Types Of Contracts And Contract Law Principles

Types of Contracts

• The claimant must show that the defendant ought to have known that his omission would cause damage to the claimant.
• The claimant must show that the defendant failed to do something that a person in his position could have done to protect the claimant’s damages.
• The claimant must show that the damages suffered reasonably resulted from the breach.

Since the case of (Kennedy v London (City), 2009), the law in occupiers’ liabilities requires occupiers to handle minors with more care than when handling adults. The standard cares required from occupier’s is to ensure that their premise is reasonably safe notwithstanding the erratic behaviors of minors.

The Anns test was set in  (Anns v. Merton London Borough Council, 1978). In the case of professional liability, the first stage will look at whether a professional wrongdoer and the claimant had a satisfactory relationship of proximity such that a reasonable person in defendant’s position (profession)would have reasonably contemplated that the actions would harm the claimant. The second stage would look at situation for reducing the scope of the duty of care for professionals in the same position as the defendant. 

In case of a material misrepresentation or concealment, the insurer has the option of rescinding the insurance policy. The insurer may also use the act of misrepresentation as a defense when the insured brings claims for policy cover. 

Indicate what other means insurance corporations have to keep their damages as low as possible.  The right to subrogation allows an insurer to sue on behalf of the insured to recover its loss. Other methods of reducing cost include

Mitigation of costs: It is a duty for the insured to take all reasonable actions of averting the loss.

Reservation of rights: Allows the insurer to reject some claims. 

1. What is meant by “freedom of contract?” Explain the impact of this principle on the development of contract law. What are two types of restrictions on this principle?

The freedom of contract is a principle in law that gives the parties to mutually agree, and choice to accept or reject the terms of a contract. The two restrictions are; (1) Government regulations on

Illegal contracts unconscionable dealings. (2) Restraint of trade clauses where one party agrees not to engage in business or employment on specific circumstances.

 Agreement: Should have an offer and acceptance based on definite terms.

Consideration: It is the item of the bargain. What one party surrenders to the other in order to secure the promise.

Intention to form a legal relation: Contracts are enforceable if the parties contemplated that they were making the agreement with intention to legally enforce them. 

1. Explain the difference between:

A contract is formed when there is acceptance of an offer, and the acceptance is communicated to the offeree. The general rule is that silence cannot amount to acceptance. The only exception to this rule is when one party remains silent, but continues to perform as per the requirements and terms of an offer. i.e acceptance by conducts. 

Contract Law Principles

Under s 6(1) IN (Electronic Commerce Act, 2000), the law provides that electronic information for a contract muse be in writing, a document that the other party can download and retain. Under s 17, an enforceable contract must bear an electronic signature.

It is True. In (R v Oldham Metropolitan BC, 1993),  Justice Scott stated that where a minor enters into a contract, he/she he must be on an age that can understand the scope of the transaction.

When infants’ contract enforceable

Section 19 (1) (INFANTS ACT, 1979) provides that a contract with an infant is

19 (1) Subject to this Part, a contract made by a person is unenforceable unless (a) if the contract is specified to be enforceable in different enactment or law. In this case, a contract for necessity. (b) The contract can be enforceable upon the ratification of the person when he reaches an age of the majority. (c) Continued performance or partial performance after reaching an age of the majority (d) There was no repudiation after reaching an age of majority. In (Johnstone v. Marks, 1887), it was stated that a contract for necessaries of life is enforceable to a minor, but it is upon the plaintiff to proof that the items were necessaries of life, and the transaction was fair. 

A minor can be liable for debts he incurred upon ratification. 

Stage 1: Contract formation. Even if minors can legally form the contract, they have unilateral authority to set the contract aside.

Stage 2: Enforcement. The contract may not be enforceable against the minors. However, minors can enforce the contract against an adult if they want.

Stage 3: Termination. Both parties can terminate the contract performance. While a minor can terminate the contract by neglecting the duties (disaffirming) without any liabilities, and adult would have the liabilities for breach.

