Law of contract

What are the requirements of a contract for the sale of goods?

• a seller transfers or agrees to transfer

• the property in

• goods

• to the buyer 

• for a money consideration called the price

Goods

all chattel personal other than choses in action and money

Capital gains tax 

charged on the disposal of an asset, the time at which that disposal is deemed to occur:

• the time the contract is made is the time at which disposal and acquisition occurs

• if different, time at which the asset is conveyed or transferred

What are the essential elements of a contract in english law?

• the parties intend to create legal relations

• there is an agreement between parties (offer and acceptance)

• the agreement is supported by consideration or is contained in a deed

Intention to create legally enforceable relations

Seller must intend to sell goods and buyer must intend to buy them. Commercial and business negotiations presumed to create legal relations but social and domestic arrangements are not 

What is the purpose of the doctrine of consideration?

To put some legal limits on the enforceability of agreements. A gratuitous promise (not supported by consideration) is binding only if made by deed

Deed

A written document with certain formalities:

• must be described on its face as a deed or be expressed as executed or signed as a deed

• must be signed in the presence of witnesses who attest the signatures and then be delivered as a deed

What are the only contracts that have to be in writing?

sale of land and contracts for the sale of shares

Can a minor make a contract?

Yes - as long as they have the mental capacity, however it is not always possible to force a minor to carry out their promises 

How can an offer be communicated?

Expressly (spoken words or writing) or by implication (by conduct) 

Actions that are not offers

• a supply of information

• a declaration of intent

• an invitation to treat (invitation to others to make an offer)

When is an offer terminated?

• rejection

• counter offer

• revocation (offeror can revoke an offer at any time before offeree accepts it unless the offeree has been granted an option)

• lapse of time

• failure of condition precedent (an event that must take place before a contract comes into force)

• death

When does acceptance take place when posting a letter?

When it is sent, not when it is received (but this does not apply for other types of communication like offer or revocation of an offer - takes place when received)

Types of conditional contract

Promissory (obligation in a contract which one of the parties has the power to fulfil - not conditions but terms) and contingent (may be either condition precedent or condition subsequent)

condition precedent 

the event referred to by the parties to the would-be agreement is not within their power to bring about. The existence of this suspends the very existence of a contract until the occurrence of a specific event . A contract needs to include this in order to be a conditional contract

Promissory condition

an obligation on one of the parties to the contract which is within the power to perform 

Condition subsequent

provides that a previously binding contract is to come to an end on the occurrence of a specific event 

How to distinguish conditions subsequent from conditions precedent and promissory conditions?

conditions subsequent relate to a termination of contract as opposed to its coming into being

Typical obligations in a condition precedent that suspends the existence of the main obligations under a conditional contract

• a restricted right to withdraw until a specified time or until a reasonable time 

• a duty not to prevent the occurrence of the condition precedent

• a duty to make reasonable efforts to bring about the event 

changes unilaterally mean?

one party changes something - can’t happen

What is the degree to which parties may mutually agree the terms of the contract between them limited by?

• the use of standard form contracts

• the presence of implied terms by virtue of statue

• the restriction of the effectiveness of certain terms because of statue

Are parties bound by implied terms when they have never expressly agreed to them?

Yes

Retention clause

Seller continues to be the legal owner of the goods until goods have been paid for - provides the seller with security of payment

Assignment of contract

party may transfer the rights and benefits of the contract to another person (assignee) who is then entitled to enforce the rights against the other original party to the contract

Novation

A party cannot transfer its duties and obligations to a third party without consent. If they consent then a separate contract (a novation) must be entered into 

What happens if no novation is agreed?

a party may arrange to have its obligations discharged by someone else as a subcontractor. Original party remain liable. Cannot do this if contract was agreed that it would be personal performance

void contract vs voidable contract

void = effectively treated as if it had never been formed and is unenforceable by either party

voidable = valid and enforceable unless the innocent party chooses to cancel the contract making it void 

Main factors that invalidate a contract

• the main contract being illegal or contrary to public policy

• mistake or misrepresentation when the contract is formed

• the exercise of duress or undue influence when the contract was formed 

Restraint of trade

seeks to prevent a person from carrying on a trade, business, profession etc - anti competitive so against public policy and so void, but the rest of the contract is still valid

How can a contract be discharged lawfully?

• by performance

• mutually by agreement

• by frustration = contract can no longer be carried out because of circumstances beyond the control of the parties (not when it merely becomes more difficult or expense to perform)

Actual vs anticipatory breach

actual = a party fails to carry out their duties under the contract

anticipatory = one party repudiates the contract (refuse to carry out duties)

What are the remedies that the innocent party are entitled to?

• damages (compensatory not punitive), innocent party has to mitigate their loss

• specific performance (an equitable remedy). Not awarded where damages are an adequate remedy and never awarded in a contract for personal services

Two types of damages

• liquidated = amount set by the parties themselves as a term in the contract

• unliquidated = the amount of loss to the innocent party that is worked out by a court