Contracts Flashcards
1
Q
What are the basic requirements for a contract?
A
- offer
- acceptance
- consideration
2
Q
Which contracts HAVE to be in writing?
A
- guarantee
- contract for sale of land
- consumer credit transactions
3
Q
What is required to execute a deed?
A
- in presence of witness
- delivered
- promise to make gift is enforceable if made by deed
- conveyance must be by deed
4
Q
When must a claim for simple contract be brought?
A
within 6 years
5
Q
When must a claim for contract by deed be brought?
A
within 12 years
6
Q
How is an offer valid?
A
- must be definite and certain
- offeree must have knowledge of offer
7
Q
Are adverts offers? What is the exception?
A
No - invitation to treat
Unless advert promises something if reader does something = treated as offer to enter into unilateral contract.
8
Q
How can an offer be revoked?
A
Free to revoke any time before offer accepted
- can be direct
- or revoked if offeree receives information
9
Q
When is revocation effective?
A
When received
10
Q
When can you NOT revoke an offer?
A
- if collateral contract was made to keep offer open
- unilateral contract and began performance
- offeree accepted contract by beginning performance in bilateral contract
11
Q
How can an offer be terminated?
A
- impliedly by failing to accept within time
- operation of law - dies, destroyed, becomes illegal, condition
12
Q
How can an offer be accepted?
A
- in any reasonable manner / reasonable medium
- if method of acceptance is stipulated, another method that is no less advantageous
- silence usually not deemed acceptance
13
Q
When is there acceptance of a unilateral contract?
A
Until completion of the requested act
14
Q
What is the postal rule?
A
Acceptance by post creates a contract at moment of posting unless letter is not properly addressed and stamped / was not reasonable to accept by post.
15
Q
What is the battle of the forms?
A
If offer and acceptance exchanged containing different terms and each says terms prevail - it is the last set of terms that were not objected to which win out.
16
Q
What is required for a contract to be binding?
A
Intention to be legally bound
- rebuttable presumption in domestic agreements / social situations
- no presumption for commercial settings
17
Q
What are the rules for minor contracts?
A
- voidable by minor unless ratify it when they turn 18
- if enters contract for necessary goods / services, bound by contract
- need to return property if voided the contract
18
Q
Are contracts entered by a person without mental capacity voidable?
A
Voidable by that person only if the other knew they lacked mental capacity.
19
Q
What is executory consideration?
A
If act / forbearance is promised in the future.
20
Q
What is illusory consideration?
A
If consideration offered has no value.
21
Q
When is a promise to accept part of a debt enforceable?
A
- debt disputed in good faith
- claim was unliquidated
- payment at different place / time / means
- composition of creditors
22
Q
What is the purpose of promissory estoppel?
A
Substitute for consideration
- promise not to rely on existing legal rights
- promisee detrimentally relied on promise by altering position
- would be inequitable.
23
Q
May a third party enforce the contract?
A
Under Contracts (Rights of Third Parties) - if contract expressly provides so
- if contract confers benefit with apparent intent to allow them to enforce it
- employment contracts excluded
- if third party has rights under contract.
24
Q
Can rights be assigned to a third party?
A
Yes - if rights are assigned, third party can enforce rights assigned.
25
What is a representation?
Statement which induces someone to enter into a contract.
26
What is a term?
Statement of law or fact which is part of the contract.
27
What can be contract terms?
Conditions or warranties - express or implied.
28
What happens if a contract is in writing - oral statements?
Oral statement not included in writing will be representation - statements of law / fact in the written contract will be considered terms.
29
Is it a representation or term if a statement is of fundamental importance?
Term.
30
What is a condition? What happens if breached?
Term that is so fundamental that is said to go to the root of the contract - if breached, the contract does not work without it.
- Non-breaching party has the option to terminate the contract and sue for damages.
31
What is a warranty? What happens if breached?
Term incidental / collateral to main terms of contract.
- Non-breaching party can sue for damages but cannot terminate.
32
What is an innominate term? What happens if breached?
Not clear when contract is made whether condition or warranty.
- Courts look at the effect of the breach of the term to determine the appropriate remedy.
33
What happens if time is of the essence under the contract?
Condition - right to terminate the contract.
34
Is time of the essence presumed in which contracts?
Commercial contracts.
35
What is the parol evidence rule?
External evidence cannot add to, subtract, contradict or vary the terms of written contract.
