Contract Law Essentials

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Questions and Answers

What is the key principle established in Hargraves Transportation Ltd. v. Lynch regarding conditions in contracts?

The case illustrates that a condition becomes binding when it is contingent upon a specific occurrence.

In Pynn v. Campbell, what aspect of contract discharge was primarily examined?

The case focused on the discharge of contract obligations through mutual agreement, especially when previous obligations are satisfied.

How does a breach of condition differ from a breach of warranty in terms of contract discharge?

A breach of condition allows the injured party to treat the contract as discharged, while a breach of warranty permits the party to sue for damages but requires them to continue with the contract.

What is the legal implication for a party that refuses to perform their contractual obligations?

The refusal to perform releases the other party from their obligations and can render the defaulting party liable for breach of contract. Signup and view all the answers

What does discharge by acceptance of breach imply in contract law?

Discharge by acceptance of breach means that a breach may allow the innocent party to treat the contract as discharged if they choose to do so. Signup and view all the answers

Explain the role of consideration in the discharge of a contract under mutual agreement.

Discharge of a contract under mutual agreement must be supported by consideration or made under seal to be valid. Signup and view all the answers

What recourse does an injured party have if they incur expenses after a breach of warranty?

The injured party can sue for damages while continuing with the contract, as they do not have the right to rescind it. Signup and view all the answers

In cases of breach of contract, what is a quasi contractual quantum meruit action?

It is an action for compensation that an injured party may bring if they incurred expenses related to the contract, despite the contract being considered discharged. Signup and view all the answers

What is the primary characteristic that distinguishes an offer from an invitation to treat, based on the case Fisher v Bell?

An offer shows a clear intention to create legal relations, whereas an invitation to treat does not commit the offeror to any contract. Signup and view all the answers

In the case of Carlill v Carbolic Smoke Ball Co. Ltd., what was the court's finding regarding the intention to do business?

The court found that the company demonstrated a clear intention to bind itself by offering a reward for using the product as specified. Signup and view all the answers

How did the case of Hyde v Wrench illustrate the concept of a counter offer?

Hyde v Wrench showed that when a counter offer is made, it effectively rejects the original offer, terminating it. Signup and view all the answers

What are the essential requirements for valid acceptance of an offer?

Valid acceptance must be unconditional and communicated to the offeror, agreeing to all terms of the offer. Signup and view all the answers

What is the significance of the case Hyde v Wrench in contract law?

Hyde v Wrench establishes that an acceptance must be exactly on the same terms as the offer; any variation leads to a counter-offer. Signup and view all the answers

In Ramsgate Hotel v Montefiore, what does the case illustrate regarding the lapse of time for an offer?

The case illustrates that an offer may lapse if it is not accepted within a reasonable time frame, leading to its termination. Signup and view all the answers

Explain the Postal Rule as demonstrated in Adams v Lindsell.

The Postal Rule states that acceptance is valid when a letter of acceptance is posted, as highlighted in Adams v Lindsell. Signup and view all the answers

Based on Routledge v Grant, what must be present for a promise to keep an offer open to be considered binding?

A promise to keep an offer open is only binding if the offeree provides some form of payment or consideration in return. Signup and view all the answers

How does consideration function as a requirement for a valid contract?

Consideration must represent a benefit to one party or a detriment to another, as mentioned in Currie v Misa. Signup and view all the answers

What legal principle can be drawn from the case Dickinson v Dodds regarding revocation of offers?

The case establishes that an offer can be revoked before acceptance, as long as the offeree is made aware of the revocation. Signup and view all the answers

Why is it important that an offer be communicated, as discussed in the provided content?

An offer must be communicated to ensure that the offeree is aware of its existence and terms, enabling them to accept it. Signup and view all the answers

Summarize the principle regarding past consideration using Roscorla v Thomas.

Roscorla v Thomas illustrates that past consideration is not valid; consideration must be contemporaneous with the promise. Signup and view all the answers

What does the case of Tweddle v Atkinson teach about who can enforce a contract?

