A Level Law Contract Definitions

Offer

A willingness to contract on firm and definite terms

Offeror

Party making the offer (seller)

Oferree

The party who receives the offer (the buyer)

"Firm and definite" terms

The terms must be firm and definite with no words indicating hesitation e.g "might" "maybe"

Invitation to treat (ITT)

An indication that a person is willing to negotiate but not yet ready to make a legal contract-not a valid offer

Advertisement (ITT)

Advertisement are ITT's, but can turn into a valid offer if the person interested responds in firm and definite terms, in which the seller can accept or decline

Bilateral Contract

Requires both parties to do something,both parties are obliged to perform e.g buying a phone in exchange for money.

Unilateral Contract

An agreement to pay in exchange for a performance, where the oferree is not obliged to perform but once they have the offer is enforcable e.g finding a lost cat for money.

Request for Information (RFI)

When the offeree asks for more information about the offer, RFI's and replies to RFI's are not valid offers

Ways an Offer can end

Revocation

Rejection

Counter Offers

Lapse of Time

Acceptance

Revocation

Revocation means to withdraw the offer.The offeror can revoke at any time before acceptance but revocation must be communicated clearly, this may even be by a 3rd party as long as they are reliable

Rejection

A refusal to accept the offer

Counter Offer

A response to an offer that substantially changes the nature/obligations of the contract e.g alter price. Counter Offers end the original offer and create a new one

Lapse of Time

An offer can end via a lapse of time, if there was a fixed period stated in the offer then it ends after that, if not then the offer ends after a "reasonable amount of time" based on the item up for sale

Death

If the offeror dies then acceptance can still take place until the offeree learns of the offeror's death, if the offeree dies then the offer ends after

Acceptance

The final unconditional agreement to all terms of an offer, acceptance must be a positive act and unconditional.

Acceptance by conduct

Conduct or Behaviour that suggest acceptance to the offer is sufficient

Acceptance by post

There are special rules governing how acceptance takes place via post due to the fact that there will be a delay in the oferee sending the letter and the offeror receiving the letter of acceptance

Adams v Lindsell- the postal rules

The case of Adams v Lindsell created the postal rules:

1. Post must be the expected method of communication

2. The letter must be properly stamped and addressed

3. The person must be able to prove that the letter was posted

If all 3 steps are established, acceptance takes place at the moment the person sends the letter.

This means acceptance happens before the offeror has received it - so in the time period between sending the letter and receiving the letter they are not able to sell the item to anyone else

Electronic methods of acceptance

Acceptance occurs when the offeror is aware of the acceptance or when it is reasonable for them to receive acceptance

Consideration

The thing of value that is given to the other party to establish the contract

Sufficiency

The key rule of consideration is consideration need not be adequate(equal value) but sufficient (some/enough value)

Past Consideration

Past Consideration is not valid consideration, valid consideration must come after the agreement any performance prior is not enforcable consideration

Performing a pre-existing duty cannot be consideration for a new contract

Consideration cannot be added on to a pre existing contractual obligation

Above and Beyond pre existing duty

If a person goes above and beyond their pre existing duty then additional consideration can be added

Privity

Only parties of a contract are bound by, can enforce and can benefit from the contract

Rights of Third Parties Act 1999

3rd Parties can enforce the contract if:

The 3rd Party is named in the contract

The contract states that a third party can benefit from it

Intention to create legal relations (ITCLR)

A principle that parties of a contract must agree (implicitly and explicitly)that the contract is legally binding in court

ITCLR Business

The agreement that the contract is legally binding is automatically assumed in business agreements

ITCLR Social and domestic

The agreement that the contract is legally binding is not automatically assumed in social and domestic agreements

Rebuttable Presumption

Intention not being automatically assumed in social/domestic agreements is a rebuttable presumption - meaning that the party seeking to prove ITCLR can put forward an argument that there was intention despite the agreement being social/domestic. This is more likely to succeed where money has changed hands.

