Business Law BLM1007: Law of Contract Part I
31 Questions
16 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following accurately describes the role of consideration in a contract?

  • Consideration must be provided before the agreement is made.
  • Consideration can be a promise or an act given in exchange. (correct)
  • Consideration must be monetary to be valid.
  • Consideration is not necessary if both parties agree to the terms.

In which scenario would consideration be unnecessary for a contract to be binding?

  • When the agreement is made under seal as a deed. (correct)
  • When both parties have regional ties.
  • When one party fails to fulfill their promise.
  • When the contract is made verbally between friends.

Which type of agreements generally assumes an intention to create legal relations?

  • Social agreements between family members.
  • Informal agreements among friends.
  • Business agreements and transactions. (correct)
  • Agreements made to exchange favors.

What distinguishes past consideration from future consideration in contract law?

<p>Past consideration involves acts that have already taken place before the contract is made. (A)</p> Signup and view all the answers

Which principle governs the relationships and agreements made between involved parties in a contract?

<p>Privity of contract. (A)</p> Signup and view all the answers

What is a key reason why social and domestic agreements are presumed not to create legal obligations?

<p>There is always an assumption of goodwill in personal relationships. (D)</p> Signup and view all the answers

Why must consideration be present for a contract to be enforceable?

<p>It creates an obligation for both parties. (D)</p> Signup and view all the answers

In terms of enforcement, which type of agreements can successfully rebut the presumption against legal relations?

<p>Leases in residential settings. (D)</p> Signup and view all the answers

What is the main rule regarding past consideration?

<p>Past consideration does not count as consideration. (D)</p> Signup and view all the answers

Which statement correctly defines consideration in contract law?

<p>Consideration must be future-oriented and involve a mutual exchange. (C)</p> Signup and view all the answers

What happens if a breach of an important term occurs in a contract?

<p>The contract continues but damages may be awarded. (A)</p> Signup and view all the answers

In the example provided, why can the maid not sue William for the $50 promised in May?

<p>The promise was based on past consideration. (A)</p> Signup and view all the answers

What is required for consideration to be valid?

<p>It cannot consist of actions completed prior to the promise. (C)</p> Signup and view all the answers

Which of the following statements about privity of contract is true?

<p>Only parties involved in the contract can benefit from it. (D)</p> Signup and view all the answers

What type of terms can lead to a discharge of the contract if breached?

<p>Important terms known as conditions. (C)</p> Signup and view all the answers

Which of the following best describes the concept of consideration in contract law?

<p>A mutual exchange of something of value. (C)</p> Signup and view all the answers

Which scenario best exemplifies future consideration?

<p>Offering payment for a performance expected in the future. (A)</p> Signup and view all the answers

Which of the following statements is true regarding past consideration?

<p>Past consideration is never valid in contract formation. (C)</p> Signup and view all the answers

What does the concept of privity of contract refer to?

<p>The idea that only parties to a contract can enforce it. (D)</p> Signup and view all the answers

In the case of Carlill v Carbolic Smokeball, what was significant about the advertisement?

<p>It was considered a serious offer to the public. (C)</p> Signup and view all the answers

Which of the following is NOT an essential element of a binding contract?

<p>Intention to deceive (C)</p> Signup and view all the answers

What kind of agreements are generally viewed as invitations to treat rather than offers?

<p>Advertisement for a product on TV. (B)</p> Signup and view all the answers

To create a legally binding contract, an offeree must be aware of the offer. Which scenario illustrates this principle?

<p>A person who sees a reward poster claims the reward. (B)</p> Signup and view all the answers

Which of the following is a true statement about the intention to create legal relations in contract law?

<p>It is assumed in social and domestic agreements. (D)</p> Signup and view all the answers

What are the four elements that make up a binding contract?

<p>Offer, Acceptance, Intention to create legal relations, Consideration (C)</p> Signup and view all the answers

Which of the following is NOT an invitation to treat?

<p>A formal offer to sell a specific item (C)</p> Signup and view all the answers

What is the legal term for when one party withdraws their offer before acceptance?

<p>Revocation</p> Signup and view all the answers

Silence can be considered as acceptance of an offer.

<p>False (B)</p> Signup and view all the answers

What is 'privity of contract'?

<p>Privity of contract means that only a party to a contract can sue or be sued on that contract.</p> Signup and view all the answers

Which of the following is NOT a real consideration?

<p>Acts of love and affection between a parent and child (D), Acts of moral duty such as a lifeguard saving a drowning child (E)</p> Signup and view all the answers

Consideration must be adequate, meaning both parties must provide something of equal value.

<p>False (B)</p> Signup and view all the answers

Flashcards

Contract

A legally binding agreement between two or more parties, creating obligations enforceable by law.

