Contract Law

Cards are designed for Revision purposes for contract or consumer law

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a) Offer

An invitation to treat is NOT an offer

An invitation to treat is where someone invites someone else to make an offer and then will consider whether to accept reject

Examples of invitation to treat are: articles in shop window / advertisements in newspapers, magazines, catalogues / auction sales

If it is an invitation to treat there can be no contract

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Rules about offers

Rules about offers: In an exam question use these as a check list to see if an offer exists

1) Offer must be certain ie both parties know EXACTLY what they have agreed to

2) Offer can be made by any method: writing / spoken / conduct (e.g. at an auction by raising your hand

3) It can be to anyone: to a single person / a group / whole world

4) Offer must be communicated to be effective: Person who accepts offer must know it is an actual offer when he accepts it e.g reward poster for cat, neighbour finds and returns cat but does not know of reward, is not entitled to rewards because does not know of offer.

5) Must be in existence i.e. within specified time period or if this does not exist, within a reasonable time.


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Discharge (ending) of contracts

(i) Performance

Contract ends when both sides have done everything they needed to do to finish the contract: Whole contract (all parts) MUST be completed; must be performed within a reasonable or specified time.

(ii) Agreement

Both parties agree / decide to end the contract before it has been completed – can include compensation

(iii) Frustration

Something happens that means the contract cannot be finished/completed if:

Property involved in contract is destroyed e.g. by fire

Person due to perform / finish contract because they are ill

A law is passed that would make the performance (completing) a contract illegal.

If a contract is frustrated, a court will try and put the parties back in a position they would have been in before they made the contract

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Breach of contract

This happens when a CONDITION in the contract is broken

Innocent party can decide whether to continue with contract or end it



Innocent party can claim for damages for “natural and foreseeable “ loss

Can claim for specific performance / injunction / rescission

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Cessation of an offer

An offer Ceases when:

1) When time limit for completion runs out

2) If the offer is withdrawn before it is accepted – REVOKED – the person who the offer is being made to must know it is being revoked

3) When it is rejected. When the person selling says no to an offer

4) When a counter offer is made by the offeree, this ends the first contract

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An Acceptance

Must be an agreement to ALL terms of the offer:

It MUST be communicated to the offeror – silence will not do. Conduct will suffice i.e. doing some action that shows you accept the contract e.g. attending school

Any way of communicating will do as long as it is EFFECTIVE

POSTAL RULE states that an acceptance is effective as soon as it is posted, if the post is a REASONABLE method to use.

E-mails are effective when they arrive with the person they were sent to


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Both parties must contribute (put something into) to the contract.

Both sides must show that they have given something in return for the other person’s promise. In fact this is the whole purpose of the contract.

Consideration must be worth something (value) but it does not have to be worth the same on both sides (adequate)

If both sides are happy with the agreement it does not matter what the value is

Following are NOT good consideration:

Consideration in the past – If the thing being offered already took place before the contract was signed then it cannot be consideration.

If you promise to do something which legally you have to do ( a duty to do) then this cant be co nsideration.

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Third Party Rights in a contract

The contract says they have rights or gives them a benefit provided they are made clear who they are in the contract:

By name

As a member of a group or class of people

OR Answers to a particular description


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Intention to create legal relations

It is always accepted that in a business agreement it is always presumed by both parties that the agreement is legally binding unless one side can show that it did not intend this.

Social and domestic agreements take place in the family, are not normally binding and cannot normally legally be enforced in courts


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Minors’ capacity

Those under 18 are able to make a contract but:

The contract has to be for necessaries e.g. food / clothing / housing / legal advice and is binding OR

The contract has to be a beneficial contract of service e.g. work / training / apprenticeships or something similar and is binding.

All other contracts are not binding and are VOIDABLE and a minor can pull out of the contract at any time.

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Terms of a contract

(i) Express terms:

These are very specific, written and easily understandable by both sides. Can be written or verbal

(ii) Implied Term

This is not obvious, normally unmentioned and not written but is assumed to be part of the contract. E.g. that there exists trust between a manager and a worker.

(iii) Conditions

These are the most important terms in a contract and are crucial to the contract taking place. If one side breaks a conditon, the other can cancel and can sue.

(iv) Warranties

Less important part of contract

If broken the contract still carries on but innocent party can sue

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Exclusion Clauses

Exclusion Clauses

A clause written in a contract that says how a person is not liable

Disliked by courts

Exclusion Clauses are limited by:

Unfair Contact Terms Act

- person cannot be excluded from liability if death or serious injury is a result of negligence

- exclusion clause has to be reasonable

- in consumer law the liability of a person cannot be limited if the outcome of the contract is very different from that that was reasonably expected (performance)

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