Contract
- Created by: shannenwilsonx
- Created on: 16-12-13 01:40
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- Contract Law The basics
- Contents of a contract
- condition
- A condition is a major term of the contract which goes to the root of the contract. If a condition is breached the innocent party is entitled to repudiate the contract and claim damages
- warranty
- Warranties are minor terms of the contract, which are not central to the existence of the contract. If a warranty is breached the innocent party may claim damages but can not end the contract
- Innominate terms
- Innominate terms approach was established with the Hong Kong fir shipping. Rather than classing terms as condition or warranties, innominate term approach looks at the effect of the breach and questions whether the innocent party to the breach was deprived of substantially the whole benefit of the contract, Only if this happened would they be able to end the contract
- Terms implied by common law
- Courts are reluctant to imply terms into a contract at common law, it is the parties role to agree to the contracts terms, and freedom of contract prevails. There are limited circumstances where courts will imply terms at common law;
- Terms implied in law
- The courts may imply a term in law in contracts of a defined type, e.g landlord/tenant, retailer/customer where the law offers protection to weaker party
- Terms implied through custom
- Where a particular term prevails in a trade, courts may implement it into another contract of the same type in that trade
- Terms implied in fact
- Terms implied in fact are based on the imputed intentions of both parties. Two tests have been developed-
- The business efficiency test
- Whether the term was necessary to give the contract business efficiency. IE would the contract make sense without it? Courts will only imply a term when necessary
- The moorcock
- The riverbed would be safe for mooring, the court implied this term in fact. Term must be necessary to give the contract business effect
- The moorcock
- Whether the term was necessary to give the contract business efficiency. IE would the contract make sense without it? Courts will only imply a term when necessary
- The officious bystander test
- Had an officious bystander been present at the time the contract was made and had suggested such a term should be included? It must be obvious that both parties agreed to it.
- Shirlaw V Southern Foundries
- Managing directors dismissal, due to new policy
- Shirlaw V Southern Foundries
- Had an officious bystander been present at the time the contract was made and had suggested such a term should be included? It must be obvious that both parties agreed to it.
- The business efficiency test
- Terms implied in fact are based on the imputed intentions of both parties. Two tests have been developed-
- Terms implied in law
- In addition to being a contract of a defined type, the term must be a reasonable one to include. And also be sufficiently certain.
- Courts are reluctant to imply terms into a contract at common law, it is the parties role to agree to the contracts terms, and freedom of contract prevails. There are limited circumstances where courts will imply terms at common law;
- Statutory implied terms
- Unfair terms
- Regulation by statute
- Regulation by common law
- Contractual term or representation
- It is important to know whether a statement is a contractual term or a representation in order to find out the available remedy or cause of action.
- If a statement is identified as a term which hasnt been fufilled, the innocent party may sue for breach of contract
- If a statement is merely a representation, which turns out to be untrue, the person may bring action for misrepresentation
- In deciding whether a statement is a term or representation, the court looks at four factors.
- Relative expertise of the party
- If the representee has the greater knowledge it is most likely to be a representation, if the representor has greater knowledge, it is more likely to be a contractual term
- The parole evidence rule
- Where the contract has been put into writing, only the terms written in the contract are terms, any verbal communication is a representation.
- Importance of the statement
- When the representee indicates the importance of a statement to the representor, this is most likely a term
- Time
- The longer the time lapse between making the statement and entering the contract the more likely it will be a representation
- Routledge v Mckay [1954] 1 WLR 615
- Exchanged a motorbike and 30 pound for a douglas BSA motorcycle, registration said it was a 1942- It was a 1936. He bought it, and it read "when 30 pound is paid over, the transaction is closed" Held that because none were experts, The statement was a representation and not a contractual term. The lapse of time between making the statement and paying for the bike gave R a chance to check statement.
- Routledge v Mckay [1954] 1 WLR 615
- The longer the time lapse between making the statement and entering the contract the more likely it will be a representation
- Relative expertise of the party
- It is important to know whether a statement is a contractual term or a representation in order to find out the available remedy or cause of action.
