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Topic 2: The law of contract Contract formation: offer & acceptance -…
Topic 2: The law of contract
Contract formation: offer & acceptance
Introduction to the Law of Contract
Definition of a contract
An
agreement
b/tw
2 or more parties
under which
legal rights & obligations
are created which are
enforceable
in the courts.
A
promise/set of promise
that the law will enforce
Essential elements of a contract
Offer & acceptance
An
offer
by
1 party
which is
accepted
by the
other
together forming the
agreement
b/tw the parties.
Offer
1 party
is willing to
enter
into a contract with another
without
further negotiation
Acceptance
An
unqualified statement / act
that indicates that the
other party
accepts the terms of the offer
Intention to create a contract
The parties must intend their agreement to create legal relations.
Form of consideration
Some
value
must have been given in
exchange
for the other
party's promise
(
valuable consideration
)
Legal capacity
Legally capable of reaching a binding agreement
Genuine consent
Factors affecting genuine consent, e.g. mistake, misrepresentation, duress and undue influence
Legality of objects
The contract must be legal
Classification of contracts
Simple contract
May be oral, wholly/partly in writing, or implied by the conduct of the parties
Contracts under seal
Referred to as
a deed
Must be in writing & signed, sealed & delivered
Express & implied contracts
Express contract
The intentions of the parties are stated in
explicit terms
, either orally / in writing
E.g. An agreement is signed to buy a car & the price to be paid by instalments over the next 12 months
Implied contract
The
terms
of the contract are
inferred
from the conduct of the parties & the surrounding circumstances
E.g. You promise to pay the fare to your destination & the taxi driver implies agrees to transport you
Bilateral & unilateral contracts
Bilateral contract
An agreement between two parties in which each side agrees to fulfill their side of the bargain
E.g. Lease contract, Sales contract
Unilateral contract
Ane party is obligated to fulfill its obligation only if and when the other party completes a specified task
E.g. Insurance policy contract
Valid, voidable, void & unenforceable contracts
(not examinable)
Valid
Voidable
Void
Unenforceable contracts
Offer & acceptance
Offer
= a proposal by one party to enter into a legally binding contract with another
Rules as to offer
May be made to one or more people
All majors terms must be included & also should be clear
May specify conditions to be allowed
Must be communicated to offeree
May be revoked or lapse
Offers distinguished from mere puff, invitations to treat & statements supplying information
Mere puffs
Statements containing such exaggerated claims about the products/service that no reasonable person would take them seriously
No contractual significance
Invitations to treat
An indication that a person is prepared to enter into negotiations that may (or may not) result in a contract
E.g. window displays, catalogues, price list circulars & advertisements
A reasonable person would say that the advertiser intend to
enter into a contract
if the response from the person receiving the communication is positive.
E.g, "The first 50 people through the doors will receive a TV at a half price
The effect of the Australian Consumer Law
Persons to whom an offer may be made
An offer can be made to a specific person or persons, to a particular class of persons, or to the world at large
Acceptance
= An agreement is concluded when an offeree communicates a clear & unconditional acceptance of the offer to the offeror.
Rules as to acceptance
Must be communicated unless waived / unless postal rules applies
Must be unconditional
Must follow any method set out in offer
Can only be accepted by a person to whom offer directed
Special rules: postal acceptance & electronic communication
May be conducted but cannot be imposed by silence