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Commercial Law > Week 3 - Contract Law I > Flashcards

Week 3 - Contract Law I Flashcards

1
Q

What is a Contract?

A
  • Agreement between 2 or More Person that’s Legally Binding
  • Doesn’t Necessarily Have to Be in Writing
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2
Q

What are the 5 Elements that Valid Contracts Require?

A

1- AGREEMENT (Offer and Acceptance of Definite Terms) - Some Terms may be Implied (e.g. quality of goods), Non-negotiable (standard form contract), Unenforceable (e.g. personal injury clauses)
2 - An INTENTION to CREATE LEGAL RELATIONS
3- COMPLIANCE with REQUIRED FORMALITIES where APPLICABLE
4 - CONSIDERATION - Promise to Give, Do or Refrain from Doing
5 - CAPACITY to CONTRACT - parties Must have Capacity to Enter Into a Contract. Contract May be Voided if Party Didn’t have Capacity

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3
Q

What is the Difference by the 2 Forms of a Contract - Simple and Speciality Contract

A
  • SIMPLE CONTRACTS - be Made in Any Form
  • SPECILAITY CONTRACTS - Have to be in a Particular Form to Be Legally Enforceable By the Courts
    Some Contracts Required to be Made by Deed
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4
Q

What is a BILATERAL CONTRACT?

A
  • where 1 Party Promises a Certain Action in Response to Other Party’s Action
  • e.g. Buying Goods in a Store, Fixing Someone’s Car for an Agreed Price
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5
Q

What is a UNILATERAL CONTRACT

A
  • One Party Makes a Promise of an Action if Another Party (or parties) Executes of an Action, but No Obligation to Execute said Action
  • e.g. a Reward for Lost Property, an Insurance Policy
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6
Q

Explain the how it works - the Agreement of a Contract Existing with an Offer and an Acceptance

A
  • Usually 1 Party Makes an Offer, Sets Out the Proposed Terms of the Contract (the Offeror)
  • Up to the Other Party Whether they Want to Accept this or Not
  • Offers Must be Clear, Without Terms that are Too Vague, Must be Distinct from an Invitation to Treat
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7
Q

Offer - Explain Fisher v Bell (1961)

A
  • a Statute Dictated that it was an Offense to ‘Offer for Sale’ an Offensive Weapon
  • a Shop Displayed flick knives for Sale in their Window
  • Verdict : as Contract Law Principles Stipulate that an Displaying Items in a Shop Window Constitutes an ‘Invitation to Treat’ and Not an Offer for Sale, the Defendant (shop) was Acquitted
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8
Q

Explain - When is an Offer an Offer in Relation to Unilateral Offer and an Advert

A
  • A Unilateral Offer could be Made in an Advert etc. to Everybody Without Communication of Acceptance
  • Carlil v Carbolic Smoke Ball Company (1893)
  • For a Unilateral Contract to be Valid, the Requested Action is Both Acceptance and Consideration
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9
Q

Explain an Offer being Distinct from a Statement Merely Giving Info to a Party and being Distinct from a mere puff or Boast

A
  • an Offer must be Distinct from a Statement Merely Giving Info To a Party or Expressing an Intention to Do Something In the Future
  • Harvey v Facey (1893)
  • an Offer must be Distinct from a Mere Puff or Boast
  • Leonard V Pepsico
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10
Q

Explain how an Offer Must be Communicated To the Other Party

A
  • a Person Can’t Accept an Offer they Don’t Know About
  • e.g If a Reward is Given for Information, But the Informant Isn’t Aware of the Reward, they Can’t Retrospectively Claim the Reward After the Time of Executing the Action
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11
Q

State the 4 Ways an Offer Can be Terminated

A
  • Termination by REVOCATION
  • Termination by REJECTION and COUNTER OFFER
  • TERMINATION by LAPS of TIME
  • TERMINATION by DEATH
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12
Q

Explain TERMINATION of Offer by REVOCATION

A
  • Offer Withdrawn by Person Making the Offer
  • Can be Revoked at Any Time Up Until the Offer is Accepted, Even if the Offeror Informs the Offeree they will Keep The Offer Open for a Period of Time
  • Routledge v Grant (1828 ) - Although Offeror said Offer to Buy House is Open for 6 Weeks, they Were Within their Right to Sell to Someone Before Then
  • However, If Offeror Make Promise to Keep Offer Open and Offeree Gives Something in Return (consideration in law) , They’re Contractually Bound to Keep their Promise
  • Withdrawal Of the Offer Must be Communicated to the Offeree - Until Then the Offer Remains Open and Can be Accepted
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13
Q

