IBL Week 2

32 flashcards · Other · by Daniel F.

1. Contract

   Legally binding agreement between two or more parties

2. Freedom to Contract

   Parties generally free to determine terms, except in standard form contracts

3. Standard Form Contract

   Pre-set terms offered by large businesses, limiting negotiation

4. Freedom of form of contracts

   contracts can be written, oral, or inferred by conduct (except in some cases)

5. elements of a valid contract

   Agreement (offer and acceptance of definite terms) Consideration (exchange of value) Intention to create legal relations Capacity to contract (age, sound mind/ etc.) Compliance with formality requirements when required (written, deed/ Etc.)

6. Void contracts

   A contract that is null from the start lacks essential legal elements Never legally void Neither party can enforce it E.g.: contract to commit a crime, contract for an impossible act

7. Voidable contracts

   A contract that is upholdable or cancelable Initially valid, but one party can terminate it Common reasons: duress, fraud, or the involvement of a minor The affected party chooses whether to uphold or void the contract E.g. Contract entered into under duress (threats or coercion), Certain contracts with a minor, supplier misleads a company about the qualities of a product

8. Unenforceable contract

   A contract that is stuck in legal limbo May be valid in substance but can't be upheld by a court Common reasons: failure to follow formal requirements, passing time limits, or violating public policy E.g. Contract that should be in writing but only exists locally, contract where the statute of limitation has expired

9. Types of contracts

   Biliteral, uniliteral

10. Biliteral contracts

    Each party makes a promise, a promise made in return for a promise When a contract is formed by the exchange of promises, each party is under a duty to the other Each party is a promisor and promisee E.g. A: If you promise to mow my lawn, I will pay you $10”; B agrees

11. Unilateral contracts

    A party promises to perform some action in return for a specific act, but the other party is not promising to take any action Only one of those parties made a promise, only they have an obligation. E.g. A says to B, “If you will mow my lawn, I will pay you $10.” Contract formed when B completes mowing; A becomes contractually obligated to pay $10 to B. B never made a promise to mow the lawn, he was under no duty to mow it

12. The offer

    key element in contract formation For a contract to exist, one party must have made an offer, and the other must have accepted it Parties: offeror and offeree

13. elements of an offer

    must be clear - indicates the terms and conditions on which the offeror is prepared to make a contract A valid offer requires clear and unambiguous terms Terms that are overly vague make an offer difficult to enforce: Guthing v Lynn (1831) Usually made to a specific person Offers can also be addressed to a group of people, or even to the general public (often in unilateral contracts) Carlill v Carbolic Smoke Ball Co (1893) Communicated to the offeree Acceptance requires knowledge: an offeree ca…

14. Offers v invitation to treat

    not a binding offer signals a willingness to negotiate, not a definite offer ready for acceptance Initiates negotiation: Invites the other party to make an offer that can be accepted or rejected The party issuing the invitation anticipates additional discussions before a contract is formed E.g. Items on display on the shelves in a shop Pharmaceutical Society of Great Britain v Boots Cash Chemist (1953) Advertisements in newspapers (Partridge v Crittenden) on the contrary Carlill v Carbolic Smok…

15. Offers v request for information

    not a binding offer Indicating a willingness to sell in the future doesn't constitute a binding offer Simply providing a price is not an offer E.g. Harvey v Facey (1893)

16. Offers v mere puffs

    not a binding offer Puffery: an exaggerated or boastful statement is NOT a firm proposal for a contract Puffery is not meant to be a serious contractual promise E.g.: Carlill v Carbolic Smoke Ball Co (1893) and Red Bull Gives You Wings

17. Natural grounds of termination of an offer

    Grounds for termination of an offer lapse of time Offers with specified time lapse after the specified time limit. Offers with no time limit lapse after a "reasonable" period. Death Either offeror or offeree's death terminate the offer May remain valid after offerors death if it does not require them

