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13.1 Contract Law - Coggle Diagram
13.1 Contract Law
The Stages of Contract Law: - Offer, Acceptance, Consideration, Intention, Capacity
Offer: An expression of willingness to contract on certain terms with the intention that it shall be binding as soon as it is accepted to whom it is addressed.
It does not have to be verbal, declaring that someone wishes to buy or sell something.
Offeree- Buyer
Offeror- Sellor
Types of Offer: Bilateral & Unilateral
Bilateral- This is your standard offer between two parties. It is legally binding.
Unilateral- An invitation to treat. Open to the world and is not legally binding. Merely an advertisement.
Test for Offer: Must be clear terms, must be intention to do business & communication of intention
Clear Terms: The terms in the offer must be clear and unquestionable. There must be no misunderstanding about what is being sold or bought. Hillas v Arcos (1932)- In 1930, there was an agreement between two parties about the supply of timber however there was an option clause which allowed AA to buy more wood (omitted details). HOL- Still legal binding as there was clear intention- details not resolved in the document could be supplied by reference from previous dealings between the parties or the normal practice of timber trade.
Intention to do business: A party will only be bound to their offer if they really intended to make it.
For example, in a car showroom, a person might simply state that they 'want that car' or 'it's so nice' however this would not show intention it is simply a statement. No action has been taken to show that the individual wants to purchase that car.
Communication of Intention: Communication can be written/spoken or done through an action.
Taking the item to the checkout, handing money to the sellor, etc.
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Test for Acceptance: Acceptance must be a mirror image to the offer.
It must be firm.
It must be communicated to the sellor.
Acceptance must be a mirror image to the offer: Jones v Daniel (1884)- The offeree (buyer) had responded to an offer sent by the offeror (sellor) by submitting a draft which included new terms. This was considered to be a counter offer not an acceptance as the acceptance was not identical to offer (new terms)
It must be firm: When accepting an offer, the offeree (buyer) must be fully aware of the terms and thus acceptance will be full and final (Caveat Emptor)- Buyers Beware
Offer must be communicated to the Offeror: Methods of Acceptance:
Conduct- Instant Acceptance (handshake/nod)
Verbal Communication- Instant
Electronic Communication- Delayed Acceptance (when email/message has been opened than acceptance has occurred)
Postal Acceptance- Instant as soon as the letter has be posted.
Consideration: The value of a promise made between two parties. Often times referring to financial value. Promisee + Promisor
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Both parties must have a detriment and benefit in order for there to be a balance which creates a valid contract.
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Executory Consideration: This form of consideration discusses how to bind a contract with a promise. The promise has yet to be executed.
E.g Amazon Delivery- the mutual consideration is the mutual promise to provide the product and pay upon delivery. Or paying online with the mutual promise that the delivery will arrive the next day. (next-day delivery)
Executed Consideration: No obligation to pay unless the other party has executed their promise. (Payment does not always have to be financial)
Elements of Consideration: Consideration must not be past- an act or promise of one party should be made in exchange for an act or promise of another act.
Consideration must be sufficient- Must be acceptable through performance or monetary value.