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(a) Examine the definition of a contract.

A voluntary, deliberate, and legally binding agreement between two or more competent parties. Contracts are usually written but may be spoken or implied, and generally have to do with employment, sale or lease, or tenancy. A contractual relationship is evidenced by an offer, acceptance of the offer, and a valid (legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and duties of the other parties. However, while all parties may expect a fair benefit from the contract (otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that it is not void or voidable. Contracts are normally enforceable whether or not in a written form, although a written contract protects all parties to it. Some contracts, (such as for sale of real property, installment plans, or insurance policies) must be in writing to be legally binding and enforceable. Other contracts are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.

(b) Consider the importance of acceptance and the rules of acceptance.


Acceptance occurs in the law of insurance when an insurer agrees to receive a person's application for insurance and to issue a policy protecting the person against certain risks, such as fire or theft. When a person who is offered a gift by someone keeps the gift, this indicates his or her acceptance of it. In business dealings between merchants, which is governed by the law of sales, a buyer demonstrates his or her acceptance of goods that are not exactly what he or she had ordered from the seller by telling the seller that he or she will keep the goods even though they are not what was ordered; by failing to reject the goods; or by doing something to the goods inconsistent with the seller's ownership of them, such as selling the goods to consumers of the buyer's store. Legal rules of acceptance 1. Acceptance must be given only by the person to whom the offer is made 2. Acceptance must be absolute and unqualified 3. It should be in a reasonable mode 4. Acceptance must be communicated by the acceptor 5. Acceptance must be given within a reasonable time and before the offer lapses 6. Acceptance must succeed the offer 7. Rejected offer can be accepted only, if renewal

(c) Evaluate the rules of consideration.


1. Consideration must move at the desire of the promisor: In order to constitute consideration the act or abstinence forming the consideration for the promise must be done at the desire or request of the promise. Thus an act does or services rendered voluntarily, or at the desire of the third partly, will hot amount of valid consideration so as to support a contract. The logic for this may be found in the worry and expense to which every one might be subjected, if he were obliged to pay for services which he doest not need or require.

2. Consideration may move from promise or any other person: Consideration need not move from the promise alone but may proceed from third person. Thus as long as there is a consideration for a promise, it is immaterial who has furnished it. It may move from the promise or from any other person. This means that even a stranger to the consideration can be con a contract, provided he is a party to the contract. This is sometimes called as doctrine of constructive consideration. 3. Consideration may be past, present or future: The words, has done or abstained from doing or does or has abstained from doing or promises to do or to abstained from doing or promises to do or to abstain from doing. Consideration may consist of either something done or not done in the past or done or not done in the present, or promised to be done or not done in the future. 4. Consideration need to be adequate: It means that consideration is that it must be something to which the law attaches a value. The consideration need not to be adequate to the promise for the validity of an agreement. The law only consists on the presence of consideration and not on the adequacy of it. It leaves the people free to make their own bargains.

(d) Explain and analyse the courts approach in deciding the existence of an intention to create legal relations.
In analysing, the courts approach, several matters here to be taken into the account. Such is the objective test. The objective test determines what parties said and did externally, not what they actually intended to say I do. Subjective intentions will generally not prevail over their objectively ascertained intention. Hence, only if there is a clear, unequivocal offer mirrored by a clear, unequivocal acceptance, whose intentions to offer and accept were objectively ascertainable, will there be an agreement acknowledged by the courts.

(e) Differentiate between a term and a representation


Representation - A statement of fact made during negotiations - Made with the intention to persuade or induce a party to enter into a contract - Example (From Wang Jin's trout farm) - "The river flows all year" - This is a representation - a statement of fact made during negotiations - A representation becomes a misrepresentation when the statement of fact proves to be incorrect Term - The most important factor in a contract - Legally binding obligations or promised made by each party under the contract - Where a term has not been fulfilled the contract is breached - Examples of terms in a contract: Name of purchaser, name of vendor, price, settlement date

(f) Define express terms and implied terms of a contract.


Express terms are the terms of a contract which are stated and agreed by both parties Implied terms are terms of contract which are not stated by both parties but instead they are read into the account.

(g) Differentiate between a condition and a warranty.

A condition is an important contract term. It can be expressed or implied. A warranty is a minor/less contract term. It can be express or implied The difference between condition and warranty, in condition, if the innocent party has two remedies which is the right to end the contract and to sue for damages, in comparison for warranty, the innocent party has only one remedy which is the right to sue for the damage only

(h) Identify and explain the purpose of an exclusion clause and explain the legal effect of a valid exclusion clause.
An exclusion clause is an example of an express term of a contract. An exclusion clause is used by the seller to protect him from rightful claims made by his customer for any losses suffered by the customer due to the sellers fault. The exclusion clause is valid once the customer signed the contract. No matter whether the customer read the contract, the exclusion clause is valid once it signed

(i) Examine the rule about incorporation of an exclusion clause which is found in a ticket coupon.
The law requires the seller to prove that he has given sufficient notice of the exclusion clause to the customer before the contract is made. The exclusion clause must be clear and precise in meaning and it must also be legible in terms of its font size and colour. The contra proferentem rule says the law will read the exclusion clause strictly which is less benefit to the seller if the exclusion clauses are not clear and precise in its meaning.

(j) Examine the rule about incorporation of an exclusion clause which is found in a signed and written coupon.
The exclusion is part of the contract and will bind the customer since the customers signature means he agrees to the exclusion. It does not matter that the customer did not read the document before signing. The exclusion clause must be precise and clear in meaning and must also be legible in terms of its font size and colour. The contra proferentem rule provides that the law will read unclear exclusion clause strictly and in a way that does not benefit the seller.