18. Revocation or withdrawal of offer

    An offeror has the right to withdraw their offer at any time prior to its acceptance (Dickinson v Dodds) (even if the offeror promises to keep the offer open for a specified time (Routledge v Grant (1828)) except when consideration is given The withdrawal of an offer only becomes effective when the offeror’s notice is received by the offeree (Byrne v Van Tienhoven (1880)) Revocation communicated by a reliable third party is valid, even if it didn't come directly from the offeror Unilateral cont…

19. rejection of offer

    refusal by the offeree to accept an offer Ends the offer Attempted acceptance of a rejected offer is a new offer Rejection becomes effective up on the receipt of the rejection by the offeror

20. counteroffer

    offeree's rejection of the original offer and a new proposal with modified terms A counteroffer terminates the original offer & creates a new offer (Hyde v Wrench (1840)) request for clarification regarding the offer's terms doesn't terminate the original offer => so the original offer remains open - Stevenson v McLean (1880)

21. What is acceptance

    Unconditional agreement: acceptance must fully agree with the exact terms of the offer Positive act, silence or inaction is not enough Forms: oral, written, conduct (especially in unilateral contracts) battle of the forms, last shot rule: the final form exchanged becomes the offer, accepted by performing the contract. (Butler Machine Tool v Ex-Cell-O Corp.)

22. How must acceptance be communicated

    Acceptance must be directly communicated to the offeror and received by them or at their place of business Faxes, Emails, and Voicemail Sending doesn't automatically equal receipt Acceptance left on voicemail is likely deemed received when it's reasonable for the offeror to check their messages Business communications are generally expected to be checked during standard working hours Unilateral contracts are accepted by conduct where the post is a valid means of acceptance, acceptance is effect…

23. Simple or Parol vs specialty contract

    Simple or Parol Contract: A simple or parol contract is a contract that can be made in any form - orally, in writing, or by conduct. Specialty Contract: A specialty contract is a contract that must be in a particular form to be legally binding.

24. deed

    written legal agreement that states that it is a deed signed in the presence of a witness E.g. Transfer of land

25. Intention to Create Legal Relations

    agreement to be legally binding, the parties must intend to create legal relations Business/Commercial: Intention presumed. Social/Domestic: Intention not presumed.

26. Contractual Capacity

    Minors: Contracts generally not binding on minors but binding on the other party. Exceptions: Contracts for necessaries, beneficial service contracts. Intoxication: Binding unless the intoxicated party was unaware of the transaction. Mental Incapacity: Contracts voidable if incapacity prevents understanding. Corporations: Capacity limited by their constitutions (ultra vires doctrine).

27. Consideration

    Something of value exchanged for a promise Sufficient, Not Adequate Must Move from the Promisee Past Consideration doesn't count Existing duty doesn't count

28. Part-Payment of Debts

    part-payment of a debt is not good consideration for a promise to forgo the balance. However, there are exceptions to this rule, such as: Payment of a lesser sum before the due date Payment at a different place Payment in a different form Composition with creditors Promissory estoppel

29. Promissory Estoppel

    equitable doctrine that prevents a party from going back on a promise that the other party has relied on to their detriment

30. Electronic contracts

    Websites are generally considered invitations to treat. The offer is made by the customer when they place an order, and the seller can choose whether to accept Kodak case

31. Privity of Contract

    doctrine of privity of contract states that only the parties to a contract can enforce its terms or be sued for its breach Exceptions: Contracts (Rights of Third Parties) Act 1999: contracts can allow 3rd parties to enforce them Agency: agent can enter into a contract on behalf of their principal Assignment: Contractual rights can be assigned to a third party Trusts: A trust is a legal relationship in which one person (the trustee) holds property for the benefit of another person (the beneficia…

32. statute of frauds

    statute requiring that certain kinds of contracts be memorialized in writing, signed by the party against whom they are to be enforced, with sufficient content to evidence the contract Like a deed