Download Contracts 1 Introduction • Contract Definition:

Contracts 1 Introduction •
Contract Definition: -­‐a legally binding agreement between two or more parties o They allow people to enforce agreements o Contracts gives a assurance for businesses that promises will be made Forms of contracts •
Contracts can be: o Verbal/oral – contracts expressed in words § only people that know of these contracts are the people who spoke them . § Hard to prove in court o Written – document outlining the agreements between two or more parties. Written contracts do not need to be signed, with an exception to land contacts. § There are 3 types of land contracts: • Mortgage – an agreement between a bank and a property purchaser • Deed – legal documents proving the ownership of any type of personal property • lease -­‐ an agreement between an property owner and lease. Sources of contract law •
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Common law (a branch of civil law) Statue law Parties Onus of proof Outcome Standard of proof plaintiff verse defendant Plaintiff compensation, specific performance, injunction, retraction, apology balance of probabilities Formation of contracts •
Contract arises in two ways: 1. Take it or leave it (accept or decline offer) 2. Negotiation (six elements that need to be satisfied for a contract to exist/be legally enforceable à if these six elements are not present, the contract is “VOID AB INITIO” – void from the beginning) Elements of a contract 1.
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Intention – there must be evidence of an intention to enter the contract § OBJECTIVE TEST: court looks at the facts of the case à if parties dealing with commercial business situation, then an intention exists. Agreement – offer and acceptance § There must be an offer made by one party and an acceptance of that offer. § Parties agree to the proposed terms – “meeting of the minds” à all parties must agree on all terms Consideration – the benefit that each party gets or expects to get from the contractual deal , there must be an exchange between both parties § E.g. money for services/goods à doesn’t have to be equivalent value, but must have something of VALUE (First 3 elements -­‐ void an initio..... If any of the first 3 were not there, there never was a contract) 4.
Legal capacity – the capacity or ability to make contracts § Parties that have limited contractual capacities i. Minors – any person under the age of 18. There is an exception contacts must be: • Contracts for necessaries Cash transactions Beneficial contracts of service ii. Intoxicated iii. Insane Consent – agreement upon terms by both parties § Contracts may be considered void if there was: i. Mistake – one or both parties were under the misapprehension of the truth of the matter/situation ii. Duress – If pressure under unfair influence was immense, then the contract may be void. This may be due to: • Economics • A person iii. unconscionable : against good conscience. E.g. taking advantage of someone Legality of objects – the object or purpose of a contract must be legal § Contracts: i. must be made for a legal purpose ii. must be legal in relation to the country’s legislations § restraint of trade : where a contract has a term which stops someone else from working as they choose to i. Under Prima Facie (the initial judgement/face) it is illegal unless there is an exception of it being reasonable (utilising confidential business information and data) • i.e., if you work as face of Macdonalds and you quit, they may have a part in the contract to say you cant work for another fast food for after a year of •
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(Last 3 elements -­‐ voidable..... May be deemed void if one isn't present ) •
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Performance of a contract -­‐ performance must be completed with strict coherence with the terms. Contracts can be varied by : o mutual agreement -­‐ Both parties need to intend to change a term of the contract. o Through the contract itself (if it allows that variation ) Termination of a contract •
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mutual agreement – both parties agree to terminate the agreement performance ( job done or time run out) breach of a term : (the breach of every term does not entitle you to termination of the contract ) frustration -­‐ force majeure "Acts of god " : natural and human disasters ..... It must be beyond the control, and the contract cannot be performed as contemplated by the parties Remedies -­‐ what happens of there is a breach of contracts •
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termination – the contract is terminated or deemed void. compensation: generally in the form of damages = $$ (amount of money to fulfil the contract... Equivalence scenario) specific performance : parties must do what you promised (there are exceptions)..... This cannot apply to human performance -­‐-­‐-­‐ only applies to contracts injunction : court order to stop a breach + have a wide range of uses Statue of limitations •
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within 6 years from date of breach mitigation : parties must do whatever to minimise the loss or effects of breach o If there is a way for you to rectify it and you didn’t take action, you will not be compensated for entire losses.