36
What conditions does the Sale of Goods Act 1979 imply?
1. seller has right to sell the goods
2. goods match the description applied by seller
3. goods are of satisfactory quality
- fit for any special purpose known to seller by buyer.
37
Which conditions are excludable?
Condition of title cannot be excluded - whether others can be excluded depends on whether unfair/ unreasonable under UCTA.
38
In what situations will Supply of Goods and Services Act 1982 (SGSA) apply?
Contracts / services supplied by business and to goods supplied in relation to the service.
39
How does SGSA apply to service contracts?
Implies innominate term that supplier service in reasonable time and with care and skill.
40
What is the impact of Consumer Rights Act 2015?
Implies terms into sales contracts between trader (business) and consumer (someone not buying for business purpose) similar to those implied under SGA.
41
How does CRA apply to service contracts?
Implies terms that services should be
- carried out with reasonable care and skill
- completed in accordance with any information the consumer relies on
- completed for reasonable price
- completed within reasonable time.
42
Can terms implied by CRA be excluded?
Cannot be excluded or limited.
43
When will court imply a term into contract?
Will generally not imply term unless necessary to give contract business efficacy.
44
When will terms be implied?
If there is industry or market standard for field of business covered by contract
- regular and consistent course of dealings.
45
What will the court do if the contract was uncertain?
Will get involved if contract provides mechanism for resolving uncertainties
- may sever the uncertain part and enforce the rest of the contract.
46
When may a written exclusion be overridden?
If there was an oral misrepresentation inducing the party to enter the contract.
47
What is the defence of non est factum?
If party can show they had no understanding of the contract they signed and there is a fundamental difference between what they thought they signed and what they actually signed.
48
How can an exclusion clause be incorporated by notice?
If the party seeking to rely on the exclusion took reasonable steps to bring it to the other party's attention before or whilst the contract is being made.
49
How can an exclusion clause be implied?
If there is an industry custom to show regular and consistent course of dealings between the parties.
50
When will an exclusion clause be enforced?
Only if it is clearly and unambiguously covers the loss suffered.
51
What is the contra proferentem rule?
If there is any ambiguity - the ambiguity is interpreted against the party seeking to rely on it.
52
What is automatically void under the UCTA 1977?
1. any clause that attempts to exclude liability for death caused by negligence
2. any clause that attempts to exclude liability for breach of implied condition as to title.
53
What is void unless reasonable under UCTA 1977?
1. any clause that attempts to exclude liability for any loss other than death caused by negligence
2. term on one party's standard form contract that (1) excludes or restricts liability for breach of contract (2) reserves right to render contractual performance substantially different (3) negates party's duty to render contracted-for-performance
3. any clause that attempts to exclude liability for breach as to compliance with description, quality or fitness for purpose.
54
When can a consumer ask court to set aside exclusion that is unfair under CRA 2015?
- if causes significant imbalance in rights and obligations
- clauses need to be transparent.
55
What are examples of void contracts?
1. agreements that were illegal when contract was made
2. agreements entered into as result of mistake.
56
In addition to contracts that violate statute, how else may a contract also be void under illegality?
If contrary to morality or institution to marriage or damaging to government or if interferes with justice.
57
Are restrictive covenants / non compete clauses valid?
No - illegal restraint of trade if not reasonable in length and geographical scope.
58
What is the effect of a common / identical mistake?
Contract is void
- both parties made same mistake when agreement made.
59
What is the effect of mutual mistake?
Contract is void
- mutually and reasonably mistaken about different things.
60
What is the effect of unilateral mistake?
Contract can be void
- only if non-mistaken party knew of the mistake.
61
What is the effect of mistake as to identity?
Contract is void
- if one party believes they are entering contract with the person the other party is pretending to be and mistaken party would not have entered into contract if they knew who they were dealing with.
62
When is a contract voidable?
1. contract entered into reliance on misrepresentation
2. contract entered into by minors
3. contract entered into under duress
- illegitimate pressure
- threat to unlawfully retain goods
- one party in much stronger economic position
4. contract entered into as result of undue influence.
63
When may undue influence be presumed?
If contract calls for explanation and is between
- parent and child
- solicitor and client
- guardian and ward.
64
When is rectification available?
When parties actually agreed to enforceable contract but contract written down and writing mistakenly doesn't reflect oral agreement.
65
What does actionable misrepresentation require?
