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Chapter 4 - Contract Law
CONTRACT: Agreement, supported by consideration,…
Chapter 4 - Contract Law
CONTRACT: Agreement, supported by consideration, made with intention to create legal relations
Invitations
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Inviting another person to make an offer eg adverts, shop windows, goods in supermarket, auction inviting offers to be made
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Offers
1st Half of the 'Agreement',
An expression of willingness to be bound on specific terms
Must be certain, exist when accepted, distinguished from statements of intent,
Response to a request for info is not an offer, and request for info isn't a counter offer
An invitation cannot be accepted, only an offer
Termination of Offer
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Rejection - once rejected, offer doesnt exist
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Failure of a condition precedent - if based on a condition and condition doesnt happen, offer doesnt exist.
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Counter Offer - Alternative offer is made by offeree and is rejected, so offer no longer exists.
Acceptance - once offer accepted, doesnt exist as turns into an agreement.
Acceptance
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Must be complete, unconditional and
not vary original offer
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Offer must be communicated to offeror, but he may waive
right to communication
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Acceptance may be by conduct - not only by writing
but can also be orally, or actions that suggests accepted offer
Postal rule applies (only to acceptance)
- acceptance affected once posted/entered into system.
Consideration
Every contract to be supported by 2-way consideration
except Specialty Contract! (Deed of gift/covenant)
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Past consideration is no consideration
- cant use previous completed acts to support a new future contract
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Must move from the promisee (privity of contract)
- person outside contract cant sue, only person part of contract can enforce it
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Pinnell & Its Exceptions
Principle: part payment of debt isnt full settlement/Consideration,BUT:
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Representations
Not terms of a contract - Pre contractual statements, with intention of inducing another person into a contract
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No contractual obligation, BUT can rescind a contract of there are misrepresentations!
Contractual Terms
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Condition: fundamental to contract, if breached then can sue for damages.
Warranty: superficial to contract. Breach allows injured to claim damages, but contract not discharged
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Damages
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Monetary Compensation, not punishment. main remedy.
Only awarded if forseeable, not remote.
Loss suffered should either arise as natural consequence of breach, or breacher as aware of special circumstances of injured party
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May consider non-financial loss, but difficult to measure
If cost of repair outweighs loss suffered, courts may make an aware based on loss of amenity (proportion)
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Express: agreed by parties, written or oral.
Implied: judicially(court) or statutorily(law, not discussed) implied.
Judicially implied: eg trade custom. Once start accepting goods of certain quality, then should continue to accept them. Courts read into a contract to determine any implied terms.
Statutorily Implied: eg Sale of Goods Legislation:
- Title (cant be excluded in ANY contract!)
- Satisfactory quality
- Fit for purpose
- Sample
- Description
(4 after title can be excluded in course of business but NOT when being sold to CONSUMER!)
Exclusion Clauses
Used to limit extent of breacking party's liability!
Must be communicated to other party and brought to
attention before or at time entered into.
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Where parties have history of trade, other party deemed
to be aware of exclusion clause. (But needs to be more than 33/4 occassions in last 5 years.
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Unfair Terms Legislation
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Tests if a term is reasonable: (S11 UCTA 77):
- Relative bargaining power
- Any inducement offered/normal trade custom
- Special ordered goods
- fair and equitable treatment of consumer by seller
- extent of ability to cover by insurance
Unfair term: causes a significant imbalance in the parties'
rights and obligations to the detriment of the consumer
Breach of Contract
Occurs either during or 'anticipatory'
During: one party refuses to continue - injured can sue for
damages immediately
Anticipatory: one party gives notice before contract start date.
Can sue immediately for money that would have rec'd.
If Anticipatory, injured party has 3 options:
-sue immediately
-ignore, go ahead w/obligations, then sue
-wait & hope other party will change their minds, but if wait too
long may lose right to sue.
To achieve full compensation, injured party must have been in a position to complete their obligation at date due to start.