M05 Contract lists Chapter 3

Question 1

Five essentials for the formation of a valid contract

Answer 1

1. there must be an agreement, which in English law is generally shown by offer and acceptance;
2. there must be the intention to create legal relations;
3. there must be consideration (in the case of simple contracts);
4. the agreement must be in the form required by law (if any);
5. the parties must have capacity to contract.

Question 2

Six ways an offer can be made

Answer 2

1. in writing;
2. orally;
3. by conduct.
4. to one person;
5. to a group of people; or
6. to the public as a whole.

Question 3

Six ways an offer can end

Answer 3

1. Death
2. Acceptance
3. Revocation
4. Rejection/counter offer

Question 4

Five rules of consideration

Answer 4

1. Must be real or genuine
2. Need not be adequate
3. Must not be past
4. Must move from the promisee
5. Must be something the promisee is not already bound to do

Question 5

Four forms of contract

Answer 5

1. contracts which must be under seal;
2. contracts which must be in writing;
3. contracts which must be evidenced in writing by a ‘note or memorandum’; and
4. contracts where one party must give certain written particulars to the other.

Question 6

Five contracts which must be in writing

Answer 6

1. bills of exchange;
2. cheques and promissory notes;
3. the transfer of shares in a registered company;
4. some consumer credit (‘hire-purchase’) transactions; and
5. contracts of marine insurance.

Question 7

Contracts on minors which are binding

Answer 7

1. Contract for necessaries
2. Contract of employment

Question 8

Contracts which are binding on minor unless repudiated

Answer 8

1. Leases
2. Partnerships
3. Shareholder agreements

Question 9

Three ways terms are implied into a contract

Answer 9

1. in fact;
2. by custom or usage; or
3. in law

Question 10

Five ways contracts can be defective

Answer 10

1. illegality;
2. improper pressure;
3. mistake;
4. misrepresentation; or
5. non-disclosure (this needs care as it has only very limited exceptional application in general contract law and in the insurance context only in business insurance).

Question 11

Two types of defective contract which are generally void

Answer 11

1. Illegality
2. Mistake

Question 12

Four ways an insurance contract might be illegal

Answer 12

1. No insurable interest
2. Purpose of contract illegal
3. Unlawful use of insured property
4. Close connection with crime

Question 13

Three defective contracts which are voidable

Answer 13

1. Improper pressure
2. Non-disclosure
3. Misrepresentation

Question 14

Three requirements for there to be misrepresentation in contract

Answer 14

1. Must be one of fact
2. Must be made by party to the contract
3. Must induce the contract

Question 15

Five ways a contract can be discharged

Answer 15

1. performance;
2. breach;
3. frustration;
4. agreement; or
5. operation of law.

Question 16

Four main remedies in contract

Answer 16

1. termination;
2. an action for damages;
3. an action for specific performance; and
4. an action for an injunction.

Question 17

Three requirements for statutory assignment under the Law of Property Act

Answer 17

1. absolute
2. in writing
3. expressly made in writing to the debtor or trustee (although an assignment may be valid in equity without such notice).

Question 18

Two ways equitable assignment can take place

Answer 18

1. the assignor informs the assignee that they transfer the chose to them; or
2. the assignor instructs the debtor to discharge the obligation by payment to, or performance for, the assignee.

Question 19

Three types of assignment relevant to insurance contracts

Answer 19

1. assignment of the subject matter of the contract;
2. assignment of the benefit of the contract; and
3. assignment of the contract itself.

Question 20

Four requirements for acceptance

Answer 20

Must be positive

Must be communicated (exceptions if offer dispenses with communication or posting rule applies)

Question 21

Two types of insurance contracts that are assignable

Answer 21

1. Marine cargo policies
2. Life policies

Question 22

Three types of insurance that are personal contracts and are not assignable

Answer 22

Most insurance contracts are personal contracts and are not assignable eg

1. Motor
2. Property
3. Liability

Question 23

Five types of contract that must be in writing

Answer 23

1. bills of exchange;
2. cheques and promissory notes;
3. the transfer of shares in a registered company;
4. some consumer credit (‘hire-purchase’) transactions; and
5. contracts of marine insurance.