Law of contract

Law of contract

Civil law
1. Contract
  1. A contract is a legally binding agreement.
  2. Simple/parol contracts are enforceable without having to put them in writing.
  3. Four essential requirements
    1. Offer
      1. Must include clearly stated terms Must be intention to do business And that intention must be communicated.
      2. More offers are bilateral i.e. a promise made in return for a promise e.g. I promise to sell you my car if you give me £2,500. But some offers are unilateral i.e. A promise made in return for some specific act e.g. a promise of £50 to anyone who finds and returns my cat.
    2. Acceptance
      1. When an offer is accepted an agreement is formed.
        Offer + Acceptance = Agreement
        Acceptance must be absolute e.g. having been offered a car for £2,500 saying that you’ll buy it for £2,250 does not constitute an acceptance.
    3. Consideration
      1. Each party offers some kind of benefit to the other party e.g. if you buy a DVD for £10 your consideration is the £10 and the shop’s consideration is the DVD.
      2. Executory consideration e.g. exchange of promises for something to be carried out at a later date e.g. ordering goods on line. Binding contract comes into being when the order is accepted.
      3. Executed consideration – no obligation to pay arises until the other party has executed e.g. you do not have to hand over the money offered as a reward for a lost cat until the person returns the cat.
      4. Past consideration is not deemed to be consideration at all.
    4. Intention to create legal relations
  4. Invitation to treat
    1. An offer is sometimes confused with an invitation to treat.
    2. However an invitation to treat is an invitation to make an offer.
    3. Advertisements are usually an invitation to treat as are price tags in shops.
2. Tort – all civil wrongs that are not breaches of contract e.g. negligence, trespass
Intention to create legal relations
1. Both parties intend the agreement to be legally binding.
2. Where agreements are friendly or social in nature they will not be deemed to be contracts as there is rarely intentions to create legal relations.
Contract terms
1. Implied terms are not expressly stated but are implied either by statute or by the courts.
2. Express terms i.e. specifically mentioned and agreed by the parties at the time of contracting
Sale of Goods Act 1979
1. S12 (1) implies the seller has the right to sell the goods
2. S13(1) implies the goods shall match any description
3. S14(2) implies goods shall be of satisfactory quality
4. S14(3) implies goods shall be fit for the buyer’s purpose
5. S15(2) implies where goods are sold by sample that the bulk shall match the sample
Terms
1. One sub-division of contract terms is express and implied terms
  1. A further sub-division is conditions and warranties
    1. A condition is a fundamental term
    2. A warrant is a minor term.
      1. So you could have an express term that was also a condition and an implied term that was also a warrant or vice versa.
2. Breach of a condition may not necessarily lead to termination of the contract but such a breach does let the injured party decide how they want to proceed e.g. they may opt to repudiate the contract or they may wish that it continues.
3. If there is a breach of a warranty the injured party cannot repudiate the contract but can damages.
Exclusion clauses
1. These are clauses which try to limit or exclude one party’s liability.
2. Unfair Contracts Terms Act 1977 – exclusion clauses can be included in contracts only if they are reasonable.
Performance of a contract
1. This occurs when each party fulfils there part of the bargain e.g. the seller hands his car over to the buyer when the buyer hands over £2,500.
Non-performance
1. New agreement replaces the existing one;. Frustration; Serious breach may sometimes be a valid reason for the injured party to refuse to perform his/her obligations.
Frustration
1. This is where between the time the contract is formed and the performance of the contract some events outside the parties’ control render further performance impossible. The party claiming that the contract has been frustrated must satisfy that the non-controllable events have changed the nature of the contract.
Remedies for a breach of contract
1. Damages- any breach of contract allows the injured party to sue for damages.
2. Specific performance – where the court orders a person to actually perform their contractual obligations.
3. Rectification – where contract has concluded verbally and then written down. If written contract is different to the oral one the written contract can be rectified in line with oral one.

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	Created by b.campbell5322 almost 11 years ago