Essential
Points in Contract
• A contract is a legally binding
agreement
• A contract is formed when an offer
is accepted
• An offer is made when one person
proposes a set of terms to another with the intention that both will be bound
if it is accepted
• An invitation to treat is not an
offer: but an invitation to negotiate or an invitation to make an offer
Acceptance
• As soon as an acceptance of an offer
is received a contract is created
• It is not possible to accept an
offer by doing or saying nothing
• When the postal rule applies, an
acceptance by letter or electronic mail is effective when sent
Unilateral
Contracts
• An offer of a unilateral contract
can be accepted only by performing the act requested; Carlill v Carbolic
Smokeball Co [1893]
• A counter offer is not an acceptance
and revokes the original offer
• A request for more information does
not revoke the offer
Certainty
• A contract will be created only if a
reasonable person could state with certainty what had been agreed; Scamell v
Ouston [1941]
• A meaningless term in a contract can
be ignored; Nicolene Ltd. v Simmonds [1953]
Termination
• An offer that has been revoked
cannot be accepted
• Revocation is effective when
received
• A person who refuses and offer
cannot later accept it ( a counter offer is a refusal)
• An agreement made ‘subject to
contract’ is not a contract
Legal
Relations
• A contract will be created only
where the parties intend to create legal relationships
• In business transactions it is
presumed that the parties intended to create legal relations (unless evidence
to the contrary)
Consideration
• A contract will only be created
where the parties give some consideration to each other
• Consideration consists of a right
given to one party or a loss or detriment suffered by another
• A contract is a bargain the
consideration of one party given in exchange for the consideration of another
• A past act cannot be given as
consideration (unless the other party requested that the act be performed and
both parties all along contemplated that payment would be made for it)
• Consideration must be of some value
Formalities
• Most contracts do not need to be in
writing
• Most contracts are not in writing
• Contracts in the form of deed do
need to be in writing (Real Property Transfers)
• Some contracts are safer in writing
(employment contracts)
Minors
• A person who is capable of making a
valid contract has capacity
• Contracts made by minors may be
vail, voidable or void
• Loans to minors cannot be enforced
unless the minor agrees to pay the loan after they are 18
• Minors are not bound by contracts
for unnecessary goods
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