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Law of Contract 1 - Coggle Diagram
Law of Contract 1
Rules on consideration
a. Consideration must be real
consideration given must be of some value, however small.
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c. Consideration must move from the promise (privity of contract)
Privity of contract means that only a party to a contract can sue or be sued on that contract
Exception to Privity of contract rule:
Section 2 of Contract Act
A person who is not a part to a contract may enforce a term of the contract in his own right if
a. the contract expressly provides that he may
b. the term purports to confer a benefit on him
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1st element- offer
A person makes an offer when he indicates to another his willingness to enter into a contract on the terms which he sets out in the offer.
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General rules on Offer:
- Maybe be oral or in writing
a. a single, definite person
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- A offer must be communicated to the offeree before it can be accepted. the pfferee cannot accept an offer unless he knows of its existence.
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Termination of offers
a. revocation of the offer
an offer can be revoked at any time before it is accepted but the revocation must be communicated to the offeree
the offeree must actually know of the revocation by the offeror
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c. lapse of offer
- death of either offeror or offeree before acceptance
- where the offer has not been accepted within the prescribed time.
If there is no time limit set, it lapses after a reasonable time.
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Terms and Conditions
Terms are statements which form part of the agreement.
One must ascertain what the rights and obligations of each party are which are contained in the terms of of the contract
Express Terms and Implied Terms
- Express Terms- terms actually communicated to each other by the parties.
- Implied terms- those which the parties have not communicated to one another but the law inserts into the contract as a term.
Conditions, Warranties and Innominate terms
Conditions
A condition is a very important term of a contract, one which goes to the root of the contract. If it is breached, the innocent party can treat the contract as being ended and can refuse to perform his part of the contract.
Warranties
A warranty is a term which is not so important to the contract. The contract is still intact if it is breached, the innocent party cannot refuse to perform his part of the contract.
Innominate terms
Sometimes, the relative importance of a contractual term is debatable and such a term would not fit neatly into the classification of conditions and warranties. The remedy for breach of an innominate term depends on the seriousness of the breach.
Elements
4 elements:
- offer
- acceptance
- intention to create legal relations
- consideration
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Definition
A contract is an agreement which is enforceable by law between two or more persons for some purpose, their intention being to create a legally binding contract.
Terminology
Promisor: Party who makes the promise to do something or not to do something
Promisee: the party to whom the promise is made