Contract basics

Question 1

What is a contract

Answer 1

an agreement between 2 or more parties where a promise or promises are made that are legally binding

Question 2

What is an agreement

Answer 2

agreement= only a contract if it is intended to have legal consequences

Question 3

What is a promise

Answer 3

• promise= a promiser undertakes agreement to do something or refrain from doing something if the promisee does something or refrains to do something
  e.g. promiser promises to sell car to promisee if they promise to or pay for it
  —> has to be offered in EXCHANGE for smth else

Question 4

What does legally binding mean

Answer 4

legally binding= is a party breaches agreement the law will enforce it

Question 5

Requirements to be legally binding

Answer 5

1. parties must reach AGREEMENT abt subject matter of promise
2. promisee must provide CONSIDERATION—> price set out for promise (unless deed but not normal) e.g. A promises to give car to B if B promises to give $1000 (implied promise e.g. supermarket products are new)
3. must objectively appear INTENTION was for contract to be formed
4. contract must be CERTAIN in its terms
5. parties must have legal CAPACITY to enter contract—> e.g 3 year old promises to give a toy for $1 to adult and fails to give they don’t have capacity cause under 18
6. some circumstances where FORMALITY must be complied with—> only special contracts e.g. contracts to do with land need to be in writing

Question 6

What are the sources of contract law

Answer 6

• Legislation
• Case law
• Certain events may give rise to rights or obligations under consumer law as well

Question 7

Legislation

Answer 7

—> more leg is being passed to regulate consumer law e.g. Australian consumer law

Question 8

Case law

Answer 8

—> contract law mostly derives from case law
—> some equitable doctrines and remedies as treated as part of aus contract law or vital to understand it e.g. estoppel

Question 9

Classical contract theory

Answer 9

underpinned by the doctrine of freedom of contract & doctrine of sanctity of contract

Question 10

Doctrine of freedom of contract

Answer 10

law shld give parties freedom to choose who they enter contract with, what abt and all decisions reached in forming agreement

Question 11

Doctrine of sanctity of contract

Answer 11

courts shld interfere as little as possible in contract and follow it to the best of their ability as parties willingly agreed to all aspects of it so they are now stuck w it

Question 12

Problem with classical contract theory

Answer 12

HOWEVER fails to take into account limits of freedom and may not fully reflect parties will through lack of power etc
—> courts may therefore be obligated to intervene in order to protect weaker party

Question 13

Contract law overview

Answer 13

contract law essentially framework in free market economies & gives people flexibility to create their own rights and duties, but within limits
1. determines which agreements are legally binding
2. defines parties rights & obligations
3. specifies consequences of breaching a contract