Chapter one

Contract is an agreement which the parties intend to be legally binding.

 Purpose of contract
1. Freedom of contract
2. Statutory intervention
Agreement Two people when they are in the same mind about something.
Subject matter of contracts is also infinitely varied.
 Here is a selection of some of the more common ones of subject matter of the
agreement.
• Agreements for the supply of goods ('contract for the sale of goods'). •
Agreements to perform services ('contract for services').
• Agreements for the hire of goods where the hirer has the option to purchase
them ('contract of hire purchase').
• Agreements to transport people or goods ('contract of carriage').
Form was an orally, either faceto-face or by telephone.
Deed is The most formal kind of written agreement is a document under seal.
Contractual intention if at the time the parties entered into it, they intended that
agreement to be legally binding. If they did, then either party can go to court to
enforce the other party's obligations to him under the agreement, and the court
will enforce those obligations.
Inferring intention
 domestic arrangements are not intended to be legally enforceable
 commercial arrangements are intended to be legally enforceable
Express intention If a particular agreement is expressed to be legally binding (or
is expressed not to be legally binding) that express intention is conclusive.
Gentleman’s agreement' indicates that the parties did not intend their
agreement to be a contract.
The interim agreement itself is often recorded in a signed document known as a
'heads of agreement' or a 'memorandum of understanding' or some similar
phrase, and at this stage lawyers may well not be involved.
Privity of contract is that contract cannot confer rights or impose obligations on
anyone who is not a party to it, and nobody other than the parties can enforce
that contract or have it enforced against him

Chapter two
Sole trader If anything went wrong the other parties to those contracts would sue
me personally. All the assets of the business would be owned by me personally
and I would be personally liable for all the debts and liabilities incurred in the
course of the business.
Partnership is not a separate legal entity, owners liable for all depts. And liabilities
incurred in course of business .
Limited liability of company is a separate legal entity and it is the company and
not its owners which are responsible for the debts and liabilities incurred in the
course of the business.
Groups of companies
 Holding company
 Subsidiary company
Establishing the identity of a party The importance of knowing which legal entity
you are contracting. The best time to establish the legal identity of the other party
is of course before you enter into a binding agreement.

Change of company name

The shareholders of a registered company can change the name of that company
at any time. That change of name has to be notified to the Registrar of Companies,
Asset sales and share sales contract rights and liabilities are transferred from
seller to buyer.

Other legal persons

1. person' means a human being,
 2. legal person' are used to mean, in addition to human beings
3. Registered companies are by far the most common legal persons in the
commercial world
Sovereign state is a legal person and can therefore enter into contracts
Trade union does not have its own legal personality as distinct from that of its
members,
joint obligation is a single obligation owed jointly by all the members of the group
Several obligations is an obligation which is split between the members of the
group
joint and several obligation combines the features of a joint obligation and a
several obligation
Agency is used to describe the relationship between the principal and the agent.

The authority given by the principal to the agent is known as 'actual

authority
Apparent authority is directly raised whenever an individual enters into or
offers to enter into a contract on behalf of a company.
Consequences of unauthorized transactions
1. Agent within apparent authority - principal bound by contract.
2. Agent outside his apparent authority.
Undisclosed agency the agent is under no obligation to tell him of this fact .

In legal terms the intermediary is known as an 'agent', and

the party on whose behalf the agent is acting is known as the 'principal'.
The rule used to be that if it entered into any other contract that contract was
'ultra”

Each registered company has a written constitution. This generally

consists of two documents,
1. the memorandum of association
 2. the articles of association.
voidable and the individual can disclaim it provided that the other party
was aware of his mental disorder
Person’s power to contract is referred to as his 'contractual capacity'.

The contractual capacity of an individual is restricted if he or she is a

minor, mentally disordered or drunk.
minor is an individual who is under the age of 18 at the time the contract is
entered into
The contractual capacity of a minor is as follows.
1. Contracts for necessaries. meaning goods or services that the minor actually
requires.
2. Contracts of apprenticeship, employment, education or instruction.