Explain TERMINATION of Offer by REJECTION and COUNTER OFFER

A
  • If a Counter Offer is Made, This is Regarded as Rejection Of the Original Offer
  • Hyde v Wrench (1840)
    Defendant Offered to Sell Farm to Claimant for £1,000
    Claimant then Attempted to Buy Farm for £1000
    Verdict - Because Counter Offer was Made, Means Original Offer was Rejected, Therefore No Longer Open
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14
Q

Explain Withdrawal of Offers in Unilateral Contracts

A
  • If an Offer is Made Unilaterally and the Offeree has Started to Execute the Action (part-performance), there’s Generally an Implied Obligation not to Withdraw the Offer
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15
Q

Explain TERMINATION of Offer by LAPS Of TIME

A
  • If the Offer has a Time Limit, It will Expire at the End of that Limit
  • If No Specified Time Limit, It will Still Expire After a Reasonable Time (could be weeks, months, Years, Depending on Nature of Offer)
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16
Q

Explain TERMINATION of Offer by DEATH

A
  • the Deceased Offeree is Unable to Accept an Offer Because they’re Dead
  • If Offeror Dies, then the Offer Terminates Once the Offeree Knows of the Death
  • If the Offeror Dies and the Offeree Doesn’t Know the Death, Could be Legally Uncertain, Particularly If there’s a Element of Part Performance
17
Q

What is Acceptance?

A

Acceptance of an Offer is the Unconditional Acceptance to All the Terms of an Offer
- Can be Made :
In writing, Hammer Fall at an Action
- Is Unconditional :
Any Introduction or Amendment of Terms will be Seen as a Counter-Offer, Therefore a Rejection of the Original
If Counter Offer is Accepted, that will Form the Terms of the Contract

18
Q

Explain Acceptance Must being a Positive act in relation to Bilateral and Unilateral Contract

A
  • In a Bilateral Contract, the Silence of the Offeree Can’t be Regarded as Acceptance
  • In a Unilateral Contract, the Offeree Doesn’t Need to Communicate Acceptance to the Offeror as Long As the Terms of Offer are Understood and Executed by the Offeree (e.g. Part Performance)
19
Q

Explain the Communication of Acceptance

A
  • Generally, Acceptance Must be Communicated To the Offeror
  • Acceptance Must be Communicated By the Offeree Of an Authorised Agent - an Ordinary 3rd Party Wouldn’t Be Effective
20
Q

Explain Methods of (showing) Acceptance

A
  • If the Offeror Doesn’t State a Particular Method, the Court will Usually Accept Any Reasonable Method of Communication By the Offeree
  • If the Offeror Doesn’t State a Particular Method, Acceptance will Only be Valid If Communicated In that Method (or an Equally Effective Manner that Doesn’t Disadvantage the Offeror
21
Q

Explain the Communication of Acceptance

A

There Exists some Exception to the Rule that Acceptance Must be Communicate
- Unilateral Contracts - e.g. Carlil v Carbonic Smoke, Acceptance Didn’t have to be Communicated
- Postal Acceptance - General Rule is that Acceptance is Valid as Soon as the Notice of Acceptance Enters the Postal System

22
Q

Explain Intention to Create Legal Relations in relation to Agreement

A
  • For an Agreement to Be Legally Binding, the Parties Must Intend for Legal Relations (i.e. Rights and Obligations to be Imposed on Them
  • Intention Doesn’t Necessarily Have to be Stated
  • If There’s a Dispute Over the Agreement, Court Needs to Decide If there’s an Intention to Create Legal Relations or Not
23
Q

Explain Intention to Create Legal Relations - Social and Domestic Agreements

A
  • Social, Domestic & Family Arrangement Aren’t Legally Binding
  • Key Case : Balfour v Balfour (1919) - Agreement Between Separated Husband & Wife to Pay Maintenance
24
Q

What are Exemption To The Presumption

A

If There’s Clear Evidence that Legal Relations were Intended to be Created
Simpkins v Pays (1955)
- 2 Family Members and a Lodger Jointly Enter Newspaper Competitions, Sharing Cost of Entry
- When Defendant won £750, Refused to Pay Claimant
- Verdict : As they Had Equally Contributed to Entering Competitions, There’s an Expectation that the Prize would be Shared Equally

25
Q

Explain Intention to Create Legal Relations - Business and Commercial Agreements

A
  • Generally a Presumption that Both Parties Intend to Create Legal Relations
  • As Citizens, this is Important to Remember When Entering into Non-Monetary Transactions with Business Entities, for Example :
  • Competitions
  • Free Gifts
  • Using Social Media
26
Q

Summary of Intention

A

In Situations where It’s Not Obvious Whether there Was Intention to Create Legal Relations, the Court will Consider the Individual Circumstance Of the Arrangement
- i.e. it Depends from Case-to-Case

Commercial Law (8 decks)

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