Law of Contract and Problem Solving
Lecture One
- A contract is a legally binding agreement between two or more parties.
o Common Myths:
A contract is a formal written contract
Contracts are only used by large businesses
- Contracts are used to create and define obligations. These obligations bind the
parties together and are based on a principle of consent.
- “Freedom of Contract”
o The classical theory of contracts is that parties are free to enter whatever
contracts they wish with minimal intervention by the courts (only when there
is fraudulent behaviour or illegality).
o Parties determine their own nature and extent of their rights under the
contract. This can be operated harshly when there is an inequality of
bargaining power (i.e. Topman and their customer).
- Judicial and Legislative Intervention
o In some contracts there are implied terms that are set out in common law.
This can be seen when purchasing items from a shop; a contract is not signed
when the purchase is made so instead the courts have set legislation to cover
the consumers rights (in this case the Sales of Goods Act 1979).
- Classification of Contracts
o All other contracts apart from (signed, sealed and delivered/signed,
witnessed, delivered) deeds are ‘simple contracts’. They can either be orally
presented or formally written.
o There are two types of simple contract:
Bilateral contracts are where both parties have obligations under
contract and a mutual exchange of obligations and promises.
E.g. Buying and Selling goods in a shop.
o Seller promises to sell for money.
o Buyer promised to pay for goods.
Unilateral contracts are where one party has an obligation under the
agreement following the performance of an act.
E.g. Offer of reward
o Dog owner pays the other for finding her lost dog.
Offer + Acceptance = Agreement
Consideration = Test of Enforceability
Intention to create legal relations = Binding Contract
Lecture One
- A contract is a legally binding agreement between two or more parties.
o Common Myths:
A contract is a formal written contract
Contracts are only used by large businesses
- Contracts are used to create and define obligations. These obligations bind the
parties together and are based on a principle of consent.
- “Freedom of Contract”
o The classical theory of contracts is that parties are free to enter whatever
contracts they wish with minimal intervention by the courts (only when there
is fraudulent behaviour or illegality).
o Parties determine their own nature and extent of their rights under the
contract. This can be operated harshly when there is an inequality of
bargaining power (i.e. Topman and their customer).
- Judicial and Legislative Intervention
o In some contracts there are implied terms that are set out in common law.
This can be seen when purchasing items from a shop; a contract is not signed
when the purchase is made so instead the courts have set legislation to cover
the consumers rights (in this case the Sales of Goods Act 1979).
- Classification of Contracts
o All other contracts apart from (signed, sealed and delivered/signed,
witnessed, delivered) deeds are ‘simple contracts’. They can either be orally
presented or formally written.
o There are two types of simple contract:
Bilateral contracts are where both parties have obligations under
contract and a mutual exchange of obligations and promises.
E.g. Buying and Selling goods in a shop.
o Seller promises to sell for money.
o Buyer promised to pay for goods.
Unilateral contracts are where one party has an obligation under the
agreement following the performance of an act.
E.g. Offer of reward
o Dog owner pays the other for finding her lost dog.
Offer + Acceptance = Agreement
Consideration = Test of Enforceability
Intention to create legal relations = Binding Contract
