Contract Law Test notes PDF

Preview

Summary

Contract Law Test notesWhat is a contract? - A legal mechanism that backs voluntary agreements. - ‘Meeting of the minds’Why do we need a contract? - Contract is a formal mechanism to back agreement by law. - The other party is obliged/committed to perform and deliver the item - Reflects idea of reli...

Description

Contract Law Test notes What is a contract? - A legal mechanism that backs voluntary agreements. - ‘Meeting of the minds’ Why do we need a contract? - Contract is a formal mechanism to back agreement by law. - The other party is obliged/committed to perform and deliver the item - Reflects idea of reliance Trust and contracts - Trust is a sociological, not a binary contract - Different degrees in different levels and different types of trust o Contracts (legal concept) interact and supplements with trust (social concept). The higher the level of trust, the less we need contracts. Together, they provide us with certainty. -

Reputation (market concept) also relevant, actors, buyers, sellers have reputations and may determine level of trust. Religion, ethics, ideology also factors. People are motivated to deliver and perform based on the interaction and overlapping within an environment where people transact.

-

Trusts in markets and between contracting parties If A is doing something B is not aware of -> not a contract A written contract reflects that this is a stronger tool -> easy to identify, easier to enter into a contract.

How markets function - People do not know the objective value of the product, or the product does not have one. - People will not follow subjective value, market will follow subjective value, people value products subjectively. - Since people have different subjective values, they can trade - All people have different preferences, allowing the market to function. o Contract law allows people to maximise their utility, advance their preferences, and is why people choose to engage in the market. o All parties in transaction are happy as they all gained something with subjective value.  As a general rule, contract law does not scrutinize the price or exchange parties have agreed upon, as this is their subjective preference. Why do people transact? Peoples motivation: - Value of a good/service motivates the buyer to buy or seller to sell.

-

Assumes most transactions revolve around the value and enjoyment of most products Make money -> increase wealth -> improve financial situation

The Ultimatum Game “The ultimatum game is an experimental economics game in which two parties interact anonymously and only once, so reciprocation is not an issue. The first player proposes how to divide a sum of money with the second party. If the second player rejects this division, neither gets anything.” -

The economic prediction is that people are rational and pursue their preferences

Formation of the contract Essential element one: Intention - Not a joke/friendly agreement - Want to constitute a legal relationship - If introducing a contract, introduce something more formal into the contract  As a general rule, contracts do not need writing, or signing. However, sometimes people use these to signal their seriousness. -

To determine whether parties are held accountable: we must take into account the circumstances; the amount of money involved, the exchange, financial situations of the parties

Offer and acceptance - A simple contract is formed by acceptance of an offer. An offer is something that is clear, specifically detailed – if you accept, you enter a contract. Goods displayed in shop windows - In English law, display of offer is an invitation to treat, precontractual stage – not an offer you can accept. Goods with prices - English law does not assume that this is vast enough to be an offer - Stores can display goods with prices, without being committed to an offer. Goods on shelves - Still at invitation of treat, offer is made at checkout, acceptance is the checkout assistant scanning. Vending machines – no vendor to communicate with; not just an invitation to treat, but an offer  If change contract you are making a new offer. Need to ensure other party accepts it (not just one-sided change)

To whom may offers me made? - An offer can be open that anyone can accept - Contractual offers are detailed, clear, and can be open to the public - If return offer without knowledge of the ad, cannot accept offer without knowing about it. No meeting of the minds. - An offer that is directed to specific person is not an open offer

1. Trust is a sociological, not binary contract. There are different levels, different degrees and different types of trust. A contract is invented and used when parties do not fully trust each other, and thus do not have full certainty about the future. Trust is a social concept, which interacts and supplements contracts, a legal concept, as the higher the level of trust, the less the need for contracts. International contracts are likely to have a low level of trust due to differences in beliefs, cultures and lifestyles; parties find more ease in trusting people similar to them. 2. The law requires that there must be intention present in the agreement to want to constitute a legal relationship. Without intention there is no contract at all. To determine whether there was intention to enter a binding agreement, courts look at the intention of the parties, and consider what reasonable persons intentions would have been in the particular circumstances. Facts such as the value of the subject matter in the agreement, the significance of this to both agreements, financial situations of the parties and whether this was recorded in writing are all relevant to determining what the parties intended. 3. As a general rule, both oral and written contracts can be enforceable. However, contracts that are related to bank guarantees, employment or land generally must be in writing. Written contracts are stronger, as they outline the terms of the contract and signal seriousness, but may be more expensive due to the need of lawyers and formalities of the contract. In some circumstances, the transaction taking place isn’t considered a high risk by the parties, such as domestic arrangements, and can undermine trust in a relationship.

4. Signatures are not essential in a contract for them to become legally binding. But, they can signal seriousness of a contact, and show proof of acceptance. They are used to prove elements of the contract; people are less likely to challenge a contract that they signed, but can argue that they we coerced into signing, or had no intention. 5. Incomplete agreements lack certainty and completeness with the presence of missing terms and disagreements. Sometimes parties include important terms that lack meaning, or fail to agree on essential terms that the court is willing to imply, or agree to reach an agreement about an important term in the future. Non-explicit terms are not threatening to the existence of a contract, but the explicit terms are. Without detailed, specific terms, and acceptance, the agreement is not a contract, it is still in negotiations. 6. Meeting of minds is an objective measure of where this is a common understanding between the parties in the formation of a contract. There must be an offeror, and an offer-ee who accepts the offer. 7. Both parties in a contract must have legal capacity: ability to carry out actions which will have a legal effect. Contracts must be a voluntary; a matter of choice for individuals and business organisations whether they make contracts at all, and if they do, on terms that suit them that they are prepared to accept (must reflect peoples free will). Persons signing a contract must have a sound mind; an intoxicated person may have unclear judgement, and an unsound mind – causing the void of a contract....