In Tweddle v Atkinson, it is established that consideration must move from the promisee to the promisor, implying that only parties providing consideration can enforce the contract. Signup and view all the answers

Describe the implications of the case Felthouse v Bindley regarding silence and acceptance.

Felthouse v Bindley clarifies that silence cannot be interpreted as consent to an offer; active communication is necessary for acceptance. Signup and view all the answers

What is the significance of the case Central London Property Trust v High Trees House in relation to consideration?

Central London Property Trust v High Trees House recognizes promissory estoppel as a defense, allowing for part-payment to be considered as sufficient consideration under certain circumstances. Signup and view all the answers

How does the case Brogden v Metropolitan Railway illustrate the communication of acceptance?

Brogden v Metropolitan Railway demonstrates that acceptance may be communicated through conduct and acts consistent with the agreement. Signup and view all the answers

Study Notes

Definition of a Contract

A contract is a legally binding agreement between two or more parties, typically commercial in nature.
Not all agreements are legally binding; for an agreement to be legally binding, the parties must intend legal consequences.

Essentials of a Binding Contract: Offer

An offer is a clear statement of terms under which the offeror is prepared to do business with the offeree.
Offers can be bilateral (promise for a promise) or unilateral (promise for an act).
A valid offer needs to include:
- Clearly stated terms (definite).
- Intention to do business.
- Communication of the offer.

Essentials of a Binding Contract: Communication of offer

An invitation to treat isn't an offer.
Statements of negotiation aren't offers to do business
Offers can be communicated verbally, in writing, or through conduct.
Invitations to submit tenders are generally considered invitations to treat, not offers by the advertiser to consider any submitted offers.

Essentials of a Binding Contract: Acceptance

Acceptance is agreement to be bound by all terms of the offer.
Acceptance must be:
- Identical to the offer (no variations).
- Certain and definite.
- Communicated in the manner implied or expressed in the offer. (verbal, written, conduct)
Silence does not constitute acceptance.
Postal Rule: Postal acceptance is effective when the letter is posted.

Essentials of a Binding Contract: Consideration

Consideration is a benefit to one party or a detriment to the other.
Consideration is the price one party pays for the other's act or promise.
It must be sufficient but doesn't need to be adequate.
Past consideration is not valid consideration (it must occur in exchange for the promise).
Part-payment of a debt is not sufficient consideration, unless part payment is accompanied by a benefit such as an earlier payment date, or goods/material are included (exceptions).
Promissory estoppel is a defense where the court finds that part payment is sufficient consideration.

Essentials of a Binding Contract: Intention to Create Legal Relations

Courts usually presume there's an intention to create legal relations in business, but that presumption can be rebutted.
Parties in a domestic/social relationship are presumed not to intend legal relations.

Defects in Contracts: Capacity

Minors' contracts are generally unenforceable against them, except for contracts for necessaries.
Mentally impaired persons are also unenforceable against if the other party knew of the impairment at the time of the contract.

Defects in Contracts: Vitiating Factors

Misrepresentation: Untrue statements inducing contract (innocent, fraudulent, or negligent)
Mistake: Mutual or unilateral mistake, common mistake
Undue influence: One party abuses influence over another.
Duress: Threats or violence forcing contract.

Defects in Contracts: Illegality

A contract is void if it is illegal or against public policy.
Examples of illegal contracts include contracts to commit a crime or breach of trust or that are corrupting in nature.

Discharge of Contracts: Method of Discharge

Performance: When both parties fulfill contractual obligations.
Agreement: Parties mutually agree to end the contract, or substitute the terms.
Breach: One party fails to perform their obligation (providing the innocent party has right to treat contract as at an end).
Frustration: External events make performance impossible or unreasonable (due to no fault of the parties).
- Examples include the impossibility of performance due to an unforeseen event, government interference, war, or destruction of subject matter of the contract.

Lapse of Time

The right to sue for breach of contract is limited by statute to a certain time (usually 6 years).
Some exceptions: minors, mental incapacity, hidden facts/fraud

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Description

This quiz covers the definition and essential elements of a legally binding contract, focusing on offers and their communication. Understand the distinction between offers and invitations to treat, and the requirements that make an offer valid in legal terms.