Week 4 - Contract Law II

Question 1

Explain MINORS in Relation to Contracts

Answer 1

• person Under 18
• Contract with Minor for Necessaries will Be Binding On the Minor, As Long As it Doesn’t Contain Harsh Terms that Are Detrimental To the Minor , e.g. a Travel Pass for School
• What’s Regarded as Necessary will Depend on the Minor and their Social Standing

Question 2

Explain Capacity to Contract

Answer 2

• Some People may be Limited in Their Powers to Make Contracts, i.e. they Lack Contractual Capacity

Question 3

State the 3 Types of Contracts Made with Minors

Answer 3

• Voidable
• Valid
• Unenforceable

Question 4

Explain Beneficial Service Contracts (VALID) for Minors

Answer 4

• Contracts for Necessaries, Beneficial Service Contracts
• Contract for Training, Education or Employment is Binding on a Minor as Long as it is, On the Whole, For the Benefit
• Even If Some of the Terms are Detrimental to the Minor, the Contract will Still be Binding If the Majority of the Terms are In Their Favour

Question 5

Explain UNENFORCEABLE Contracts with Minors

Answer 5

• Contracts with Minors that Aren’t Necessaries, Beneficial Service Nor Fall Under Voidable will be Regarded as Unenforceable
• Includes Contracts for Non-Necessary Goods and Services, also Loans
• Though the Minor Could Choose to Ratify the Contract, i.e. be Legally Bound by it, Once they Reach 18

Question 6

Explain Contracts VOIDABLE by Minor

Answer 6

• Certain Contracts can be Voidable by a Minor, i.e. they Can be Voided By the Minor Before or Just After Reaching the Age of 18
• Contracts are Usually of a Continuous Nature, e.g. Partnership Agreements, Property Leases etc.

Question 7

Capacity - Explain INTOXICATION

Answer 7

• is Presumed that People Under the Influence of Alcohol or Drugs Still have Capacity to Know What They’re Doing, Therefore will be Bound By the Contract
• However, a Contract will be Unenforceable If the Intoxicated Party Doesn’t Comprehend the Nature of the Transaction AND the Other Party was Aware But Carried On Regardless

Question 8

Explain Corporations and Capacity

Answer 8

• a Corporation is a Legal Entity with its Own Legal Personality
• a Company has Unrestricted Objects, Meaning it Has No Restrictions to Enter into Legal Relations
• However, a Company May Choose to Restrict its Objects by Stating Restrictions in its Constitution

Question 9

Explain Consideration

Answer 9

• a Binding Contract Must have Consideration from Both Parties
• Unless made Under Deed, Gratuitous Promises Will Not be Enforced
• Consideration is the Promise to Give, Do Something or Refrain from Doing Something
• PROMISOR - Person who Make Promise
• PROMISEE - Person who Receives Promise
• in many contracts, there’s an Exchange of Promises, meaning Both Parties are Promisors and Promisees at the Same Time

Question 10

What is Executory and Executed Consideration?

Answer 10

• EXECUTORY CONSIDERATION - the Promise to Do Something in the Future
• EXECUTED CONSIDERATION - Consideration that has Already been Completed

Question 11

Explain Past Consideration

Answer 11

• Occurs when a Promise is Only Made After an Act has Been Done
• e.g. If a Person were to Find and Return an Expensive Item to You, You’d Realise that You’d Lost It
• Usually, Not Accepted as Consideration

Question 12

Explain a Request with an Implied Promise to Pay

Answer 12

• if a Request is Made for a Service and the Request Implies a Promise to Pay for It, Then Completing the Service is Consideration, Not Past Consideration
• e.g. Hiring a Taxi or Ordering at a Restaurant
• For this Rule to Apply, there Must be these Conditions Present :
  the Act Must have been Carried Out at the Request of the Promisor
  Both Parties Must Contemplate that Payment is Going to be Made for the Service

Question 13

Explain how Consideration Must be Sufficient, But it Need Not be Adequate

Answer 13

• SUFFICIENT- it Must have Some Measurable and Material Value, and it Must be Real, Legal and Certain
• NEED NOT BE ADEQUATE - Provided it has Some Value in the Eyes of the Law, the Consideration will be Regarded as Valid
• Parties have Freedom to Make their Own Contracts, that Courts Don’t Care if the Parties Make a Good or Bad Bargain

Question 14

Explain Privity of Contract

Answer 14

• Contract is Binding Between the Offeror and the Offeree (only those that signed the contract are binded)
• Privity of Contract = Persons not Party to the Agreement (i.e. 3rd parties) Cannot be Bound by the Terms or the Take Action if the Terms are Broken

Question 15

Explain Exemption to the Rule of Privity

Answer 15

• As the Rule can Cause Injustice, the Courts Developed a Number of Exceptions
• e.g. If the Contracts were Made for the Benefit of a Group of People such as Family
• Jackson v Horizion Holidays Ltd (1975)
  Mr J made a Complaint Against Horizion for Misrepresentation regarding the Lack of Facilities During a Family Holiday
  Horizion Accepted Liability But would Only Aware Compensation to Mr.J and Not the Rest of the Family
  As Mr.J Had Entered Into the Contract on Their Behalf, Damages were Awarded By Court in Respect Of the Whole Family

Question 16

What is a VOID CONTRACT?

Answer 16

• If Contract Void, it Means that Contract Effectively Never Existed
• Contract will be Voided If, e.g.
  Made by Parties Without the Capacity to Agree
  Contains Unlawful Goods e.g. illegal drugs
  No Consideration Offered
  If Contract Void, Ownership of Items Cannot Pass Between Parties

Question 17

What is an Unenforceable Contract

Answer 17

• is a Valid Contract, But If One of the Parties Doesn’t Carry Out their Side of the Contract, the Courts will Not Enforce it
• e.g. the Agreed Terms of the Contract are Too Vague

Question 17

What is a Voidable Contract

Answer 17

• One Party has the Option to Void the Contract But Until that Point, It’s Treated as a Valid Contract and Goods can be Legally Transferred Under it