Introduction - Contract Law Flashcards
(28 cards)
3 fundamental elements required to form a simple contract?
- Agreement (offer and acceptance)
- Intention and capacity (intention to create legal relations + legal capacity)
- Consideration (something of value moving from each party)
How is agreement determined in contract law?
Objectively, by analysing communications for evidence of offer and acceptance
What happens if any of the 3 fundamental elements is missing?
No valid contract
What are express terms in a contract
Statements explicitly agreed upon by the parties, orally or in writing.
How can terms be implied in a contract?
In fact - to reflect presumed intentions of the parties (eg trade customs, course of dealings, business efficacy)
Can parties contract out of implied terms?
Sometimes - especially implied terms in law - if the contract expressly includes them
What are the 5 ways a contract can be discharged?
- Performance
- Agreement
- Breach
- Frustration
- Expiry
What is the effect of complete performance?
Discharges contractual obligations and extinguishes rights under the contract
What is frustration in contract law?
When an unforeseen event after contract formation makes performance impossible, illegal, or fundamentally changes the contract’s nature
What are the 2 types of contract terms relevant to breach?
- Conditions - are fundamental terms; breach of them allows terminations + damages
- Warranties - minor terms; breach allows only claim for damages
What is the purpose of unliquidated damages?
To compensate the claimant and put them in a position they would have been in had the contract been properly performed
What legal principles govern unliquidated damages?
- Hadley v Baxendale (remoteness)
- Duty to mitigate loss
What are liquidated damages and penalties?
Liquidated damages - Pre-agreed sums enforceable if reasonable
Penalty clauses - unenforceable if intended to punish rather than compensate
What equitable remedies are available for breach of contract?
- Specific performance (order to perform)
- Injunctions (order to do or not to do something
What is agency in contract law?
Where an agent can form binding contracts on behalf of a principal
When is a principal bound by an agent’s act?
- If the agent acts within actual authority (express or implied)
- if the agent acts within apparent authority
- If the principal ratifies acts done without authority
What are Heads of Terms?
Preliminary agreements outlining intentions before a formal contract, usually non-binding except for specific clauses
What are letters of comfort?
Non-binding assurances (common in finance) that can sometimes lead to liability depending on wording and context
What is the Battle of the Forms?
A situation where parties exchange standard terms; the prevailing terms are usually the last ones sent before acceptance
What are conditions precedent in a contract?
Conditions that must be satisfied before the contract or parts of it become effective
What is assignment in contract law ?
The transfer of the contractual rights (but not obligations) to a third party, usually without the other party’s consent
What is novation in contract law?
The transfer of both rights and obligations to a third party through a new tripartite agreement requiring all parties’ consent
What is the effect of the Contracts (Rights of 3rd Parties) Act 1999?
It allows non-parties to enforce contract terms if:
- The contract expressly provides for it, or
- The term purports to confer a benefit on them
How can parties exclude 3rd party rights?
By expressly stating in the contract that no 3rd parties may enforce its terms
