Contracts

Frustration

Events occur after the contract was made which fundamentally change the nature of what the parties agreed to. It it happens, both parties must be restored to the position they were in before the contract was entered into.

Non Est Factum

For a successful ikea of 'non est factum' two factors must be established: 1. The signer was not careless in signing. There is radical or extreme difference between the document which was signed and what the signer thought they were signing.

Remedies 2

If one party decides not to proceed with the contract, or makes it impossible for the contract to proceed it is known as repudiation. A person who rescinds a contract for breach of condition may sue for damages.

Knowledge and Expertise

If the Statement was made by a party who possesses special knowledge or skill, the courts are likely to regard it as a term of the contract.

Timing

If the contract is entered into soon after the statement was made, this may indicate that it is a term, rather than a mere representation.

The Importance of the Statement

If the court considers the statement to be a pivotal factor in the contract being entered intone, the court will probably consider it to be a term

Reduction of Terms to Writing

If there is a written contract, and the statement is not included in writing, than this is evidence that it is a representation not a contractual term.

Acceptance 1

Once an offer is established, acceptance is important. Acceptance of an offer must be complete and unqualified. If it is not complete and unqualified, it may constitute a counter offer.

Offer

An offer capable of acceptance is required in order for an agreement to arise. Offers can be made in writing, verbally or by conduct, In order for an offer to be made, it must be clear.

Validity of Contracts

Even if all the elements of a contract are present, certain factors can affect the validity of contracts. If one party acts in a deceptive way, the contract is voidable

Mental Incapacity

Unsoundness of mind is now a good defence to an action upon a contract, if it can be shown that the defendant was not of the capacity to contract, and the plaintiff knew it.

Warranty

Warranties do not have the same effect on a contract if they are breached. It also depends on the intention of the parties. use the reasonable person test to decide.

Factors that Affect the Validity of Contracts

- Misrepresentation - Mistake - Undue influence - Unconscionable dealing - Duress - Lack of good faith - Restraint of trade - Frustration

The Parol Evidence Rule 2

2. Parol evidence can be given about the validity of the contract. 3. It can be used to explain words or phases which are ambiguous. 4. Evidence of custom or local usage is admissible. 5. A document may fail in accurately recording the true agreement

Contracts By Deed

A deed is a formal legal document, containing formal legal requirements. Deeds usually convey or transfer property to create legal obligation or contract.

Direct Negotiation 1

A necessary first step in the case of consumer complaint arising from a contract is to try and correct the situation by direct negotiation. An approach to the original supplier may be that it required to have the problem fixed.

Ratification

A teen under 18 can enter a contract if they affirm the contract when they turn 18. Contract for necessities: minors can be bound by contract for 'necessities'.

Simple Contracts

All other contracts are known as simple contracts. They are informal and may be made in any way. Consideration is required to make these contract enforceable. If no consideration, the agreement i not a contract

Exception to Acceptance

An important exception to this rule is known as the 'postal acceptance rule.' If acceptance is made by mail, the acceptance is deemed to have taken place once the letter has been posted.

Bilateral Contracts

Bilateral Contracts is one where a promise by one party is exchanged for a promise by another. The exchange of the promise is enough to render them enforceable.

Written Contracts

Certain types of contracts are required to be written in form. These include contracts for sale of land, transfers of share and guarantees.

Element Three

Consideration is something of value given by the parties to the agreement in exchange for the performance of the agreement. There are many rules concerning consideration as it is a potentially complex legal issue.

Restraint of Trade

Contracts are considered to be unreasonable by the courts as they unfairly restrict the ability of one of the parties to earn a living. These contracts may be set aside by the courts.

Mistake of Fact

In certain circumstances, parties to a contract may be genuinely mistaken as to certain important facts.

Statutory Consumer Protection

In most cases legislation seek to address concerns of a substantial difference or imbalance of bargaining power between the parties of the contract.

Element One

In order for an agreement to exist, there must be an offer an an acceptance of that offer. Once this has occurred, an agreement exists.

Elements of a Contract

In order to establish if a contract exits, the common law has developed the following criteria: 1. Is there an agreement in existence between the parties. 2. Is any such agreement intended to be legally biding. 3. Is the agreement supported by consideration.

Direct Negotiation 2

It is important that a record is kept of all: telephone calls, letters written, visits made. If attempt at conciliation are unsuccessful, further action may be needed and this evidence all be important.

Duress

It is the threatened or actual application of violence towards a party in order to induce them to enter into a contract. A party cannot really enter into a contract because they have no alternative. The threats can be made on the behalf of the contract.

