Study 7 – The Law of Contract – Common Law Summary Notes Download
Terms | Definitions |
|---|---|
 Provide a simple definition of a contract. | is a deliberate engagement between competent parties upon a legal consideration to do or abstain from doing some act. |
| What FIVE (5) elements are essential to a legally binding contract? | 1. offer and acceptance (agreement) 2. capacity of parties to contract 3. consideration 4. genuine intention 5. legality of object. |
| How must you make an offer when you want to enter into a contract? | the offer must be definite and must be communicated. |
| How must an acceptance of an offer be made? | It must be definite and communicated. It must be absolute and correspond to the terms of the offer. |
| What is a counter-offer? | If a new term of an offer is introduced, it becomes a counter-offer. |
| Who does not have full capacity to contract? | minors or individuals under the age of the majority and other persons of unsound mind or incapacitate through drink or drugs. |
| Why are there special rules of contract with respect to certain classes of people? | The rules are in place because they cannot be enforced in courts as it could be seen as taking advantage. |
| Define consideration in the context of contract law. | It is evidence of a serious intent to contract in which some monetary value is shown. |
| What is a gratuitous promise? | a promise to another when the element of a bargain is completely absent. Does not constitute a contract and is not enforceable at law. |
| What is genuine intention? | An intent to create a legally binding contract. |
| How do you determine whether the object of a contract is legal? | The object must be deemed legal under common law or statute law. |
| What is the difference between a void contract and a voidable contract? | a void contract is treated like it never existed whereas a voidable contract can be affirmed or rejected at the option of the aggrieved party. |
| What FOUR (4) reasons might cause a contract to be set aside? | 1. mistake 2. misrepresentation 3. undue influence 4. duress |
| Describe TWO (2) types of mistakes that may occur in contracts. | mistakes about the terms - result from typographical mistake, misunderstanding of certain words used, misquote etc. mistakes about the assumptions - mistakes that fundamentally affect the nature of the contract made. e.g. a tornado destroys a building when a contract is signed. |
| How can misrepresentation affect a contract? | a misrepresentation is an incorrect statement which may convince a party to enter into a contract. |
| What is a material fact? | is a fact that is so basic and import to the contract that withholding this fact could alter the terms of the contract. |
| What is the difference between innocent and fraudulent misrepresentation? | innocent misrepresentation is an incorrect statement made innocently whereas a fraudulent is a false statement made deliberately. |
| Give an example of a contract entered into under duress, and comment on its legal status. | An example is a party blackmailing another party to sign over their house or face violence. |
| What are the methods of discharging a contract? | -performance - agreement - frustration - operation of law - breach |
| If one party commits a breach of contract but the other party has already had some benefit from the contract, what action should be taken? | the other party cannot repudiate all liability on the contract if he or she has benefited from the contract. |