ITCLR Free gifts

A free gift does form ITCLR if the free gift is intending to benefit the business in some way

Terms

What parties of a contract have agreed to

Express Terms

These are terms of a contract explicitly stated

Implied Terms

These are terms that are not explicitly stated but assumed in the contract through statute law e.g Consumer Rights Act

Three types of Express Terms

Conditional

Warranty

Innominate

Conditional Terms

These are terms that are of central importance to the contract, without these the contract cannot continue or is substantially different

Warranty Terms

These are terms that are of lesser importance, without these the contract cannot continue go head but is slightly different

Innominate Terms

These are terms that are neither conditional or warranty, instead the courts if they are condition or warranty based on the outcome of the breach

Remedies for Conditional Breach

The contract is repudiated (rescinded) by the innocent party meaning both parties are returned to pre contractual positions and Damages can be claimed for

Remedies for Warranty Breach

No repudiation but damages can be claimed for

Consumer Rights Act 2015 (CRA)

The CRA is a statute of law implied into all consumer/trader contracts involving a supply of goods or a supply of service,thus all parties are bound by it even if its not in the terms of the contract

Consumer

A person acting for purposes outside of their trade/profession.

Trader

A person acting for purposes relating to their trade/profession

Supply of Goods

The supply of an item for sale or hire

Three sections for Supply of Goods

S9

S10

S11

S9 and rules

The right to satisfactory quality

The quality of the good is satisfactory if they meet the standard that a reasonable person would consider satisfactory, taking account of

a) Descriptions of the goods

b) The price

c) All the other relevant circumstances

S10 and rules

The right for the good to be fit for a particular purpose, applies if before contract the trade makes it known that the goods are for a particular purpose.There is no need to state a purpose where the goods are being bought for their normal use e.g underwear

S11

The right for good to be as described

Three Implied Remedies for Supply of Goods

S20

S23

S24

S20

Short term right to reject which must be exercised within 30 days of goods being delivered.The consumer is entitled to a full refund.

S23 and rules

Right to repair or replacement, If outside the 30 days then the consumer has this option

This repair of the goods must be -

a) Do so within a reasonable time without significant inconvenience to the consumer

b) The trader must bear any costs incurred in doing so - the trader cannot charge the customer for any repair/replacement

The trader only has one chance to repair or replacement, if this is still not satisfactory the consumer can reject the goods and obtain a refund

S24

The final right to reject and obtain a full refund if s23 was not satisfactory

Supply of Service

The supply of a performance (service)

Two implied rights for supply of service

S49

S52

S49

The service to be performed with reasonable care and skill

S52 and rules

The service is to be performed within a reasonable time.Where a contract does not have an express term for a time limit the service is expected to completed within a "reasonable time"

Two implied remedies for supply of goods

S55

S56

S55 and rules

The right to require a repeat performance.The trader performs the service again, or to the extent necessary to complete its performance.

Must be provided without inconvenience/interference to the consumer and within a reasonable timeframe

S56 and rules

Right to a price reduction for the supply of service

This right is to reduce the price to the consumer by an appropriate amount for the trader's failure to perform the contract. This may result in the trader giving a refund, up to the full contract price, that recognises the obligations not fulfilled.

This is only available in two situations:

1. Where completion by repeat performance is impossible, or

2. The consumer has asked for a repeat performance, but the trader cannot do this in a reasonable time frame and without interference/inconvenience to the consumer.

Exclusion Clause (EC)

Clauses which seek to exclude (limit/remove) liability for a breach of a contract

Three common law controls for EC

Is the contract signed

Was reasonable notice of the exclusion clause given

Previous Dealings

Is the contract signed?

Exclusion clauses are valid if the contract has been signed as you have agreed to what you've signed up for regardless of whether you've read the full contract

Was reasonable notice of the exclusion clause given?

The courts will consider whether reasonable steps were taken to make the other party aware of the exclusion clause.The courts will consider whether the clause was shown to the claimant before entering the contract or after the contract

Previous Dealings

If the parties have traded before then the clause will be binding based of previous knowledge

Two Statutory controls for EC

The Unfair Contract Terms Act 1977

Consumer Rights Act 2015

Unfair Contract Terms Act 1977 (UCTA)

Provides main statutory controls for EC's:

1)A person cannot exclude liability for death or personal injury caused by negligence

2)Imposes a reasonableness test:

- The party who is seeking to rely on the exclusion clause must prove that the exclusion clause is reasonable considering what was known to both parties at the time the contract was made.