Local authority can only enter into contracts which relate to or are
incidental to the functions of that local authority
Chapter 3
Entering into a contract
Offer: An offer is a proposal
This means that the proposal must be
(1) Complete and
(2) Made with contractual intention.
Termination of offer:
 To begin with, an offer which is stated to be open for specified period lapses at
the end of that period if it has not been accepted by then. If no such period is
stated, the offer lapses if it has not been accepted within a reasonable period.
 Second, an offer terminates if the offer or notifies the offered that he is
withdrawing it, and the offer or can in fact withdraw an offer at any time even
 if it is stated to be open for a specified period, provided of course that it has
not already been accepted.
Acceptance: accepts the offer.
Suppose: then that an offer or makes an offer which says 'I will assume that you
have accepted this offer unless you tell me otherwise within seven days.' The
offered is free to ignore this offer, and if he does so his silence will not constitute
the acceptance of the offer and no contract will be formed.
Rejection and counter offer: If the offered does anything other than simply accept
the offer, then he is taken to have rejected it. So the offered may expressly reject
the offer, but he is also taken to have rejected it if he responds with a counter
proposal or a qualified or conditional acceptance.
application of principles:
Most ordinary situations lend themselves quite easily to this analysis.
The significance of a signature:
The importance significance is evidence for contractual intention.
Consideration: Means the exchange of a something that have value.
An agreement which lacks this element of mutuality would not be called a deal or
transaction and is not in legal terms a contract.
[Link] requirement of consideration:
Exactly how 'consideration' should be defined is a favourite academic question,
but the best way to think of it is this: a party provides consideration if the
agreement involves him undertaking to do something.
Only requirement is something that have value.
[Link] counts as consideration
The law is not concerned with the value of the consideration provided.
As long as a party provides some consideration it does not matter if its value is
minimal or else totally disproportionate to the value of the consideration provided
by the other party.
 Existing contractual obligations
There is only one situation in which a party's undertaking to do something does
not satisfy the requirement of consideration, and this is where he is already
obliged under an existing contract with the other party to do that thing.
Practical significance Our discussion of the doctrine of consideration has been
deliberately brief, and the reason for this should already be clear.
The commercial realities of contracting businessman entering into a contract is
seldom much concerned with the legal technicalities of offer and acceptance or
consideration.
His concern is to get the right deal at the right price, and as long as he does not
resort to criminal or otherwise unlawful means the law has very little to say about
how he achieves that objective.
Commercial custom and practice
Each different type of trade or business has its own way of doing things, its own
customs, practices and traditions.
Lawyers refer to this using the rather quaint phrase 'custom of the trade', and as
we shall see commercial custom does have legal ramifications. But the scattered
references in law books to custom of the trade hardly do justice to its enormous
practical significance.
Customary ways of contracting Customs of a particular trade or business often
include a customary way of entering into contracts.
Non-disclosure party entering into a contract is not legally obliged to disclose
what he knows about the subject matter of that contract to the other party
Chapter 4

The terms of a contract

contract consists of two types of terms.

1. express terms, those terms which are expressly agreed between the parties.
2. implied terms which, although not expressly agreed between the parties, the
law will nevertheless imply to supplement the express terms.
 Oral agreement

With only a few exceptions, any contract can be entered into orally.

the difficulty in establishing subsequently what the terms of the contract are.

Agreement by exchange of correspondence

The second possibility is that the contract was entered into in the course of an
exchange of correspondence.

Agreement in writing

the buyer is claiming that the document is inaccurate or is incomplete, the

difficulty facing him is the so-called 'paroleevidence rule',

The basic terms of a transaction

The requirement that the parties themselves have agreed the basic terms of the
transaction is known to lawyers as the requirement of 'certainty of terms', and
they describe an agreement which is unenforceable because its basic terms have
not been agreed as being 'void for uncertainty'.

The context of a transaction

In order to identify the basic terms of a transaction it is often necessary to consider

the context of the parties' words as well as their content..

Referential terms Instead of agreeing the basic terms of their transaction, the
parties may instead agree some means for determining one or more of those
terms at a future date.

Agreements to agree doesn’t contract so this is unenforceable.

 Statements which are not terms

1. Mere puff'it's wonderful', 'you'll love it' and 'you won't regret it', have no
real meaning. The buyer cannot sue.
 2. Misrepresentation is an untrue statement of fact which, although not
included in the terms of the contract, nevertheless induced the other party
to enter into that contract.
3. Exclusion clauses and indemnities The parties are free to agree contract
terms which restrict their potential liabilities to each other.
4. indemnities. The parties can however agree terms which set out how
potential liabilities to third parties will be apportioned between them:terms
of this kind are called

The two kinds of implied term

1. where the parties must have intended that term to be included even
though they did not say so.
2. where an Act of Parliament requires that term to be implied into a contract
of that type.

Other legal presumptions

1. Means of payment.

[Link] of title and risk

Chapter five

Standard terms and conditions' means a set of written contract terms which are
intended to be incorporated into more than one contract.
The use of standard terms for convenience
 Negotiated standard terms can be both useful and time-saving. Suppose. .
These terms will not deal with quantities and probably not with price
There is a crucial difference between this arrangement and a long term supply
contract
  Published standard terms professional and comermercial entities wich
publishe standard terms and condition of particular type of contract
What are other some point particular issue
1. clear set of standard terms
2. inconsistent terms
3. to be sure what those terms actually say
The use of standard terms for contractual advantage
1. the terms are nearly always very one-sided
2. the part using does not want or intended the other to be aware of their
contents,
Origin of stander term the ninetenth century by the railway companies and
shipping lines
Other users of standard term are those which have a monopoly
Terms of sale and terms of purchase wich will not try to incorporate into all of sale
or purchase contract
The incorporation of standard terms into a contract This comes about as a result
of the application of the principles of offer and acceptance
Dealing with a party which uses standard terms there is no real solution
The battle of forms Where both parties are using their own standard terms is,
both legally and commercially, a nightmare. Failure to respond to an offer is to
accept the other party's standard terms and lose the game.
Reasons for extensive use of standard terms, including that
(1) it does away with the need to negotiate suitable terms,
(2) the need for specialized staff who really understand contracts,
(3) it is convenient and lends itself to computerization,
(4) it provides a written record of the main terms of the contract and is therefore
preferable to an oral contract