Contract Law Basics

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Questions and Answers

What are the essential elements of a valid contract?

Offer, acceptance, consideration, capacity, lawful object.

What are the classifications of contracts?

Bilateral, unilateral, executory, executed, expressed, implied.

What are the provisions of capacity to contract?

Age, sound mind, not disqualified by law.

What are the rules regarding valid acceptance?

Must be unqualified, communicated, made in the prescribed manner. Signup and view all the answers

What is the discharge of a contract due to impossibility of performance?

Contracts can be discharged if performance becomes impossible due to unforeseen circumstances. Signup and view all the answers

What are the different types of agreements declared void?

Agreements without consideration, agreements by incompetent parties, illegal agreements. Signup and view all the answers

What is the difference between undue influence and coercion?

Undue influence arises from relationships affecting decision-making; coercion involves threats or force. Signup and view all the answers

What are the rules of a contingent contract?

The contract depends on the occurrence of a future event. Signup and view all the answers

What are the essential elements of a contract of guarantee?

Three parties, guarantee of performance, and consideration. Signup and view all the answers

What is the difference between a contract of guarantee and a contract of indemnity?

A contract of guarantee involves three parties and secondary liability, while indemnity involves two and primary liability. Signup and view all the answers

What are the different types of agents?

General agent, special agent, universal agent. Signup and view all the answers

What are the essential elements of a contract of bailment?

Delivery of goods, purpose, and return of goods. Signup and view all the answers

What are the essential elements of a contract of sale?

Parties, subject matter, transfer of ownership, and price. Signup and view all the answers

What is the doctrine of Caveat Emptor?

Let the buyer beware; buyers must check the quality before purchasing. Signup and view all the answers

What are the implied conditions under the Sale of Goods Act?

Condition as to title, condition as to description, condition as to quality or fitness. Signup and view all the answers

What is the difference between a sale and a hire-purchase agreement?

In a sale, ownership transfers immediately; in hire-purchase, it transfers after full payment. Signup and view all the answers

What is the difference between a promissory note and a bill of exchange?

A promissory note is a promise to pay; a bill of exchange is an order to pay. Signup and view all the answers

What are the essential elements of a promissory note?

Written instrument, unconditional promise, signed by the maker. Signup and view all the answers

What are the characteristics of negotiable instruments?

Transferability, holder in due course, and unconditionality. Signup and view all the answers

What are the different types of cheques?

Bearer cheque, order cheque, crossed cheque, post-dated cheque. Signup and view all the answers

Study Notes

Essential Elements of a Valid Contract

Agreement: Offer and Acceptance
Consideration: Something of value exchanged
Capacity: Legal ability to contract
Legality: Contract must be legal
Intention to create legal relations: Parties must intend to be bound

Classification of Contracts

Bilateral and Unilateral Contracts
Express and Implied Contracts
Void, Voidable, and Valid Contracts
Executed and Executory Contracts

Provisions of Capacity to Contract

Minors: Generally lack capacity to contract
Persons of unsound mind: Lack capacity if unable to understand contract
Corporations: Have capacity to contract within their objects

Rules Regarding Valid Acceptance

Must be absolute and unqualified
Must be communicated to the offeror
Must conform to the offer's terms
Must be made within a reasonable time

Discharge of a Contract Due to Impossibility of Performance

Supervening impossibility: Event makes performance impossible
Frustration of contract: Purpose of contract becomes impossible
Doctrine of frustration: Law excuses performance due to impossibility

Different Types of Agreements Declared Void

Agreements without consideration
Agreements in restraint of trade
Agreements in restraint of marriage
Agreements by way of wager
Agreements against public policy

Difference Between Undue Influence and Coercion

Undue influence: Unfair advantage taken of a weaker party
Coercion: Use of force or threat to induce contract
Both can render a contract voidable

Rules of A Contingent Contract

Dependent on a future event
Performance is conditional
Contract may be discharged if the event does not occur

Essential Elements of a Contract of Guarantee

Principal debtor: Person primarily liable
Creditor: Person owed money
Guarantor: Person guaranteeing payment
Consideration: Guarantor must receive something in return

Difference Between a Contract of Guarantee and a Contract of Indemnity

Guarantee: Guarantor promises to be liable if the debtor fails to pay
Indemnity: Indemnifier promises to protect the indemnitee from loss
Guarantee is secondary liability, indemnity is primary liability

Different Types of Agents

Universal agent: Power to act on behalf of principal in all matters
General agent: Authority to act within a specific area of business
Special agent: Authority to act in a specific transaction

Essential Elements of a Contract of Bailment

Bailor: Person delivering goods
Bailee: Person receiving goods
Delivery of goods: Bailor must deliver goods to bailee
Contractual terms: Agreement on terms of bailment

Essential Elements of a Contract of Sale

Agreement: Buyer and seller agree on price and terms
Subject matter: Goods are identified and specific
Consideration: Payment of price by buyer
Transfer of ownership: Title to goods passes from seller to buyer

Doctrine of Caveat Emptor

Buyer beware
Buyer is responsible for inspecting goods before purchase
Seller is not liable for defects unless disclosed

Implied Conditions Under the Sale of Goods Act

Title: Seller has good title to goods
Description: Goods correspond to description
Quality: Goods are of merchantable quality
Fitness for purpose: Goods are fit for intended purpose

Difference Between a Sale and a Hire-Purchase Agreement

Sale: Transfer of ownership immediately upon payment
Hire-purchase: Ownership remains with seller until final payment
Hire-purchase agreement creates a debt and allows for repossession

Difference Between a Promissory Note and a Bill of Exchange

Promissory Note: Written promise to pay a certain sum
Bill of Exchange: Written order to pay a certain sum
Both are negotiable instruments and can be transferred

Essential Elements of a Promissory Note

Unconditional promise to pay
Fixed sum of money
Payable at a certain time
Must be signed by the maker

Characteristics of Negotiable Instruments

Must be in writing
Must be signed by the maker
Must contain a promise or order to pay
Must be payable on demand or at a fixed time

Different Types of Cheques

Bearer cheque: Payable to anyone presenting it
Order cheque: Payable to a specific person
Crossed cheque: Can only be paid into a bank account

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Description

This quiz covers the essential elements of a valid contract, including agreement, consideration, and capacity. Additionally, it explores the classification of contracts and rules regarding valid acceptance. Test your knowledge of contract law principles and their applications.