Uos Pmgt5895 Contracts Management - Lecture 02

Front 1

What role does intention play in the formation of contracts?

Back 1

The parties must intend that their agreement is to have legal force in the sense that each party can take legal action to enforce it (i.e. be able to sue or be sued for any breach of the contract).

Front 2

Are agreements with family or friends considered to be binding?

Back 2

Unless there is an express statement in the agreement on this matter, there is a presumption (a fact assumed to be true under the law)that agreements of a family, social or domestic character are not intended to have legal effect.

Front 3

What is the default intention with business agreements? Are they binding?

Back 3

In all other agreements (commercial agreements) the presumption is that the parties did intend it to have legal intent. In both situations the presumptions can be rebutted by evidence to the contrary.

Front 4

What types of entities have limited contractual capacity?

- limited legal rights to enter contracts

Back 4

- Minors;
- Persons lacking full mental capacity;
- Aliens;
- Bankrupts;
- Convicts;
- Corporations (in certain circumstances).

Front 5

What is the definition of a minor in Australia?

Back 5

A minor in Australia is anyone under the age of 18 years.

Front 6

What is person lacking full mental capacity?

Back 6

A contract with a person who has been legally declared insane is absolutely void.

A person may lack full mental capacity as a result of mental illness, alcohol or drugs. In this case the contract is voidable at the discretion of the innocent party if:

- the disability is such that the person does not know what he or she is doing; and
- the other party knows, or should in the circumstances have known, of the lack of capacity.

Front 7

In the context of contracting, what is an alien?

Back 7

All those persons who were not born as, not naturalised as or who have otherwise not acquired the rights of an Australian citizen.

Front 8

What special circumstances can arise in contracts with aliens?

Back 8

if there is a state of war between Australia and the country of that foreign national, there are two important consequences:

- the foreign national is without contractual capacity to enter into a contract;
- the foreign national may not enforce a contract even if that contract was made before the outbreak of hostilities.

Front 9

Can a bankrupt person enter in to a contract?

Back 9

The fact of bankruptcy does not automatically disqualify the bankrupt from making contracts but it may place some limits on a bankrupt person’s ability to contract. For example, a bankrupt cannot obtain credit for amounts over a prescribed figure without telling the lender that he or she is bankrupt.

Front 10

Can a convicted criminal enter in to a contract or sue?

Back 10

Generally yes, however in Australia those who have been sentenced to death and have had that sentence commuted to life imprisonment have no rights under common law and thus no rights to sue under contract.

Front 11

Can a corporation make any kind of contract?

Back 11

Formerly a corporation could only make a valid contract which it was authorised to make by its constitution.

Under s 124 of the Corporations Act 2001 (Cth), companies now have effectively the same contractual capacity as a natural person. Section 125 also provides that, even if a company’s constitution contains an express restriction on, or a prohibition of, the company exercising any power that, by itself, will not invalidate any exercise of that power. These provisions, therefore, ensure that a company’s contracts and arrangements will not be invalidated simply because they are ultra vires (beyond powers).

Front 12

What does the term contra preferentum mean?

Back 12

Contra proferentem is a doctrine of contractual interpretation which provides that an ambiguous term will be construed against the party that imposed its inclusion in the contract – or, more accurately, against the interests of the party who imposed it.

Front 13

What does the term ex gratia mean?

Back 13

When something has been done ex gratia, it has been done voluntarily, out of kindness or grace. In law, an ex gratia payment is a payment made without the giver recognising any liability or legal obligation.