law of contract - w1 Flashcards
(30 cards)
general questions
what is the most fundamental definition of a contract?
an enforceable agreement between two or more parties
general questions
which one is not one of the three fundamental elements for forming a contract?
- consideration
- intention to create legal right
- agreement
- formal written document
general questions
if a contract lacks one of the three fundamental elements, what is its legal status?
- enforcable with limitations
- void
- voidable
- still a valid contract
true or false?
some contracts can be legally binding, even if they are not written down
true
general questions
a legaly enforceable agreement that meets all requires elements is a…
valid contract
general questions
an agreenent that had no legal effect from the beginning is a
void contract
general questions
a contract that is valid but can be set aside by one party is a
voidable contract
general questions
the legal test used to determine contract formation based on a reasonable person’s perspective is called
the objective test
general questions
something of value exchanged between parties in a contract is called
consideration
contract and the law of contract
what is contract law?
- a contract is defined as “an enforceable promise or agreement”
- the law of ctract is to establish whether the law will enforce such a promise or agreement in the given contract
contract and the law of contract
how many parts of contract law are there?
there are 4 parts of contract law:
- part 1: formation of contract
- part 2: terms
- part 3: avoidance
- part 4: discharge and remedies
how many parts of contract law are there?
what are the three fundamental parts of a formation of contract?
- agreement
- intention to create legal rights
- consideration
refers to how a contract is made by parties
- lots of legal issues
how many parts of contract law are there?
what are the terms of a contract?
- content of the agreement
- what are the terms
- how we interpret or construe the true meaning of the language parties used to form the contract
how many parts of contract law are there?
what is avoidance?
not fair for the courts to enforce
refers to when there is some agreement, properly formed, but at a later stage, although the contract was deemed as formde, the quality of consent, maybe some other factors, made the contract should not be enforced, since it is unfair
- unconsionable conduct
- misrepresenation
- duress
how many parts of contract law are there?
performance of the contract and how can it end
discharge and remedies
- parties are discharged or relased from the obligation
- breach and how to deal with remedies
contract and the law of contract
key terms that describe the enforceability of contracts
dont use the word agreement to substitute contract
there must be an agreement for a contract
valid: contracts properly formed (elements of formation of contract)
- courts will choose to enforce
voidable: valid till set aside/rescinded due to vitiating factors
- a contract is properly formed, but a party who has the legal right to set aside the contract, making the contract say void, however, if they planned to resume the contract, then it is now considered a void contract
void: invalid from the beginning
- legally as empty, invalid
- there is no legal effect in the eye of law
contract is different from agreement
- not all agreements are contracts
13.10
what makes a contract enforceable?
Agreement
there are three elements needed for an enforceable contract
not all agreements are enforceable by court
- to have an agreement there must be a meeting of the minds (refer to the objective test)
always before a forming a contract
agreement
traditional and modern approach to establishing an agreement
to find agreements, one goes through offer and acceptance analysis
consensus: agreeing on the same thing and minds that should be really agreed with each other
traditional approach: simple, popular contractual agreement
modern approach: a party making an offer to contract with the other on certain terms
agreement
the law for offer
making an offer
an offer is a ‘firm’ statement of intention to be bound on certain terms
firm statement: nothing more to be bargined for, immediate conclusion of the bargain
- offeror makes an offer to offeree
invitation to treat vs offer
treat: interested to bargain, draft proposal waiting for the exact terms of the ‘contract’
- display of goods: pharmaceutical society of great britain v boots cash chemist
- advertisment: carlill v carbolic smoke ball
- auctions
- tenders
offers must be communicated, and takes effect when it reaches the other party
terminating an offer
when are offers terminated?
