Formation Flashcards
(22 cards)
Components for valid contract
- Offer
- Acceptance
- Consideration
- Intention to create legal relations
Offer test
Definite promise to be bound by specified terms
1. Certainty of term (if ‘may’ = ITT)
2. Willingness to be bound
3. Communicated
4. Addressed to person or group
Examples of ITTs
- Display / website
- Advert unlesss reward or unilateral offer
- Tender unless commitment in tender (to consider by deadline / accept highest offer)
Auction rules
With reserve
* A’s request for bids = ITT
* Bid = Offer
* Hammer = Acceptance (bilateral contract between seller and bidder)
Without reserve
* A’s request for bids = offer
* Highest Bid = acceptance
(Unilateral contract between bidder and auctioneer. Entitled to damages on expectation loss basis)
Ways in which an offer may be terminated
- Revocation
- Lapse of Time
- Rejection
When is an offer validly revoked?
- Before Acceptance
- Communicated by offeror or reliable 3rd party (not selling to another)
- Received by Offeree (no postal rule)
If unilateral: cannot be revoked if oferee has started to perform act of acceptance
A promise to keep an offer open is not binding unless consideration + intent to create legal relations
When is an offer validly rejected?
- Counteroffer (definite proposal of its own); and
- Communicated to Offeror
When is an offer terminated by lapse of time?
- End of express time frame
- Reasonabel time
- Express or implied condition is no longer met (e.g. goods no longer in same condition)
Valid acceptance conditions
Complete and unqualified assent to all the terms
1. corresponds exactly
2. knows of offer + addressed to offeree
3. Follows prescribed mode of acceptance
4. communciated (by themselves or AA) UNLESS postal rule applies
If unilateral: once fulfilled all conditions
How can acceptance be communicated if there is a prescribed acceptance method?
If mandatory: must use
If not mandatory: any method no less advantageous
When does postal rule apply?
- Reasonable to use post (no need for prompt response)
- Posted correctly
- Not excluded (no notice required)
Consideration - rule
Need not be adequate but must be sufficient (i.e. do something in return)
Insufficient consideration:
* Past act
* Performance of an existing duty
* Partial repayment
When will a past act be sufficient consideration for a later promise to pay?
- Act is done at promisor’s request
- Mutual understanding at outset it woudl be rewarded
- intention to create legal relations
When will performance of an existing duty be sufficient consideration for a promise of additional payment?
- Exceed duty
- Existing duty is owed to a third party
- A doubts B will complete + A offers B more money + A obtains a benefit + no duress
When will part repayment be sufficient consideration for a promise to forgo balance?
- Offer something different
- paid by a 3rd party
- accepts partial repayment early; or
- Promissory Estoppel
What is Promissory Estoppel?
Clear promise to waive a legal right
Debtor alters position
Defence (shield not sword)
No duress
Effect
- cannot reclaim past payment
- can claim future payments after reasonable notice (if one off, can claim after reasonable notice)
How to vary a contract?
Agreement
Consideration (think: existing obligation / part payment)
Intention to create legal relations
Enforceability of contracts on minor
Minor can enforce contract but not enforceable against minor UNLESS:
1. Necessaries; or
2. Employment / Education / Apprenticehip + Minor’s benefit
Contract adn mental incapacity - enforceability
Voidable by person with incapacity if:
1. incapable of understanding anture of transaction; and
2. other party knew this
Privity of contract
A 3rd party cannot be sued or sue under a contract UNLESS
1. Assigned Rights (3rd party can sue but cannot be sued - sue original for breach)
2. CRTPA: (3rd party can sue or rely on an exemption clause) if:
a) identified by name, member of class or particular description; and
b) express provision giving 3rd party right -or- term purports to confer a benefit on 3rd party