- condition
- Vitiating factors
- Misrepresentation
- Mistake
- Duress
- Undue Influence
- Illegal contracts and contracts void for contravening public policy
- Discharge of contract
- Discharge by performance
- Discharge by agreement
- Discharge by breach
- Frustration
- Remedies
- Intention to create legal relations
- In order to determine which agreements are legally binding, and have an intention to create legal relations, the law distincs between social and domestic agreements and agreements made in a commercial context.
- Intention to create legal relations in social and domestic agreements
- In social and domestic agreement the law makes a presumption that there is no intent to create legal relations
- Jones V Padavatton
- Mother promised to pay daughter $200 pm if she quit her well payed job to study at the bar in london. She did, however the mother meant 200 trinidad money. It wasnt enough so the mother bought the daughter a larger house to rent out for money andshe got married and didnt finish her studies. This was a domestic agreement and wasnt intended to be legally binding
- Evidence to prove this asumptions wrong can be shown in a written agreement.
- Errington V Errington Wood
- Father in law purchased house for son and daughter in law to live in and said that if they paid mortgage installments he would transfer it over. He died and the mother inherited it, wanted the wife to be moved from the house even though she was still paying installments. Was held that this unilateral contract was accepted by conduct, and intended to be legally relations.
- where the parties have seperated
- Where spouses have seperated it s generally found that their agreements tend to be binding. The signed written agreement was further evidence to the intention.
- or where there is a 3rd party to the contract
- Errington V Errington Wood
- Jones V Padavatton
- In social and domestic agreement the law makes a presumption that there is no intent to create legal relations
- Intention to create legal relations in commercial agreements
- Esso Petroleum V Custom and Excise
- The coins were not exchanged for a money consideration and therefore the coins weren't for resale- which was the courts question
- This can be rebutted with evidence to the contrary
- Binding in honor only clause
- Rose an frank co v Compton Bros
- The contract contained an honorable pledge clause stating the agreement wasn't formal or a legal agreement, and shall not be subject to jurisdiction in the courts of both England and the UK
- Comfort letters contrast honor clauses
- Kleinwort Benson v Malaysia Mining corp
- MMC's comfort letter had no legal effect, the fact they refused to act as a guarantor indicated they wanted no legal relation.The letter referred to company policy, they could change there policy at any time
- Kleinwort Benson v Malaysia Mining corp
- Rose an frank co v Compton Bros
- Binding in honor only clause
- Esso Petroleum V Custom and Excise
- Intention to create legal relations in social and domestic agreements
- In order to determine which agreements are legally binding, and have an intention to create legal relations, the law distincs between social and domestic agreements and agreements made in a commercial context.
- Consideration
- Rules of consideration
- The consideration must not be past
- Consideration must more from the promisee
- Must be sufficient but not adequate
- Chappell V Nestle
- An existing contractual duty will not amount to valid consideration
- Stilk V Myrrick
- Unless the party goes beyond their contractual duty
- Hartley V Ponsonby
- Or if they confer a practical benefit
- Untitled
- William V Roffey Bros
- Or if they confer a practical benefit
- Hartley V Ponsonby
- Unless the party goes beyond their contractual duty
- Stilk V Myrrick
- An existing public duty will not amount to valid consideration
- Unless the promisor goes beyond their duty
- Glasbrook Bros V Glamorgan county council
- Unless the promisor goes beyond their duty
- Part payment of a debt isnt valid consideration
- Pinnels Case
- Unless at the request of the promisor
- part payment made before the due-date
- with a chattel
- to a different destination
- This rule in pinnels case was affirmed by the house of the lords in Foakes V Beer
- Further exeptions in pinnels case
- Where part-payment is made by a third party
- Promissory Estoppel
- Further exeptions in pinnels case
- Unless at the request of the promisor
- Pinnels Case
- Rules of consideration
- Contents of a contract
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