- rejection or counter-offer: hyde v wrenchg
- revocation of offer: byme v tienhoven -> needs to be communicated, before it is accepted
- lapse of time
- death
- option: goldborough Mort v Quinn -> 2.140
- unilateral contract: mobil oil australia v wellcome international ->2.140
when an offer is accepted, it become as ‘agreement’
agreement
unilateral and bilateral contract
the law of offer
unilateral contracts: one parties has completed or performed the task that they were meant to do
- one party making a promise and the other person accepting it by performing an action
- someone promises to pay a reward to anyone who finds their lost pet
bilateral contracts: a legally binding agreement where two or more parties exchange promises to perform specific actions
- both parties are both a promisor and a promisee
- essentially, it’s a ‘promise for a promise’
- e.g. a buyer promises to pay for goods, and a seller promises to deliver them
3.50-3.60
agreement
the law for acceptance
general requirements
- acceptance is an unequivocal (so clear and firm, as to reduce the chances of changing their decisions) response to the offer
- acceptance must be absolute, unqualified (if new conditions are added, they need to be amounted to a counter-offer);
- offeree must fully to the terms of the offer - otherwise, a counter offer (so must follow the instructions given in the ‘offer’)
- acceptance must be in response to offer (rely upon the offer): the crown v clarke -> 2.180
rely upon the offer
know the offer well -> if one party doesn’t know the offer, then they can’t accept it
the communication requirement
generally, acceptance must be communicated (this determines the timing and place of formation of agreement
- instantanous rule for instantanous communication: telephone, telex: brinkibon case -> 2.200-2.100 - when received by the offeror
- law of the place: where the contract is formed
- timing of accpetance: when does the contract become binding
there are always exceptions
- postal accceptance rule: henthorn v frased -> 2.230 : when posted, if contemplated or appropriate in the circumstnace
- this postal rule only applies to ‘acceptance’, not to ‘offer’ -> 2.240
- refers to when an offer is made and the parties intend to accept it via post, the contract is considered to be formed when the letter of acceptance is posted, not when it is received by the offeror
- this is bc offeror usually have the upper hand by dicating the wau of acceptance (par makes it fairer), however there are times where this doesn’t apply e.g. if the offeror says let me know, then postal services is not acceptable since it will take to long to receive a reply
battle of the forms 2.310 & E-commerce 2.330 (modern approach)
- documents, conduct considered as a whole -> battle of the forms: lord denning in butler machine tool ltd
- electronic transactions acts (extract from NSW act 2000)
-> statements on websites: generally invitation to treat -s14b
-> recognises electronic communication - s14c
-> allows withdrawal of errors in electronic communications regarding contracts - s14d
general questions
consesnsus as idem means ‘agreement to the same thing’
offer
true
what makes a contract enforceable?
intention to create legal rights
there are three elements needed for an enforceable contract
the key is the parties’ intention to create legal relations
- courts use an objective test to determine the parties intention
why the courts should chooose to enforce the contract or why the law is made in that way that allows the judge, or court to enforce the contract?
contractual obligations are private and self-imposer (unlike criminal law)
parties to the contract decide between themselves
- parties has promiseed each other and they have demonstrated objectively that they’ve intention to seriously deal with each other, take responsibility and create some legally enforceable rights and obligation
- the role of the court is not to re-write the contract for the parties, but to determine what a reasonable person would understand about the meaning
exceptions can be made by law that limits contractual freedom e.g. for the protection of consumers (to prevent unfair terms, or misleading conduct)
intention to create legal rights
what is the objective test?
aka a reasonable person test
subjective test is not used (rarely)
consensus ad idem - ‘agreement to the same thing’ or ‘meeting of the minds’
objective test: used to assess offer and acceptance in contract law
- evaluates actions or behaviour based on what a reasonable person would have done, thought, or believed in the same circumstances, rather than focusinf on the individual’s actual beliefs and intentions
- aims to remove personal biases and subjectivity, promoting fairness anf consistency
subjective test: examines the person’s actual mental state, thoughts or intentions at a specific time, focusing on their individual perspective
Gibson v Manchester City Council 1979 1 WLR 294
2.30
