Andrew Herd

Instructor’s Name
Course Title
Date

C O N T RAC T L AW , T H E B A S I C S

ok before i begin is there anyone here that has already completed the
ls1509 course in contract law? good then we can begin.

ok the idea of todays meeting is to give you some idea of the basics of
contracting, im not going to bombard you with cases and i dont want you to
take notes i just need everyone to listen participate.

by the end of the evening i hope you will all have some idea of what a
contract is, how a contract is formed, what type of terms you can expect to
find in a contract and what happens when there is a breach of contract
obligations.

right first off, can anyone define a contract for me???? good , ok, at the
most basic level a contract is an agreement , most contracts can be made
orally or in writing, you all make contracts each and every day, when you buy
things from a shop, when you get on a bus or a train. contract law is really
important to soociety because it provides a framework for commerce as well as
adjudicating disputes.

ok now for a more formal definition. dont worry were going to break it
down. starting with capacity, now your going need to know all this in much
more detail next year but as an overview. contracts made by a person under
the age of 16 are void. the act does of course have exceptions under s2 so
children under 16 can make contracts suitable for there age group this
generally covers buying things from shops etc. Someone who is insane likewise
has no contractual capacity and neither do people who are incapacitated
through drink or drugs but this is only if your too shitfaced to know what your
doing, ive put a wee questionmark up on the slide because the law is often
reluctant to reduce contracts because someones blazing.

right , this is the important part. were going to look at exactly how a
contract is made. the formation of a contract really boils down to a negotiation
with each party pursuing his or her interests.

even the most complecated contract can be analyzed in terms of what we

call offer and acceptance. at first glance it seems quite simple

well use this pen as an example, terms etc ok i offer you accept, at the
point of your acceptance the contract is created this is because both of us are
in agreement the words we have spoken are objective evidence of what is
called consences in idem or meeting if the minds

now if for instance i offer to sell you this pen for 20 pounds and you give me
a different offer there is no consenses between us . what you have done is
issued a qualified acceptance. the effect of this is that my previous offer is
effectively struck down legally you can not turn round and say i accept your
original offer because it no longer forms part of the contract

why is it important its really important to know exactly when a contract is

formed so each party can know exactly what their obligations are to one
another

the reason we have this rule that a counter offer kills the original offer is to
create certainty over the content of the terms of the contract if we allowed
prior negotiations to be mooted in the courts then no one would contract as
there is little certainty that you have a stable contract.

right does everyone understand this?

ok now we are going to move on and have a little look at breach of

contract, the terms of the contract define the obligations , or duties that each
of the parties owes to each other, the terms in the example of the .. were that i
would deliver the bottle in exchange for the price

breach of contract occurs when one party breaks one or more of these
terms without justification so for instance if i failed to give you your bottle of
water that would constitute a breach of contract.

you have to be aware however that not every failure will amount to a
breach if for example i tried to deliver your water to you but you wouldnt
answer your door and had taped up the letterbox then this would not amount
to a brech

where the innocent party has suffered a breach there will often be a
remedy. sometimes this can be specified in the contract itself and at other
times it will be implied in law

ok here are 2 pieces of important terminology that i want you to become

familiar with ok to repudiate a contract means that in a situation where you
have no right to, to give a clear indication either by words or actions to the
effect that you are no longer willing to perform. a good example would be a
joiner who told you that he was no longer willing to do work on your property
 now if someone rescinds a contract they also bring the contract to an end
but they do so un response to either a repudiation or breach of core terms. can
anyyone hear hazard a guess as to what a core term is/ a core terms is one
which is central to the contract such as price or delivery

ok now we,ve got that out of the way we can move on to the two basic
principles that govern breach of contract mutuality and materiality.

well start with mutuality. right obligations under a contract are reciprical in
nature, in other words they are counterparts of one another i give you
something in exchange for something else.

you need to look at a contract as an expression of unity the party who is

claiming there is a breach or seeking a remedy must not himself be in material
breach of his obligations. what this boils down to is that you can only insist on
someone elses performance if you have performed your side of the bargain.

the next big concept we need to look at is materiality. can anyone guess
what materiality means. ok materiality means the degree of seriousness, or
importance of the breach.. the more serious the breach the more remedies
become available . to illustrate imagine if you order a porche from a car
salesman and the delivered you a ford focus this would be considered a
material breach. when there is a material breach the party at fault is said to
have repudiated the contract does anyone remember what repudiation
means ? Now heres the important bit , when a contract is repudiated i.e there
is a material breach or the party walks away from the contract the innocent
party has a personal remedy . he can rescind the contract, which basicaly
means bring it to an end this is one of the only remedies you dont need to go
to court to exercise.

now, im not going to bore you for much longer guys this is the last slide. ok
so judicial remedies.

the most common of these is an action for payment it pretty much

describes itself its where someone fails to pay the purchase price and the seller
sues for payment

secondly we have specific implement and interdict. specific implement is a

remedy which forces someone to do something and interdict is a remedy
which prevents someone from taking action.
 lastly we have damages, almost every breach of contract gives rise to a
claim in damages put simply damages are payment for loss suffered. and can
be coupled with any of the remedies i have already talked about, in addition
you do not need a material breach to give rise to a claim in damages you only
have to prove you have suffered forseeable loss. unlike the states where you
can claim half a million for having coffee spilled on your lap damages are not
awarded as punishment for the party in breach but rather to put the innocent
party back in the position he was before.

ok thats me finished for the day and your all free to go , im sorry if i bored
you , if you have any questions dont hesitate to go to the library and pick up a
book on contract law, the blue one by woolmans pretty good , right , cheers