Private Law Test Moment 1

Contract Law

Governs binding agreements and the obligations between parties. It includes their creation, validity, interpretation, termination and enforcement.

Contract

A contract is a legally binding agreement that will be enforced by the law.

A contract gives rise to obligations between the parties to the contract and the failure to perform these obligations gives the right to a remedy.

Party Agreement

Rules made by the contracting parties (freedom of contract).

Official Sources

Rules from national, European, and supranational authorities.

Informal Rules

Created by non-state organizations and academics.

Freedom of Contract

The autonomy of parties to make the choices they desire in contracting:

-       On Whatever terms (Freedom with regard to content)

-       Whenever desired (Freedom to contract or not to contract)

-       With Whomever (Freedom to choose the other party)

Binding Force

Agreements lawfully entered into have the force of law between the parties.

-       Binding (i.e. there will be a consequence if the contract is breached)

-       Party in default MUST compensate the party not in breach.

-       UNLESS terms are deemed unfair or prohibited by law.

Informality

Contracts do not require any particular form.

-       HOWEVER, a particular may form be required by law for certain contacts to be valid.

Contractual Fairness

A contract should show procedural fairness.

• Procedural fairness = unequal position between the parties is remedied.

• NOT Substantive fairness = The contents of the contract is up to the parties even if to anybody else the contract seems to be a ‘bad contract’ for example selling a mansion worth €5,000,000 for €50.

Externalisation Theory

The moment it is written

Dispatch Theory

Moment it is sent

Receipt Theory

Moment it is recieved

Actual Notice Theory

Moment it is read

Warning Function

Cautionary Effect: Makes parties think more carefully about what they are about to do; especially for important or financially dangerous transaction!

Evidentiary Function

Promotes Certainty; what did the agreement contain?; avoids disputes.

Informative Function

Explains and informs and advises

Protective Function

All of the above protects weaker party.

Notarial Acts

Notarial acts are documents in which agreements and declarations are legally recorded by a valid Notary. It is compulsory for some types of agreement to be included in a notarial act.

Consideration

• Doctrine of Consideration is unique to the common law. Causes vanishing from Civil Law canons.

• It refers to the principle that there should be a ‘cost’ for a promise / quid pro quo

• Doctrine is based on the idea of reciprocity: ‘something of value in the eye of the law must be given for a promise in order to make it enforceable as a contract.’

Basic Rules of Consideration

1. Consideration must not be Past

2. Consideration must move from the promisee [the one who received the promise]

3. Consideration need not be adequate but must be Sufficient

4. Fulfilling an existing legal obligation is not consideration.

Re. McArdle

Must not be past consideration                                                     

Tweedle v. Atkinson

Move from promisee, but not always to promisor (privity) 

Chapple v. Nestle

Must be sufficient, not necessarily adequate                            

Glassbrook v. Glasgow

Cannot be for performance of existing duty.                             

Mirror Image Rule- France, Germany England

Art. 1118., Section 147 and Hyde v. Wrench

Acceptance that differs is a rejection and counteroffer.

Receipt & Dispatch Theory- France

Art. 1121

Receipt Theory/Rule = Takes effect at the time the acceptance is received (we assume it was read).

Receipt & Dispatch Theory - Germany

Section 130

Receipt Theory/Rule = Takes effect at the time the acceptance is received (we assume it was read).

Receipt & Dispatch Theory - England

Adams v. Lindsell

Dispatch Theory/Rule = Takes effect at the time the acceptance is sent or posted.

Legal Capacity

Control and ability to assess

Necessaries

things necessary to life, e,g. clothes, medicines, food, shelter etc. Not luxuries.