duress- Remedies
Innocent remedies
Recission this is an equitable remedy. It is not avaliable if resitituition to original position is impossible. The contract is affirmed. Delay and if a third party has gained rights over property. Damages not available but can be awarded instead of a recission (s.2(2) Misrep act)
73
# Economic Duress- remedies
Negligent remedies
Recssion or damages
Con Neg applies
73
# Economic Duress- remedies
Fraudulent remedies
Recission and damages
Court has also used contractual damages to recover loss of profit
74
# Discharge of contract
Discharge by performance
Parties must each do what was agreed.
Performance must be complete and exact.
| Cutter V Powell
75
# Discharge of contract- Performance
Divisible Contracts
A contract that has several parts. Non completion of one part is not a breach of the whole
76
# Discharge of contract- Performance
Substantial performance
Where what was subastantially meant to be done has been done then the doctrine of subtsantial performance will apply and payment must be done according to what has been done
77
# Discharge of contract- Performance
Prevention of full performance
If one party prevents the other from carrying it out his contract. Then the innocent party can be paid qunatum Merit
78
# Discharge of contract- Performance
Acceptance of the part performance
If one party has agreed that the other need not complete the whole contract it must be paid on a quantum merit basis. Must be voluntary
79
# Discharge of contract- Performance
Effect of a term as to time of perfromance
Time is usually a warranty.
Unless
* Parties have expressly stated that that time is of the essence
* In the circumstances time for completion of the contract is critical
* One party has failed to perform on time and the other has insisted on a new date for completion. This new date then becomes a condition
80
# Discharge of contract- Breach
Actual breach
If party fails to perform his/her obligations under the contract. Victim is entitled to damages. If it is a breach of condition then contract can be terminated.
81
# Discharge of contract- Breach
Total or partial breach
1. Renunciation by a party of his/her liabilites
2. Impossibility created by his/her own act
3. Total or partial failure of performance
82
# Discharge of contract- Breach
Repudiatory Breach
Serious breach that allows contract to be terminated. This can occur by:
* Breach of condition
* Refusal to perform the contract
* A suffiencently serious breach of a innomiate term that will be considered a breach of condition
83
# Discharge of contract- Breach
What can happen if it is a Repudiatory Breach
The party that is not in breach can terminate the contract and claim daamages or continue the contract and claim damages
| Stocznia Gdynia V Gearbulk Holdings
84
# Discharge of contract- Breach
Anticipatory breach
* Parties gives notice that they wont be performing or completing the contract
* Innocent party can sue immediatley or wait until the contract is actually breached
* This can occur by conduct if the innocent party reasonably concludes the contract is over
85
Damages for breach
Seek to put C in a position that they would have been in if the contract had been sucssefully completed. A warranty gets damages while condition can get damages or repudiation
86
# Discharge of contract- Fustration
Discharge by fustration
Contract is prevented from occuring by an event outside the parties control. Often be a force majeure clause in a contract outlining the liability in the case of extraordinary events.
87
# Discharge of contract- Fustration
What is fustration likely to be beacsue of
* Impossibilty of performance:
* Contract becomes illegal
* Radical change of circumstances so that the purpose of the contract can not be achieved
88
# Discharge of contract- Fustration
When can fustration not apply
* If it is self induced
* The contract has became less profitable
* The event was a forseeable risk or metioned in the contract
89
# Discharge of contract-fustration
Remedies for fustration
* Common law - fustration automatically terminates the contract of the time of the event
* Obligations in existence at the time of the fustration have to be completed
* Law reform (fustration contract) Act 1943
90
# Remedies for fustration
Law Reform s.1(2)
* Money paid before fustration is recoverable
* Money payable ceases to become payable
* The court may award costs to the person to whom sums are paid/payable
91
# Remedies for Fustration
Law Reform S.1(3)
* If one party received valuable benefit prior to the fustration the count may order payment for this
* The sum is what the court considers just given the circumstances
92
# Remedies for Fustration
Law Reform S.1(4)
Expenses may include overhead expenses, work or services performed personally
93
# Remedies
What is the approach used with remedies
Contrcatual damages seek to put the claimant in the posoition they would have been if the contract had been performed
94
# Remedies
What are nonmial damages
This is where there is no loss
| Staniforth V Lyall
95
# Remedies
What are speculative damages
This is where the loss is a special chances for a possibel benefit
96
# Remedies
Caustion
But for the breach would the loss have occured
97
# Remedies
Remoteness
Was the loss natural conseqence of the breach.
* If subjective: Would the type of loss be supposed reasoanbly to be in completion of parties at the time of contract
| Hadley V Baxendale
98
# Remedies- How to assess damages
Expectaion loss
* This includes loss of any potential profit
* Difference between value of goods and services required and what was received
* Difference between conntract price and market price
* There is no loss of chance
| Charter V Sulivan
99
# Remedies- How to assess damages
Reliance loss
* Wasted expenditure- aims to put C in a position they would have been in the contract had it not been made
| Anglia Tv v Reed
100
# Remedies- How to assess damages
Restitution
Repayment of any other money or other benefits post parties prior to the breach
101
# Remedies
Liquidated damages
These are fine as long as they are to protect a legitimate interest as long as the amount is not exorbitant or unconscinable. If not it would be seen as a penatly cost
| (Parking eye limited V Beavis) (Cavendish square holding)
102
# Remedies
General righst against goods
Sale of goods act 1979 rights of a person selling goods which are not paid for
* A lien- Retain possession of the debtors goods until paid
* Insolvency of buyer- Stop goods in transit and get them back before the buyer takes possession
* Resale of goods
103
# Remedies
Quantum Merit
* Usually for goods that are interrupted and so part of performance
* A fresh agreement can be implied in place of the orginal one ( Steve V Bromley)
* A contract for services has no price stated ( Upton Rural distrct council V Powell)
* When contract is discharged by the others breach or a party has been prevented from the performing by the other party ( De Barnady V Harding)
104
# Remedies
Equitable Remedies
Recission, Injunction, specific performance
This will not be used if:
* Damages will be suffuicent
* In contracts for personal services
* Where perfomance would be impossible
* Where there has been excessive delay without complaint
* Where the claimant themeleves behaved badly
105
# Remedies
Termination of contract (repudiation)
* Breaching of condition/ innominate term construed as a condition.
* A party refuses to perform his or her obligations under the contract
* One party makes it impossible to perfom the contract
