week 4 - contract law Flashcards
what has to happen for an agreement to be legally binding?
- parties must intend for legal relations (rights or obligations) to be opposed on them.
- if there’s dispute, court decides if there was intention to create legal relations or not.
- doesn’t have to be stated.
in social and domestic agreements, what happens to the intention to create legal relations?
- no intention presumed
or - presumption is proved wrong.
in business and commercial agreements, what happens to the intention to create legal relations?
- intention is presumed
or - presumption is proved wrong
what does contractual capacity mean?
- a person’s legal ability to enter into binding contract.
- a lack of this makes the contract voidable.
what are the factors of contractual capacity?
- minors
- persons intoxicated
- mentally impaired persons
- corporations
what is a minor?
person under 18
what are the aspects of a contract with a minor for necessaries?
- will be binding on the minor as long as it doesn’t contain harsh terms
- what is necessary will depend on the minor and their social standing (class or status in society).
what is a voidable contract?
one party has the option to void the contract but until that point it is treated as a valid contract + goods can be legally transferred under it.
what is a void contract?
- contract that is not legally enforceable + was never legally valid.
- will be voided if made by parties without the capacity to agree, involves unlawful goods (drugs) or no consideration offered. if voided ownership of items cannot pass between parties.
what is an unenforceable contract?
is a valid contract but if one of the parties does not carry out their side of it, the courts will not enforce it eg the agreed terms of the contract are too vague.
what are the different types of contracts made with minors?
- void contracts
- voidable contracts
- valid contracts (necessities contracts + beneficial contracts of service)
what is a beneficial service contracts for minors?
- contract for training, education or employment is binding on a minor as long as it is for their benefit.
- even if some terms are detrimental, the contract will still be binding if the majority is in their favour.
what are voidable contracts by minors?
they can be voided before or just after becoming 18, they are of a continuous nature such as partnership agreements, property leases etc.
what are unenforceable contracts with a minor?
contracts that are not for necessaries or beneficial service, includes contracts for non-necessary goods and services (also loans), though the minor could choose to ratify the contract (be legally bound by it once reaching 18).
what is meant by contractual capacity when intoxicated?
- they still have capacity to know what they’re doing so will be bound by contract
- contract is unenforceable if the intoxicated party does not comprehend the nature of the transaction and the other party is aware of this but still went ahead with it.
what is a corporation?
a legal entity with its own legal personality.
what are the factors of corporations and capacity?
- company has unrestricted objects meaning it has no restrictions to enter into legal relations
- they choose to restrict objects by stating restrictions in its constitutions.
what is the definition of consideration?
the promise to give, do something or refrain from doing something.
what is meant by consideration?
a binding contract must have consideration from both parties. unless made under deed, promises made without any expectation of something in return will not be enforced.
what is a promisor?
person who makes a promise
what is a promisee?
person who receives a promise
what happens to exchanging of promises in contracts?
when exchanging promises both parties are promisors and promisees at the same time.
what is executory consideration?
the promise to do something in the future
what is executed consideration?
consideration that is already completed.