Capacity

It is whether the parties to the contract have the capacity to legally make a contract. People who are not Australian citizens are subject to restriction. People who are bankrupt or in jail are also restricted.

Minors

Minors generally lack the capacity to contract, however is subject to some important exceptions. Cash purchases are contracts that minors make.

Mistake

Mistakes can be made by parties in relation to the law or to important facts. In some circumstances 'non est factum' (it is not my deed) makes a document void.

Condition and Warranty

Once it has been established that a statement is a term of the contract, it is important to clarify what type of term it is. The terms that are vital are classified as 'conditions' and less important ones are called 'warranties'.

Unilateral Contracts

One party promises to do something in return for an act of the other party, as opposed to a promise.

Oral/Verbal Contracts

Oral/Verbal Contracts are legally enforceable. They can also be implied by conduct. There is difficulty in proving the contracts exist

Mistake of Law

Parties are sometimes mistaken as to the legality of the agreements they make. This does not normally allow them to avoid their responsibilities. However if a contract is formed for an illegal purpose, the contract is void.

Undue Influence

Sometimes parties enter into contracts due to press brought upon the be another party, not being able to form an independent judgment about the contract. A contract may be set aside. Certain relationships may give rise to undue influence: solicitor/client, doctor/patient, parents/children.

Unconscionable Dealing

Sometimes parties to a contract take an unfair advantage of another party to such an extent that the court will order them to be void. This can occur where a party takes advantage of the other because lack of education, illness or problem with language.

Representations 1

Sometimes, statements are made by the parties to a contract, and the court must decide whether these become terms of the contract or whether they are 'mere puff'. If representation are made with the intent to defraud, legal consequences will apply.

Terms

Terms are considered to be part of the contract and have legal consequences. Representations do not carry the same weight with the law. It is often a statement to attract interest and not have legal consequences.

The Competition and Consumer Act 2010

The CCA imposes strict liability on manufacturers of defective products which may cause injury or damage. It also prohibits conduct that may mislead or deceive.

Representations 2

The court takes factors into account when deciding if a statement made is a term or representation: 1. Timing. 2. The importance of the statement. 3. Reduction of terms to writing. 4. Knowledge and expertise

Lack of 'Good Faith'

The enforceability of contracts may be called into question in certain circumstances for lack of 'good faith'. It means that information of relevance to the contract must be disclosed to the other party.

Invitation to Treat

The law has allowed a seller to choose who to sell to. most advertisement will therefore be advertisements to treat. These are invitations to submit an offer to buy.

Remedies 1

The main effect of the difference between conditions and warranties is in the remedies available to a party affected by the breach. If a condition is breached, this gives a right to terminate the contract, which is known as recission.

The Parol Evidence Rule 1

The rules states hat when a contract is in writing, oral evidence is not allowed to vary or interpret the document. There are a number of exceptions: 1. The written agreement is not the whole agreement.

Types of Misrepresentation

There are three types of misrepresentation: 1. Innocent. 2. Negligent. 3. Fraudulent.

Element Two

There is a difference between domestic or social agreements and legally binding contracts. The courts use a test to see whether an intention exists. Would a reasonable person see the agreement as one in which court action could follow.

Voidable

There is a difference between void and voidable. A voidable contract is one on which the parties may choose to continue to proceed even if the other party has done something which could allow them to terminate it. If one does not understand the contractual relationship, the contract is not enforceable.

Fraudulent Misrepresentation

These are elements needed to prove fraudulence: 1. The statement was actually made. 2. It was untrue. 3. The party making the statement knew it was untrue. 4. Didn't care if it was true and. 5. Intended the other party to act on it. 6. They suffered damages.

Fair Trading Act 1989

These provisions are mirrored in the FTA but apply also to 'persons' rather than just companies.

Misrepresentation

This involves a false statement that induces a party to enter into a contract. In order for apart to successfully allege misrepresentation, it must be a false statement of fact not opinion or future intention.

Conditions

This is vital to the contract, and without that term forming part of the contract, it would essentially not be the same agreement.

Innocent Misrepresentation

This occurs where a party makes a statement of fact that they believe to be true. The wronged party may be able to rescind the contract but maybe not able to claim damages.

Negligent Misrepresentation

This occurs where a statement is made by a party without taking reasonable care to ensure it is true. The contract may be rescinded and/or damages may be sought.

Contracts

Type of legally enforceable promise. If a promise made is intended to have legal consequences, the agreement is likely to be a contract

Acceptance 2

You cannot infer acceptance by silence, it must be communicated to the person making the offer. once acceptance has been communicated, it can not be withdrawn unless the person making the offer agrees to do so. A third party cannot accept.