Law of Contract

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Unfinished - Work in progress.

17/2/2024: Created.

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This gives some simple statements of principles of the law of contract. References have been made to "The Law of Contract, Fourth Edition 1974" written by W.T. Major in order to compile these statements.

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  1. A bilateral contract is created upon unqualified acceptance of an offer.
  2. A unilateral contract is created upon the offeree's performance according to an offer.
  3. An agreement "subject to contract" is not binding.
  4. There must be an intention to create binding legal relations.
  5. An agreement cannot oust the jurisdiction of the courts.
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  1. An offer must be clear, complete, and final.
  2. An invitation to treat is not an offer.
  3. A mere statement of price is not an offer.
  4. An offer must be communicated to the offeree.
  5. An offer may be communicated orally or in writing or be implied from conduct.
  6. An offer to a particular person or group of persons can only be accepted by those persons.
  7. An offer to the world at large can be accepted by any person having the notice of the offer and fulfilling the terms of the offer.
  8. An offer can be withdrawn (revoked) at any time before valid acceptance.
  9. An undertaking to keep the offer open for a specified time is not binding unless the offeree gave consideration in return for it to make it a binding contract (known as an option).
  10. Revocation is effective if and when it is actually (including by post or indirectly) communicated to the offeree.
  11. An offer may lapse by passage of time (acceptance not made within the specified time or, if not specified, within a reasonable time). 
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  1. An invitation to tender is an invitation to treat.
  2. A tender in response to an invitation to tender is an offer.
  3. A tender can be a definite offer or a standing offer.
  4. A definite offer becomes a binding contract if accepted without change.
  5. A standing offer is open for acceptance more than once, and each such acceptance will make a distinct contract.
  6. A standing offer may be revoked at any time unless if it is given under seal or consideration is given for it to be held open for a specified time.
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  1. An acceptance of an offer must be communicated to the offeror in the case of bilateral contract.
  2. If acceptance by post is permitted by the offer, acceptance is communicated at the time the letter of acceptance is properly posted.
  3. An acceptance of an offer must be unqualified and must correspond exactly with the terms of the offer.
  4. An acceptance which changes the terms of the offer becomes a counter-offer and the offer is deemed to have lapsed.
  5. An acceptance "subject to contract" is not binding.
  6. Where the parties are in different countries, the place sending the acceptance by letter or cable will be the place of the contract unless otherwise specified in the offer.
  7. Where the parties are in different countries, the place receiving the acceptance by telex will be the place of the contract unless otherwise specified in the offer.
  8. The mode of acceptance must comply with the terms of the offer.
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Rejection of Offer

  1. An offer rejected expressly or impliedly cannot subsequently be accepted by one who rejected it.
  2. An express rejection is effective when notice of it has reached the offeror if no acceptance by the same person has reached the offeror earlier.
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  1. A simple contract must have valuable consideration exchanged.
  2. A valuable consideration "may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other". (Currie v. Misa 1875)
  3. A consideration may be executory (to be done in return for a promise already made) or executed (done in return for a promise already made).
  4. Consideration must be real (or sufficient).
  5. Consideration need not be adequate.
  6. Consideration must move from the promisee.
  7. Consideration must not be past (done before the other party's promise is made).
  8. Consideration must not be illegal.
  9. Consideration must not be vague.
  10. Consideration must be possible of performance.
  11. Waiver of a contractual right without consideration exchanged is not binding.
  12. Consideration makes a waiver binding.
  13. Payment of a lesser sum without consideration exchanged does not discharge an existing obligation to pay a greater sum.
  14. Payment of a lesser sum by a third party in agreement with the creditor discharges the debtor's obligation to pay a greater sum.
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Terms of a Contract

  1. The terms of a contract can be expressed or implied.
  2. Express terms are express statements made by the parties and intended to bind the parties.
  3. Implied terms can be implied according to statutory obligations or to give effect to the presumed intentions of the parties.
  4. Mere statements made during the making of a contract without intention to be binding are not valid terms.
  5. Construction of a contract means how the contract terms should be construed (explained).
  6. Words are presumed to have their ordinary literal meaning.
  7. Legal terms are presumed to have their special meaning.
  8. Where words have both legal and ordinary meaning, the legal meaning will be preferred.
  9. Where the meaning of words is not clear, or where two terms cannot be reconciled, the intention of the parties will prevail.
  10. Specially prepared document takes precedence over standard printed form.
  11. The contract will be construed most strongly against the party who drew it up. (contra proferentum rule).

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