Offer (contract)

A clear expression of willingness to enter into a contract on specific terms, by one party (offeror) to another (offeree).

Acceptance (contract)

A final and unqualified assent to the terms of an offer, creating a legally binding contract.

Consideration (contract)

Something of value exchanged between the parties to a contract.

Signup and view all the flashcards

Intention to create legal relations

The parties' serious intention to be legally bound by the agreement.

Signup and view all the flashcards

Offer to the world

An offer made to the general public, where anyone can accept it.

Signup and view all the flashcards

Carlill v Carbolic Smoke Ball Co.

A landmark case demonstrating that an advertisement can, under specific circumstances, constitute a legally binding offer.

Signup and view all the flashcards

Invitation to treat

An indication of a willingness to negotiate, but not a firm offer.

Signup and view all the flashcards

Past Consideration

An act performed before a promise was made is not valid consideration for the promise.

Signup and view all the flashcards

William's Maid: Past Consideration Example

William promised to pay his maid extra after she worked well in May - a past action. This is not valid consideration, so he's not legally bound to pay.

Signup and view all the flashcards

What makes a contract legally binding?

A contract must have four elements: offer, acceptance, intention to create legal relations (ICLR), and consideration.

Signup and view all the flashcards

Offer: The first step

An offer is a clear statement of willingness to enter into a contract on specific terms.

Signup and view all the flashcards

Acceptance: The agreement

Acceptance is the unqualified agreement to the terms of the offer.

Signup and view all the flashcards

Intention to Create Legal Relations (ICLR)

Both parties must have a serious intent to be legally bound by the agreement.

Signup and view all the flashcards

Consideration: The exchange

Something of value exchanged between the parties to a contract.

Signup and view all the flashcards

Terms of a Contract

Details or statements within a contract that set out the duties and rights of the parties.

Signup and view all the flashcards

What are the 4 elements of a contract?

A valid contract requires four essential elements: Offer, Acceptance, Intention to Create Legal Relations, and Consideration.

Signup and view all the flashcards

What is an Offer?

A clear expression of a willingness to enter into a contract on specific terms by one party (the offeror) to another party (the offeree).

Signup and view all the flashcards

What is Acceptance?

An absolute and unqualified agreement to the terms of an offer, creating a legally binding contract.

Signup and view all the flashcards

What is Intention to Create Legal Relations?

The parties' serious intention that their agreement be legally binding.

Signup and view all the flashcards

What is Consideration?

The price or compensation for the promise given by one party to the other, i.e., something of value exchanged in the contract.

Signup and view all the flashcards

Why are Commercial Agreements presumed to be legally binding?

In commercial agreements, there is a presumption that the parties intended to create a legally binding contract. This presumption is usually strong and difficult to rebut.

Signup and view all the flashcards

Why are Domestic Agreements presumed NOT to be legally binding?

Domestic and social agreements, like those between family members, are presumed not to be intended to be legally binding.

Signup and view all the flashcards

What is a Contract under Seal?

A contract under seal, also known as a deed, is a special type of agreement that does not require consideration, as it is signed, sealed, and delivered.

Signup and view all the flashcards

What is intention to create legal relations (ICLR)?

ICLR means both parties seriously intend their agreement to be legally binding, not just a casual arrangement.

Signup and view all the flashcards

Contract under Seal

A contract that does not require consideration, as it's formally signed, sealed, and delivered. It's a special type of agreement.

Signup and view all the flashcards

Commercial Agreement

Agreements made in a business context are usually presumed to be legally binding, as parties are expected to intend to create a binding contract.

Signup and view all the flashcards

Domestic Agreement

Agreements made in a domestic or social setting, such as family arrangements, are generally presumed not to be legally binding.

Signup and view all the flashcards

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.
    • 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.
  • 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.
    • General Rules:
      • Absolute/Unconditional
      • By prescribed method
        • Otherwise, by reasonable method
      • Must be communicated.
  • 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).

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Business Law (BLM1007) Contract Law Part I Lecture Notes PDF
Business Law (BLM1007) - Contract Law Notes PDF

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.

More Like This

Formation of Contracts Quiz
8 questions

Formation of Contracts Quiz

ProtectiveXenon avatar
ProtectiveXenon
Formation of a Contract
117 questions

Formation of a Contract

StainlessAshcanSchool avatar
StainlessAshcanSchool
Contracts Overview and Formation
26 questions

Contracts Overview and Formation

HealthyMulberryTree avatar
HealthyMulberryTree
Contract Law: Formation and Elements
13 questions

Contract Law: Formation and Elements

DelightedHeliotrope3341 avatar
DelightedHeliotrope3341
Use Quizgecko on...
Browser
Open
Browser
Browser