Business Contract Terms Unit 2
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Questions and Answers

Where does acceptance take place in the case of instant communication like a telephone call?

  • At the place where the acceptance is made
  • At the place where it is received (correct)
  • At a predetermined location
  • At the place where the offeror is located

What happens if the acceptance is drowned out by noise, according to the case of Entores v Miles Far East Corp?

  • The acceptance is deemed implicit
  • The contract is still valid
  • No contract exists unless acceptance is repeated (correct)
  • The parties must renegotiate

In which situation would acceptance not create a binding contract?

  • When both parties sign an agreement
  • When the terms are mutually understood
  • When the offeree agrees directly without conditions
  • When the acceptance is expressed as 'subject to contract' (correct)

Which term in an agreement would have potentially allowed for a binding contract in the case of Branca v.Caborra?

<p>Tentative (A)</p> Signup and view all the answers

What does the court consider with vague terms in a contract?

<p>They may imply unstated terms (D)</p> Signup and view all the answers

In the case of Foley v.Classique Coaches Ltd, what was the court's ruling regarding the lack of a stated price?

<p>It did not invalidate the contract (C)</p> Signup and view all the answers

What does a statement indicating that acceptance is 'subject to contract' imply?

<p>It negates the intention to create legal relations (C)</p> Signup and view all the answers

Which of the following scenarios implies valid acceptance?

<p>An acceptance clearly communicated without conditions (D)</p> Signup and view all the answers

What are terms implied by the parties in a contract?

<p>Terms that are deemed part of the contract by law even if not discussed (B)</p> Signup and view all the answers

What is an example of a term implied by custom?

<p>A varying contract price for unstable materials in construction (C)</p> Signup and view all the answers

In the Sale of Goods Act, what is implied about goods?

<p>Goods are of satisfactory quality unless stated otherwise (C)</p> Signup and view all the answers

What does the phrase 'time is of the essence' mean in the Sale of Goods Act?

<p>Buyers may reject late deliveries unless agreed otherwise (D)</p> Signup and view all the answers

Which of the following best describes terms implied by statute?

<p>Terms mandated by legal regulations to protect against power imbalances (A)</p> Signup and view all the answers

In Frafra v. Boakye, what was the court's implication regarding the use of a tractor?

<p>The tractor should fulfill the warranty of fitness for hauling timber (A)</p> Signup and view all the answers

Which case exemplifies terms implied by custom in construction contracts?

<p>Sowah v. Bank for Housing and Construction &amp; Another (B)</p> Signup and view all the answers

What happens if the parties do not expressly exclude fluctuation payments in a construction contract?

<p>They are implied as a standard practice (C)</p> Signup and view all the answers

What is the main distinction between a void contract and a voidable contract?

<p>A void contract has no legal force at all. (A)</p> Signup and view all the answers

Which of the following is a circumstance that may vitiate a contract?

<p>Actual or threatened violence. (B)</p> Signup and view all the answers

In which case is the principle of quantum meruit applied?

<p>Remuneration for services rendered without prior agreement. (C)</p> Signup and view all the answers

Which of these is NOT a recognized ground for vitiating a contract?

<p>Mutual understanding. (A)</p> Signup and view all the answers

What does the court typically provide as a remedy in the case of a breach of contract?

<p>Monetary compensation based on remoteness. (C)</p> Signup and view all the answers

How does a unilateral mistake affect a contract?

<p>It may be disregarded if the other party was aware. (B)</p> Signup and view all the answers

What does 'remedy' in law generally refer to?

<p>The means of recovering rights or obtaining redress. (B)</p> Signup and view all the answers

What term describes a contract that is not enforceable due to being against public policy?

<p>Invalid contract. (C)</p> Signup and view all the answers

What can the buyer do if the seller fails to deliver the correct goods on time?

<p>Reject the goods delivered (A)</p> Signup and view all the answers

What constitutes a breach of warranty according to the Sale of Goods Act?

<p>Delivery of a lesser quantity of goods (A), Delivery after the agreed time (C)</p> Signup and view all the answers

What is the fundamental obligation of the seller in the sale of specific goods?

<p>To deliver the specific goods to the buyer (C)</p> Signup and view all the answers

How do sections 8(2) and 11 of the Sale of Goods Act differ?

<p>8(2) requires delivery of corresponding goods, while 11 requires exact matches with descriptions (D)</p> Signup and view all the answers

In a case where 100 French oranges were supposed to be delivered, what happens if only 80 are delivered?

<p>The seller can only sue for damages (C)</p> Signup and view all the answers

What happens when there's a breach of either fundamental obligation or condition according to the Sale of Goods Act?

<p>The aggrieved party can discharge the contract (A)</p> Signup and view all the answers

What kind of breach occurred in Bowes v. Shand when rice was shipped earlier than agreed?

<p>Breach of condition (C)</p> Signup and view all the answers

What does section 12 of the Sale of Goods Act imply?

