Chapter 3 PBL

Contract

Legally enforceable agreement between two or more persons called parties

Discharged

The termination of contractual obligations

Breach of a contract

The act of a party failing to carry out their legal obligations

Pre contractual phase

The formation of a contract before it becomes legally binding

Capacity to contract

The legal competence to be able to make an enforceable agreement

Deed

S formal written instrument executed in a prescribed way and intended to create a legally binding obligation

Objective approach

An approach used by court which involves asking “What would a reasonable person infer from the observable facts of the case”

Minor

A person under the age of 18

The three elements required for a contract to become valid thus legally binding

1. Parties intend to become legally binded by their agreement

2. The agreement is either formalized in a form of writing such as a deed or an exchange of something of value is made at the time of the agreement

3. All the terms have to be agreed upon with sufficient certainty by both parties

Condition precedent

A condition that must be satisfied before contractual obligations take effect

Subsequent condition

A condition that, if it occurs, terminates the existing contractual obligations

Letter of comfort

It is written assurance of support that may provide reassurance to parties which do not know each other well but does not necessarily become a binding obligation

Consideration

Something of value given or promised in exchange for a contractual promise

Informal agreement

An agreement which is not made under a seal, it is usually only enforceable if the normal requirements of a contract are satisfied

Bilateral contract

Is when two parties exchange a promise for a promise

Unilateral contract

When one party exchanges a promise for an act eg “I will pay 500 dollars to anyone who is able to find my dog”

Past consideration

This is an act performed before a promise is made, and is generally not valid consideration for that promise

Executed consideration

This is an act performed in return for a promise

Sufficient agreement

When all things that are needed for a workable transaction have been agreed

Offer

This is a definite promise to be bound on stated terms if the other party accepts

Invitation to treat

This is an invitation to other to make offers, rather than a definite offer capable of acceptance

Third party

Anyone who is a stranger to the contract

Privity doctrine

It states that only parties to a contract have rights and obligations under that contract

Doctrine of estoppel

This doctrine prevent s a party from departing from a representation or promise where another party has relied on it to their detriment

Ordinary estoppel

This prevent s a person from denying a representation of fact that another person has reasonably relied on to their detriment

Equitable estoppel

This prevents a party from departing from an assumption or expectation they induced where another party relied on it to their detriment