A way to escape liabilities is by proving that the person was intoxicated or insane during the formation of the contract, and the other party was aware of the insanity or intoxication. However, if the contract was made for goods necessary for his/her life and such goods have already been delivered, the person cannot escape liabilities of paying the price. 

The court first categorizes the agreement into either (i) agreement arising from domestic and social settings or (2) agreement arising from commercial or business settings. The presumption for domestic or social agreements is that they are made without the parties’ intention to form legal bond while the presumption for commercial or business agreements are that the parties’ intended to form legal bond.

Rights and Liabilities of Minors

Fraudulent Misrepresentations: Happens when one party intentionally gives the other party an untrue statement intending to lure it to the transaction. The innocent party recovers all the damages under the tort of deceit. Rescission can be awarded if damages are not adequate relief.

Negligent misrepresentations: A party makes false statements to the other believing that it is true but there are no reasonable grounds for believing in the statements. The innocent party recovers all the damages incurred. Rescission can be awarded upon the court’s discretion.

Innocent misrepresentations: Happens when the maker of the statements provides false statement but with reasonable grounds for believing that the statements were truthful.  The innocent party recovers all the damages incurred. Rescission can be awarded upon the court’s discretion.

If misrepresentation turns to be a term, the innocent party can elect a suit for a breach. Silence becomes a misrepresentation on ground where there is a fiduciary relationship exists. (b) Where it misrepresents a constructive representation such as withholding facts. (c) In contracts that necessitates Uberimma Fides.

In (Smith v. Land and House Property Corporation, 1884), the developed principle was that if the person giving the opinion is in a reasonable grounds to provide a statement, any of his/her untrue statement would become a misrepresentation.

By voidable, the contract is valid until when the innocent party may decide to set it aside due to the mistake. Void is when the mistake was operative to set aside the entire contract. 

Shared mistakes: Both parties make similar mistakes.

Misunderstandings: Both parties think and agree on different facts so there is no agreement on the required facts.

One-sided mistakes: Only one party make the mistake.  

In most cases, courts take an objective analysis of the core facts of the contract. Where the court finds it, it will rule that the parties should perform on the terms the court may deem fit to capture both parties’ intentions. Where the court finds no answer, the court will declare the contract as void on grounds for mistake.

When there is substantial performance. When the party completes nearly but not all the obligations.

Conditions are the main terms that goes to the core of the contract, and their breach would cause the innocent party to end the contract and sue for damages (Taylor & Taylor, 2015, p. 105).

Warranties are insignificant and their breach cannot cause the innocent party to end the contract, but that party can still sue for damages after completion of its performance (Taylor & Taylor, 2015, p. 105). 

The first choice for an innocent party when there is an anticipatory breach is to treat the contract as fully breached, quit its performance and sue for damages. The second option is to wait for the actual breach to happen. The disadvantage is that if a frustrating event such as a war or ‘act of God’ occurs, the innocent party loses the chance of suing for damages. 

An express clause in a contract that attempts to dismiss or limit the breaching party’s liabilities once the contract is breached. These clauses may be unenforceable if;

• They are ambiguous
• Not incorporated in the contract.
• If they are, unfair, unconscionable or against public policy.

It is a breach of the main terms of the contracts. Where there is a fundamental breach, the innocent party is entitled to rescind the contract and sue for the incurred damages.

References

Anns v. Merton London Borough Council, 1978 AC (1978).

Electronic Commerce Act (2000).

INFANTS ACT, Pub. L. No. CHAPTER 196 (1979).

Johnstone v. Marks, 19 Q. B. D. 509 (1887).

Kennedy v London (City), 58 M.P.L.R. (4th) 244 (2009).

R v Oldham Metropolitan BC, 1 FLR 645 (1993).

Smith v. Land and House Property Corporation, 28 Ch D (1884).

Taylor, R., & Taylor, D. (2015). Contract Law Directions. Oxford University Press.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order