<p>Goods sold by sample must exactly match the sample (A)</p> Signup and view all the answers

What was the primary consideration that the plaintiff provided in the Charment & Another case?

<p>Procurement of timber concessions (B)</p> Signup and view all the answers

In the context of the Charment & Another case, what did the defendants promise the plaintiff in return for his services?

<p>5% shares in the company and cash remuneration (A)</p> Signup and view all the answers

What key issue did the court identify with the offer in Scamell and Nephew Ltd. v Ouston?

<p>The offer terms were vague and uncertain (C)</p> Signup and view all the answers

In general offers, what distinguishes an offer made to a specific individual?

<p>It can only be accepted by the intended recipient (B)</p> Signup and view all the answers

What does the court generally prefer regarding terms of an offer?

<p>Terms that are clear and certain (D)</p> Signup and view all the answers

What was said about the proposals for the plaintiff's appointment in Charment & Another case?

<p>They were mere indications of good intentions (A)</p> Signup and view all the answers

What aspect did the court look for in determining the enforceability of a vague offer?

<p>Previous dealings between the parties (D)</p> Signup and view all the answers

How did the court characterize the agreement in the Scamell and Nephew Ltd. case?

<p>It had not passed the stage of negotiation (B)</p> Signup and view all the answers

What happens to an offer once acceptance occurs?

<p>It ceases and merges into a contract. (C)</p> Signup and view all the answers

Which of the following events can lead to the termination of an offer?

<p>Revocation of the offer. (C)</p> Signup and view all the answers

In the case of Byrne v. Van Tienhoven, why was the revocation of the offer ineffective?

<p>The acceptance was received before the revocation. (B)</p> Signup and view all the answers

What was the outcome in the case of Dickinson v. Doods?

<p>The offer was revoked effectively even without communication. (A)</p> Signup and view all the answers

What does the performance of a condition in an offer impact?

<p>It can prevent revocation of the offer. (D)</p> Signup and view all the answers

If the offeror dies before the offer is accepted, what happens to the offer?

<p>It terminates. (B)</p> Signup and view all the answers

Which case exemplifies that an offer cannot be revoked once performance has commenced?

<p>Errington v. Errington &amp; Woods (C)</p> Signup and view all the answers

What must occur for a revocation of an offer to be valid?

<p>It must be communicated to the offeree. (D)</p> Signup and view all the answers

Flashcards

Valid Contract (Charment v. Another)

A contract where both parties agree and there is consideration given by one party for a benefit given by another party.

Vague Offer (Scamell v. Ouston)

An offer that lacks clarity about important details, making a contract unenforceable. Terms are too unclear.

Offer (General vs. Specific)

A proposal made by a person or entity to another party. Can target one recipient (specific) or all interested parties (general).

Unenforceable Contract

A contract that cannot be legally enforced and has no legal obligations for parties involved.

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Clear and Certain Terms

Essential details of an offer/contract should be definite and unambiguous, avoiding ambiguity or vagueness.

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Hire Purchase Agreement

A financial arrangement in which the buyer purchases an item over time, paying in instalments.

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Consideration

Something of value given by one party to another as part of a contract or agreement.

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General Offer (Carl ill v. Carbonic Smoke Ball Co.)

An offer to the public, usually advertised to all potential buyers/clients, who can accept by fulfilling the offer conditions.

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Revocation of Offer

Withdrawal of an offer by the offeror before acceptance.

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Acceptance

Agreement by the offeree to the terms of an offer.

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Offer

A proposal made by one party to another, inviting acceptance.

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Communication of Revocation

The offeror must inform the offeree of the revocation.

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Byrne v Van Tienhoven

Case showing that acceptance must occur before revocation to be valid.

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Dickinson v Dodds

Illustrates that offers can be revoked if offeree is aware of offeror withdrawing despite a stated deadline.

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Errington v Errington & Woods

Case showing that an offer can't be revoked once performance has started.

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Exceptions to Revocation

Certain situations where an offer cannot be revoked, for example, substantial performance.

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Instantaneous Communication Acceptance

Acceptance in instantaneous communication (e.g., phone) is effective when received by the offeror.

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Acceptance Subject to Contract

Acceptance stating it's 'subject to contract' lacks the intention to create legal obligations, and does not match the offer's terms.

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Provisional Agreement

An agreement that's not immediately binding, often needing further formalization.

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Vague Contract Terms

A contract with unclear terms that the court can't interpret legally.

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Implied Terms

Missing terms a court might add to make a vague contract valid.

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Accepted Business Practice

Valid contracts can exist even without specific price details, if there's a typical business custom.

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Binding Contract

Agreement with clear, specific terms that creates a legal obligation.

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Effective Acceptance

Acceptance is only valid when communicated to the party making the offer, in instantaneous communication scenarios.

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Late Delivery Breach

Seller fails to deliver goods by agreed-upon time. Buyer can reject or sue.

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Wrong Goods Delivery

Seller delivers goods that don't match the contract. Buyer can reject.

