Week 9 Lecture slides

Week 9 Lecture slides - Formation of a Contract LAW101 Law,...

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1 LAW101 Law, Business Week 9 Contract Law - Formation of a Contract We now know the requirements for a legally binding contract are: ; ; ; : : : : Formation of a Contract • Assuming that a simple contract has been created and that there are no elements that affect its validity – the next question to be considered is: What are the rights and obligations that the parties have entered into? • The answer is found in the terms . Contents of the contract • The terms of the contract encapsulate the rights and obligations of the parties. A term is a legally binding statement or promise. ± A breach of a term gives rise to an action for breach of contract. Contents of the contract Contents of the contract In negotiations leading up to ‘reaching agreement’, what statements did parties actually make to each other (ie. expressly - in words and/or writing)? 1. Which of these statements were intended to be promissory in nature (called contractual ‘terms’ ) 2. Which were merely intended to induce the making of an agreement, but not be promissory in nature (called ‘mere representations’ )
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2 Express Terms When are oral statements binding? • The main test used is whether the maker of the statement (the promisor) intended to absolutely promise its truth to the other party • Did they intend for it to become part of the contract OR merely to induce the entering of the contract? •A n objective test Express Terms When are oral statements binding? • The REASONABLE BYSTANDER test “…the question whether a … term was intended depends upon the conduct of the parties , on their words and behaviour , rather than on their thoughts. If an intelligent bystander would reasonably infer that a term was intended, that will suffice.” Oscar Chess Ltd v Williams [1957] Terms v Representations • To determine whether a statement is a representation or a term consider: – Time lapsed between the making of the statement and the final agreement – Whether the innocent party was asked to verify the statement – The importance attached to the statement: Pym v Campbell (1856) Terms v Representations • To determine whether a statement is a representation or a term consider: – Whether the statement was made with the intention of preventing the other party from looking for/finding any defects: Hopkins v Tanqueray (1854) – Whether one of the parties had special skill or knowledge: Oscar Chess v Williams (1957) Parol evidence rule Parol = oral, spoken • Where the contract is in writing, the parol evidence rule excludes oral evidence that will ‘add to, vary or contradict’ the written document. • There are a number of exceptions to the parol evidence rule.
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Week 9 Lecture slides - Formation of a Contract LAW101 Law,...

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