False statement of fact / law to induce them to enter into contract
- past or present fact not future
- statement of opinion not fact if genuinely held
- statement of intention is statement of fact only if proved speaker did not have intention.
66
When can silence be actionable misrepresentation?
- in utmost good faith contracts
- where partial disclosure is misleading
- if earlier representation has become untrue.
67
What is fraudulent misrepresentation?
False statement made knowingly, recklessly or without belief in truth.
68
What is negligent misrepresentation?
False statement and person who made statement cannot prove had reasonable grounds for believing it when made.
69
What is innocent misrepresentation?
False statement made without fault.
70
What is the option if a contract is based on misrepresentation?
Voidable
- can rescind contract or seek damages.
71
When is rescission not available?
1. impossible to restore
2. bona fide third party purchaser
3. finds out about misrepresentation but continues
4. waits so long that other party would be harmed by rescission.
72
What are the damages available for fraudulent misrepresentation?
If innocent party can prove fraudulent - recover all losses incurred.
73
What are the damages available for negligent misrepresentation?
If cannot disprove negligence - likely recover all losses incurred.
74
What are the damages available for innocent misrepresentation?
No damages - but court has discretion to award damages in lieu of rescission.
75
When will there be discharge of contract?
1. fixed term contract expires
2. agreement of parties
3. waiver
4. full performance
5. substantial performance - but still breach of warranty
6. divisible contracts.
76
When does anticipatory breach arise?
Clear 1 party won't perform when time for performance arises
- if goes to condition of contract, immediate right to terminate contract and/or sue for damages
- if chooses to wait, will lose right to sue.
77
When will a contract be discharged for frustration?
If after contract made an event occurs making contract impossible or radically different.
78
Does destruction of a house discharge the contract?
No.
79
How can 'radically different performance' be a ground for frustration?
Must be fundamental to contract.
80
If a contract is frustrated but a party incurred expenses before discharge, what happens?
Court may allow them to retain sufficient sums as reimbursement for expenses.
81
If a contract is frustrated but a party obtained a valuable (non-monetary benefit) before discharge, what happens?
Party who benefitted may have to pay for it.
82
Which contracts do frustration not apply to?
Insurance contracts, contract for sale of goods when goods perished, or if contract includes force majeure.
83
What is the purpose of damages in contract?
To put the innocent party in position in which would have been if contract had been performed.
84
What happens if a party has suffered no loss? What are their damages?
Nominal damages at most.
85
What is the basic measure of damages?
Expectation damages or loss of bargain damages.
86
What do we use if expectation damages are too speculative?
Reliance damages.
87
What type of non-monetary losses will be awarded?
1. damages for physical injury - as long as not too remote.
88
Are punitive damages recoverable in contract?
No.
89
When is damages measured?
At the date of breach.
90
What must damages be if they are to be recoverable?
1. fair and reasonably arises naturally from breach
2. reasonable contemplation of both parties
3. remoteness considered at time contract was made.
91
When is it possible breaching party may not be liable for losses caused by breach?
1. intervening event
2. breach of 2 effective causes - still liable
3. contributory negligence only if breach involves duty of care.
92
What are damages in contract for sale of goods if goods aren't delivered / buyer rejects?
Difference between contract price and market price for goods at time of breach.
93
What are damages in contract for sale of goods if buyer wrongfully refuses to accept delivery?
Difference between contract price and market price for goods at time of breach.
94
What must the innocent party do for damages?
Mitigate damages
- but no duty if claim for debt owed.
95
What is the effect of a liquidated damages clause?
Innocent party recover specified amount - only if genuine estimate of damages cannot be a penalty.
96
What is an indemnity?
Promise to accept responsibility if someone else doesn't perform obligation.
97
What is a guarantee?
Promise to perform obligation instead of person in the primary contract performing
- must be in writing
- no effect if primary contract discharged.
98
When is specific performance available?
Equitable order requiring party to contract to perform as promised and granted only if monetary damages is inadequate
- not if causes undue hardship or supervision by court.
99
What are the specific rights under CRA 2015 for damages?
1. right to reject defective goods within 30 days for full refund
2. if no rejection - can require trader to repair / replace at trader's expense
3. if repair / replacement not successful / too expensive - right to require trader to reduce price or reject goods in return for refund deducting use consumer has made of them.
100
What happens if no contract remedy available but person will be unjustly enriched because contract failed?
Restitution may be sought to prevent unjust enrichment.
101
What may restitution require?
Payment of money or turnover of property.
