Law of Contract

Part payment of a debt

an agreement to accept less than the full sum that is owed. Not a good consideration.

Agreement

1. Offer
2. Acceptance

Consideration

Both parties must receive something of value. Both fulfill their promise. Evidence that they have an agreement.

Consent to contract

The parties must enter the contract of their own free will. There can be no duress or undue influence. No pressure. Full information. Transparency..

Capacity to contract

Ability. Legal right to enter a contract. Some people have no, or a limited ability, to create binding contracts.
eg.minors - U18 (except for everyday purchases)
unsound mind
directors acting ultra vires

Intention to create legal relations

The parties must have intended the agreement to be a binding contract. Legal element.
With social/private agreements the assumption is that there was no intention.
With business agreements the assumption is that there was intention.

Termination of an Offer

1. Lapse of time
2. Rejection of the offer
3. Offer revoked (withdrawn)

Termination of an Contract

1. Performance
2. Agreement
3. Frustration
4. Breach

Remedies for Breach of Contract

1. Rescind (cancel) the contract
2. Compensation (sue)
3. Seek specific performance

Invitation to treat

Inviting a person to make an offer that does not have to be accepted. A suggestion to someone that they should make an offer.

Offer

In writing, verbal, by gesture. Revoke, Time limit, Rejected. Counter offer.

Acceptance

Offer accepted unconditionally. No changes. All terms accepted. In writing, verbal, by gesture.

Ultra Vires

Meaning "beyond the powers". Businesses can only make contracts within their legally stated purpose.
eg. A butcher cannot sell insurance

Legality of Form

Means that certain contracts must be drawn up in writing before they can become legally binding

Performance

All parties to a contract fulfill their obligations.

Frustration

An unforeseen event pre4vents the contract from being completed. eg. fire in a factory.

Breach of contract

A failure to complete a contract. Condition is broken

warranty

A non-essential element of a contract

contract

an agreement that courts will enforce

offer

proposal by an offeror to do something, provided the offeree does something in return

test of the reasonable person

objective legal test used by jurors or judges to determine whether the offeror has shown an intent to contract (comparing offeree's interpretation of the offer to a reasonable person's interpretation)

revocation

withdrawing an offer before it is accepted

counteroffer

offeree's response to an offer which modifies it

acceptance

occurs when a party to whom an offer has been made agrees to the proposal

mirror image rule

a rule that requires that the terms in the acceptance must exactly match the terms contained in the counteroffer

bilateral contracts

places obligation upon and grants rights to both parties. For example, I promise to pay you £100 if you run London Marathon and you are obliged to run it. An offer was made and an acceptance is present, if I promised to give you £100 if you promised to run the marathon, and you promised to do so, it becomes bilateral.

unilateral contract

offeror promises something in return for the offeree's performance and indicates that this performance is the way acceptance must be made.
an offer which can only be accepted by performance. or example, I promise to pay you £100 if you run London Marathon, but at no stage you are under an obligation to run it, yet you take my offer BY running a marathon. No promise and no contractual obligations. Estate agency contracts may be analysed as unilateral, as the estate agent is not bound to find a purchaser but if he does, he will be entitled to a commission.

duress

occurs when one party uses an improper threat or act to obtain an expression of agreement

undue influence

occurs when one party to a contract is in a position of trust and wrongfully dominates the other party

material facts

important facts that influence the parties' decisions about a contract

innocent misrepresentation

party to a contract does not know that a statement he or she made is untrue

fraudulent misrepresentation

party to a contract knows that a statement he or she made is untrue

consideration

that of value which is given or received in a contract

legal value

change in the legal position of a party as result of the contract

promissory estoppel

promise is enforced even though no consideration is given for it

disaffirmance

both parties to a contract return the consideration

restitution

recovery of your payment

Positive consideration

promise to pay more, provide more work, services, money, the performance is ongoing, and parties are interested in performance being carried out (e.g., Stylk v Myrick, Williams v Roffey)

Negative consideration

promises to accept less; the only obligation remained is to pay the money, no further performance expected (e.g., Foakes v Beer)

executed contract

a contract that has been fully performed

executory contract

a contract that has not been fully performed

parol evidence rule

rule under which oral testimony cannot be used to contradict terms in a complete, final, written contract

contractual rights

something a party will receive under a contract

performance

the fulfillment of contractual promises as agreed

contractual duties

legal obligations created by a contract

discharge

termination of duties that ordinarily occurs when the parties perform as promised

breach of contract

failure to provide a complete performance

cancellation

ending a contract for sale of goods because of breach, while retaining other remedies; aslo, any act that shows an intent to end the obligation of payment of commercial paper

substantial performance

performance of all but a minor contractual duty

anticipatory breach

notification, before the scheduled time of performance, of refusal to perform contractual terms as agreed

substitution

parties' replacement of their original contract with a new contract

modification

agreement to change the obligation required by the original contract

Limits of promissory estoppel

- Applies to promises not to enforce existing rights (negative promise – shield not sword)
- Promise must be relied upon so that it is inequitable to go back to promise
- effect of promise depends on scope of promise- reasonable notice may be available to terminate effect

: what counts as an illegitimate threat in duress

a) Exploitation by defendant knowledge of criminal activity
b) The use by a defendant of reprehensible means to manoeuvre the claimant in the position of weakness to force them to waive pre-existing claim