INTRODUCTION TO CONTRACT LAW Law for Business INTRODUCTION TO CONTRACT LAW

DEFINITION “a contract is an agreement which legally binds the parties to it”

FACTORS AFFECTING CONTRACT Inequality of bargaining power The standard form contract Consumer protection

INEQUALITY OF BARGAINING POWER Two parties bring with them differing levels of bargaining power

THE STANDARD FORM OF CONTRACT Made by large companies Consumers do not have the opportunity to negotiate Example: Customers of the electricity/gas companies

CONSUMER PROTECTION Consumer interests served by consumer protection agencies List two examples:

ESSENTIALS OF A VALID CONTRACT Agreement Consideration Intention Form Capacity Genuineness of consent Legality

AGREEMENT One party accepts the offer of another EXAMPLE: Purchasing a jumper from a shop

CONSIDERATION Each side must promise to give or do something for the other

INTENTION The parties must have agreed that their promise be legally binding

FORM A contract may be in any form (written, oral) However, some contracts do have to be made in a particular form EXAMPLE: memorandum of sale (house)

CAPACITY Must be legally capable of entering into a contract EXAMPLE: children and the lottery

GENUINENESS OF CONSENT Must have been entered into freely ‘meeting of minds’ EXAMPLE: cohersion

LEGALITY Must not be illegal

VOID CONTRACTS A void contract is not a contract at all No time has there been a contract at all between the parties Any goods or money must be returned Where items have been sold to a third party they may be recovered by the original owner EXAMPLE: HP agreement

VOIDABLE CONTRACTS Contracts founded on a misrepresentation EXAMPLE: children playing the lottery

UNENFORCEABLE CONTRACTS Valid contracts but cannot be enforced by the courts if one of the parties refuses to carry out its terms Items received under the contract cannot be reclaimed Only problematic if a dispute over the contract arises EXAMPLE: House purchase/ building regs

LIFE OF A CONTRACT Once a valid contract has been formed, it remains in existence until it is discharged Most common form is performance, where both parties perform their obligations and the contract comes to an end

Reading You are to read and make notes on P.Richards; Law of Contract; 9th Ed; 2009 – pages 1 - 109

Cases You need to investigate cases that apply to each of the essentials of a valid contract