The CRA 2015 (EC)

s31 Prohibits a term excluding liability for a breach of s9, s10, s11

s57 Prohibits a term excluding liability for a breach of s49, s52

s65 Prohibits a term excluding liability for injury or death resulting from negligence

Vitiating Factor (VF)

Factors which undermine a contract

Two types of VF

Misrepresentation

Economic Duress

Misrepresentation

A false statement of material fact which is made by a party to the contract, that induces the other party to enter the contract

False statement of material fact

This must be a false statement of fact or law not an opinion or estimation

Opinion rule

An opinion may be an actionable misrepresentation if the representer was in a position to know the facts

Estimation rule

An estimation of future of events may be an actionable misrepresentation if the representer had no intention or knew that there was no intention to carry out the performance

Silence

Silence will not amount to a misrepresentation

Misrepresentation via Conduct

Misrepresentation can be actionable through conduct

Made by a party of the contract

The false statement of fact must be made by a party of the contract, it cannot be made by a 3rd party who is not privy to the contract

Induces the party to enter the contract

The misrepresentation must be the thing that led to claimant to enter the contract.The claimant must prove it was the misrepresentation and nothing else that induced them into contractig

Three types of misrepresentation

innocent

negligent

fraudulent

Innocent

A false statement that is genuinely held on reasonable grounds.

This means the representor genuinely believes that what they are saying is true and they have reasonable grounds to believe that it is true.

Negligent

A false statement that is genuinely held but with no reasonable grounds for believing it is true.

This means the representor believed that what they are saying is true, but they do not have reasonable grounds for believing it is true.

Fraudulent

This is a false statement made without belief in the truth.

Remedies for Misrepresentation

Remedy for innocent misrepresentation:

The party may seek to rescind the contract or damages under the Misrepresentation Act 1967. The courts will decide whether to award a rescission or whether damages are more appropriate.

Remedy for negligent misrepresentation:

The party may seek rescission and/or damages under the Misrepresentation Act 1967

Remedy for fraudulent misrepresentation:

The party may seek rescission and damages.

Economic Duress (ED)

Coercing a party into a contract by threatening the financial status of the party typically where one party is in a stronger bargaining position

Three Steps for ED

Illegitimate Pressure

Caused the C to enter the contract

Left the claimant no reasonable alternative

Illegitimate Pressure

This does not mean illegal pressure but simply undue influence and Pao on established these factors in determining illegitimate pressure:

Was the D acting in Good or Bad faith

Was the an alternative for the victim

Did the victim protest

Was the D acting in Good or Bad faith?

Pressure applied by a D acting dishonestly/selfishly (bad faith) is more likely to be illegitimate but pressure from a D who had genuine reason (good faith) is not

Was there any alternative for the victim?

If the victim had other alternatives rather than entering the contract then it is less likely to illegitimate and vica versa

Did the victim protest?

Pressure which causes the victim to protest/hesitate is more likely to be illegitimate

Caused C to enter the contract

There must be no other factor that causes the victim to enter the contract Left

Left the claimant with no reasonable alternative

Must be no other alternative for C, this is already establishedin the factors of illegitimate pressure

Remedies for ED

The contract is voidable - and rescission can be claimed. Meaning the parties will be put back into the pre-contractual position.

This means that the money demanded with illegitimate pressure is recoverable/no longer payable.

There will be no award of damages

Fustration

Where an unforeseen (supervening) event makes performance of the contract impossible

Three steps of Fustration

Supervening Event

Fault of Neither party

Significantly changes the nature of contract

Supervening Event

This is the unforeseeable event and is a charge or interruption in an existing situation.

Three types of Supervening Event

Destruction of Subject matter/Impossibility

Subsequent Illegality

Change in Circumstance

Destruction of Subject matter/Impossibility

When the subject matter of the contract is no longer available due to unforeseen event e.g death, sickness, destruction

Subsequent Illegality

This occurs when there are changes/updates to legislation that makes performance of the contract now illegaL

Change in Circumstance

An unforeseen event causes a radical change in the circumstance of the contract meaning the central purpose of the contract cannot be achieved

Fault of Neither Party

Neither party must have any responsibility or liability for the frustrating event