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Questions and Answers
Which of the following accurately describes the role of consideration in a contract?
Which of the following accurately describes the role of consideration in a contract?
In which scenario would consideration be unnecessary for a contract to be binding?
In which scenario would consideration be unnecessary for a contract to be binding?
Which type of agreements generally assumes an intention to create legal relations?
Which type of agreements generally assumes an intention to create legal relations?
What distinguishes past consideration from future consideration in contract law?
What distinguishes past consideration from future consideration in contract law?
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Which principle governs the relationships and agreements made between involved parties in a contract?
Which principle governs the relationships and agreements made between involved parties in a contract?
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What is a key reason why social and domestic agreements are presumed not to create legal obligations?
What is a key reason why social and domestic agreements are presumed not to create legal obligations?
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Why must consideration be present for a contract to be enforceable?
Why must consideration be present for a contract to be enforceable?
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In terms of enforcement, which type of agreements can successfully rebut the presumption against legal relations?
In terms of enforcement, which type of agreements can successfully rebut the presumption against legal relations?
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What is the main rule regarding past consideration?
What is the main rule regarding past consideration?
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Which statement correctly defines consideration in contract law?
Which statement correctly defines consideration in contract law?
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What happens if a breach of an important term occurs in a contract?
What happens if a breach of an important term occurs in a contract?
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In the example provided, why can the maid not sue William for the $50 promised in May?
In the example provided, why can the maid not sue William for the $50 promised in May?
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What is required for consideration to be valid?
What is required for consideration to be valid?
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Which of the following statements about privity of contract is true?
Which of the following statements about privity of contract is true?
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What type of terms can lead to a discharge of the contract if breached?
What type of terms can lead to a discharge of the contract if breached?
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Which of the following best describes the concept of consideration in contract law?
Which of the following best describes the concept of consideration in contract law?
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Which scenario best exemplifies future consideration?
Which scenario best exemplifies future consideration?
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Which of the following statements is true regarding past consideration?
Which of the following statements is true regarding past consideration?
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What does the concept of privity of contract refer to?
What does the concept of privity of contract refer to?
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In the case of Carlill v Carbolic Smokeball, what was significant about the advertisement?
In the case of Carlill v Carbolic Smokeball, what was significant about the advertisement?
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Which of the following is NOT an essential element of a binding contract?
Which of the following is NOT an essential element of a binding contract?
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What kind of agreements are generally viewed as invitations to treat rather than offers?
What kind of agreements are generally viewed as invitations to treat rather than offers?
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To create a legally binding contract, an offeree must be aware of the offer. Which scenario illustrates this principle?
To create a legally binding contract, an offeree must be aware of the offer. Which scenario illustrates this principle?
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Which of the following is a true statement about the intention to create legal relations in contract law?
Which of the following is a true statement about the intention to create legal relations in contract law?
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What are the four elements that make up a binding contract?
What are the four elements that make up a binding contract?
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Which of the following is NOT an invitation to treat?
Which of the following is NOT an invitation to treat?
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What is the legal term for when one party withdraws their offer before acceptance?
What is the legal term for when one party withdraws their offer before acceptance?
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Silence can be considered as acceptance of an offer.
Silence can be considered as acceptance of an offer.
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What is 'privity of contract'?
What is 'privity of contract'?
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Which of the following is NOT a real consideration?
Which of the following is NOT a real consideration?
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Consideration must be adequate, meaning both parties must provide something of equal value.
Consideration must be adequate, meaning both parties must provide something of equal value.
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Study Notes
Business Law (BLM1007) - Law of Contract Part I
- This course covers the formation of contracts and their terms.
- Key topics include introduction to contract law, elements of a contract, terms of a contract, and conditions and warranties.
What is a Contract?
- A contract is a legally binding agreement between two or more parties.
- It involves obligations that are enforceable by law.
- Contracts typically have specific terms, promises, and a valuable consideration exchanged.
Elements of a Contract
- An essential contract must have:
- An offer
- Acceptance
- Intention to create legal relations
- Consideration
1. Offer
- An offer is a clear and definite expression of willingness to enter into a contract.
- It must be communicated to the offeree.
- Offers can be made to a specific person or to the world at large (e.g., advertisements).
- Offers can be written or spoken.
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General Rules:
- Offer can be made orally or in writing
- Can be made to one person, a group, or to the world
- Must be communicated to the offeree.
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General Rules:
-
Offer to the world at large:
- An advertisement is generally not considered an offer but can be, under special circumstances, an offer in special instances, such as in the Carlill v Carbolic Smoke Ball Co case.
- The offer must be communicated.
- What isn't an offer:
- Invitation to treat
- Supply of information
- Declaration of intent
1. Invitation to Treat (ITT)
- An invitation to start negotiations or make an offer.
- Advertisement, displays of goods for sale, and requests for bids are examples of ITT.
- The Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd case demonstrates displays of goods as ITT. The offer is made by the customer, and the pharmacist accepts.
- Harvey v Facey [1893], an example of a supply of information, demonstrates that merely giving price information isn't an offer.
- Harris v Nickerson [1873], an example of declaration of intent, demonstrates that an announcement of an auction isn't an offer.
Termination of Offer
- An offer is valid until it is terminated.
- It can be terminated in three common ways:
- Revocation (withdrawing the offer)
- Rejection (refusing the offer) (including counter-offer)
- Lapse (expiry) (time-related).
2. Acceptance
- Unconditional consent to the offer.
- Acceptance must be communicated to the offeror to be effective.
- Silence is not acceptance, as seen in Felthouse v Bindley.
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General Rules:
- Absolute/Unconditional
- By prescribed method
- Otherwise, by reasonable method
- Must be communicated.
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General Rules:
3. Intention to Create Legal Relations (ICLR)
- The parties must intend their agreement to be legally binding.
- Courts consider the circumstances and nature of the agreement.
- Presumption exists for commercial agreements (they're intended to be legally binding) and domestic/social agreements (not intended to be legally binding).
- Presumption for commercial agreements can be rebutted.
4. Consideration
- Consideration is the price or compensation exchanged for a promise.
- It must be sufficient, adequate (not required), and move from the promisee.
- Consideration must be real and not past.
- Example, an act performed before the promise isn't valid.
- Consideration must be legal and not for an unlawful act.
- Cases like Stilk v Myrick, Chappel v Nestlé & Donoughue v Stevenson illuminate different aspects of consideration.
Terms of a Contract (Part II)
- Terms of a contract set out the duties and rights of parties.
- Terms can be express (explicitly stated) or implied (not explicitly stated but understood).
- Important terms can be classified as conditions (breaching them leads to contract termination) or warranties (breaching them allows for damages but doesn't break the contract).
Conditions and Warranties
- **Conditions:** Essential to the contract. Breaching a condition allows the innocent party to terminate the contract and seek damages.
- **Warranties:** Less crucial. Breaching a warranty allows for damages, but the contract remains in effect.
- **Innominate Terms:** Terms whose impact on the contract depends on the specifics of the breach (difficult to classify as either condition or warranty)
Next Lecture
- The course continues in the next module (Part II).
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Description
This quiz delves into the fundamental aspects of contract law, exploring the formation and terms of contracts. It covers key topics such as the elements of a contract, including offer, acceptance, and considerations. Perfect for students of Business Law looking to solidify their understanding of contractual agreements.
