Contract Law Overview

Contract Law Summary Notes

• A contract is a legally binding agreement, a promise enforceable by law
• Essential elements of a contract include agreement (offer and acceptance), intention (parties intended legal consequences), and consideration (each party promises something for the other).
• Capacity refers to the parties' legal ability to enter a contract. Minors or those mentally incapacitated have limited capacity.
• Legality necessitates the contract's purpose and terms being lawful and not violating public policy.
• Certainty of terms is crucial for enforceability; terms must be clear and definite.

Offer and Acceptance

• An offer is a proposal made by one party to another, intending to be legally bound.
• Acceptance occurs when the offeree agrees to the terms of the offer.
• Clear communication of acceptance is essential, unless a unilateral contract or postal rule applies.
• An invitation to treat is not an offer, it is an invitation to make an offer. Examples include advertisements, displays of goods in shops, and auctioneers' requests for bids.
• An offer can be terminated by rejection, counter-offer, revocation (withdrawal by the offeror before acceptance), lapse of time, or death/insanity of either party.

Consideration

• Consideration is the price paid for a promise. It must be something of value in the eyes of the law, and it must not be something the promisee is already obligated to do.
• An existing legal duty does not qualify as consideration. Promising to do something you are already obligated to do is not sufficient.
• Past consideration is not valid consideration for a current promise.

Intention to Create Legal Relations

• The parties must have intended to create a legally binding agreement.
• In commercial contexts, there's a presumption of intention to create legal relations; however, it is rebuttable.
• In social or domestic agreements, there's a presumption against.

Capacity

• Minors generally lack capacity to contract; however, certain contracts are enforceable against them if they are beneficial or relate to necessities. Mentally incapacitated persons may enter into voidable contracts.
• Corporations are treated differently, with ultra vires contracts potentially being unenforceable.

Contents of the Contract

• Terms of a contract classify as conditions, warranties, or innominate terms, contingent on the effect of their breach.
• An important term is one that substantially affects the contract; a minor breach will affect the contract, whereas a serious or fundamental breach invalidates it.
• Pre-contractual statements can be classified as representations or terms of a contract depending on the circumstances surrounding their utterance.
• Exclusion clauses/terms are incorporated into contracts; if the document is signed, the terms within will be binding, regardless of whether they have been read, but if unsigned, incorporation depends on the reasonableness of drawing attention to the clause.

Vitiating Elements

• Several issues can render an otherwise valid contract void or voidable:
• Misrepresentation - A false statement of material fact that induces the other party to enter the contract. Can be fraudulent, negligent, or innocent.
• Duress - Coercion, where one party is forced into the contract due to threats or improper pressure.
• Undue Influence - A party exploiting a position of trust or power over the other party to get them into the contract.
• Mistake - A shared or unilateral misunderstanding concerning the terms or subject matter of the contract, may render a contract void.

Discharge of Contracts

• Discharge by performance – fulfilling all contractual obligations
• Discharge by agreement– mutually agreeing on termination
• Discharge by breach – breaking a contract by failing to perform obligations
• Discharge by frustration – contract becoming impossible to perform due to circumstances outside the control of either party.

Remedies

• Damages – compensation for loss arising from breach of contract
• Specific performance – court order enforcing a party to comply with contractual obligations
• Injunction – court order preventing a party from carrying out a threatened action

Privity of Contract

• Only parties to the contract have rights and responsibilities. There's an exception with the Contracts (Rights of Third Parties) Act 1999.

Illegality

• Contracts with illegal purposes or that are against public policy.
• If a contract is illegal, it cannot be enforced.

This quiz covers essential concepts of contract law, including the elements of a contract, the processes of offer and acceptance, and key terms such as capacity and legality. Test your understanding of how binding agreements are formed and enforced within the legal system.