Formation of a contract Flashcards
What is a contract
A contract is a legally binding agreement between two or more parties for goods or services
What are the essential elements for a valid contract
Essential elements of a valid contract are:
- Offer and Acceptance
- Consideration
- Intention to Create Legal Relations
- Capacity to Contract
What is offer and acceptance
Offer and acceptance is when a clear offer is made and accepted with defined terms
What is consideration in a contract
Consideration in a contract means each party must give or promise something of value
Who can’t enter into contracts
People who can’t enter into contracts are:
- Minors
- Drunk or Drugged
- Mental Incapacitated
What did the court rule in Nash v Inman 1908
Nash v Inman 1908, the court ruled that minors have limited capacity to contracts
How does the Companies Act 2006 protect third parties acting in good faith with a company
Companies Act 2006 removes the effect of the ultra vies rule to protect third parties acting in good faith with a company
What do void contracts mean
Void contracts have no legal effect, e.g. illegal contracts
What are voidable contracts
Voidable contracts is when one party can choose to set it aside, e.g. under duress
What are unenforceable contracts
Unenforceable contracts can’t be enforced even if technically valid
What are implied terms
Implied terms are terms not explicitly stated
What did the Consumer Rights Act 2015 state about goods sold
Goods must be fit for purpose - Consumer Rights Act 2015
What do unenforceable clauses mean
Unenforceable clauses are clauses where parties cannot exclude them from liability of death or personal injury (Unfair Contract Terms Act 1977)
Under the Limitation Act 1980 how long do you have to sue for a breach
You usually have 6 years to sue for breach (Limitations Act 1980)
What is an offer
An offer is a definite promise
What does an invitation to treat invite
An invitation to treat invites negotiation
What must acceptance be
Acceptance:
- Must be unconditional
- Must be communicated to be valid
What are the exceptions to acceptance
Exceptions to acceptance are:
- Postal rule
- Unilateral contracts
- Emails
When is acceptance valid with the postal rule
With the postal rule acceptance is valid when posted
When is acceptance valid with unilateral contracts
With unilateral contracts acceptance is based by performance
When is acceptance valid with emails
With emails acceptance is valid when received, not when sent
How can a contract be terminated
A contract can be terminated by:
- Revocation
- Lapse of time
- Death
- Rejection or counter-offer
What is revocation
Revocation is withdrawn before acceptance
When is past consideration valid
Past consideration is not valid, unless a prior request with implied payment
