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25 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What is a contract? |
A contract is a legally binding agreement between parties about a future transfer of an entitlement in exchange for another entitlement. |
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What does a contract include? |
An offer An acceptance A consideration |
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A gratuitous promise leads to the existence of a contract. True or False. |
False. There would be no consideration therefore no contract would exist. |
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What is the benefit of enforcing contract terms? |
Maintains confidence in contracting Controls costs Improves the likelihood of welfare gains from trade |
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Why is litigation not always the best process? |
May endanger long-term relationships with traders May be costly |
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Contracts contain multiple terms. True or false. |
True. |
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What are the types of defences? |
Duress Mistake Incompetence/incapacity Fraud Unconscionability |
5 types of defences |
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What is Duress? |
Duress is a defence that can be used by individuals who are forced to enter into a contract against their will. |
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A contract made under duress serves the economic purpose of mutual gain end it should be enforceable. True or false. |
False. A contract made under duress would not serve as a mutual game and it should be unenforceable. |
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What does Duress include? |
Threats Violence Constraints |
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What is undue influence? |
The term that covers cases where a party is pressured into contractual relations. |
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Is undue influence a valid reason to void a contract? |
Yes. |
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What are the two types of mistakes that can be used as a defense? |
Unilateral Mutual |
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What is unilateral mistake? |
When only one party is mistaken about the terms of the contract. It is rare to use this mistake as a ground for legally voiding a contract. |
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What is a mutual mistake? |
When all parties to a contract are mistaken/unclear about the terms of a contract. This type of mistake can be used as ground to legally void a contract. |
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What is the incompetence/incapacity defence? |
This type of defence disqualifies a person from making the contract since they may not understand what they are agreeing to. An incompetent party may not be reasonably expected to fill their obligation. |
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Under the incompetence/incapacity defense, what are grounds to void a contract? |
Being a minor Being someone with mental incompetence Being someone in high levels of intoxication A corporation acting outside the scope of their Memorandum or Articles of Association. |
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What is the fraud defence? |
In contract fraud one party games and unfair or diss honest advantage as a result of their actions or lack of actions. |
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Can contract fraud be voidable? |
Yes. Their rational intentions would not be reflected in the contractual terms, leading to inefficiency. |
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What is unconscionability? |
A doctrine that describes terms to be extremely unjust or one-sided in favour of the party who holds the bargaining power. |
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What does unconscionability apply? |
Fairness Efficiency |
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What are performance excuses? |
Excuses for incorrectly assessing future events. |
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It is efficient and fair if one side is allowed to cancel their promise to the other. True or false. |
False. It is inefficient and unfair if one side is allowed to cancel their promise to the other. |
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When is it acceptable to use performance excuses? |
When performance is; Extremely difficult or impossible A severe threat to social welfare Frustrate the overall purpose |
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A bargain that turns out bad for one party does not mean it reduces social welfare. True or false. |
True. |
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