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Minor Delivery Issue

Seller delivers slightly different or fewer goods than agreed. Buyer can only sue for damages.

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Fundamental Obligation (Seller)

Seller's core duty in a contract. Deliver correct goods to buyer.

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Unascertained Goods

Goods not yet identified. Seller's obligation is to deliver goods matching description.

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Exact Match (Sale by Description)

Goods must be exactly as described in a contract.

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Superior Obligation

Fundamental obligations are more important than other contract terms.

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Contract Discharge

Buyer/seller can end the contract if fundamental obligation breached.

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Implied Terms (Contracts)

Terms not explicitly stated but understood as part of a contract based on circumstance or industry.

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Terms Implied by Custom

Terms added to agreements due to common business practices, industry standards or consistent dealings between parties.

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Terms implied by Statute

Terms automatically included in a contract by law, often to protect weaker parties.

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Sale of Goods Act Implied Terms

Laws adding terms relating to the condition, quality, and delivery of goods in a sale.

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Implied Warranty of Fitness (Tractors)

A term automatically included to ensure a product is suitable for its intended use.

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Price Escalations (Implied)

Contract terms, not explicitly stated, but understood to be part of the agreement.

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Consistent Dealings

A pattern of previous agreements establishing implied terms for future relationships.

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Time as Essence (Buyer)

Unless otherwise stated, the buyer has the right to reject goods delivered late.

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Vitiated Contract

A contract considered invalid due to factors like duress, undue influence, or mistake.

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Void Contract

A contract with no legal effect from the start.

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Voidable Contract

A contract initially valid but can be made invalid by one party.

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Contract Remedy

A way to fix a broken contract, often involving compensation or an order to fulfill the contract.

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Damages (Contract)

Monetary compensation awarded for a contract breach by the court.

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Quantum Meruit

Fair payment for services rendered, even without an agreement on price.

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Duress (Contract)

Invalidating a contract due to threats or force.

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Undue Influence

Invalidating a contract due to an unfair advantage in a relationship.

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Study Notes

Unit 2: Agreement and Terms of a Business Contract

  • Learning Objectives:
    • State and explain the basic elements of a contract.
    • Define and describe the terms of a contract.
    • Apply the principles to hypothetical and real situations.

Session 1-2: Agreement: Offer and Acceptance

  • 1-2.1 Clarity of an Offer:

    • An offer is a firm proposal from one party (offeror) to another (offeree).
    • The offeror promises or undertakes to do, give, or forbid something specific.
    • The offer is open for acceptance by the offeree at any time, unless revoked by the offeror.
    • Example: Nana Yao offers to sell his car to Kwabena for GH¢2,000; Kwabena must accept the specific terms for the sale to be legally binding.

  • 1-2.2 Termination of an Offer:

    • Offer termination can stem from revocation of the offer, rejection by the offeree, lapse of time, failure of an attached condition, or the death of the offeror.
    • Revocation: Offeror can withdraw offer any time before acceptance, but must communicate this to the offeree.
    • Rejection (of an offer by the offeree): Offer ends – offeree cannot accept later.
    • Lapse of time: Offer ends after a reasonable time, or a specified time period.
    • Failure of an attached condition: Condition required for acceptance is not met.
    • Death of offeror: Offer terminates if the offeror dies.

  • 1-2.3 Acceptance:

    • Acceptance is an agreement to all terms of the offer.
    • It can be oral, written, or implied.
    • Acceptance must exactly match the offer, or it's a counter-offer (terminating the original).
    • Acceptance takes effect when communicated to the offeror.

Session 2-2: Terms of Business Contracts

  • 2-2.1 Warranties and Conditions:

    • Conditions: Fundamental obligations of a contract – breach allows the other party to terminate.
    • Warranties: Minor obligations; breach allows only for damages.
    • Case Example: Frafra v Boakye (1976): Incorrect representation about a tractor's hauling capacity – breach of warranty.

  • 2-2.2 Types of Contractual Terms:

    • Express terms: Explicitly stated agreements between parties.
    • Implied terms: Terms not explicitly stated but understood from custom, statute, or court interpretation; or common practice.

  • 2-2.3 Exemption Clauses:

    • Designed to limit liability for breaches of terms.
    • Courts interpret them narrowly to prevent unfair treatment of one party.

2-2.2 Vitiation and Remedy

  • Circumstances Affecting Validity of Contracts:

    • Duress (threat of violence)
    • Undue influence (unfair advantage in a relationship)
    • Mistake (misunderstanding)
    • Misrepresentation (false statement)
    • Unconscionable conduct(oppressive, one-sided, or unreasonable).

  • Remedies for Breach of Contract:

    • Damages: Monetary compensation for losses suffered due to the breach.
    • Quantum meruit: Fair payment for services performed, even without an exact agreement.

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Description

This quiz focuses on the fundamental aspects of business contracts, emphasizing the elements of agreement, offer, and acceptance. Participants will explore the clarity of offers and conditions for their termination, applying these principles to various scenarios.

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